Corporate governance

OP Financial Group's Corporate Governance

OP Financial Group's corporate governance is based on Finnish legislation, the Finnish Corporate Governance Code and the Group's own corporate governance recommendations.

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 its operations, OP Financial Group applies its Code of Business Ethics. The Code of Business Ethics provides an ethical framework for the conduct of all employees and members of governing bodies of OP Financial Group.

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.

Principles of Good Corporate Governance

OP Cooperative’s Supervisory Board 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.
  • They operate transparently and openly and disclose relevant information from the perspective of reliability.
  • Personnel has the opportunity to report violations they have observed using an independent channel.

Governance diversity

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, for example, of fostering adequate diversity. Diversity is fostered by ensuring that the candidates have a wide range of knowledge, skills and experience, as well as the comprehensive representation of various regions and the balanced representation of genders and age groups on the administrative bodies.

The aim is that the central cooperative's Supervisory Council and member cooperative banks' supervisory boards 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 governing body is nominated a member of the governing body.

OP Cooperative’s new governance structure

On 1 January 2020, OP Financial Groups’ central cooperative adopted a three-tier governance structure (President and Group Chief Executive Officer – Board of Directors – Supervisory Council). In future, the central cooperative has a Board of Directors consisting of members who are not directors of the central cooperative.

The Supervisory Council acts as the highest tier in the new governance structure. The Board of Directors  is be responsible for the central cooperative's supervision and decision-making, except for decisions of principle which are significant to the entire OP Financial Group and defined in the Bylaws as requiring the approval of the Supervisory Council. As the central cooperative’s CEO, the President and Group Chief Executive Officer will be responsible for the central cooperative’s daily management. The central cooperative’s Executive Management Team will assist the President and Group Chief Executive Officer in the management of the central cooperative at operational level.