Human resources

Having become increasingly prevalent in recent years, the use of digital media and virtual communications remained firmly established in 2022, irrespective of whether employees are at their workplace in the bank or at home. This is a clear sign of the ability of the Cooperative Financial Network and its employees to adapt to changing conditions and their willingness to adopt new technologies in their day-to-day work. The BVR has observed how managers and employees have come up with new and effective ways of communicating and keeping in touch with each other. Over the course of 2022, the task was to establish a ‘new normal’ that usefully combines the benefits of being in the office with the positive aspects of working remotely, as experienced in the past few years, and thereby to develop attractive hybrid working models. Human resources management created the necessary framework and was on hand to provide support.

The Cooperative Financial Network’s adaptation to digital and societal change also helps to make its institutions more attractive employers. As has been the case for many years, the cooperative banks were once again included in the trendence institute’s ranking of the most sought-after employers for school-leavers in 2022.

The institutions in the Cooperative Financial Network remain very aware of their central role as providers of employment and training in their regions. The ratio of trainees to other employees was virtually unchanged year on year at 6.4 percent in 2022 (see chart on page 38), showing that initial vocational training has traditionally been – and will remain – highly important to the cooperative banks and DZ BANK AG in helping to secure the skilled workforce they need.

Last year, the ongoing shortage of skilled workers became increasingly acute in the banking industry and wider economy. The human resources management teams in the Cooperative Financial Network’s institutions are therefore called upon to counteract this shortage by carrying out innovative recruitment activities and steadily improving the already good working conditions. After all, future success depends on being able to attract new employees and retain existing ones.

The continuing professional development (CPD) opportunities for employees 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 and DZ BANK AG. The proportion of trainees undertaking these degree apprenticeships stands at 10.6 percent. The BVR believes that university graduates – particularly those who studied a business-related subject – also view the cooperative banks as an attractive employer. The proportion of employees with a degree increased to 9.3 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 68 percent of employees in the cooperative banks and at DZ BANK AG have been working at these organizations for more than 10 years and that over a third of employees have been with their bank for more than 25 years.

The number of employees in the Cooperative Financial Network fell slightly from 170,614 to 170,488 in 2022.

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 back in 1987, but which still holds true today: “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 depends on us ensuring that our current business practices take appropriate account of social, economic, and environmental aspects. The international community has therefore set itself ambitious goals for greater sustainability and climate neutrality (limiting 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 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.

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 dialogue 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 primarily 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 BVR believes that customer proximity and regional roots are what is needed during difficult times involving significant upheaval and uncertainty. The institutions in the Cooperative Financial Network are updating their values-based business model for the future, in dialogue with their members and for their benefit.

Sustainability in management processes

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).

Holistic approach: facilitating the network’s transformation, helping others to transition, seizing market opportunities

The implementation of sustainability requirements calls for effective collaboration between the institutions of the Cooperative Financial Network, associations, and other cooperative partner companies, their service providers, and specialist organizations. To coordinate this collaboration even more efficiently, the BVR established a center of excellence for sustainability in 2022 and thereby completed a key step in updating the Cooperative Financial Network’s sustainability strategy.

There are also various project activities aimed at supporting the cooperative banks, including the development of an online sustainability portal that the BVR began offering in conjunction with its partners and associations in June 2022. The portal includes a sustainability cockpit, which is a tool for systematic self-assessments, and numerous sustainability-related offerings from the Cooperative Financial Network, such as product solutions incorporating sustainability aspects, training, and examples of best practice at banks.

Another joint project headed up by the BVR is the sustainability action plan, which aims to develop levels of ambition and certain key performance indicators for the Cooperative Financial Network in the environmental, social, and corporate governance (ESG) dimensions and to provide the cooperative banks with a toolbox so that they can achieve their goals in stages in line with the maturity level chart. This fan-shaped chart shows the levels to be reached in terms of the banks’ sustainability efforts. A further aim of the project is to lay the foundations for ensuring consistent ESG data across the entire network.

The BVR’s activities also remain focused on incorporating sustainability aspects into the banks’ core business. In addition to regulatory requirements, such as implementing the green asset ratio, the BVR has carried out further strategic sales projects, such as a current account with sustainability features, and sustainability in corporate banking.

With regard to the latter, a growing portfolio of sustainability products is becoming established across the Cooperative Financial Network. These products are distributed by the cooperative banks. The entities in 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.

Corporate social responsibility (CSR)

Every year, the BVR conducts a survey of all member institutions in order to record Germany-wide information on corporate citizenship in 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 and CSR portal of the local cooperative banks, vielefuerviele.de).

The latest figures for 2022 show that the Volksbanken Raiffeisenbanken Cooperative Financial Network stepped up its corporate citizenship efforts considerably in the reporting year and thus continued to provide strong support for social issues and initiatives, despite the many difficulties and uncertainties. The institutions of the Cooperative Financial Network provided financial assistance totaling €171 million to people in Germany. Around €116 million was disbursed in the form of donations, of which €41 million was in the form of sponsorship and around €14 million in the form of income for charitable foundations for the benefit of people in local communities. This ever stronger commitment, not just in 2022 but also in the years before, reflects the healthy financial results of the Cooperative Financial Network.

The foundation assets of the Volksbanken Raiffeisenbanken Cooperative Financial Network amounted to €380 million as at December 31, 2022. This sum has been rising steadily for years. To put that into context, the equivalent amount at the end of 2012 was only €201 million. In line with the sustainability and long-term orientation of the Cooperative Financial Network’s business philosophy, this commitment to charitable foundations represents a very durable way of backing local projects.