OP Financial Group’s corporate governance is comprehensive and proportionate with respect to the nature, scope and diversity of its operations to ensure the efficient management of the Group in accordance with prudential business principles, and so that the Group’s governing bodies can effectively supervise its management.
In their decision-making and corporate governance, OP Financial Group and its central cooperative, OP Cooperative, comply with the laws of Finland and standards issued by virtue of them. OP Financial Group's operations are specifically governed by the Act on the Amalgamation of Deposit Banks (Laki talletuspankkien yhteenliittymästä), the Act on Cooperative Banks and Other Cooperative Institutions, the Act on Credit Institutions, the Insurance Companies Act, the Act on Investment Services, the Co-operatives Act and the Limited Liability Companies Act.
Core values and responsible operations
OP Financial Group has defined core values that guide its operations and support its mission. The Group’s core values are people first, responsibility, and succeeding together.
In its operations, OP Financial Group applies its Code of Business Ethics, which includes the key principles for corporate responsibility and environmental impact that all employees and members of governing bodies of OP Financial Group must observe. The Group is committed to complying with international principles that guide operational responsibility. The most important of these are the principles of the United Nations Global Compact initiative. In 2019, OP Financial Group became a Founding Signatory of the Principles for Responsible Banking under the United Nations Environment Programme Finance Initiative (UNEP FI). In addition, the Group’s fund and asset management companies have committed to the UN Principles for Responsible Investment (UN PRI).
Corporate responsibility is an integral part of OP Financial Group's business and strategy. OP Cooperative's Supervisory Council has approved OP Financial Group’s Corporate Responsibility Programme. OP Financial Group reports regularly on its corporate responsibility issues according to the Global Reporting Initiative (GRI) guidelines.
Principles of Good Corporate Governance
OP Cooperative’s Board of Directors and, with respect to the diversity of governance, the Supervisory Council, has confirmed the Principles of Good Corporate Governance for OP Financial Group. These Principles cover all OP Financial Group entities as applicable. The Group entities may, if necessary, draw up their own guidelines expanding on the Group-wide guidelines.
Good corporate governance means that OP Financial Group as a whole and its entities have the following regime in place:
- They have documented their organisational structure with well-defined powers, responsibilities and reporting relationships.
- They have diverse governing bodies; their members have versatile skills and experience, the governing bodies have balanced representation of genders and age groups and have comprehensive representation of various regions.
- The governing bodies assess their performance on a regular basis.
- Members of senior and executive management are reliable, fit and proper and professional.
- They manage conflicts of interest.
- They have organised risk management, compliance and internal audit so that these functions are independent of business lines/divisions.
- The remuneration principles support the achievement of targets and do not encourage risk-taking above the defined risk-taking level or acting contrary to the conflict of interest policy, and do not lead to actions against the customer’s best interests.
- They operate transparently and openly and disclose relevant information from the perspective of reliability.
- They ensure that corporate security, data protection and data security are an essential and inseparable part of operations.
- When functions are outsourced, they ensure that risk management and control related to the outsourced operations are organised appropriately.
- Personnel has the opportunity to report violations they have observed using an independent channel.
OP Financial Group has a long-term approach to planning the composition of administrative bodies. Effective work in administrative bodies requires that their members have sufficiently diverse expertise, skills and experience.
In preparing the selection of members of the administrative bodies, attention is paid to the person’s added value to the body's composition in terms of, for example, fostering adequate diversity. Diversity is fostered by ensuring that candidates have a wide range of knowledge, skills and experience, and that various regions, genders and age groups are represented on OP’s governing bodies.
The aim is that the central cooperative's and member cooperative banks' supervisory councils and boards of directors are represented by both genders in proportion of 60/40. To that end, the Group seeks to ensure on a long-term basis that where any candidates have equal strengths in terms of skills and experience, the person who represents a gender that is in minority on the administrative body is appointed a member of the administrative body.
Governance of OP Cooperative
OP Cooperative’s Annual Cooperative Meeting of 20 March 2019 decided to alter OP Cooperative’s bylaws. As a result of the alteration, OP Cooperative adopted a new governance structure as of 1 January 2020. Before the alteration, operational decision-making powers were exercised by the Executive Board acting as the board of directors elected by the Supervisory Board. The Executive Board was made up of management executives. In the new governance structure, OP Cooperative has a Supervisory Council, a Board of Directors and President and Group Chief Executive Officer. The Board of Directors controls and supervises the operations of the central cooperative and the whole OP Financial Group. Without prejudice to the supervisory obligation of the Board of Directors, the general duties of the Supervisory Council include supervising the governance of the central cooperative which is managed by and the responsibility of the Board of Directors and the President and Group Chief Executive Officer acting as the CEO. The President and Group Chief Executive Officer is responsible for the central cooperative’s daily management. The central cooperative’s Executive Management Team assists the President and Group Chief Executive Officer in the management of the central cooperative at operational level.