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Sustainability governance structure

Transforming our sustainability governance model

Nordea’s sustainability governance structure dates from a couple of years back. In June 2020, a group-wide task force was appointed with the purpose of identifying improvements in terms of managing sustainability in general and ESG and climate-related risks in partic­ular following heightened expectations from supervisors and regulators. The outcome of the task force’s work was a five-year action plan. The first step is to revise the ESG risk definitions in our risk taxonomy to consider ESG factors as drivers of the existing risk categories – including credit risk, market risk, liquidi­ty risk and operational risk – and to fur­ther incorporate them into the existing risk management framework. To sup­port this approach, we decided to modify our sustainability governance model to tie sustainability and risk clos­er together.

At Board level, the Board Operations and Sustainability Committee assists the Board in fulfilling its oversight responsi­bilities concerning sustainability, which includes strategy, operational model, reporting and frameworks. The Board is also assisted by the Board Risk Commit­tee in the fulfilment of its oversight responsibilities concerning the manage­ment of risks, related frameworks, con­trols and processes (including ESG fac­tors as drivers of existing risk).

At the executive level, in 2020 our governance structure included a group-wide Business Ethics and Values Com­mittee (BEVC) as a sub-committee of the CEO’s Group Leadership Team. BEVC comprised representatives from the business areas and group functions including Group Risk and Group Compliance, and served as an executive preparatory body for the CEO and the Board. BEVC monitored and reviewed relevant group policies related to sustainability. It was also responsible for recommending to the CEO participation in and exit from sustainability commitments, as well as for approving external position state­ments and sector guidelines. The BEVC also held a role in preparing the sustain­ability strategy, targets and the Sustain­ability Report for the CEO and the Board. Our Risk Committee (RC) also provided input for our sustainability agenda from a risk perspective. The role of the RC in relation to sustainability will remain in place in 2021, but BEVC was replaced by the Sus­tainability and Ethics Committee (SEC) in January 2021. The SEC has a stronger mandate to facilitate the forth­coming overall integration of sustain­ability into our business strategy and to support the integration of ESG factors in risk management..

The new sustainability governance model is illustrated below.