Human resources

As in 2020, the COVID-19 pandemic once again had a significant impact on people’s working lives and on their personal lives in 2021. Human resources management in the cooperative banks thus continued to be focused on identifying ways of overcoming the problems created by the pandemic, especially how to balance work-related requirements with other requirements. As well as ensuring compliance with the obligation to work from home, the banks’ HR departments expanded and professionalized the various arrangements that had been introduced at short notice at the start of the pandemic to allow more flexible working hours. They also had to monitor the statutory requirements, such as the ‘3G’ rules (vaccinated, recovered, or negative test result).

The workplace itself has seen a further increase in the use of digital media and virtual communications, irrespective of whether employees are working in the office or at home. This has automatically strengthened the ability to adapt to technological progress. Nevertheless, managers and employees have come up with new ways of communicating and keeping in touch with each other effectively. The task of human resources management was to help them find new communication methods.

The Cooperative Financial Network’s more rapid adaptation to digital and societal change may help to make the local cooperative banks a more attractive employer. As in 2020, the local cooperative banks were once again included in the trendence institute’s ranking of the most sought-after employers for school-leavers in 2021.

The cooperative banks are very aware of their central role as providers of employment and training in their regions. The ratio of trainees to other employees increased again to reach 6.6 percent in 2021 (see chart on page 38), showing that initial vocational training has traditionally been – and will remain – highly important in helping to secure the skilled workforce needed. As in other industries, the banking sector therefore has to continually counteract the shortage of skilled workers by carrying out innovative recruitment activities and steadily improving working conditions.

The continuing professional development (CPD) opportunities are complemented by a wide range of training and development activities offered by regional associations and academies. These include combined work and degree courses. Many trainees are keen to study for a degree too, and this is encouraged by the cooperative banks. The proportion of trainees undertaking these degree apprenticeships stands at 10.5 percent. University graduates also view the cooperative banks as an attractive employer. The proportion of employees with a degree remained at the high level of 8.7 percent in the reporting year (see chart on page 39).

A company cannot continue to perform strongly over the long term unless it has highly skilled and motivated employees. They lay the foundations for long-term customer relationships. Long periods of service are one of the indications of loyalty and a close bond between employees and their company. The chart on page 37 shows that approximately 70 percent of employees in the cooperative banks have been working at these organizations for more than 10 years and that nearly one in three employees has been with their bank for more than 25 years.

There was a further decrease in the number of employees of the Cooperative Financial Network to 170,614 in 2021 (see chart on page 36). At just 1.0 percent, however, this fall was less pronounced than in 2020.

Sustainability

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 social, 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 at all levels is required from all parties. 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. 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 difficult 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 into management

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. There are also various project activities aimed at supporting the cooperative banks, including the development of a sustainability portal for the cooperative banks and concerted efforts to plant trees as part of the climate initiative ‘Morgen kann kommen’ (we’re ready for tomorrow).

Seizing market opportunities: increasing number of 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). The BVR added a function to the central cooperative advisory process in May 2021 that allows the banks to check sustainability preferences in the system’s database when providing investment advice. The banks are free to use this function as they wish. The partners in the Cooperative Financial Network have also expanded their portfolios of sustainability-oriented products, including impact-oriented investment funds (UniZukunft Klima A) and DZ BANK AG’s investment certificates based on sustainable underlying instruments. The BVR is currently preparing for implementation of the further-reaching regulatory requirements that will apply with effect from August 2, 2022 under the Markets in Financial Instruments Directive (MiFID II).

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. Details can be found in the DZ BANK Group’s Sustainability Report.

The latest figures for 2021 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 €157 million to people in Germany. Donations from the Volksbanken Raiffeisenbanken and other cooperative banks reached around €111 million and local communities benefited from sponsorship worth €32 million; income from charitable foundations added a further €14 million. This ever stronger commitment, not just in 2021 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 €352 million as at December 31, 2021. This sum has been rising steadily for years. To put that into context, the equivalent amount at the end of 2011 was only €183 million. Reflecting the sustainability and long-term orientation of the 771 cooperative banks’ business philosophy, this commitment to charitable foundations represents a very durable way of backing local projects.