Human resources report

Human resources management in the cooperative banks was dominated by the myriad challenges of the COVID-19 pandemic in 2020. Many changes had to be made at short notice and greater flexibility was needed in order to enable employees to continue to carry out their work safely and securely despite coronavirus. Working conditions had begun changing even before 2020, but many trends were accelerated by the pandemic. The banks significantly increased remote working options and, on the basis of collectively negotiated agreements, brought in more flexible arrangements for working hours, for example to enable parents to manage home-schooling while daycare and schools were closed. Some institutions introduced short-time working temporarily, particularly during periods when branches were unable to open.

The pandemic also created an unusual situation with regard to the recruitment and induction of new employees, especially new trainees. Direct, face-to-face contact was replaced with video calls, digital recruitment events, virtual induction days, and similar. For all of these changes, the aim was and is to include employees in the necessary measures and, despite the physically separate, virtual working conditions, to maintain dialog with and within the workforce. This placed particular demands on managers. The cooperative banks successfully navigated these changes by investing a huge amount of effort and showing great commitment.

Another change affected banking traineeships, for which new rules came into force in Germany on August 1, 2020. Vocational training for banking is becoming more transparent, customer-oriented, and practical overall, with a greater emphasis on digital technologies. It will continue to teach the necessary banking-specific competencies in areas such as wealth-building, pensions, lending, home finance, and corporate finance. But it will now also focus on communication skills – such as providing advice – and incorporate new digital aspects and skills.

Banking remains one of the most important recognized occupations in Germany, with more than 22,700 trainees overall. Traineeships in banking, as an entry-level qualification, remain a high priority for the cooperative banks, and the ratio of trainees to other employees rose by 0.2 percentage points year on year to 6.5 percent (see chart on page 36).

In view of the digital revolution, however, HR planning is increasingly focusing on other occupations too. This includes traineeships in dialog marketing, IT, and e-commerce. In addition to traditional traineeships, degree apprenticeships also play an important part. Around one in eight trainees combine their practical training with part-time studies at a traditional university or university of cooperative education.

The popularity of the local cooperative banks as a training provider and employer was confirmed when they were included in the trendence institute’s ranking of the most sought-after employers for school-leavers for the 15th year in succession in 2020. The cooperative banks also continue to offer attractive career opportunities for university graduates, as shown by the fact that the proportion of employees with a degree remained almost unchanged at 8.6 percent in the reporting year (see chart on page 37).

Long periods of service reflect the loyalty and close bond between employees and their company. As at the end of 2020, about 70 percent of all cooperative bank employees had been with their bank for more than ten years and 35 percent for more than 25 years (see chart on page 35).

But the reorganization of the workforce was also reflected in the number of employees. In the year under review, the number of employees of the Cooperative Financial Network decreased slightly from 174,314 to 172,334 (see chart on page 34).

Sustainability report

For many years, the idea of sustainability has been a guiding light for politicians, businesspeople, and environmentalists. One of the most widely used definitions of the term sustainability is the one developed by the United Nations in 1987: “Sustainable development is development that meets the needs of the present generation without compromising the ability of future generations to meet their own needs.” This concept of intergenerational justice crucially depends on us ensuring that our business practices take appropriate account of socio-economic and environmental aspects. The international community has set itself ambitious goals for sustainable development and solving the climate crisis (limitation of global warming to 1.5 degrees). To achieve these goals, fast, determined, and concerted action is required by all parties and at all levels. The financial services industry is playing an important part in shaping this endeavor in its role as an intermediary. The Volksbanken Raiffeisenbanken Cooperative Financial Network also promotes sustainable development from an economic, social, and environmental perspective.

Owners: achieving more together

The identity principle is what makes the cooperative different from all other types of company structure. Like members of any cooperative, the members of the cooperative banks are its owners as well as its customers. More than half of customers have decided to become a member. Across Germany, that makes for a total of around 18.4 million cooperative bank members. The cooperative banking remit to provide development finance entails collaboration in a spirit of partnership. It also defines the strategic focus and how it is underpinned by ethical business practices: According to section 1 of the German Cooperative Act (GenG), the nature of the business has to be oriented to the long-term success of its members. One factor in achieving this objective is to avoid sustainability-related risk and seize sustainability-related opportunities. Based on the cooperative principles of partnership, personal responsibility, and helping people to help themselves, cooperatives and cooperative banks are called upon to support their members through sustainable transformation processes.

Cooperative advocacy, along with the annual general meeting or general assembly of representatives and the supervisory boards of the individual cooperative banks (whose members are mostly businesspeople and distinguished persons from the relevant region), underpins the regional control of the individual banks. It provides opportunities for involvement in the democratic process and encourages dialog within society on economic, social, and environmental issues. At the same time, the local cooperative banks learn from the collaboration with their cooperative governing bodies, adopt business innovations, and embrace changing requirements – including with regard to current sustainability-related challenges – in order to put their business models on an efficient footing for the future in line with market needs.

Regional responsibility

In accordance with their remit to provide development finance, the cooperative banks align the nature of their business to the long-term success of their members and customers. A responsible business policy with a strong focus on the common good is thus an integral element of their corporate strategy. For more than 170 years, they have been supporting, encouraging, and advising local people and companies through their financial services and playing a vital role for the real economy through responsible lending. They operate and do business on the basis of mutuality: Each cooperative bank belongs to its members, who benefit from the strength and solidarity of a powerful community. The practices of local cooperative banks are guided by the principle of sustainability. This is why they share their economic success with the region in which they operate. They play a proactive role in the economic, social, and cultural development of their local area. They expand their cooperative network structure through donations, sponsorship, and the voluntary activities of their employees in the community. At the same time, the remit to provide development finance defines the sustainable value creation process at the core of their day-to-day business. The combination of commercial viability and corporate responsibility underpins their regional strength, which they continually develop and expand.

The cooperative movement’s strengths of customer proximity and regional roots are what is needed in these challenging times of digital transformation and social change. The cooperative banks are updating their values-based business model for the future, in dialog with their members and for their benefit.

Systematic integration of sustainability factors in the management of cooperative banks

The factors that are driving the member institutions of the Cooperative Financial Network to further enhance the integration of sustainability into their management processes are not purely of a regulatory nature. The focus is not only on sustainability risks that could have an impact on financial performance, but also on the sustainability implications of the banks’ own operations and investment behavior. These complex matters require the banks to devote significant resources to transformation. The Bundesverband der Deutschen Volksbanken und Raiffeisenbanken e.V. (BVR) [National Association of German Cooperative Banks] and the specialized service providers in the Cooperative Financial Network have therefore been stepping up their support services for cooperative banks. In December 2019, for example, a network-wide project to address these issues was launched. The project resulted in a discussion paper on integrating topical sustainability aspects into strategic bank management and risk management being published in November 2020. This was followed in January 2021 by guidelines entitled ‘Doing business sustainably – analyses, positions, and strategies for cooperative banks’ that are designed to assist the cooperative banks in systematically establishing sustainability management. In these guidelines, the BVR specifically encourages the banks to adopt a proactive position regarding sustainability and to commit to adhering to the UN’s sustainable development goals (SDGs). In addition, the BVR submitted a stakeholder endorsement of the UN Principles for Responsible Banking (PRB) in January 2021 in order to underline this positioning.

Cooperative banks exploit opportunities in the market by offering sustainability-oriented products

A growing portfolio of sustainability products is becoming established across the Cooperative Financial Network. These products are distributed by the cooperative banks. In addition to sustainable securities products (e.g. sustainability-oriented funds from Union Investment and GLS Gemeinschaftsbank eG), they also offer credit products (e.g. sustainable loans from Münchener Hypothekenbank eG).

Corporate social responsibility (CSR)

Every year, the BVR conducts a survey of all member institutions in order to record the Germany-wide CSR data of the Cooperative Financial Network. This provides tangible proof of how the many different engagement activities in the regions combine to create a force to be reckoned with at national level and highlights the particular contribution that the cooperative banks make to society (CSR reports of the local cooperative banks). The entities of the DZ BANK Group have also established various products, concepts, and processes that are based on environmental, social, and ethical criteria.

The latest figures for 2020 show that the Volksbanken Raiffeisenbanken Cooperative Financial Network provided reliably strong support for social issues and initiatives, despite the many difficulties, uncertainties, and social-distancing restrictions that characterized last year. The local cooperative banks and their specialized institutions provided financial assistance totaling €154 million to people in Germany. Donations from the Volksbanken Raiffeisenbanken and other cooperative banks reached €108 million and local communities benefited from sponsorship worth €33 million; income from charitable foundations added a further €13 million. This ever stronger commitment, not just in 2020 but also in the years before, reflects the healthy financial results of the Cooperative Financial Network. Moreover, this shows that good financial performance is not an end in itself but leads to more being done for local needs.

The foundation assets of the Volksbanken Raiffeisenbanken Cooperative Financial Network amounted to €350 million as at December 31, 2020. This sum has been rising steadily for years. To put that into context, the equivalent amount at the end of 2010 was only €140 million. Reflecting the sustainability and long-term orientation of the 814 cooperative banks’ business philosophy, this commitment to charitable foundations represents a very durable way of backing local projects.