Analyst Meeting: Sector Banking

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Presentation by Eric Flamand, Sustainable Development Officer - Dexia - France.

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  • Analyst Meeting: Sector Banking

    1. 1. Triple Bottom Line Investing Conference 2005 Frankfurt November 3, 2005 “Dexia and Sustainable Development” Eric Flamand Sustainable development officer
    2. 2. Crédit Communal de Belgique 1860 1987 1991 1996 1999 2000 2001 Crédit local de France Dexia Belgium Dexia France Dexia Labouchere FSA 56% 99% Kempen Banque Internationale à Luxembourg 100% 100% 100% Artesia B.C. 100% Group History
    3. 3. Dexia business lines Contribution of 3 business lines (excepted the fourth business “Treasury and financial markets”) to the underlying net income as of December 31, 2004
    4. 4. Stakes <ul><li>“ Social and </li></ul><ul><li>environmental” </li></ul><ul><li>development rating </li></ul><ul><li>Dialogue with investors </li></ul><ul><li>Dexia integrated in stock market indices </li></ul><ul><li>Expectations of civil </li></ul><ul><li>society (United Nations, </li></ul><ul><li>NGOs, media...) </li></ul><ul><li>UNEP declaration, signature of Global </li></ul><ul><li>Compact, Charter for Access to Local Public </li></ul><ul><li>Services, Equator Principles… </li></ul>Commitments by Dexia <ul><li>Regulations </li></ul><ul><li>(reporting, benchmark, </li></ul><ul><li>transparency…) </li></ul><ul><li>“ Sustainable Development Report”... </li></ul>Sustainable development reflected by “constraints” and “commitments” <ul><li>HR: “Diversity Charter”, </li></ul><ul><li>“ Apprenticeship Charter”… </li></ul><ul><li>SRI: European code of transparency for </li></ul><ul><li>SRI funds… </li></ul>
    5. 5. Dexia / indices and ratings Human Resources + Environment + Customers & Suppliers + Corporate Governance = Community Involvement + Human Rights + A <ul><li>“ Sustainable Development” Ratings </li></ul>Vigeo min -- / max ++ Innovest min CCC / max AAA B CoreRatings min D / max A+ <ul><li>SRI stock market indices including Dexia </li></ul><ul><li>Dow Jones Sustainability Index “World” </li></ul><ul><li>ASPI Eurozone </li></ul><ul><li>FTSE4Good “Europe” and “World” </li></ul><ul><li>Ethibel Sustainability Index (ESI) “Europe” and “World” </li></ul>
    6. 6. Objectives <ul><li>Responding to new </li></ul><ul><li>client expectations </li></ul><ul><li>Leader in SD on local authority territory </li></ul><ul><li>Citizen bank in Belgium </li></ul><ul><li>Among leaders for “sustainable” </li></ul><ul><li>or SRI investment funds </li></ul><ul><li>Responding to the need for </li></ul><ul><li>direction and commitment </li></ul><ul><li>among staff </li></ul><ul><li>An SD action plan which unites all </li></ul><ul><li>teams and business lines </li></ul>Dexia Results Sustainable development represents an “opportunity”… <ul><li>Strengthening </li></ul><ul><li>our rating and our place </li></ul><ul><li>in the stock market indices </li></ul><ul><li>A reinforced message: “Dexia, </li></ul><ul><li>the bank of sustainable development”… </li></ul>
    7. 7. External <ul><li>Reinforcing good internal </li></ul><ul><li>governance </li></ul><ul><li>Anticipating client expectations: </li></ul><ul><li>climate change… </li></ul><ul><li>essential services to the </li></ul><ul><li>population… </li></ul><ul><li>- SRI investment products… </li></ul><ul><li>RHM: </li></ul><ul><li>attracting and keeping talents </li></ul><ul><li>managing diversity (place of women, </li></ul><ul><li>seniors, disabled…) </li></ul>Internal <ul><li>Charter of professional ethics in </li></ul><ul><li>relations with suppliers </li></ul><ul><li>Increasing the reliability of </li></ul><ul><li>environmental management </li></ul>The most significant stakes for Dexia… <ul><li>Integrating SD in risk management </li></ul><ul><li>Risk management ( Equator </li></ul><ul><li>Principles …) </li></ul><ul><li>Compliance and professional ethics: </li></ul><ul><li>notably, internal policy and </li></ul><ul><li>procedure on financing armaments </li></ul><ul><li>companies </li></ul><ul><li>Quality of commercial </li></ul><ul><li>relations </li></ul><ul><li>Strengthening dialogue with </li></ul><ul><li>“ stakeholders” </li></ul>
    8. 8. The identity and values of the company … the originality and identity of the company … a common platform of values <ul><li>A group specializing in financing </li></ul><ul><li>the environment and the </li></ul><ul><li>management of savings </li></ul><ul><li>Group culture and history </li></ul><ul><li>(Credit Local de France, </li></ul><ul><li>Crédit Communal de Belgique) </li></ul><ul><li>The Group’s European </li></ul><ul><li>dimension: </li></ul><ul><li>97% of employees in Europe </li></ul>Identifying and prioritizing actions in relation to… <ul><li>Humanism </li></ul><ul><li>Long term </li></ul><ul><li>General interest </li></ul><ul><li>Strong capacity for innovation </li></ul>
    9. 9. The dynamics of the SD action plan <ul><li>Strengthening our rating in an ever more competitive </li></ul><ul><li>environment. </li></ul><ul><li>Three principal objectives for 2005-2007: </li></ul><ul><li>Accompanying clients in implementing SD: </li></ul><ul><li>the major stakes of the greenhouse effect: Véolia-Dexia-CDC Agreement, </li></ul><ul><li>European Carbon Fund, “Guide to climate change”, HEQ… </li></ul><ul><li>development of SRI: a strengthened new team of 7 people for own </li></ul><ul><li>SRI research,. </li></ul><ul><li>Continuing our policy of being a socially responsible company: </li></ul><ul><li>strengthening environmental and social reporting; </li></ul><ul><li>increasing the dialogue with stakeholders (NGOs…) ; </li></ul><ul><li>implementing the “Ethics Charter / suppliers”. </li></ul><ul><li>Reinforcing the Group’s citizen commitment with new projects. </li></ul>
    10. 10. Management of the “sustainable development” project <ul><li>A flexible organisation structures the “sustainable </li></ul><ul><li>development” project at Group level: </li></ul><ul><li>1 managing director (Daniel Caille) also executive General Manager, </li></ul><ul><li>Dexia Crédit Local </li></ul><ul><li>1 project leader ( É ric Flamand) </li></ul><ul><li>1 steering committee where the following are represented: </li></ul><ul><li>the 3 main entities: Dexia Crédit Local, Dexia Bank, Dexia BIL… </li></ul><ul><li>cross-discipline functions: HRD & Internal Communication, Logistics </li></ul><ul><li>& Purchasing, External Communication, Professional Ethics & </li></ul><ul><li>Compliance, Corporate Governance, Risk Management, Audit… </li></ul><ul><li>Regular reporting vis-à-vis the Management Board. </li></ul><ul><li>A logic of working groups / projects. </li></ul>
    11. 11. <ul><li>Project financing </li></ul><ul><li>EUR 6.4 billion in 2004 </li></ul><ul><li>Implementation of the Equator Principles : </li></ul><ul><li>EUR 2.5 billion for 40 projects in 2004 </li></ul><ul><li>The challenge of </li></ul><ul><li>climate change </li></ul><ul><li>In France, Véolia-Dexia-CDC Agreement </li></ul><ul><li>European Carbon Fund </li></ul><ul><li>Slovakia, Austria, Eastern Europe… </li></ul>Financing the local public sector <ul><li>Promotion of HEQ </li></ul><ul><li>“ HEQ Association” partnership, publication </li></ul><ul><li>of a “Guide to HEQ”… </li></ul><ul><li>Subsidised loans / certified transactions </li></ul><ul><li>Dexia leader in wind power (more than 30 </li></ul><ul><li>projects since 2002, EUR 350 million financing) </li></ul><ul><li>Dexia described “the bank of renewable </li></ul><ul><li>energies” by the Infrastructure Journal. </li></ul><ul><li>Direct and tailor-made </li></ul><ul><li>financing to facilitate </li></ul><ul><li>access to essential goods </li></ul><ul><li>EUR 28 billion in 2004 </li></ul>
    12. 12.  Questioning room for manoeuvre.  Idea of additional expenditure 1 Need for technical and financial engineering    Financial analyses  Simulations / projects  Building a long-term loan strategy  Project financing  Global financial engineering  Tailor-made packages and innovations  Example: HEQ buildings  What management mode the most “sustainable” and “effective”?  direct loans, lease credits or PPP ?  renting clean vehicles? financial leasing of selective sorting bins?  Optimizing human resources management  Attendance reward, coaching quality and psychological support…  Management of time
    13. 13. Stakes observed / “SD successes”  Climate change, energy savings, sustainable tourism… Standardization and resource management (waste incineration , water,…) Transport networks / context of high urban density HEQ being disemminated … Culture, heritage maintenance… Responsible local public sector ordering and purchasing policy Development and adaptation of the local economy
    14. 14. <ul><li>The strong progress </li></ul><ul><li>made by SRI funds </li></ul><ul><li>(at 30 June 2005) </li></ul><ul><li>EUR 10.1 billion in managed funds </li></ul><ul><li>12.4% of total managed by Dexia Asset </li></ul><ul><li>Management </li></ul>So-called “SRI” investment funds <ul><li>Good practices and </li></ul><ul><li>initiatives </li></ul><ul><li>A large range of 19 funds. </li></ul><ul><li>A new methodology and an own research </li></ul><ul><li>team with 7 new analysts specialized in SRI </li></ul><ul><li>“ Portfolio 21” method taking account of </li></ul><ul><li>“ human rights at work” in the management </li></ul><ul><li>of insurance reserves. </li></ul><ul><li>Implementation of a policy of exercising </li></ul><ul><li>voting rights. </li></ul><ul><li>Market share </li></ul><ul><li>7.3% in Europe to which can be added assets of </li></ul><ul><li>78 mandates and SRI funds (instit. and private </li></ul><ul><li>clients) </li></ul><ul><li>60% in Belgium </li></ul><ul><li>n°1 or n° 2 in France </li></ul>
    15. 15. Sustainable and responsible relations with clients Disadvantaged people Social engineering Quality <ul><li>Basic banking services </li></ul><ul><li>/ disadvantaged people </li></ul><ul><li>(Public Social Assistance </li></ul><ul><li>Centers) </li></ul><ul><li>Quality </li></ul><ul><li>processes and </li></ul><ul><li>certification </li></ul><ul><li>Micro-credits: </li></ul><ul><li>MFI refinancing in </li></ul><ul><li>developing countries. </li></ul><ul><li>NGO support in </li></ul><ul><li>Belgium </li></ul><ul><li>In Belgium: </li></ul><ul><li>round table / the young </li></ul><ul><li>and money </li></ul><ul><li>insurance companies </li></ul><ul><li>Reinforcing the </li></ul><ul><li>appropriateness of </li></ul><ul><li>products to each </li></ul><ul><li>client </li></ul><ul><li>Measuring client </li></ul><ul><li>satisfaction </li></ul><ul><li>Purchase-option lease </li></ul><ul><li>/ population mix </li></ul><ul><li>Dexia Savings Pension: </li></ul><ul><li>retirement savings </li></ul><ul><li>products, </li></ul><ul><li>management of 35 hours </li></ul><ul><li>In Belgium: </li></ul><ul><li>“ Silver” initiative, </li></ul><ul><li>evaluation of charges </li></ul><ul><li>for communes </li></ul><ul><li>Dexia Sofaxis: </li></ul><ul><li>optimization of HRM </li></ul>
    16. 16. <ul><li>Environmental </li></ul><ul><li>reporting: </li></ul><ul><li>paper consumption </li></ul><ul><li>ink cartridges </li></ul><ul><li>waste management </li></ul><ul><li>(paper-card, organics…) </li></ul><ul><li>liquid and energy consumption </li></ul><ul><li>professional travelling </li></ul>Assessing environmental impacts… <ul><li>Measuring evolutions, </li></ul><ul><li>and fixing objectives… </li></ul><ul><li>New indicators ? </li></ul><ul><li>Promoting good </li></ul><ul><li>practices. Examples: </li></ul><ul><li>“ Carbon Balance” </li></ul><ul><li>(Paris building of </li></ul><ul><li>Dexia Crédit Local) </li></ul><ul><li>- “HEQ” building in Luxembourg </li></ul><ul><li>“ Mobility Action Plan” in Belgium </li></ul><ul><li>Internal awareness </li></ul>
    17. 17. <ul><li>Social </li></ul><ul><li>data 2004 </li></ul><ul><li>97% of 24,019 employees based in Europe </li></ul><ul><li>Women 46.15% / Men 53.85% </li></ul><ul><li>Executives: 10% women. </li></ul><ul><li>17.54% part time (15% in 2003) </li></ul><ul><li>Recruitment on indefinite-term contracts: 95.63% </li></ul><ul><li>Average length of service: 9.15 years (11.2 in 2003) </li></ul><ul><li>3.27 days training per employee on average </li></ul><ul><li>Sickness absenteeism low: 3.51 days per employee </li></ul><ul><li>Employee share ownership 4.80% (4.14% in 2003, 3.5% in 2002) </li></ul>Human management and social dialogue <ul><li>Management </li></ul><ul><li>and tools </li></ul><ul><li>“ Principles of Social Management” (2002) </li></ul><ul><li>“ HR Quality Charter” (2004) </li></ul><ul><li>“ White Paper on the Place of Women” (2004) </li></ul><ul><li>Development </li></ul><ul><li>of skills </li></ul><ul><li>“ Business partners” put in place </li></ul><ul><li>Creation of the “Dexia Corporate University” </li></ul><ul><li>(“DEAL” and “LEAD” programmes) </li></ul><ul><li>Innovation </li></ul><ul><li>and social </li></ul><ul><li>dialogue </li></ul><ul><li>16 collective labor agreements in 2004 </li></ul><ul><li>The importance of the European Works Council </li></ul>
    18. 18. The Dexia citizen commitment EUR 6.1 million (in 2004) Support of expertise and awareness of sustainable development 45% Culture and sport 28% Social and solidarity 27% <ul><li>“ Successes in sustainable </li></ul><ul><li>development” </li></ul><ul><li>benchmark study </li></ul><ul><li>over 200 towns </li></ul><ul><li>Dexia TV </li></ul><ul><li>Symposia, studies and </li></ul><ul><li>events… </li></ul><ul><li>Avignon Festival </li></ul><ul><li>“ Axion Classics” and </li></ul><ul><li>“ Axion Art” </li></ul><ul><li>(plastic arts </li></ul><ul><li>competition </li></ul><ul><li>in Belgium) </li></ul><ul><li>Publication of works </li></ul><ul><li>Foundation </li></ul><ul><li>Dexia Crédit Local </li></ul><ul><li>/ citizenship with “local </li></ul><ul><li>Missions” </li></ul><ul><li>Support “Conservatoire </li></ul><ul><li>du Littoral” </li></ul><ul><li>In Belgium: </li></ul><ul><li>“ Dexia Bank Foundation” </li></ul><ul><li>road safety partnership </li></ul>
    19. 19. <ul><li>Corporate </li></ul><ul><li>Governance </li></ul><ul><li>Application of the new Belgian Code of Corporate </li></ul><ul><li>Governance (Lippens Code) </li></ul><ul><li>Constitution of a “corporate governance” commission and </li></ul><ul><li>draft corporate governance charter by the end of 2005 </li></ul><ul><li>Classic stakes: number of independent directors, </li></ul><ul><li>self-assessment, transparency of remuneration… </li></ul>Good governance <ul><li>Compliance </li></ul><ul><li>and ethics </li></ul><ul><li>Approximately 150 people dedicated to compliance. </li></ul><ul><li>Policy of Group integrity, fight against money </li></ul><ul><li>laundering… </li></ul><ul><li>“ Code of Professional Ethics”, “Compliance Charter”… </li></ul><ul><li>Risk </li></ul><ul><li>management </li></ul><ul><li>Implementation of the Basle II agreement </li></ul><ul><li>Mapping operational risks </li></ul><ul><li>Audit </li></ul><ul><li>Approximately 200 people dedicated to internal audit </li></ul><ul><li>and inspection. </li></ul><ul><li>Audit mission on SD policy at the end of 2004. </li></ul>

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