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Sustainability Model

At Bancolombia Group we have defined the Sustainability Model that includes our policies of purchases, human rights, climate change, financing, investment, relationships with stakeholders and our social and environmental goals.

Our Model

We are the most sustainable bank in the world

With a score of 87 out of 100, we were ratified as the most sustainable bank in the world in the Dow Jones Global Sustainability Index, a global indicator that measures the sustainable performance of companies in economic, social and environmental matters. Since 1999, this measurement is a benchmark for foreign investors that include the management of sustainability as one of its criteria for decision making

On this occasion, more than 3,500 companies from around the world were invited to participate, of which 201 were banks, 133 were evaluated and only 27 entered the index.

In this way, we show our commitment to work for a community with a prosperous economy, a healthy environment and an inclusive society

Sustainability Policies

As part of our corporate strategy, in Bancolombia we apply several Sustainability Policies:

Policies Indicator DJSI
Sustainable purchasing Supply chain
Human rights Labor practices and HHRR on business
Climate change Climate change strategy
Controversial issues on financing and investment Controversial issues on business
Responsible investmen Sustainable businesses
Stakeholders relationships Stakeholders relationship

Dialogue with our stakeholders

To think about others and being sensitive towards their needs is the basis to transcend our service, thus creating different ways of relating with them through which we generate value and strengthen trust through a permanent conversation and dialogue.


Through face-to-face spaces, mass media and interpersonal relationships, we interact with each group of interest and become aware of their interests and priorities. Further, we share with our different stakeholders the most relevant actions taken as to social and environmental management and how we consolidate a sustainable development as from our daily actions.

If you have any question about this, you can mail us to sostenibilidad@bancolombia.com.co

Stakeholders Information
Mass media Press Site
Clients and others 2017
2016
2015
All our stakeholders Annual management reports

For Bancolombia Group it is very important to know the expectations that stakeholders have about our management; their priorities and needs to offer them long-term value. In our organization we not only care about getting results, but particularly in how we generate this shared value, how we grow hand in hand with our shareholders, investors, employees, customers and suppliers; of how we are profitable, always understanding our social role. The interactions we do with every stakeholder, are conducted through classroom spaces, media and interpersonal relations, which has enabled us to further strengthen relations based on trust.

We also have a virtual site where our stakeholders can enter by clicking here. On this site we explain what each of our relevant topics consist of and open a permanent dialogue.

In 2017 we developed the dialogue process that we carried out with employees, customers and suppliers, in accordance with the Global Reporting Initiative (GRI) standard. This allowed us to communicate progress on issues relevant to our stakeholders and report on our performance in the economic, environmental and social fields. According to our stakeholders relationship policy, the dialogues take place every two years, for this reason in 2019 a new dialogue will be held.

Dialogue with stakeholders

Enter here to know the results of the dialogue with our stakeholders. You can find:

  • Methodology
  • Scope and objectives
  • Dialogue results
  • General key findings
  • Conclusions

Materiality matrix

As a result of the dialogue with our stakeholders, upon which the sustainability annual report was designed, at Bancolombia Group we created our Materiality Matrix.

Further information in this regard

Materiality

We have established our corporate sustainability targets to support our business strategy and our sustainability management commitments:

In 2017 we conducted a process of dialogue and consultation with our relationship groups, particularly with employees, customers and suppliers, in accordance with the Global Reporting Initiative standard and the new strategic vision of the organization, in which the following material topics were defined : Superior customer experience, Innovation, Humanistic culture and high performance, Profitable growth and sustainability, and Operational and technological excellence; this in order to better understand the issues that are relevant to them and to publicize our performance in the economic, environmental and social fields.

According to the consultations carried out in 2017, the three most important topics for our relationship groups were: Humanistic Culture and High Performance, Operational and technological excellence and Profitable growth and sustainability.

Employees, customers and suppliers, would like to have spaces for knowledge transfer, co-creation and greater involvement in the design of the bank's products and services. They also expressed interest in learning more about the strategies we are developing in each material issue.

In accordance with our stakeholder policy the next consultation will be held in 2019.

Alignment of material issues with ODS

 

Impact Measurenment and Valuation

To valuate externalities, we mapped our materiality and it’s specific topics with the sustainable development goals (SDG) as seen at our web site (see attached IMPACT MEASURENMENT AND VALUATION). Our environmental and social material issues (sustainable businesses, climate change, ecoefficiency, ESRA, human rights and innovative talent management) were assessed positively or negatively and classified within the Megaforces and SDG. To show quantitative data, in order to evaluate positive and negative impacts and, based on these, make strategic decisions and replicate them at a regional level, we analyse one strategic business line and two key projects.

Strategic business: The business line is the “Línea Verde Bancolombia”; to estimate the social and environmental benefits we use the Results Chain method for the metric approach (see attached file). The results are summarized in:

  • 24 benefits generated by the different kind of projects, were identified as follows: 11 environmental, 2 social and 11 economic.
  • The recollection of available indicators was carried out in order to do the evaluation. Input information was found for 13 of the identified benefits.

It is expected that the financed projects generate environmental and social benefits for COP 26.797 Million: for EACH PESO (COP 1) invested in discounting the interest rate, COP 12 would be obtained in environmental and social benefits (relation 1:12).
The PDF of the complete estimation is in Spanish, you would find executive summaries attached in English.

Key projects: On the other hand, the 2 projects analyzed and their results were:

Las Letras van por Colombia is an initiative of the Fundación Bancolombia; the first approximation to an economic valuation and calculation of the social return of this project, result in benefits like:

  • Economic: Higher wages and access to the labor market.
  • Social: facilitate decision-making in the face of social investments and strengthening of the communication strategy based on transparency criteria that contributes to the maximum generation of social value.

Quantitative studies have not been carried out in the country, which is why in this case the transfer of benefits of estimates was applied and done in developed countries (United States and England), adjusting it in cases that are possible with the information available at the national level.
The Total Added Value by Las Letras van por Colombia in 2016 – 2017 is COP $ 23,945 Millions. So, the social return (SROI) of this program is equivalent to 14.2 pesos for each peso invested, which ratifies its social convenience because of its contribution to the creation of social value (relation 1:14).

The SROI of the Teatro Digital (Digital Theater) project, results in benefits like:

  • Economic: Savings in households due to a decrease in expenditure on cultural consumption.
  • Environmental: Emissions reductions for trips to the Theater that are avoided.
  • Social: i) Use of free time ii) Improvement of self-esteem, social cohesion and civic and cultural values iii) Improvement of the physical and mental health of adults iv) Learning and better school performance.

The calculations and estimations were made based on the information provided by Bancolombia for each case, secondary sources consulted, scientific articles or official reports of projects with related topics.
The applied method for the quantification of the economic added value is based on the components of cultural value, the corresponding benefits and co-benefits (see attached file, pag 6). The economic benefit is quantified through the savings (avoided costs) users perceive, which corresponds to a direct effect on their welfare, as it corresponds to an increase in the consumer surplus associated with the possibility of increasing the consumption of cultural goods and services without affecting their income or purchasing power to meet other needs (see attached file, pag 8). Then, the added value by the offer of cultural goods and services is equivalent to: (Added value cultural events = Symbolic Value + Social Value + Economic Value) = COP $ 2,950 Millions. The results show the important contribution that is made to the creation of social value, through the democratization of culture: relation 1:2.4.

See the report in the library.

Finally: Grupo Bancolombia has been advancing since 2017 in the economic valuation and calculation of the social return of some of its social projects, and we hope this year to work to get to have an Impact Measurement Evaluation System immersed in the business, that is permanently evaluated, in a way that allows us to evaluate and actively manage each of the main externalities related to our operation and its impact on society (value), and thus achieve: 1) Make better informed and more responsible decisions, 2) Manage our risks more accurately and proactively and 3) Improve transparency by presenting our stakeholders with more comprehensive and informed information in facts.

More information

Human rights

”Promote, Respect and Repair”

For Grupo Bancolombia, respecting human rights is an integral part of responsible and sustainable business behavior, and for this reason it constantly works to align its strategies and policies, and has always been working with our employees, customers, vendors and society, always holding as our fundamental principle that the bond with the people with whom we interact should always preserve the value of human dignity as its central focus. Thus, it follows, we do not in any way endorse any kind of discrimination with regard to color, gender, race, language, religion, economic or social condition, political or philosophical opinion, national or social origin, or of any other nature; as such discrimination might violate one's inalienable right to equal treatment and opportunities in the different activities that people practice in the organization.

Having as a Strategic Pillar the Humanist Culture and declaring our Human Rights Policy in 2013, we made public our commitment to the "protection, respect and repair of human resources" in all activities and relationships with third parties associated with them, as well as with all our other relationship groups and in all the locations where we operate, based on the Ruggie Framework and the Guiding Principles on Business and Human Rights supported by the UN Human Rights Council.

In this way, we are also consistent with the application of the Principles of Ecuador to which Bancolombia has adhered since 2008, and with our commitment to the United Nations Global Compact in which we commit ourselves to align our operations and strategies with the principles universally accepted in the areas of human rights, labor, environment and anti-corruption. Likewise, the Grupo Bancolombia has joined other initiatives such as Business for Peace, the Carbon Disclosure Project, and the Water Mandate -which is very relevant from a human rights perspective because they address issues such as water, climate protection, the fight against corruption and peace construction.

To have further deatil, please click de following issues:

Human rights and Business 

Due diligence process

With the purpose of preventing and mitigating the negative impacts that could result from the violation of human rights, the Grupo Bancolombia has been working on the definition of strategies to cover its own operations, those derived from them, and those of its stakeholders  with impact on the Group. The Human Rights Compliance Assessment (HRCA_quick check) has been completed every year, a tool designed by the Human Rights & Business program of the Danish Institute for Human Rights, whose latest review was conducted in March 2018; this allows, through a self-assessment, to identify possible events and where they might occur.

However, in order to have a Risk Management System in Human Rights based on the same methodologies applied by the company for the other types of risk, it has begun with the design of a new model, whose main inputs are the result of the HRCA and the framework of good practices given by the ISO:26000 "Guide on Social Responsibility"; this model was approved by the Risk Technical Committee, considering the elements that Grupo Bancolombia takes into account for risk management. In this first approach to the implementation of the new model, a Map of Inherent Risks was obtained, which is in permanent update considering that the action plans evolve according to the internal and external environment.

In the measurement methodology, the rating of the risks is given by expert criteria, according to the impact it could generate if the event materializes and the probability of it occurring, on a scale of 1 to 5. As the respective controls become associated, the residual risk assessments will be defined. The model is expected to be applied during 2018 and we hope present its results in the next completion of the DJSI, including the Residual Risk Map, which will be reviewed annually.

Evaluation

To date, we have managed to advance the diagnosis to 100% of the operations in Colombia, Panama, El Salvador and Guatemala, thanks to the completion of the HRCA_quick check self-assessment and the first approach to the implementation of the new risk model, according to which the percentage of operational sites where inherent risks were identified higher than tolerable is 53% (8 out of 15).  

Risk issues identified as moderate include conditions in employment and work as days greater than 48 hours per week; acts of harassment, abuse or threat; Occupational health and safety risk management; employment practices within the supply chain; and the financing of projects and investments in companies that do not respect human rights. And the risk identified as high is about occupational safety and health in Vendors and third parties.

The percentage of sites that have controls and action plans executed or in progress, on risks above the tolerable level, is 100%.

With respect to the risk to which we are exposed to investing in companies that violate human rights, we were the first company in Colombia to embrace the PRI and we established a Responsible Investment Policy by means of which we have committed to include the Sustainability Requirements (including Human Rights) in every investment made by the bank, aimed at controlling and mitigating this risk. Additional due diligence should be performed when investing in the more controversial sectors.

For the risk of financing projects that may have a greater incidence in the violation of the human rights of the communities located in their area of influence, of the society in general, the employees of the company that run the project or its chain of supply, we analyze 94 subsectors financed in Grupo Bancolombia to identify which ones have a higher risk to violate the human rights and design the controls necessary to diminish such risks. In this way, we keep the policies, procedures and documentation updated: we have reaffirmed our commitment to voluntarily adopt the Equator Principles and the Global Deal, the latter to which we join in 2008 and, therefore, we commit ourselves to upholding Environmental Management Policy when financing such projects, an Exclusion List of assets and activities that will not be financed and the Manifest of Respect for the Human Rights in the contracts with clients, and a Controversial Issues Policy in financing identifying all those sectors and subsectors posing the highest risk of human right violations, assessing the Environmental and Social Risks of the project to be financed and refuse to provide funding if violations are detected or where proper due diligence has not been performed from the Human Rights standpoint, identifying the most controversial sectors to be financed and defining minimum requirements for funding projects or activities in 5 sectors with the greatest exposure to human rights violations, and upholding a Respect for Human Rights manifesto to be signed by the legal representatives of the companies whose projects are to be financed in sectors flagged by our Environmental and Social Risk Policy as well as that governing Controversial Financing Issues.

Also, we defined the financing conditions in five sectors deemed as critical or controversial: mining, energy, oil & gas, agricultural industry and infrastructure works.

Based on this, in 2017 the evaluation of Environmental and Social Risks was applied to 223 projects, 34 of which obtained an unfavorable result due to non-compliance with environmental, technical and/or legal standards, within which it is contemplated the violation of human rights and specifically on this issue, there were 6 projects that were not funded because they presented a possible violation of human rights:

Table. Non-financed projects for violation of human rights

These are 2 of those cases:

Case 1: In Cauca´s department in the rural sector, the mining activity of gold and metals precious open sky, which was not financed due to not have a social management plan, evidence of proper management of solid waste and lack of an Occupational Health and Safety Management System, where the human rights of workers were affected and exposed to a possible accident or occupational disease.
Case 2: In Antioquia´s department, mining activity is developed underground gold, which was not financed due to not having evidence enough of the appropriate Environmental Management Plan that can generate a significant environmental impact, does not have a Management Plan defined and not even with a Health and Safety Management System in the work, the human rights of workers were affected and exposed to a possible accident or occupational disease.

We do not have public remediation actions because there have been any case:

Table. Events of discrimination and corrective measures adopted. GRI 406.1

Respectful Supply Chain of Human Rights 

Since 2009 we have been working with our suppliers and strategic partners to continuously improve our mutual performance from the environmental, social and ethical standpoints.

Since 2015 we have been added sustainability clause agreements with our suppliers and service providers, covering respect for human rights, compliance with all environmental, legal, occupational health and safety, corporate social responsibility, climate change and corporate governance rules and regulations. During 2016 and 2017 we continue with the inclusion of clauses on respect for Human rights in all new contracts and renewals with suppliers and contractors, as well as in service orders.”

We continue with the implementation of the new methodology to measure the performance in sustainability of our supply chain, through the tool "Measure what's Important" of Sistema B that allows them to measure their economic, social, environmental and corporate governance performance, to identify opportunities for improvement and we can accompany them in the implementation of best practices; in addition to the opportunities they represent for our partners in reducing risks and understanding their positive impacts on society, our organization obtains a very clear mapping of the sustainability performance of our supply chain and the impact we are having on society through this relationship group. In 2017, 89 of our Strategic Suppliers evaluated their impact using the tool -141 since 2016-. 91% of Contractors and Suppliers of level I made the evaluation.

We also continued to evaluate our procurement of goods and services based on the guidelines contained in our Sustainable Procurement Policy which explicitly prohibits contracting services or purchasing goods from a vendor that commits human right violations.

Also, we have a Suppliers Development Model to conduct audits for assessing the social and environmental risks that incorporate Human Rights criteria. Additionally, we have clauses that consider the respect and encouragement of HHRR in the contracts with our suppliers and contractors, who are governed by our Code of Ethics, evaluated by the guidelines of our Sustainable Procurement Policy and our HHRR Policy.

During 2017 we made on-site audit visits to Contractors and Suppliers of level I, with coverage equal to 91%, and none have detected evidence on issues of human rights violations. We also have a code of ethics that applies to suppliers and an ethics help line for reporting any violation of human rights, unethical or illegal practices or other infringements that are not accepted by us (please see document section).

Human rights and our employees 

We have implemented an independent Ethics Line intended to make possible for different groups to report any type of breach of the codes of conduct, ethics, and good governance, including potential violation of human rights.

Cases reported are subject to investigation and, according to the findings, an action plan is executed according to the reports received by the employees through the ethics line and the coexistence committee. In 2017, zero (0) cases of effective violation of human rights were reported.

Events of discrimination and corrective measures adopted. 406.1.

Thanks to the work carried out by an interdisciplinary team and our benchmarking efforts in terms of best worldwide practices, we were able to define the concepts relating to Diversity and Inclusion that the Bancolombia Group must uphold, as stipulated in the corresponding Diversity and Inclusion policy based on the following three mainstays:

  • Respect for diversity and inclusion,
  • Reasonable adjustments to ensure inclusion
  • And encouraging multiculturalism.

At Bancolombia Group we base all our actions on Human Rights and the sound treatment to our employees. Therefore, we have developed the following strategies:

  • Wellbeing programs.
  • Talent Innovative Management.
  • "Bancolombia for Everyone"
  • Implementation of career plans.
  • Collective Agreements.

For further details click here.

Respect for economic rights

At Bancolombia Group our priority is to respect, in all our actions and alliances, the economic rights, as follows:

  • Corporate Governance Model: We have a set of practices of transparency, ethics, corporate governance, internal control and risks that allow us ensuring a Good Corporate Governance Model, that generates trust to all our stakeholders and that guarantees the sustainability of businesses in all the countries where we are present according to our Code of Ethics that since year 2013 considers explicitly the respect for Human Rights as an action guideline.

In the same line, in March, 2014 we became the first company in Colombia to subscribe the Principles of Responsible Investment of the United Nations, by having a Responsible Investment Policy, since as institutional investors we have the duty to focus our action toward the generation of value in the long term to our beneficiaries and be consistent with the economic rights. In such trust function, we estimate that the environmental, social and corporate governance issues might affect the yield of investment portfolios and recognize that the application of said policy helps us to act accordingly to the broadest purposes of the society.

  • Zero Fraud Tolerance: This policy is focused to the immediate action in the event of fraud, unlawful practices and asset laundering, which implies to investigate and report any fraud behavior or related with wrongful action from our collaborators, strategic allies and suppliers. This policy does not have any distinction as to the amount since the simple fact of having a fraud conduct carries the highest seriousness to our organization.

Promotion and Respect for Communities’ Rights 

At Bancolombia Group we understand that our commitment with human rights goes beyond our economic role to be agents of social development, concerned to generate capacities and transformations in the long term, as well as a positive impact in the communities by supporting in an overall manner the life cycle of the people as of their early childhood until they become autonomous and capable to manage their own development.

  • Social inclusion.
  • We make dreams come true.
  • Working for peace.
  • Contributing to culture.

For further details click here.

Respect and promotion of the Right to Enjoy a Healthy Environment 

At Bancolombia Group we are aware of the right of every human being to enjoy a healthy environment. Thus, we work to generate a balance between the quality of the environment and the living standards in order to become more sustainable through time. With such purpose, we have created the Environmental Management System, an Environmental Management Policy and the Corporate Ecoefficiency Program that allow us to identify the direct and indirect impacts of our activity on the environment to promote the prevention, mitigation, correction and compensation thereof.

Likewise, in our organization:

  • We frame our action in the respect for the legal environmental framework.
  • We participate in the Environmental Committee of ANDI (Colombian National Association of Entrepreneurs), which allow us to be updated in regulations and contribute to create new environmental standards.
  • We have an Environmental Committee that gathers every month to discuss legal technical issues, both of Colombia and of other jurisdictions where we are present.
  • We monitor the legal environmental requirements applicable to our activities, our clients and suppliers, through the interdisciplinary team of experts, both internal and external, as to legal environmental matters; such experts, by analyzing said requirements, their implications and commitments undertaken voluntarily, generate action plans and controls necessary to ensure their compliance.
  • We have a Climate Change Policy and a Climate Change Strategy the purpose of which is to assess the direct consequences of such phenomenon in our business to take the corrective measures, consider how the indirect effect might influence our operation and develop opportunities for us and for our clients.

Controversial Issues

Loans to Responsible Companies

In year 2008 we adhered to the Principles of Ecuador and the Global Compact. Since then, we have delved into the financing under social and environmental criteria pursuant to our Environmental Management Policy and the Social and Environmental Risk Assessment Policy.

Since 2013, we implemented a Policy of Controversial Issues in Financing; the policy is intended to define the activities that are not financed by its high environmental and social impact and the financing and investment conditions in economic sectors with a high environmental and social impact. We have a list of exclusion which describes the activities and the assets not financed by us. 

The coverage is 100% of Grupo Bancolombia activities.

During the evaluation process for environmental and social risks during 2017, 223 operations were evaluated in sectors defined as critical for their high environmental and social impact; 189 of that operations were approved because there are favorable or favorable conditioned, thus 34 were rejected. 

List of Exclusion

As part of our entrepreneurial perspective, at Bancolombia Group we do not finance companies or projects related to the production, commercialization or use of the products, substances and activities included in our list of exclusion.

Financing social and environmental sensitive industries

During 2014 we defined and applied a methodology to identify which one of the subsectors financed by us is the most controversial according to its environmental impact, risk of violation of HHRR, exposition to mega forces and damages due to climate change, thus obtaining the following five subsectors:

  • Energy
  • Oil & gas
  • Mining
  • Infrastructure
  • Agricultural industry

Subsequently, at the Group we designed a document with the previous results together with the analysis about the social and environmental risks.  It was shared with the involved areas for their due management. Likewise, to finance such sectors we defined the minimum requirements that should be met in connection to the environmental and social issues, and with regard to the human being.

In 2017

Here in below, two cases related to 2017 controversial issues are shown:

In 2016

Here in below, two cases related to 2016 controversial issues are shown:

In 2015

Here in below, two cases related to 2015 controversial issues are shown:

In 2014

Here in below, two cases related to 2014 controversial issues are shown:

Impact and social innovation

Through our Foundation we aim to eliminate the gap between rural and urban areas, making the countryside an innovative and attractive territory for its people, a driver for our countries’ sustainable development through pertinent quality education, promotion of associativity, productivity and formalization of rural entrepreneurs, and transferring our knowledge in favor of their growth. To achieve this, we focus on 3 main strategic lines: Education, Rural Development, and Cooperation; all supported by our corporate volunteer program and connected with different business units at the Bank that focus on student loans, investment management in Education, financial inclusion and bankization, financial education, and services for rural and urban entrepreneurs. Our Foundation works hand in hand with business units so that the bank becomes a strategic partner of the community, in the long-term.

Business KPI’s and Social KPI´s

Prioritis

Emerging Risks

Understanding that the Emerging Risks are topics of public interest and global concern, Grupo Bancolombia has been working on identification and management processes for these risks, as well as the effects that these could lead to the organization and our interest groups: shareholders, customers, regulators, providers and users, seeking thereby for the best administration and management strategies, proving once again that we are a responsible, reliable and sustainable Bank.

That is why we offer to the public this page for consultation, hoping that it will be useful for the intended purposes.

 

Emerging Risks 2016 

The following Emerging Risks was identified by Grupo Bancolombia during 2016:

TECHNOLOGICAL DEPENDENCE

Technological dependence has taken a great interest in Grupo Bancolombia as well as in many other organizations in the world under the concept of emerging risk, considering that this is part of the evolutionary process of an organization to provide better service to its customers. It has been considered as an emerging risk, because every time society demands greater connectivity, services at hand and speed in customer service, making it necessary to meet this need increasingly involve technological processes, but at the same time, prepare for what this implies.

Potential Business Impact and Mitigating Actions

The impact of this risk is given by the provision of the service in terms of availability and access, since the services are mainly provided in a virtual way and supported in technological processes, which, although it does not suspend the operation of the Bank nor jeopardize the information or money from our customers, this can limit the fulfillment of our promise of service.

We have a specialized team of Technology, Security and Business Continuity that day-to-day monitor and prepare to maintain the proper provision of the service to our clients, striving to have the latest technology in our technological infrastructure, seeking with that our customers count with a quality experience while ensuring the security of the information and the money. Likewise, we have a state-of-the-art datacenter, technology integration processes, platform renewal and continuous improvement schemes for our operation.

In consideration of the strategic content and specific knowledge of these plans, we are not able to provide information in this regard. If required, it must be expressly requested under confidentiality conditions that will be dealt with in the organization according to the type of request.

NON-TRADITIONAL COMPETITORS

With new technologies and companies opening their doors to new business niches, financial institutions face new challenges by having non-traditional competitors offering some similar services, under a mantle of flexibility, simplicity and lower costs, and focused on segments or mobile generations that do not require physical branches or paperwork to obtain their financial services.

Potential Business Impact and Mitigating Actions

As potential impacts, we see the eventual loss of clients due to migration to proposals other than traditional banking, on the assumptions of flexibility and agility beyond the support offered by entities subject to the control and supervision of regulatory agencies.

Grupo Bancolombia has a Vice-Presidency of Innovation focused on the generation of products and processes that allow to offer to our customers new solutions, more agile and personalized processes, as well as adjust to the needs of our clients, even generating alliances with these new competitors as means of massification of financial services.

In consideration of the strategic content and knowledge contained in these plans, we are not able to provide information in this regard. If required, it must be expressly requested under confidentiality conditions that will be dealt with in the organization according to the type of request.

State investment in infrastructure – 4G Highways 

The development in state infrastructure has always been an activity loaded with risks that goes from the execution to the executioners; for that matter, the state for the roads construction has been advancing till arrived today to what it´s called 4G highways, where the private parties whom aspired to be the executioners, must ensure their technical and economic capacity to do it, obtaining at the end the economic rights of use under concession. Being the financial entities the source of capital for these private parties, all risks has to be considerate from our organizations, including the credit, legal, reputational and environmental risks.

Potential Business Impact and Mitigating Actions

Considering that the state is promoting the massification of the 4G projects, we have to be prepared to assume all the risks of it. Those risks go from the possibility of a contractor default to the environmental impact that the development of the construction could have.
Being a billion Colombian pesos projects, a non-completion of the contractor obligations surely became a matter of concern by our entity, as well the possibility to incur in reputational risks by been financing primary state infrastructure in hands of negligent contractors. Mitigating actions are the following:

  • Creation of a Risk Credit Area for Public Projects
    We create an area with special knowledge in public work projects with a focus in the 4G. From this area we validate the conditions of each project identifying the braches and opportunities of it.
  • Legal Area Trained
    We count with a trained legal area in public work projects, which provides support to contracts negotiations and ensure the accomplishment of the parties’ obligations.
  • Environmental Analysis
    Being a responsible bank we have also an environmental engineer which supported by the expertise of an environmental lawyer, studies the implications and effects of our company participation in the projects, validating and proposing conditions to the work execution.
  • Independent Engineer
    From our financial role, we demand to these projects to have an “Independent Engineer” participation, which is selected by regarding his reputation and experience. This professional performs a technical audit and reports the progresses of the work as the possible issues related with it, allowing us to anticipate any risk related.

Talent migration 

The new technologies by the hand of the globalization have taken the new generations to a labor instability based on the highly pay expected, personal and professional development outside, creativity opportunities, non-traditional work proposals, self-employment initiatives, headhunters chase, and others, taking the people to be short term employ in a company.

Potential Business Impact and Mitigating Actions

The talent migration leads to lost key knowledge and sometimes even to slowdown some process in the organization, given the time and money to spend looking a new person for the job, and sometimes, having to start all over again with all risk related to it. Mitigating actions are the following:

  • Lidership Institute
    We have interdisciplinary teams leaded only to innovation processes, which even have a special room for it in the organization. In this team each participant not only develops personal skills but also create solutions to our company and clients.
  • Innovation Teams
    We have interdisciplinary teams leaded only to innovation processes, which even have a special room for it in the organization. In this team each participant not only develops personal skills but also create solutions to our company and clients.
  • Variable Remuneration
    It´s well known that we are very competitive y salary matters in the labor market, counting also with benefits such as low interest credits, economic aids, health & insurance packages, as others that leads or organization as a reference to stability and security for all our employees.
  • Excellence Grants
    We offer with excellence grants to our collaborators with outstanding performance and projection y the organization.
  • Career Processes
    Procuring to give opportunities to our actual collaborators, we have psychologist, HR area and coaching consulting to leverage our talent in house, open our vacancies first to our employees.

Emerging Risks 2017 

In 2017, Grupo Bancolombia has identified the following Emerging Risks as the most representative:

Cyber-security Risk

Grupo Bancolombia is subject to cyber-security risk, which includes the unauthorized access to privileged information, technological assaults on the infrastructure of the Bank with the aim of stealing information, committing fraud or interfering with regular service, and the interruption of the Bank’s services to some of its clients or users due to the exploitation and materialization of these vulnerabilities.

Potential Business Impact and Mitigating Actions

The Bank’s business is highly dependent on the security and efficacy of its infrastructure, computer and data management systems, as well as those of service providers, and others with whom the organization interacts.

The Bank has implemented a cyber-security management and control system in order to establish measures and procedures to anticipate, identify, and offset these threats. Such measures include, among others, the setup of perimeter security devices and its constant monitoring, continued to assess of technological infrastructure seeking to identify vulnerabilities, upgrade implementations, security backups, special 24/7 teams (such as a security operations center) and continuous security tests (including ethical hacking, among others). Furthermore, the Bank is currently negotiating an insurance policy aimed to cover damages that may be suffered by the Bank and third parties as a result of data or economic losses derived from cyber-attacks.

As of the date of the 20F Annual Report, the Bank has not faced a cyber-attack with a material impact on its business or its clients. However, we can give no assurance that such measures, initiatives, and procedures will be effective to prevent or mitigate potential future attacks or threats to our technology infrastructure. Any failure by the Bank to detect or present cyber-security risk in a timely manner could result in a negative impact on the Bank’s results of operations and financial position, or in problems with information, including data related to customers to be lost, compromised, or to be delivered to the Bank’s clients with delays or errors.

Regulatory Compliance

The Bank is in the process of creating a special unit responsible for overseeing and ensuring regulatory compliance in general and, in particular, regulation related to anti-competitive practices, personal data protection, and responsible lending. If this initiative is not successful our reputation, regulatory position and financial condition may be adversely affected and our ability to achieve our strategic objectives may be impaired.

Potential Business Impact and Mitigating Actions

The Bank is subject to laws and regulations related to anti-competitive practices, including the formation of cartels and the abuse of its dominant position. Violation of these laws and regulations may result in significant administrative sanctions imposed by the SIC. The Bank is actually developing a compliance program to prevent and detect such practices. Regardless, the program may not be able to prevent all inappropriate use of personal data or breaches that may result in personal data being exposed.

The Bank may not be able to prevent all risks associated with regulatory compliance or detect all instances of non-compliance with regulations. Any failure by the Bank to detect and prevent the aforementioned practices in a timely manner could damage the Banks reputation and face substantial fines and penalties which could result in a negative impact on the Bank’s results of operations and financial position.

For more information

Currently, some organizations and interest groups issue information about the principal Emerging Risks in according to global trends and different bussines activities. Some of these reports can be review in next links:

http://www.agcs.allianz.com/insights/white-papers-and-case-studies/allianz-risk-barometer-2018/
https://www.weforum.org/reports/the-global-risks-report-2018
http://www.ey.com/Publication/vwLUAssets/EY-viewpoints-top-and-emerging-risks/$FILE/EY-viewpoints-top-and-emerging-risks.pdf
http://www.swissre.com/library/expertise-publication/
https://www.protiviti.com/US-en/insights/protiviti-top-risks-survey
 

Target

Here we present measuring progress of strategic goals according to the three material issues selected as the most relevant for our relationship groups.

Ethical Bank

At Bancolombia Group we have an economic dimension  oriented towards become an increasingly sustainable organization.

Ecobank

Our organization contains several aspects that make up the environmental dimension.