ING IN SOCIETY - UAB BarcelonaIt goes without saying that the new Executive Board wants to continue building a culture within ING in which behaving according to sound business ethics

ING GROUPCORPORATERESPONSIBILITY REPORT

ING IN SOCIETY

2004

CONTENTS

2.0OUR STAKEHOLDERS PAGE

CUSTOMERS 10Our commitments 10Responsibilities with regard to our products and services 10Monitoring whether we meet our promises 11Social, ethical and environmental standards in our core business 13Sustainable products and services 15

SHAREHOLDERS 17Long-term shareholder value 17Investor relations 18Corporate governance 18

EMPLOYEES 20Our people and our policies 20Personal development and education 21Diversity management 22Health and safety 23Monitoring our HR promises 23

BUSINESS PARTNERS 25Standardisation in procurement 25Supplier relationship management 26

SOCIETY 27Strenghtening the financial sector 27Community development and sponsoring 28Engaging the communities 30Care for the environment 31

1.0WHO WE ARE PAGE

KEY FIGURES 1

ING AT A GLANCE 2

CHAIRMAN’S STATEMENT 4

MANAGING OUR RESPONSIBILITIES 6

3.0REPORTING GUIDELINES AND VERIFICATION PAGE

REPORTING PRINCIPLES 34

ASSURANCE REPORT 35

GENERAL INFORMATION 36

ING BUSINESS PRINCIPLES IBC

ADDITIONAL INFORMATIONFor additional information regarding Corporate Responsibility visit our website:www.ing.com/CorporateResponsibility

Also look out for quick links within this reportThis symbol is used throughout this report to show that more information is available on our website.

FRONT COVER PHOTO: Huib ter Haar (centre), Group Compliance Officer,with his colleagues Michael Pot and SamanthaBruyn-Boel from the Corporate Legal, Compliance& Security Department of ING Group, Amsterdam, the Netherlands.

http://www.ing.com/CorporateResponsibility

ING Group Corporate Responsibility Report 2004 1

KEY FIGURES1.0WHO WE ARE

2004 2003 2002

ECONOMIC

BALANCE SHEET (in millions of euros)Total assets 866,201 778,771 716,370Shareholders’ equity 25,866 21,331 18,254

RESULTS (in millions of euros)Total operating income 67,814 64,746 70,633Operating profit before tax 7,419 5,857 4,638

SUSTAINABLE PRODUCTS (in millions of euros)Sustainable assets under management 1,823 1,538 1,200

SOCIAL

TOTAL EMPLOYEES (in FTEs, year-end) 112,196 114,344 115,815Personnel expenses (in millions of euros) 7,744 7,429 7,551

GENDER DIVERSITY (Male ��, Female ��) ��

All levels(1) 52% 48% 53% 47% 52% 48%International Management Council 92% 8% 94% 6% 94% 6%

BREAKDOWN OF WORKFORCE BY EMPLOYMENT TYPE (Full-time(2) – Part-time) Full-time Part-time Full-time Part-time Full-time Part-time

86% 14% 87% 13% 88% 12%BUDGET FOR TRAINING AND PERSONAL DEVELOPMENT(3) (in millions of euros) 96 89 66Budget for training and personal development per FTE (in euros) 912 860 740

COMMUNITY

CHARITABLE DONATIONS(4) (in millions of euros) 12.5 15.0 11.2

ENVIRONMENT

ELECTRICITY CONSUMPTION(5) (in millions) 530 kWh 540 kWh 470 kWhElectricity consumption per FTE 5,800 kWh 5,900 kWh 4,700 kWh

WATER USE(6) (in thousands) 780 m3 850 m3 –Water use per FTE 13.0 m3 14.3 m3 –

PAPER CONSUMPTION(7) (in millions) 17.1 kg 12.8 kg –Paper consumption per FTE 178 kg 158 kg –

WASTE(8) (in millions) 16.3 kg 17.8 kg 16.4 kg

BUSINESS TRAVEL BY CAR(9) (in millions) 70 km 75 km –Business travel by car per FTE 1,000 km 1,100 km –

CO2 EMISSION(10) (in millions) 293 kg 300 kg 280 kgCO2 emission per FTE 3.3 kg 3.4 kg 2.8 kg

(1) Based on internal CSR survey in 2004, 2003 and 2002, covering respectively 93%, 92% and 82% of FTEs

(2) Full-time is defined as a working week of 35 hours or more. Based on internal CSR survey in 2004, 2003 and 2002, covering respectively 110,000 persons, 103,800 FTEs and 81,400 FTEs

(3) Based on internal CSR survey in 2004, 2003 and 2002, covering respectively 105,400 FTEs, 103,700 FTEs and 89,000 FTEs

(4) We redefined ‘charitable donations’ by excluding commercial sponsoring for sports and culture in the figures from 2004. The decline in charitable donations this year is the result of this redefinition.

(5) Based on internal CSR survey in 2004 and 2003, covering respectively 91,400 FTEs and 91,400 FTEs. Data is reported for an extrapolated 99,000 FTEs for 2002

(6) Based on internal CSR survey in 2004 and 2003, covering respectively 60,000 FTEs and 59,300 FTEs in Europe

(7) To get more insight in our paper use, a distinction was made in the data collection process between office paper, organisational printed matter and commercial printed matter. Because of the distinction by type of paper, it is not possible to compare the 2004 figures with the 2003 figures. Based on internal CSR survey in 2004 and 2003, covering respectively 95,800 FTEs and 81,100 FTEs

(8) Based on internal CSR survey covering for 17,100 to 71,300 FTEs depending on the type of waste in 2004, for 43,700 to 75,600 FTEs depending on the type of waste in 2003. Data is reported for an extrapolated 99,000 FTEs for 2002

(9) Based on internal CSR survey in 2004 and 2003, covering respectively 69,000 FTEs and 64,900 FTEs

(10) Based on internal CSR survey covering 65,400 to 91,400 FTEs depending on the source of CO2 emission in 2004, and 62,600 to 91,400 FTEs depending on the source of CO2 emission in 2003. Data is reported foran extrapolated 99,000 FTEs for 2002 and for energy usage only

2 ING Group Corporate Responsibility Report 2004

ING AT A GLANCE1.0WHO WE ARE

2004

2003

OPERATING PROFIT BEFORE TAXINSURANCE EUROPE

in millions of euros

1,733

1,791

2004

2003

OPERATING PROFIT BEFORE TAXINSURANCE AMERICAS


1,669

1,310

2004

2003

OPERATING PROFIT BEFORE TAXINSURANCE ASIA/PACIFIC


751

411

ING GROUP

INSURANCE

INSURANCEAMERICAS

Holds insurance operations and asset-management activities in the Americas. It is well established in the United States with retirement services, annuities and life insurances and hasleading positions in non-life insurance in Canada and Mexico.Furthermore, we are active in Chile, Brazil and Peru.

INSURANCEEUROPE

Operates the insurance activities in the Netherlands, Belgium,Spain, Greece and Central Europe and asset-managementactivities in Europe. In these countries we offer life insurancewith special attention for pensions. In the Netherlands andBelgium we also offer non-life insurance.

INSURANCEASIA/PACIFIC

Holds the life insurance operations and asset/wealthmanagement activities in Asia/Pacific. It has well establishedpositions in Australia, Hong Kong, Japan, Korea, Malaysia and Taiwan. The activities in China, India and Thailand are future growth engines for ING.

In 2004, ING introduced a new structure of six business lines. A clear client focus and strong business logic are the key elements in this structure.

DISTRIBUTION OF PREMIUM INCOME PER BUSINESS LINEin millions of euros

Insurance Europe 26% 11,369 Insurance Americas 52% 22,760Insurance Asia/Pacific 22% 9,469Other 19Total 100% 43,617

MISSION

We strive to deliver our financialproducts and services in the way ourcustomers expect: with exemplaryservice, maximum convenience and at competitive rates. This is reflected in our mission statement: To set thestandard in helping our customersmanage their financial future.

PROFILE

ING Group is a global financial servicescompany of Dutch origin with 150 years of experience, providing a wide array ofbanking, insurance and asset managementservices in over 50 countries. Our 113,000employees work daily to satisfy a broadcustomer base: individuals, families, smallbusinesses, large corporations, institutions

and governments. Based on marketcapitalisation, ING is one of the 20 largestfinancial institutions worldwide and inthe top-10 in Europe.


2004

2003

OPERATING PROFIT BEFORE TAXWHOLESALE BANKING


1,932

1,272

2004

2003

OPERATING PROFIT BEFORE TAXRETAIL BANKING


1,170

1,058

2004

2003

OPERATING PROFIT BEFORE TAXING DIRECT


432

151

BANKING

WHOLESALEBANKING

Takes care of the global wholesale banking operations. It has five divisions: Clients, Network, Products, Corporate Finance and Equity Markets, and Financial Markets. It offers a full range of products to corporates and institutions in thehome markets in the Benelux countries and elsewhere it operates a more selective and focused client and product approach.

RETAIL BANKING

Holds retail banking activities in the Netherlands, Belgium,Poland, Romania and India. Retail Banking also offers privatebanking in selected markets; for instance in the Netherlands,Belgium, Luxembourg, Switzerland and several countries in Asia.

ING DIRECT Operates direct retail-banking activities for individual clients in Australia, Canada, France, Germany, Austria, Italy, Spain,United Kingdom and the United States. Main products offeredare savings and mortgages. A separate activity is ING Card, which manages a credit-card portfolio within the Benelux.

DISTRIBUTION OF BANK LENDINGin billions of euros

Netherlands 48% 152.4 Belgium 18% 55.8Rest of Europe 19% 61.9North America 8% 26.9Latin America 1% 1.9Asia 2% 6.8Australia 4% 11.8Total 100% 317.5

BUSINESS

ING is the number one financial servicescompany in the Benelux home market.ING services its retail clients in thesemarkets with a wide range of retail-banking, insurance and asset managementproducts. In our wholesale bankingactivities we operate worldwide, but alsowith a primary focus on the Beneluxcountries. In the United States, ING is a top-5 provider of retirement services

and life insurance. In Canada, we are the top property and casualty insurer. ING Direct is a leading direct bank withover 11 million customers in nine largecountries. In the growth markets of Asia,Central Europe and South America weprovide life insurance. We are also alarge asset manager with assets undermanagement of almost EUR 500 billion.

STAKEHOLDERS

ING conducts its business on the basis of clearly defined businessprinciples. In all our activities wecarefully weigh the interests of ourstakeholders: customers, shareholders,employees, business partners and society at large. ING strives to be a good corporate citizen.

For further information visit: www.ing.com

MORE INFORMATION

http://www.ing.com


CHAIRMAN’S STATEMENT1.0WHO WE ARE

A COMPANY THAT IS GOING TO BE SUCCESSFUL IN THE LONG-TERMMUST CONSIDER ALL ITS STAKEHOLDER GROUPS AND HOW TOCREATE VALUE FOR EACH OF THEM

DEAR STAKEHOLDER,

Respect and trust are fundamentalingredients for sustainable growth inthe financial services industry. For thisreason ING wants to pursue solid growthon the basis of sound business principles.It goes without saying that the newExecutive Board wants to continuebuilding a culture within ING in whichbehaving according to sound businessethics is simply the right thing to do. A clear code of conduct, the INGBusiness Principles, has for years beenproviding us with guidance in our dailywork. In 2004, the Business Principleswere updated reflecting the changes

in our business environment. They now include a reference to human rights and to sustainable development. The updated Business Principles werecommunicated to all employeesworldwide. This is supported by a training programme to be rolled out in the course of 2005.

Our strategic focus on creating long-term value is consistent with the generalresponsibilities ING has towards ourstakeholders, in particular our customers,shareholders, employees, businesspartners and society at large. In formingstable relations with them, it is essentialto gain and retain respect and trust. We do this by interacting with them and by responding to their concerns,wherever possible. In this edition of ING in Society, we aim at informing allstakeholders on how we take account of their interests.

Our customers put a significant part of their financial future in our hands. It is our ambition to deliver on the

confidence they put in us. We want toprovide quality products at fair pricessupported by good execution, exemplaryservice and proper accessibility. During2004, we measured an upward trend incustomer satisfaction compared to 2003and we want to continue this.

Customers seem increasingly inclined to make choices that go beyond purefinancial considerations about theproducts they buy and from whatcompany. In 2004, we made progress inembedding social and environmentalcriteria into our core business. One of the things we did was to review ourpolicy with regard to the defenceindustry. The Executive Board decided to limit investments and other businesswith companies that are directly involvedin controversial weapons. We furtherimplemented the Equator Principles; aframework for determining, assessingand managing social and environmentalrisks in project finance transactions.

A growing number of our shareholders islooking more closely at the non-financialperformance of the companies theyinvest in because of the impact it has ona company’s ability to create value for its owners. In this report, you can readabout the steps we have taken to furtherstrengthen our corporate governance.We have implemented the DutchCorporate Governance Code (‘TabaksblatCode’) and renewed the ING externalauditor independence policy in order tobe fully in line with the US Sarbanes-Oxley Act. In 2004, we maintained our position in the most prominentSustainability Indices, such as the DowJones Sustainability and the FTSE4GoodIndices.

In 2004, external research showed that avast majority of our employees prefers towork for a socially responsible company.For years, we have made an effort atoffering a stimulating and attractiveworking environment. We believe thatsatisfied and motivated employees

MICHEL TILMANT

Chairman Executive Board


deliver better customer service and driveour success as a business. To underlinethe importance of the workforce, directresponsibility for Human Resources has,as of 2004, been attached to thechairman’s office.

We want to be a reliable counterpart for our business partners and we wantto ensure that our cooperation, and the activities that result from thiscooperation, do not conflict with ourethical standards. That is why weupdated our General Terms & Conditionsfor Procurement and communicatedthem to all our suppliers. They nowinclude clauses related to environment,health and safety and child labour.

To society at large we are committed to being a good corporate citizen in thecountries where we do business. Activeinvolvement in community developmentwill in turn strengthen the ING brandand reputation. We developed a newcommunity development policy in 2004named ‘ING Chances for Children’, whichfocuses on making education betteraccessible to children.

In realising the importance of corporateresponsibility, carefully weighing theinterests of our stakeholders and bymaking sure that ING’s activities areconducted in a responsible way, webelieve that we have a healthy companythat creates good value for shareholdersand other stakeholder groups.

For the years ahead we will continue to engage you in the challenges ourcompany faces. We will continue todevelop our thinking about our role andresponsibilities in today’s society. This canonly be done in an open dialogue withour stakeholders. We invite you to sendyour reactions, comments and suggestionsthrough our corporate responsibility webpages on www.ing.com.

Michel TilmantChairman Executive Board

All amounts are derived from the profit and loss account and the related specifications of ING Group as published in

the ING Group annual report for 2004

LENDERS AND BANK CUSTOMERSThe distribution to our lenders and bank customers largely consists of the intereston deposits by banks, on funds entrusted, on debt securities, on subordinatedloans and other interest expenses.

POLICYHOLDERSThe distribution to our insurance customers is based on underwriting expenditure,net of insurance premiums paid. The spreading of risks between policyholders,which is an important contribution of ING Insurance to society, is not reflected in this amount.

INSURANCE INTERMEDIARIES The distribution to intermediaries amounted to EUR 2.2 billion in 2004 andconsists mainly of commissions.

SHAREHOLDERSIn 2004, ING’s net profit was EUR 6.0 billion. Of this amount EUR 2.4 billion was allocated to our shareholders by means of dividend and EUR 3.6 billion wasretained. In 2004, EUR 272 million was allocated to third-party interests.

EMPLOYEESAt year-end 2004 ING employed 112,196 FTEs worldwide. A considerable part ofING’s revenues is distributed to them by way of salaries, pension and socialsecurity costs, amounting to EUR 7.7 billion in 2004.

SUPPLIERSIn 2004, EUR 5.8 billion of ING’s costs were attributed to suppliers. This will helpthem to create jobs and new economic activity.

AUTHORITIESGovernments collect a number of taxes, the most important being statutoryincome taxes. These revenues are used for education, infrastructure and manyother investments that benefit society. For 2004, the statutory income taxesreported by ING amounted to EUR 1.8 billion.

The Economic Contribution model below illustrates the economic role of ING in society and it indicates how our contribution is spread out among our stakeholder groups. It is more than the traditional Added Value model which focuses on the value that is added for shareholders, employees and the authorities. Banks and insurance companies fulfil an important role inmeeting the demand and supply for capital. The chart below illustrates theeconomic contribution and demonstrates how ING’s revenue is distributed to the various stakeholder groups.

ECONOMIC CONTRIBUTION TO OUR STAKEHOLDERS

ECONOMIC CONTRIBUTION ING GROUP 2004in billions of euros

Lenders and bank customersPolicyholdersInsurance IntermediariesShareholders: dividends paidShareholders: retained earningsShareholders: third-party interestsEmployees: salariesEmployees: social charges and other SuppliersAuthorities (statutory income tax)

17.81.82.22.43.60.35.02.75.81.8

43.4

41%4%5%6%8%1%

12%6%

13%4%

100%

http://www.ing.com

MANAGING OUR RESPONSIBILITIES

1.0WHO WE ARE


As a global financial institution, INGoccupies a special role in the economy.Our customers represent all sections ofsociety. Our banking, insurance and assetmanagement activities, as well as ourown investments, can have a significantimpact on local capital markets.

ING has specific responsibilities that gohand-in-hand with its status. We mustcomply with a wide range of regulationsdesigned to organise financial marketsand to safeguard customer informationand the integrity, security and continuityof our business processes.

Being a listed company also bringsobligations. One of them is disclosure:providing high-quality and timelyfinancial data to the market. Another is good corporate governance. ING strives to have a corporate governancestructure in place that does justice to the interests of all its stakeholders.

RESPONSIBILITIES TOWARDS OUR STAKEHOLDERS

Many of the responsibilities towards ourstakeholders are defined by regulators.But many are set by ourselves. Anongoing dialogue with our stakeholdershelps us to stay in touch with theirexpectations and concerns.

For our customers, we want to offer good service and products. During 2004,we introduced a new structure andstrategy that will help ING to become a more customer-centric company. This is reflected in our revised missionstatement: “To set the standard inhelping our customers manage theirfinancial future.”

Our customers put a significant part oftheir financial future in our hands and it is our ambition to deliver on theconfidence they have in us. We thereforewant to provide quality products at fairprices, supported by good execution,exemplary service and accessibility.

In other words: good value for money.

Our shareholders provide us with thecapital we need to operate and grow.We want to deliver an attractive returnon their investment that is higher thanthat of the average of our peers, butwithout compromising our BusinessPrinciples or taking on risks that couldcome back to haunt us in the future.

Our business success is directly linked tothe motivation and performance of ouremployees. We aim to be a good employer,a great place for employees to work anda company they can be proud of. We havea duty to provide our employees withgood terms of employment, safe workingconditions and ample opportunities forprofessional and personal development.

Towards our business partners, we have aresponsibility to be a reliable counterpart.We want to ensure that our cooperationwith them, and the activities that originatefrom this cooperation, do not conflictwith our values and ethical standards, as stated in our business principles.

Through our close financial relationswith individual and corporate customers,business partners, governments andregulators, we are by definition embeddedin local communities. We want to be a good corporate citizen, which is why we are involved in numerousprogrammes that contribute tocommunity development. Investing incommunity development will in turnstrengthen the ING brand and reputationand will help us attract, retain andmotivate talented employees.

Diverging stakeholder interestsMany stakeholder interests overlap. For example, measures to improvecustomer service can also benefitshareholder return. But stakeholderinterests can also clash. For example,efficiency gains from outsourcing acertain business function could enhanceshareholder return, but also adversely

affect employees. It is an everydaychallenge to balance our stakeholders’interests, and in this report you will learnabout some of the dilemmas we facedduring the last year and how we handledthem. We believe that taking theexpectations of our stakeholders intoaccount contributes to our long-termsuccess and makes us a respected andtrustworthy partner.

Conflicts of interestSometimes different parts of ING interactwith customers in different roles. Forexample, the possibility exists that aninsurance unit is an investor in a company(and thus part-owner) that ING also serves as an advisor via its wholesalebanking unit. Conflicts of interest canarise in such cases. We have a long-standing tradition in keeping thesematters separated. To increase thetransparency of ING as an investor wecodified the way ING deals with suchissues in the ING Global Voting Policy,adopted in 2004.

ING BUSINESS PRINCIPLES

The ING Business Principles serve as themain ethical compass for our businessactivities and guide us in managing ourduties towards others. They describe ourcommitments towards each stakeholderand they create a single standard ofethical behaviour for everyone at ING.

The Business Principles were first drawnup in 1999. They were updated in 2004 toreflect regulatory requirements and thechanging business environment. Weadded a business principle that explicitlyendorses the Universal Declaration ofHuman Rights. ING’s top managers havereceived a management guide to helpthem define their role and responsibilitiesconcerning human rights. In 2005 theywill carry out a self-assessment on humanrights within their own business unit.

The Business Principles also refer to the new ING Whistleblower Procedureintroduced in 2004 as a result ofregulatory requirements connected with the US Sarbanes-Oxley Act.

Simply articulating our BusinessPrinciples is not enough. They createobligations we have to live up to.Through their individual behaviour

IN EVERYTHING WE DO, WE HAVE TO MAINTAIN HIGH ETHICAL STANDARDS


They periodically monitor the integrityrules as part of the business process. Theyalso report on whether, among otherthings, the local Codes of Conduct andthe ING Business Principles are beingrespected and whether ING complies withall the applicable regulations and laws.

In the United States, ING dealt with anumber of regulatory developments,including inquiries by several federal andstate governmental and self-regulatoryagencies in connection with investigationsrelating to fund trading, compensation,conflicts of interest and sales practices.ING is cooperating fully and providing all information requested. In addition,ING in the United States implementednew compliance rules, streamlined itscompliance organisation and updated its Code of Conduct.

Operational Risk ManagementIn addition to Group Compliance, ING hasan Operational Risk Management (ORM)department that monitors how well wemanage operational risk. The departmenthelps us understand any activities thatwent wrong in the company and helps toadjust the quality of our processes in sucha way that mitigates the risks identified.

The operational risk categories monitoredand measured by ING are defined by theBasel Committee on Banking Supervisionat the Bank for International Settlements.Examples are process failure, controlfailure, internal crime and fraud, externalcrime and fraud, unauthorised activities,employment practices and workplacemalpractice. ING’s reporting systems arein line with the requirements of the mostrecent regulations.

Over 200 dedicated operational riskmanagement officers are activethroughout ING. They collect and analyse incident reports each quarter. In addition, they monitor Key RiskIndicators and carry out regular riskassessment sessions with management.

These are not questionnaires thatmanagers must fill in, but interactivegroup discussions that provide valuablequalitative information and help toidentify where potential risks might be ‘hiding’ in a business unit.

About 90% of the business units inbanking are currently covered by ORMincident reporting. In 2004, incidentreporting was introduced in theinsurance operations, and at year-endaround 70% of insurance activities wascovered. For 2005 ING aims to extend itsincident reporting to 98% of its bankingbusiness units and to 90% of its insurancebusiness units.

RegulatorsIn addition to regulators like the BaselCommittee, the United States Securitiesand Exchange Commission (SEC) and theDutch Central Bank (DNB), each countryhas its own (and sometimes more than one) financial regulator. These regulatorsdetermine, among other things, thecapital adequacy ratios our insurance andbanking subsidiaries must meet. Theysupervise that we have solid governancestructures in place and that we adequatelyinform our customers about our products.We have to comply with legislation andregulations designed to prevent insidertrading and other forms of market abuse.Regulators have an impact on how weselect certain business partners whenoutsourcing by requiring that certainminimum governance standards be met.Regulators also supervise if the managerswe appoint to certain positions have theright expertise or background to do thejob properly.

Being a regulated company builds in extrasafeguards that ensure that we manageour duties well. In addition, we complywith many industry codes that are notrequired by law. The failure to complywith regulations and important industrycodes could damage our brand andreputation.

FINANCIAL AND ECONOMIC CRIME

We have an obligation to prevent our banking,insurance and asset management infrastructure fromcriminal activity. In 2004, we implemented a newcorporate policy on financial economic crime (FECpolicy) that complies with international laws andregulations on money laundering, fraud and terroristfinancing. In countries where ING’s FEC policy isstricter than local rules, ING’s policy is followed. The FEC policy, which replaced ING Group’s existing

policy on anti-money laundering, enhancesprocedures and processes on customer acceptance,business partner acceptance (like correspondentbanks), pre- and post-trade screening and monitoringand incident management. Local ING management is responsible for implementing and complying withthe FEC policy. By the end of 2004 the new policy had been implemented throughout the organisation,except in some IT areas that are still being addressed.

each day, our employees determinewhether we live up to our obligationsor not. One of our objectives is tomake sure everyone at ING is trained in the new Business Principles. Theyhave been incorporated in ‘Live ING’, a learning programme for all INGemployees worldwide to give them a better shared focus on our strategicpriorities and corporate culture. ‘LiveING’ will be rolled out worldwide in2005. Through such training, we areworking to build a company in whichethical behaviour is well-ingrained.

MONITORING HOW WE MANAGE OUR RESPONSIBILITIES

The degree to which ING fulfils itsobligations is monitored both internallyand externally. Internally, complianceofficers try to reduce the probability ofintegrity risks and mitigate their impact.Externally, ING is subject to the scrutiny of many regulators around the world.

ComplianceFor decades already, ING has had itsinternal rules which its business entitiesmust comply with. We continuouslyupdate these rules and develop andintroduce new ones. For example, makingsure the ING Business Principles areadhered to is an important part of ourinternal monitoring programmes.

Compliance is the responsibility of themanagers of the business units, and theExecutive Board has overall collectiveresponsibility. ING has a GroupCompliance Department which monitorsrisks in the area of reputation andintegrity. In addition, around 375 localcompliance officers are embedded in alllevels of the organisation worldwide.

0

2

4

6

8

NUMBER OF COMPLIANCE OFFICERS per 1,000 FTEs

INGís compliance function is far more prominent inthe US than in the home market of the Netherlands,for example. Group Compliance intends gradually tocorrect that imbalance and give compliance greaterprominence in other regions.

Netherlands OtherEurope

Americas Asia/Pacific

MANAGING OUR RESPONSIBILITIES

1.0WHO WE ARE


ACTION PLANFOCUS AREA 2004 GOALS AND INTENTIONS

BUSINESS PRINCIPLES

MONITORING CORPORATE RESPONSIBILITY

CUSTOMERS

SHAREHOLDERS

EMPLOYEES

BUSINESS PARTNERS

SOCIETY

• Rephrase our Business Principles to reflect regulatory requirements and the changingbusiness environment.

• Introduce a Business Principle with reference to Human Rights.

• Intensify training in the Business Principles.

• Increase coverage of Operational Risk Management (ORM) reporting system to 80% of ING’s operations.

• Improve quality and coverage of performance data related to corporate responsibility.

• Two-year period for implementation Equator Principles.

• Structure local stakeholder dialogue with local management involvement.

• Further intensify shareholder communication and extend proxy voting to depositary-receiptholders and shareholders in the United Kingdom and the United States.

• Structure local stakeholder dialogue with local management involvement.

• Incorporate performance in developing employees in the appraisal systemof senior management.

• Seek partnerships with international organisations in field of pensions and financial sector development.

• Develop corporate guidelines on sponsoring, donations and volunteering.


2004 ACHIEVEMENTS 2005 GOALS AND INTENTIONS

• The ING Business Principles refer to the new ING Whistleblower Procedure.

• Introduction of a business principle that explicitly endorses the UniversalDeclaration of Human Rights.

• Development of a management guide to help senior managers to define theirroles and responsibilities concerning human rights.

• Development of ‘Live ING’, an interactive, two-hour learning programmedesigned for all staff about our strategy, structure, Business Principles and brand.

• About 90% of all business units in banking and 70% of insurance activities werecovered by ORM incident reporting.

• Reporting entities covered in our internal CSR survey increased from 28 countriesin 2003 to 33 in 2004, including ING joint ventures in India and China.

• A special team within Corporate Credit Risk Management was designated toimplement the Equator Principles and employees worldwide were trained.

• ING reviewed its policy for the defence industry.

• Of our business units 48% measured an upward trend in customer satisfaction,compared to 27% in 2003.

• The proxy-voting system was extended to the United States, the United Kingdomand international institutional investors, raising the proportion of votes castthrough proxy voting from 8% in 2003 to 21% in 2004.

• ING published an additional financial report about its United States operations,the US Statistical Supplement.

• 95% of business units has defined policies on employee motivation against 83%in 2003.

• The Female Development Programme (FDP) was expanded to the rest of Europeunder the name Leadership by Example.

• New general terms and conditions with ethical clauses.

• ING together with the Dutch government and a number of banks in theNetherlands, combined their expertise in the Netherlands Financial SectorDevelopment Exchange.

• ING joined the ‘Global Pensions statistics Project’ of the OECD, set up to ensure the availability and comparability of global pension data.

• ING Netherlands announced its alliance with Oikocredit, one of the world’slargest non-commercial financial institutions engaged in microcredits.

• New policy developed for community development activities and sponsoring.

• ING strengthened the ties with a number of NGOs to enhance mutualunderstanding.

• Self-assessment human rights by top management.

• Launch of ‘Live ING’ and mandatory training for all ING staff.

• Increase coverage of ORM reporting system to 98% of all business units in banking and 90% in insurance.

• Conduct a target group research to investigatestakeholder expectations, with regard to corporateresponsibility reporting.

• Equator Principles fully implemented before June 2005.

• Intensify reporting on the Equator Principles.

• Implement new policy for the defence industry.

• Prioritise customer satisfaction.

• Further encourage depositary-receipt holders to useproxy voting.

• Customised plans per business line to create diverse teams.

• Increase number of supplier-performance surveys.

• Main sponsorship of the 2005 United Nations Year of Microcredit.

• Seek global partnership for ‘Chances for Children’ and start roll-out.

CUSTOMERS2.0OUR STAKEHOLDERS


EARNING THE TRUST AND LOYALTY OF OUR CUSTOMERS IS ESSENTIAL TO OUR BUSINESS SUCCESS

ING offers a wide range of banking,insurance and investment products toover 60 million customers worldwide.Our customers reflect all sections ofsociety: individuals, families, corporatecustomers, municipalities and nationalgovernments. We strive to meet theneeds of each of them. In 2004, ING set out on a new strategic directionthat puts more emphasis on serviceexecution and personal accountability,the ultimate goal being the improvementof customer satisfaction.

OUR COMMITMENTS

Customer focusWe aim to provide our customers withthe best possible service, which in turnwe hope will contribute to long-termrelationships and a regular stream ofbusiness and profits. Early 2004, INGcreated a new mission statement: to set the standard in helping ourcustomers manage their financial future.Customers put a large part of theirfinancial future in our hands, and wewant to repay this trust by standing outfrom other financial services providers.

Keeping customers happy means beingeasily accessible, fulfilling our promises

REGIONAL DISTRIBUTION OF ING CUSTOMERS in percentages, year-end 2004

Europe 49%Americas 41%Asia/Pacific 10%

0

20

40

60

80

100

Customersatisfaction

Productinformation

Customerprivacy

Responsiblemarketing

IMPLEMENTATION STATUS CUSTOMERRELATED POLICIES AND PROCEDURESbased on internal CSR survey(100% = 68 business units, representing 94,520 FTEs)

Policy definedPolicy and procedures implementedResults are monitored

– regardless of how large or small thosepromises are – and delivering value formoney. It means doing everything to the highest standard throughout eachtransaction and every relationship. ING distributes its products and servicesthrough a variety of channels – fromface-to-face service at a branch office to digital service via the internet – withvarying levels of convenience andpersonal advice. To do this effectivelyand profitably requires good executionat every stage of the process.

RESPONSIBILITIES WITH REGARD TOOUR PRODUCTS AND SERVICES

Meeting regulatory requirementsFrom the time a product idea is born tothe end of its life – which in the case ofa life insurance policy can last severaldecades – ING has a wide range ofobligations. One of these is ensuringthat new products meet regulatoryrequirements. We sell our productsthrough a variety of distributionchannels, and as marketing and sales practices are subject to locallegislation they are the responsibility of local management. It is also theresponsibility of local managers to trainagents and monitor feedback from

end-customers about the differentdistribution channels.

Transparency in pricing and conditionsIn addition to careful productdevelopment, we have a responsibility toprovide our customers with clear pricesand conditions of purchase. Customersshould be well-informed about thefinancial choices they make. This is whywe have to provide transparent salesinstructions and have to ensure clearcommunication towards our customers.This commitment to transparency isanchored in our Business Principles.

Whenever product responsibilities are at stake, ING accepts responsibilityappropriately. One recent example of this was the public controversy that Postbank (ING’s direct banking unit in the Netherlands) faced with one of its mortgage products, the‘MeerWaardehypotheek’. The productwas designed to allow customers topurchase a larger home. The excesshome equity was invested in a bondfund and the returns from the fundwere to be used to complementcustomers’ monthly incomes over thenext 20-30 years. The fund did notperform well, and customers becameconcerned about their ability to meettheir monthly mortgage payments. To compensate the customers for thedisappointing return on investmentrelated to the mortgage product,Postbank took a significant loss. This illustrates that ING is prepared to incur a short-term financialdisadvantage in order to strengthenlong-term customer loyalty and to retain its good reputation.

In another case, ING acted followinginquiries by several federal and stategovernmental and self-regulatoryagencies regarding market timing andlate trading of some of the mutual fundsoffered by ING in the United States.


After conducting a thorough internalreview ING provided information toUnited States regulators. ING tookadditional measures beyond the publicfilings to inform its customers directly ofthe findings of its internal review andpromised to reimburse any ING Fund(United States) shareholder affected byinappropriate trading for which ING wasresponsible. ING in the United States also updated its Code of Conduct andreorganised its compliance functions.

Customer privacyWe are committed to safeguarding the security and confidentiality of ourcustomers’ personal data. In mostcountries, customer privacy is governedby local laws and regulations includingspecific banking secrecy laws. In theUnited States, employees working withcustomers take a special mandatorycourse which explains federal, state and ING’s requirements for handlingcustomer data. The independentintermediaries who distribute ING’sproducts in the United States also have a mandatory customer privacy coursebuilt into their training.

Accessibility of financial servicesAnother important responsibility ismaking sure our products and servicesare easily accessible to everyone.Integrating peripheral social groups intothe mainstream financial system is part ofthis aim. Accessibility of financial servicesis an issue in both developing and maturemarkets. In India, for example, ING VysyaLife began marketing insurance productsto farmers by teaming up with MadrasFertilizers Ltd (MFL). Particularly in hard-to-reach rural areas, non-traditionaldistribution strategies like these areneeded to reach potential customers.

Within our Retail Banking and ING Directbusiness line, most business units providespecial services to people in backwardareas, the elderly, non-native speakers

and disabled persons. So do many of ourinsurance business units in the UnitedStates, Belgium and Central and Eastern Europe. In Belgium a policy isimplemented for insuring young drivers,as a result of a gentlemen’s agreementbetween the government and theinsurance industry. When young peoplemeet certain conditions, price maximaare guaranteed.

MONITORING WHETHER WE MEET OUR PROMISES

Customer satisfactionMonitoring whether ING’s financialproducts and services fulfil the objectivesthey were meant to, is vital for ourbusiness success. That is why ING businessunits regularly monitor customersatisfaction. Another way we learnwhether we are living up to our promisesto customers is by collecting andanalysing data on customer complaints.

According to the internal Corporate SocialResponsibility (CSR) survey conducted for2004, 90% of the business units withexternal customers measure customersatisfaction. The majority of the businessunits measure this themselves as well asthrough external parties. Issues covered inthe satisfaction surveys include time ofresponse, accessibility, claim handling,clearness in presentation of information,friendliness of staff and pricing. Businessunits that do not measure customersatisfaction are largely from within ourwholesale banking business line. This isdue to the fact that institutional clientshave direct and frequent contact withrelationship managers, to whom they givepersonal feedback.

As the chart indicates, a vast majority ofour business units reported to measurecustomer satisfaction more than once a year. Overall, the frequency with whichbusiness units measure satisfaction hasincreased substantially compared to

2003. In 2004, the results of testingcustomer satisfaction showed anongoing upward trend compared to the average stable trend that wasmeasured by the business units during2003. Also, of the 40 business units thatset targets to improve client satisfaction,36 indicated that they met their targets,while four did not.

At ING Direct, which is active in ninecountries and has 11 million customers,customer satisfaction has been high for

For customers we have more in-depthinformation available on:

• Customer satisfaction• Sustainable products and services

For further information visit: www.ing.com/CorporateResponsibility

DIVERGING STAKEHOLDER INTERESTS: PERSONAL CONTACT WITH CUSTOMERS

Telephone and internet banking have become verypopular in developed countries. ING has investedconsiderable resources to be available 24 hours aday through these means of communication. Yetmany customers still prefer face-to-face contact,even for the simplest transactions. Several yearsago, ING Bank Netherlands established a centralisedcall centre to streamline telephone banking services,but also made it more difficult for customers to

telephone or carry out cash transactions at theirlocal branch. ING Bank lost much valuable contactwith customers as a result. So, in 2004, ING Bank re-established direct telephone contact with branchesfor customers. In addition, ING Bank has started tore-establish the cashier function in most branchesand will complete this process by the end 2005. Thiscase illustrated the tension that can exist betweendifferent stakeholder demands: the dilemma facing

the bank here was the need to operate moreefficiently versus the need to provide personalservice for customers.

FREQUENCY OF MEASURINGCUSTOMER SATISFACTIONin percentages

Outer circle: 2004Inner circle: 2003

More than once a yearOnce a yearLess than once a year

4

18

78

16

35

49

TRENDS IN CUSTOMER SATISFACTIONREPORTED BY BUSINESS UNITSin percentages

Outer circle: 2004Inner circle: 2003

Upward trendStable trendDownward trend

2

50

48

73

27


CUSTOMERS(continued)

2.0OUR STAKEHOLDERS


several years: in 2004, 78% of thecustomers surveyed said they were moresatisfied with ING Direct than any otherfinancial institution.

Postbank in the Netherlands, with over 7 million customers, introduced themonthly customer satisfaction trackingin 2004. Through computer assistedtelephonic interviews customers are surveyed about their generalsatisfaction, their loyalty and theirconcerns. Postbank’s score improvedfrom 7.4 in 2003 to 7.5 on a ten-pointscale in 2004. External research showedthat Postbank customers are moresatisfied with their bank than are thoseof other major banks in the Netherlands.

“OUR CUSTOMERS HAVE CONSISTENTLY TOLD US THAT THEYVALUE A COMPANY THAT RESPONDS QUICKLY TO THEIRREQUESTS. THAT’S WHY ONE OF OUR HIGHEST PRIORITIES IS FIRST-CALL RESOLUTION.”

MARIE AUGSBERGER (RIGHT), HEAD OF UNITED STATES FINANCIAL SERVICES (USFS) CUSTOMER CONTACTCENTRES AND ANGELA KAHRMANN (LEFT), DIRECTOR USFS CUSTOMER CONTACT CENTRES, HARTFORD

THE ‘FIRST-CALL RESOLUTIONCAMPAIGN’

Through training, Customer ServiceRepresentatives become more knowledgeableabout our products and are able to answerquestions directly, rather than refer to someoneelse. Innovations such as document imaging and improved workstations give them quickaccess to the customer information they need to resolve the issue. As measured by ourcustomers, ING increased its first-call resolutionrate from 66% in 2003 to 69% in 2004.

In the United States, ING’s insurancecompanies offer life insurance,annuities and retirement servicesproducts. They measure annually thesatisfaction levels among customers and independent intermediaries. During 2004, initiatives were taken to focus on the primary drivers ofsatisfaction for both end-customers anddistributors. For example, customerresearch revealed that the ability toresolve a problem during the first timea customer calls – known as first-callresolution – is one of the most importantdrivers of distributor and customersatisfaction. All of ING’s contact centreservice employees in the United Statesare trained in customer service skills.

In 2003, ING Canada, the largestprovider of non-life insurance in thecountry, promised customers that when they call ING with an emergencyclaim, they will be able to reach a claimsrepresentative within 30 minutes ortheir annual premium will be refunded,up to a maximum of 1,000 Canadiandollars. Of the 254,000 of such claimsreceived since November 2003, INGCanada failed to meet that promise only25 times.

For Nationale-Nederlanden (NN), one of the largest insurance companies inthe Netherlands, the more than 10,000insurance intermediaries who distributeNN’s products are the company’s main


ING BANK IN THE NETHERLANDS STIMULATES RESPONSIBLE ENTREPRENEURSHIP

ING Bank Netherlands encourages businesscustomers to embed CSR into their activities. Theunderlying principle is that companies that engagein sustainable activities become healthier in thelong term, perform better in a wide range of areasand have better financial results.

To promote this belief, ING Bank launched the Careand Profit Prize in 2004 in cooperation with HetFinancieele Dagblad and Good Company. Thiscontest recognises small- to- medium-sizedcompanies that demonstrate responsibleentrepreneurship. 56 companies entered in the first year.

customers. Keeping the intermediariessatisfied is vital so that they can betterserve end-customers. In 2004, NN made substantial progress in improvingsatisfaction levels among theindependent intermediaries. Backlogs,the main cause of dissatisfaction forseveral years, were reduced from270,000 in early 2003 to 60,000 at theend of 2004. In the 2004 InsurancePerformance Survey, conducted by the leading Dutch organisation ofinsurance intermediaries, NN’s scoreimproved from 2.78 in 2003 to 3.22 on a five-point scale in 2004.

Complaint managementAnother way to know whether or not we are fulfilling our promises to our clients is to collect and analysecomplaints. Customer satisfactiondepends on our ability to minimise the number of mistakes and to takecomplaints seriously when mistakes dooccur. ING considers every complaint as abusiness opportunity because customerfeedback can help us avoid future errors.We want to create value for customersby understanding what triggers theirgrievances. In the Netherlands, forexample, the heads of the customercomplaint departments of ING Bank,Nationale-Nederlanden and Postbank – ING’s three largest business units in thecountry – meet every six weeks toexchange experiences on complaintsreceived, find out where they originateand what triggers them.

ING does not have a global policy forcomplaint management, but data oncustomer criticism is gathered by thebusiness units. In some countries thereare regulations stipulating how quicklycomplaints must be handled. Of thesurveyed business units 97% indicated tohave a customer complaint registrationsystem in place. 81% of the business unitsthat set targets to decrease customercomplaints reported that they met theirtargets, while 19% did not.

Operational risk managementUnderstanding the things that wentwrong, or can go wrong, in ourinteractions with customers is anotherway we make sure we are meeting ourpromises to customers and fulfilling ourresponsibilities. Within our operationalrisk management we identify two riskcategories that are directly related toour product responsibilities and ourcustomer interaction: clients, productsand business malpractice; and processingfailure. Regular incident reporting ofthese risks (and others) allows ING tobetter understand why certain incidentoccur in the first place and to takeappropriate actions to prevent themfrom happening again. Knowing ouroperational risks and mitigating themhelps us to create value in the future.

SOCIAL, ETHICAL AND ENVIRONMENTALSTANDARDS IN OUR CORE BUSINESS

We have a responsibility to conduct ourcorporate activities in a way that is sociallyand environmentally sustainable. ING’sBusiness Principles state that whilerespecting the wishes of our customers,we take into account a range of social,ethical and environmental considerations.

Credit lending and financingING has policies governing lending tocompanies involved in areas that may beincompatible with ING’s environmental,social or ethical values. Areas covered bythese policies include amongst otherstropical rainforests, palm oil, defence,human rights, gambling and fur.

ING’s policy on oil palm and pulp andpaper, for example, is aimed at preventingillegal logging in High Conservation ValueForests (HCVF) and primary rainforests. As a result, ING will not finance companiesinvolved, directly or indirectly, in thedegradation or destruction of theseforests. Another example is ING’s defencepolicy. ING began a review of its statementfor the defence industry following

questions received from variousstakeholders. ING has since clarified itsposition about investments in and thefinancing of companies that areinvolved in controversial weapons. INGhas engaged an independent researchprovider to investigate on an annualbasis whether companies are involved in controversial weapons or not.

Project FinancingIn June 2003, ING endorsed the EquatorPrinciples (EP). By adopting theseprinciples, ING has committed itself to apply certain policies and standardsset by the World Bank (WB) and theInternational Finance Corporation (IFC) to project finance transactions.These principles form a framework for determining, assessing andmanaging social and environmental risks in project finance transactions. The full text of the Principles can befound at www.equator-principles.com.

At the end of 2004, more than 25 banksand financial institutions that providemore than 75% of the total amount ofproject finance loans were committed to the EP. ING plays an active role in thegroup of EP banks and other financialinstitutions by discussing recentdevelopments such as the update of the IFC Safeguard policies, and bycommunicating the importance of the principles to its clients and otherstakeholders.

ING applies the EP to project financetransactions where the total project costis USD 50 million or more in the industrysectors metals and mining, oil and gas,utilities and power, pulp and paper, andinfrastructure. All proposed projectfinance transactions in these sectorsundergo a risk assessment on the possible social and environmentalimpacts. In doing so, ING has includednon-financial risks into its overall riskanalysis. Addressing these risks enablesING to lower the credit risk of its own

http://www.equator-principles.com


portfolio and to help its clients designmore socially and environmentallyresponsible projects.

A team within Corporate Credit RiskManagement is responsible forimplementing the Equator Principles.This EP team operates separately fromING’s commercial departments, whichenables it to play an independent role in the approval of project finance deals.It has developed an EP policy whichguides the commercial bankingdepartments towards EP compliance.This policy describes the internalprocesses for EP transactions. It includesa categorisation guide and a checklistthat determines the potential issues thatmight have environmental and/or socialimpacts. The EP team advises the dealteam on EP compliance throughout thelife of ING’s involvement in any giventransaction. Requests for approvals for allproject finance transactions subject to theEP are submitted to ING Group’s highestCredit Committee.


2.0OUR STAKEHOLDERS

”THROUGH APPLYING THE EQUATOR PRINCIPLESWE ENFORCE OUR COMMITMENT TOADDRESSING SOCIAL AND ENVIRONMENTALCRITERIA IN OUR PROJECT FINANCE DEALS.”

ASSESSING THE SUSTAINABILITY OF OUR CLIENT’S PROJECTS

In Singapore ING Wholesale has a regionalstructured finance team that is involved infinancing of various projects in the Asian region.The Equator Principles apply to a number oftheir activities, for example the financing ofpower companies. To help this project team get acquainted with the Equator Principles and how to apply these in practice, INGorganised a training for all project finance and risk management colleagues from the Asian region. Our front office employees and risk managers are also assisted by thespecial Equator Desk within Corporate Credit Risk Management in Amsterdam.

ERWIN MASPOLIM, UTILITIES FINANCE ASIA AND COLLEAGUES, SINGAPORE

PROJECTS GOVERNED BYTHE EQUATOR PRINCIPLES

Number of projects by regionEastern Latin Middle

Asia Europe America East Total

A Projects 3 1 – 1 5B Projects – 2 2 1 5C Projects – – – – –Total Projects 3 3 2 2 10

This overview provides details on theapplication of the Equator Principles (EP)within ING's project financing portfoliofrom 1 June until 31 December 2004. Itcovers all project finance transactions that strictly fall under the EP scope,including annual reviews. All projectfinance transactions are categorised inHigh risk (A), Medium risk (B) and, Lowrisk (C) reflecting the environmental and social risks involved in the project. ING applies the EP to all project financetransactions whether or not they proceedto financial close. There were nodeclinations in ING’s transaction approvalprocess solely due to EP. ING performed

ERWIN MASPOLIM, ING UTILITIES FINANCE ASIA, AND COLLEAGUES, SINGAPORE


a leading role in assessing and advising on the environmental/social due diligence on behalf of the Lenders’ Group in two out of the ten projects.

By implementing the policies andprocedures within ING’s commercialbanking units and the Corporate CreditRisk Management department, the EPare embedded in ING’s Credit ApprovalProcess. Worldwide, more than 80% of ING employees involved in projectfinance, working in commercial and riskfunctions, have been trained to assessprojects and minimise the negativeimpacts on the environment and thelocal community.

Insurance Taking social issues into account isrelatively new ground for many lifeinsurers. The pricing of life insurance istraditionally driven by the risk profile of the policyholder, not social factors. It is not ING’s policy to accept all risks inits portfolio, demonstrating again thetension between different stakeholderinterests. ING has to obey the law andhas an obligation towards regulators,current policyholders, and shareholdersto maintain a portfolio based onprudent risk management. This requiresING to reject certain risks, even ifaccepting them might, on the face of it, appear to benefit specific socialgroups or society as a whole.

Investment management ING is a large asset manager with asignificant number of 5% and moreinterests in – mainly Dutch – companies.ING manages third-party funds as well as its proprietary assets. Its total assetsunder management amounted to aroundEUR 500 billion at the end of 2004.

In 2004, a non-governmentalorganization (NGO) contacted INGInvestment Management (ING IM) todiscuss the activities of one of thecompanies in its investment portfolio.

GENDER-BASED PRICING IN PENSIONS

In 2004, the European Commission considered aproposal to force insurers to introduce uniformpricing for pension contracts for men and women(known as unisex premiums). The proposal wasbased on the premise that men and women shouldbe treated equally in pensions as in other walks oflife and that it was therefore unethical for women,who on average live longer than men, to payhigher premiums than men for the same pension

product (such as an annuity). ING actuariesprovided testimony to the European Commission on the feasibility of unisex premiums. ING, alongwith the rest of the industry, concluded thatpension premiums based on unisex mortality tables would pose an extra risk for an insurer’sportfolio and would end up costing both men and women more than premiums based on traditional mortality tables.

In late 2004, the European Council of Ministersdecided that pension providers could be exemptedfrom the ban on differentiating between men andwomen if they can demonstrate that gender isnecessary to determine the risk.

This company was alleged to be complicitin violating indigenous peoples’ rights.ING said that it was not responsible forthe impact of this company’s businessactivities, but nevertheless regarded it to be within its sphere of influence toencourage the company to engage in a dialogue with the NGO.

ING Investment Management, togetherwith a large number of other institutionalinvestors, participates in the CarbonDisclosure project. This project aims toimprove investors’ understanding of thepotential risks and opportunities relatingto climate change that are faced bycompanies in which they invest.

Real EstateING Real Estate is one of the world’slargest real-estate companies, with EUR 51 billion in assets undermanagement, and is involved ininvestment management, developmentand finance in more than 15 countries.In the area of Corporate Responsibility,ING Real Estate is focussed on closecooperation with local governments andcommunities, on environmental aspectsand the selection of business partners.

SUSTAINABLE PRODUCTS AND SERVICES

ING business units in Australia, Belgium,France, India, Luxembourg, Mexico, theNetherlands and the United Kingdomoffer customers a variety of products andservices that are more environmentally or socially sustainable than its traditionalofferings. Our Real Estate entities in theNetherlands and the United Kingdomoffer social and affordable housing, butthis is less than 1% of total investments.

Green FinancePostbank Green, a separate bank withinING Netherlands, invests the savings of retail customers in environmentally-friendly projects. In addition to theinterest payable of Postbank Green,customers get a tax break of up to

2.5%. At the end of 2004, PostbankGreen’s portfolio totalled EUR 720million. In 2004, EUR 109 million wasinvested in 55 projects concerningrenewable energy, district heating,Green Label Greenhouses, sustainablebuilding and organic agriculture. By financing these types of projects,Postbank Green contributed to areduction of CO2 emission of 330kilotons, compared to 277 in 2003.

Under the tax regulations PostbankGreen is allowed to extend itsinvestments beyond environmentally-friendly projects. As a new goal in 2005 Postbank Green aims to invest EUR 15 million in microfinance. Thisinvolves small loans aimed at helpingapproximately 150,000 small enterprisesin developing countries.

Sustainable investmentsING offers a range of sustainableinvestment opportunities, among othersthe global sustainable equity fundsmanaged by ING IM. The biggest is the ING Sustainable Return Fund at EUR 405 million, with institutionalinvestors accounting for 85% of thetotal assets under management. This amounted to 6.5% of the totalglobal equity portfolio of EUR 6.2 billionat the end of 2004.

The funds are marketed through ING’sbusiness units in Europe and Australiaunder various names. Although 2004again was a difficult year for activeinvestment managers, ING’s sustainablefunds performed better than manytraditional global investment funds andthe major Sustainability Indices of DowJones and FTSE. With a 6.15% grossreturn in 2004, ING IM sustainable fundslagged slightly behind the 6.95% totalgross return of their official benchmark,the Morgan Stanley Capital Index (MSCI).



2.0OUR STAKEHOLDERS

Loans to vulnerable groupsBanks in India are required by law toearmark a certain percentage of loans foragricultural and social banking. Thereforethe Agri and Social Banking Departmentof ING Vysya Bank offers products thathelp to improve the income of the poor.The microcredits are growing rapidly,especially the Differential Rate of InterestAdvances Scheme designed to helpfamilies living below the subsistence levelof less than EUR 115 per annum. Anotherexample are the loans to the rural poorwomen that are organised in Self HelpGroups. These vary from USD 25 to 2,500and most loans are around USD 200-300.A sustained level of income is assuredthrough the process of social mobilisation,training, capacity building and provide of income generating assets.

Mortgages for youngstersIn Belgium, ING Belgium and RecordGroup provides ‘prêts jeunes’ to helppeople younger than 35 years to financetheir housing. These mortgages areguaranteed by the Walloon governmentand amounted to EUR 166 million in 2004.

SUSTAINABLE AND SOCIALLY RESPONSIBLE PRODUCTS & SERVICES

Country 2004 2003In millions of euros, year-end

SUSTAINABLE ASSETS UNDER MANAGEMENTPostbank Green total portfolio Netherlands 720 604

Sustainable global equity funds managed Europe andby ING IM Australia 447 398

ING (L) Selectis Sustainable Distri Belgium 32 30

ING Australia Sustainable Wholesale Share Trust Australia 25 22

ING (B) Invest Solidarity Mixed Euro Belgium 2 2

Sustainable discretionary Portfolio Management Netherlands 277 251

Socially responsible investment funds managed bythird parties United States 320 231Total 1,823 1,538

SUSTAINABLE AND SOCIALLY RESPONSIBLE LOANSMicrocredits (direct) India 8.4 5.7

Loans to Micro Finance Institutions (indirect) India 3.1 –

Prêts jeunes (Mortgages for youngsters) Belgium 166 131

PREMIUM INCOME SUSTAINABLE INSURANCESVida Creciente (Life-insurance) Mexico 6 –

Environmental (Risk Insurance) Mexico 1 –


WE ARE COMMITTED TO DELIVERING A GOOD RETURN ONINVESTMENT FOR OUR CAPITAL PROVIDERS AND AIM TO DO SO IN A RESPONSIBLE WAY

ING wants to offer shareholders a higherreturn on equity than its peers through a clear focus on long-term value creation,a target set in 2004 when ING renewedits overall strategic direction.

United Kingdom 27%United States and Canada 23%Netherlands 17%Belgium 9%Luxembourg 7%Switzerland 6%France 5%Germany 3%Other 3%

GEOGRAPHICAL DISTRIBUTIONOF ING SHARES in percentages

ENGAGING SHAREHOLDERS

Type of engagement Target Group Frequency 2004Annual General Meeting Private & institutional shareholders 1Investor Relations symposia Analysts 2Conferences Investors, analysts 13Road shows Investors 17One-on-one meetings Investors, analysts 184Group meetings Investors, analysts 42Conference calls Analysts 5Results meetings Analysts 6Meeting with raters Credit rating agencies 6

LONG-TERM SHAREHOLDER VALUE

It has always been a priority for ING toprovide a good return for shareholdersin terms of capital gains and re-investeddividend, a measure known as ‘totalshareholder return’ (TSR).

Annual resultsING achieved strong results in 2004 witha rise in operating net profit of 33% to EUR 5,389 million. Operating netprofit from banking rose 55.6% led by ING Direct and Wholesale Banking.Operating net profit from insuranceincreased 19%, lifted by higher results in Asia/Pacific and the Americas.

In 2004, important steps were taken tostreamline the portfolio of businesses.Managing the portfolio is crucial in thevalue creation process because, togetherwith good execution, it frees up capitalto invest in future growth. The Asian cash equities business was sold as well asthe Australian non-life insurance jointventure, the Dutch health insurancebusiness and CenE Bankiers in theNetherlands. Agreements were reachedto sell the life insurance operations in Argentina, to sell Baring AssetManagement and Life of Georgia,

and to exit the individual life reinsurancebusiness in the United States. In Germany,most parts of ING BHF-Bank were sold. InCanada, a public offering of shares wascompleted. After the offering, ING held70% of the shares of ING Canada.

Some of the proceeds of the sales wereused to strengthen the capital position,leading to a sharp improvement of thedebt/equity ratio to 9.9% in line withthe 10% target. The balance of proceedswere invested in our growth enginessuch as ING Direct, the insuranceactivities in Asia and Central Europe and the retirement services business in the United States.

Underlying profit developments of thecore businesses continued to be strongin 2004. Top-line growth was seen in both banking and insurance. ING will continue to focus on controllingoperating expenses.

On 31 December 2004, ING’s shareholders’equity amounted to EUR 25.9 billion, an increase of EUR 4.6 billion (21.2%)compared with year-end 2003. Listeningto the vast majority of our shareholders,we decided to pay future dividends fullyin cash.

SHAREHOLDERS2.0OUR STAKEHOLDERS

SHAREHOLDERS(continued)

2.0OUR STAKEHOLDERS


INVESTOR RELATIONS

ING Investor relations (IR) aims tocommunicate the strategy and theresults of ING Group to the investorcommunity so that private andinstitutional investors can properly value the Group’s shares and othercapital instruments. We also aim to gain their support for the strategy and tactics of the Group.

During the year, IR is in constantdialogue with analysts, rating agenciesand private and institutional investors,offering opportunities for meetings withIR staff or Executive Board members.While the Executive Board is responsiblefor creating shareholder value, InvestorRelations is responsible for having itrecognised in the Group valuation.

US Statistical SupplementIn response to requests from analystsand investors, and increased disclosureexpectations, ING published additionalfinancial information in 2004 about its United States operations, the US Statistical Supplement. This unaudited supplement providesinformation and figures that are notregularly published in the quarterlyfigures or annual report. It is in line withthe strategy to provide more opennessand transparency for ING’s stakeholders.

Sustainability/CSR RatingsAnalysts and investors continued toexpress an interest in ING’s sustainable/CSR performance in 2004. Severalspecialised research agencies provideinformation on ING for sustainabilityindices and sustainable-asset managers.The assessments provide valuableinformation on the strengths andweaknesses of the company and itsposition vis-à-vis its peers. Manyinstitutional investors depend on the assessments for their portfolio

management. As in previous years, ING is included in the most prominentSustainability Indices such as the DowJones Sustainability World and STOXXIndices, FTSE4Good Global 100 andEurope 50. ING was also included in theEthibel Sustainability Index, the EthicalIndex Euro and Global and the ASPIEurozone Index. According to a studyinto the sustainable entrepreneurship of companies listed on the AEX by Dutch Sustainability Research (DSR), ING ranked third in 2004.

Sustainable-fund managers increasinglyperform their own assessments ofcompanies and prefer a more personalapproach. In 2004, ING conducted severalconference calls and presentations oncorporate responsibility, at the request of institutional investors.

In September 2004, ING asked theSustainable Business Institute at theEuropean Business School to perform an evaluation of the share of equities of ING held by European sustainableinvestors to get more insight in thesustainable investment market. TheInstitute estimated that the total volumeof sustainable investments in Europewas EUR 182 billion in 2003 includingretail funds (15%) and institutionalinvestments (85%). The analysis showedthat ING was held by approximately 40% of the sustainable retail funds inEurope (107 of 254 analysed funds). The proportion of ING shares held by sustainable investors in Europe(including institutional investments) wasestimated by the Institute to be 1.45%at the year-end 2003. The institute alsoconcluded that ING was the mostpopular Dutch company and among thetop five European companies forsustainable investors in Europe.

CORPORATE GOVERNANCE

ING believes that good corporategovernance – the proper managementand supervision of companies – entails acareful balance between the short-termand long-term interests of the company.ING’s aim is to have a governancestructure in place that is transparent and does justice to the interests of all itsstakeholders: customers, shareholders,employees, business partners and society as a whole. ING has a two-tiermanagement structure with anExecutive Board and an independentSupervisory Board to create the properchecks and balances.

In 2004, the Dutch CorporateGovernance Code, the Tabaksblat Code,was implemented. ING adapted itspractices, its Articles of Association andthe Charters of the Executive Board and the Supervisory Board to complywith the Tabaksblat Code.

The Annual General Meeting ofShareholders (AGM) on 27 April 2004included discussions on corporategovernance and the remuneration ofthe Executive Board. The new corporategovernance structure, introduced in2003, had a visible effect on the AGM.Shareholders stated they were satisfiedwith ING’s financial results in 2003 andthe prospects for the future. There was considerable commitment fromshareholders and depositary-receiptholders. The proxy-voting system – voting without physically attending theAGM – which was introduced in 2003,was extended to the United States, theUnited Kingdom and internationalinstitutional investors in 2004. This raisedthe proportion of the votes cast by proxyfrom 8% in 2003 to 21% in 2004.Including the votes cast during theshareholders meeting, shareholder parti-cipation showed a record high of 27%.

AWARD FOR INVESTOR RELATIONS

ING won first place in the AEX stocks category of the 2004 Rematch Investor Relations Award.Rematch is an independent Dutch research andconsultancy agency.

It was the third time in the Rematch survey’s 15-year history that ING came first, having also won in 1997 and 2000.

As in previous years, Rematch asked investors,portfolio managers, analysts and financialjournalists to rate the IR policy of the 25 largestcompanies in the AEX index.


For 2005 and beyond ING aims tofurther encourage depositary-receiptholders to use proxy voting and thusincrease participation in decision-making. As of 2005 proxy voting viainternet will be possible for our Dutchshareholders via the ShareholdersCommunication Channel.

Sarbanes-Oxley ActThis United States law, dating from2002, is intended to restore investorconfidence in the capital markets after a number of bookkeeping scandals. Itcontains comprehensive guidelines forboth financial reporting and auditingand communication of the figures.Section 404 requires the Chief ExecutiveOfficer (CEO) and Chief Financial Officer(CFO) to sign not only for the accuracyof the figures but also for the quality ofinternal controls for the financialreporting. ING’s CEO and CFO areexpected to sign their first Section 404declaration as of 31 December 2006. Themanagers of ING’s divisions and business

“WE EDUCATE OUR TOP MANAGERS AROUNDTHE WORLD IN ORDER TO CREATE ANDINCREASE LONG-TERM SHAREHOLDER VALUE.”

TOOLS FOR TOP MANAGERS TO FOCUS ON TSR

Through our Business School we educate ourtop managers around the world. In 2004 weintroduced a special course that explains theconcept of Total Shareholder Return. Topmanagers need to be given the tools in order to develop and execute the concept ofincreasing long-term shareholder value. It istheir responsibility to manage the company in the future.

MARINA ELOY, ING GROUP HEAD OF HUMAN RECOURCES, AND TEAM, AMSTERDAM

units will sign for the quality of internalcontrol for the financial reporting withintheir areas.

Auditor independenceOn 1 April 2004, the renewed INGexternal auditor independence policybecame effective, fully in line with Sarbanes-Oxley. ING’s externalauditor independence policy definesaudit services, audit-related services and non-audit-related services and theapproval procedure for each type ofservice. ING’s policy requires that theexternal audit firm inform the AuditCommittee of the Supervisory Board ofsituations that may be thought to bearupon its independence. The policy alsospecifies which activities are prohibitedto be performed by external auditors.

For shareholders we have more in-depthinformation available on:

• Annual results• Investor Relations• Corporate governance



CREATING VALUE FOR OUR EMPLOYEES

Within a call-centre environment it is achallenge to keep employees motivated. The ING Belgium call centre in Brussels has found a successful way of maintaining call centre employees. How? Thanks to intensive coaching on commercial, language and interactive skills, the call/mail advisorsprepare themselves for other jobs within ING Belgium. During their careers within ING they take with them the valuableexperience of knowing the customers and the company. During 2004, well over 80% of the call-centre leavers have moved on to commercial and advisory functions in the network.

“OUR HUMAN RESOURCE POLICIES OFFER AMPLE OPPORTUNITIESFOR PERSONAL DEVELOPMENT AND HELP US ATTRACT ANDRETAIN MOTIVATED AND TALENTED EMPLOYEES.”

FRANÇOISE PAQUET, HEAD HUMAN RESOURCES ING BELGIUM CALL CENTRE, WITH COLLEAGUES, BRUSSELS


EMPLOYEES2.0OUR STAKEHOLDERS

Managing for value is at the centre of ING’s strategy, and our people are essential for value creation. Thesatisfaction of our customers is to a largeextent dependent on the knowledge and professionalism of our workforce. In 2004, ING introduced a neworganisational structure and strategicdirection which, among other things,was aimed at building more strength,depth and diversity in the workforce and strengthening the performanceculture. Top management regularlycommunicates to employees their crucialrole in creating value for the company.

OUR PEOPLE AND OUR POLICIES

Workforce reductions and job creation At the end of December 2004, the totalnumber of employees in full-timeequivalents (FTEs) at ING worldwideamounted to 112,196. This is a decreaseof 2,148 FTEs compared to the 114,344FTEs at year-end 2003, resulting in anoverall workforce reduction of nearly 2%.

The average number of staff at InsuranceEurope declined 3.6%, due in part to thesale of the Italian life insurance business.The number of staff at Insurance Americasdeclined 3.4% mainly as a result of staff reductions in Argentina and theoutsourcing of IT functions in the UnitedStates. The decline in staff was partiallyoffset by the purchase of Allianz inCanada. Within Wholesale Banking, staff

numbers were 9.2% lower, mainly due tothe sale of CenE Bankiers, the Asian cashequities business and parts of ING BHF-Bank. Retail staff decreased 3.6% mainlydue to the sale of ING BHF-Bank activitiesand lower staff numbers in Belgium, Indiaand the Netherlands. The main jobcreator was ING Direct: the averagenumber of FTEs increased by 1,300 to5,300 in 2004, as a result of expansion inGermany, the United States and theUnited Kingdom.

HR policyDuring the year, the Human Resources(HR) function was restructured to bettersupport ING’s strategy. A new centralGroup HR function was created to serve the six new business lines andsupport them in creating a moreperformance-driven corporate culture.

SATISFIED AND MOTIVATED PEOPLE DELIVER BETTER CUSTOMERSERVICE AND MAKE US A SUCCESSFUL BUSINESS, WHICH, IN TURN,CONTRIBUTES TO SHAREHOLDER VALUE

7996v08_AS_ING_Society_0804 13-04-2005 12:38 Pagina 20


To emphasise that human resources is a top management priority, the CEO Michel Tilmant assumed directresponsibility for HR.

ING’s policy is to attract, develop, trainand reward its employees based onmerit. ING wants to offer payment andbenefits that are up to market standardsas well as opportunities for personal and professional development. ING iscommitted to equal opportunities and the avoidance of harassment anddiscrimination. We want to foster anenvironment in which our people trusttheir colleagues and management. INGwants to maintain good labour relationsand provide safe working conditions.These goals and commitments areanchored in ING’s Business Principles.

Employee benefitsFor many years, ING has striven todistinguish itself as a good employer byproviding excellent benefits. Employeebenefits take the form of primary andsecondary benefits. Primary benefitsinclude base salary and performance-related salary (e.g. bonuses and stockoptions). Secondary benefits includepension rights, reduced prices onfinancial products (for exampleinsurance and residential mortgages),compensation for disability, childcare,sabbatical leave, parental andemergency leave and psychologicalcounselling. The scope of these benefitsvaries from country to country.

Offering attractive benefits creates value for ING because they give us anadditional competitive edge in the jobmarket. Excellent benefits also motivateemployees and help to retain dedicatedand talented employees.

Performance management In 2004, personal accountability,execution and value-based managementbecame more explicitly embedded inING’s corporate culture and strategy.Execution and personal initiative lie atthe heart of performance management,which applies throughout ING and forwhich each country has its own system.Employees and their direct managerjointly set the employee’s targets for the year as well as the extra trainingthat is needed to reach those targets.Performance targets are in line with theobjectives of one’s own department andthe company’s overall strategy.

PERSONAL DEVELOPMENT AND EDUCATION

TrainingAnother way ING contributes to creatingvalue is by investing in the personal andprofessional development of its staff.Career development is encouraged for everyone at ING. Employees areexpected to take the initiative inshaping their career and development,and ING supports them where possible.

Training and education not only give ourpeople new skills and capabilities thatbenefit the company; they also facilitateemployability by making our staff morecompetitive in the job market, creatinga win-win situation. Most business unitshave formal policies and procedures tostimulate the personal development and education of their employees. The budget for training and personaldevelopment reported by ING’s businessunits amounted to EUR 96 million in2004, an average of EUR 912 per FTE.

One cultureThe value we create for customers,shareholders and communities is directlylinked to our employees’ behaviour. Our people are continually reminded of ING’s brand promises to its customersand how their own behaviour cancontribute to fulfilling that promise.What does ING stand for? And what sort of behaviour is expected from each employee? In order to give ourpeople a shared focus on the company’spriorities and corporate culture, a newinternal programme called ‘Live ING’ was developed during 2004. ‘Live ING’ is about communicating ING’s strategy,structure, Business Principles and brand. ‘Live ING’ will be rolled out for all employees in 2005.

Talent management and succession planningTalent management and successionplanning contribute to value creationfor both customers and shareholders.Both functions occupy an importantplace in ING’s overall HR policy.

Talent management is about having theright people in the right place at theright time, and recruiting, developingand retaining them. ING distinguishesthree categories of talent: ‘InternationalManagement talent’, ‘talent’ and ‘juniortalent’. ING attracts talent by recruitingexternally and managing high-valuespecialists and high potentials within the company.

GEOGRAPHICAL DISTRIBUTIONOF FTEs in percentages, year-end 2004

Netherlands 30% Belgium 11% Rest of Europe 19% North America 16% Latin America 10% Asia 12% Australia 2%

3012

0

2

4

6

8

10

12

14

Based on internal CSR survey covering 104,152 FTEs, where staff turnover was 12.3% in 2004.

REASONS WHYEMPLOYEES LEFT INGin percentages, year-end 2004

Own initiativeInitiative INGPensionsDeath and disability

7.4%4.0%0.7%0.2%

For employees we have more in-depthinformation available on:

• Employee benefits• Personal development and education• Diversity management• Health and safety• Employee satisfaction



EMPLOYEES(continued)

2.0OUR STAKEHOLDERS


The aim of succession planning is toidentify and develop ING’s current and future generation of seniorexecutives. One of ING Group’s keystrategic objectives is to build a moreperformance-driven culture. ING’sleaders are expected to have – or tolearn – the ability to guide individuals,teams and organisations toward thisdesired goal.

ING Business School The ING Business School (IBS) plays animportant role in communicating ING’sstrategy and teaching value-basedmanagement to its most talentedemployees. In 2004, the IBS delivered 48programmes and workshops, with a totalnumber of 1,040 participants. It alsoorganised the ING Dialogue Series, whichaims to familiarise talented people withkey executives in the company.

People in the first managerial positionare the most critical level of the company.For most employees and customers, theyare the ‘face’ of the company and the lastin line in management to translate ING’svalues, strategy and mission into theindividual behaviour of other employees.For this reason, ING Business School offers courses specifically tailored for this group.

DIVERSITY MANAGEMENT

Diversity management has been on theagenda at ING since 2000. In that year, a Diversity Council was formed to advisethe Executive Board on diversity issues.When the Diversity Council was firstestablished, its focus was to move more women into senior managementpositions. Since 2001, when 4% of the International Management Councilwas female, the percentage of womenhas almost doubled to 8% in 2004.

GENDER DIVERSITY AT ING WORLDWIDEin percentages, year-end 2004

Outer circle: All levels (based on data covering 110,000 employees)Inner circle: International Management Council

MaleFemale

48 52

8

92

“EMPLOYEES WITH EXPERIENCE AND EMPATHYLEAD TO COMPLIMENTS FROM CUSTOMERSWHO ARE IN ARREARS.”

CREATING VALUE THROUGH DIVERSITY

ING Direct’s business in Australia was growingrapidly and it needed to staff the collectionsarea. This is considered a difficult area to workin, as it involves calling up people who arebehind in their mortgage repayments. Inrecruiting extra staff for this department, INGDirect wanted to operate the collectionsdepartment in a more sympathetic way bydemonstrating that it wanted to help people indifficult circumstances as much as possible. INGDirect hired veteran individuals who werereleased by other banks in order to takeadvantage of their experience. These employeeshave been effective in their new jobs and thesuccess rate of collections increased. As a result,mortgages arrears are significantly better thanaverage.

BILL RICHARDS, COLLECTIONS OFFICER AT ING DIRECT AUSTRALIA, WITH COLLEAGUES, SYDNEY


Today, the focus is much broader. Thestarting point is that ING needs toattract the best people and tap thelargest possible talent pool – whichmeans recruiting from a variety ofbackgrounds. ING understands diversityas the need to form diverse teamsthroughout the organisation and toattract people regardless of their ethnic,cultural, family or other backgrounds. By hiring and retaining people ofdiverse backgrounds, better businessdecisions can be made because differentpoints of view are considered, thusadding value for all our stakeholders.

New initiatives 2004 Several new initiatives were introducedto make the organisation more diverse.In the United Kingdom, almost allcurrent employees in the WholesaleBanking division participated in a newthree-hour diversity awareness trainingsession. Several ING business units inLatin America began comparing theirown country demographics with the demographics of the local INGworkforce to make sure the make-up ofthe workforce reflects local society. TheFemale Development Programme (FDP)was expanded in the rest of Europeunder the name Leadership by Example.

Employee networksAnother part of our diversitycommitment is to facilitate the creationof networks for specific groups ofemployees. It is all part of ING’scommitment to foster an opencorporate culture where people feelwelcomed. To date, ING has eightemployee networks worldwide,including women and youngprofessional networks in variouscountries and networks for African-American, Latino and Asian employeesin the United States. A new gay andlesbian staff network called GALA wasestablished in 2004. The objective ofGALA is to promote inclusiveness,increase awareness of gay and lesbianissues within the organisation and act as a point of reference.

salary and benefits, working conditions,motivation, and opportunities forpersonal and professional development.74% of our business units, representing78,000 employees, indicated to measuretheir employees’ satisfaction.

The results of these surveys provideinformation on ING’s strong and weakpoints in its HR policies. Twice as manybusiness units indicated to havesufficient data to draw conclusions with respect to trends in employeesatisfaction compared to 2003. For 10%of the surveyed staff a negative trendwas reported in 2004.

Motivation surveyIn the Netherlands, 32,000 employeeswere invited to take part in the 2004Motivation Survey. Fifty-four percent of employees responded to the survey, a 25% higher response rate than 2003;79% of management responded.Employee satisfaction continues to behigh at ING. Employees rated overall jobsatisfaction with a score of 3.9 (out of a scale of 1 to 5), unchanged comparedto 2003. Only 3.7% of our employees in the Netherlands said they wereunhappy in their current job (score 1-2),a decrease over 2003 when 5% said they were dissatisfied.

External surveysVarious external parties gauge thesatisfaction of ING’s employees. In theNetherlands, ING has consistently beenrated as a top employer for many years. In the 2004 survey of the 25 best employers in the Netherlands byIntermediair, a magazine for academics,ING was rated second. ING Chile wasvoted one of the top 15 places to work,according to a study conducted by the Great Place to Work Institute onChilean companies with more than 500 employees.

HEALTH AND SAFETY

ING is a strong advocate of physical andmental well-being and fitness. Peopleperform better on the job if they workin a safe environment and live healthylifestyles. ING aims to provide itsemployees with safe conditions of work, and this is explicitly stated in theBusiness Principles. ING adheres torelevant local health and safetyregulations. For practically all of ouremployees, policies and procedures have been implemented with regard to safety, sexual harassment and otherforms of harassment, employeegrievance and non-smoking. Manybusiness units have adopted their ownhealth and safety regulation policies ona number of issues. In the Netherlands,the introduction of a number ofpreventive measures has helped tosubstantially reduce the sickness anddisability rate in Postbank’s call centrefrom 10.5% in 2002 to 5.6% in 2004.

ING encourages its employees to livehealthy lifestyles. Many teambuildingevents involve sports. ING sponsorsworldwide marathon events andencourages its employees to train forand take part in running events. In theUnited States, ING sponsors an eight-week walking programme called ‘10Kper day’ that encourages its employeesto exercise regularly. ING promoteshealthy living by imposing non-smokingpolicies, facilitating membership infitness clubs, and providing advice on ergonomics.

MONITORING OUR HR PROMISES

Employee satisfaction ING wants to be a place where peopleenjoy working and feel challenged.According to the internal CSR survey,95% of the ING business units haveimplemented policies and proceduresfor employee commitment andmotivation, an increase against the 83% in 2003. To make sure we are ontrack in fulfilling our commitments, ING regularly holds employeesatisfaction surveys to determine how our people feel about their job,management, work/life balance issues,

EMPLOYEES(continued)

2.0OUR STAKEHOLDERS


Corporate cultureDuring 2004, several studies wereconducted by external agencies in theUnited States, Chile and the Netherlandsto determine how employees feel aboutING’s brand and corporate culture. The surveys included questions oncorporate responsibility, diversity andenvironmental care. The studies showedthat most of the nearly 2,400 INGemployees surveyed agreed that INGtakes its social responsibility seriously. The vast majority of respondents alsoagreed to the statement “I prefer anemployer who encourages sociallyresponsible behaviour.” The studiesfurther indicated that a large percentageof employees think that personal respectand non-discrimination are takenseriously by ING. In all three countries,around 75% of the respondentsacknowledged that the workingenvironment is pleasant for all peopleand that ING provides a goodwork/private life balance.

Labour relations In addition to holding regular employeesurveys, ING wants to maintain goodlabour relations through a regulardialogue with its employees.

Dialogue with employee representativeshelps ING to stay in touch with theconcerns of its employees and is animportant form of stakeholderengagement. Dialogue contributes toING’s success when new strategies ordifficult restructuring measures need tobe implemented.

The internal CSR survey indicated that61,500 employees were represented byindependent trade union organisationsor were covered by collective bargainingagreements in 2004. Of our businessunits, 97% gives information toemployees, 79% consults employees and 65% negotiates with employeesregarding operational changes.ING has a European Works Council(EWC) consisting of 35 members. Russiaand Bulgaria joined the EWC in 2004,bringing the total number of countriesrepresented from 15 to 17. The full EWCmeets on a bi-annual basis. In 2004, theEWC aligned its structure with the ING’snew lines-of-business structure. The EWCestablished six committees: a BankingCommittee, an Insurance Committee, anOperations and IT Committee, a Social Committee, a Financial Committee and a Public Relations Committee.

In 2004, each Committee has met withthe responsible managers to discussissues of interest and concern. Amongthe subjects discussed during 2004 were the new organisational structure, INGGroup’s portfolio management and the quarterly results.

In the Netherlands, where a third of theworkforce is based, the Central WorksCouncil (COR) is the main dialoguepartner for employee consultation.

Incident reportingNot only does ING make promises to its employees which are regularlymonitored, it also expects its employeesto keep their promises to the companyand to uphold the highest standards ofintegrity. A lack of integrity or lapses of judgment can create considerabledamage to ING. This too, is monitoredwithin ING’s operational riskmanagement and complianceframework. Some risk categories aredirectly related to our responsibilitytowards employees and employeebehaviour. Examples are employmentmalpractice and workplace safety failure.Other risk categories are related to theemployees’ responsibilities towards thecompany, such as internal criminalactivity and unauthorised activity.

Regular incident analyses regardingthese risks allow ING to betterunderstand why certain ‘accidents’happened in the first place and to incitethe responsible management to takeappropriate actions to prevent themfrom happening again.

DIVERGING STAKEHOLDER INTERESTS: EXECUTIVE BOARD REMUNERATION

The announcement in the spring of 2004 about thecompensation package of members of the ExecutiveBoard is a good example of the tension betweendifferent stakeholders’ interests and the challengein managing competing interests.

Employees, labour unions and employeerepresentatives argued that the increases inExecutive Board compensation were

disproportionate and set a poor example to the restof the workforce, especially since the Dutch unionshad already agreed to refrain from structural wageincreases in 2004.

The Supervisory Board explained that the increaseswere necessary in order to keep ING competitive inthe international arena and to attract and retainfuture generations of leaders.

The issue spawned much criticism in Dutch society.ING explained the background behind the increasesin an open dialogue to media, shareholders, labourunions and employees. The increase in ExecutiveBoard compensation was approved by the AnnualGeneral Meeting of Shareholders in April 2004.

Results are based on a sample of 1,579 employees in the Netherlands, 583 in Chile and 194 in the United States (US)

0

20

40

60

80

100

Netherlands Chile US Netherlands Chile US Netherlands Chile US

EMPLOYEE OPINIONS ON SOCIETAL ISSUESin percentages

ING takes its responsibility to society seriously

ING wants you torespect all people

ING is environmentallyresponsible

DisagreeNeutralAgree


STANDARDISATION IN PROCUREMENT

The ING Procurement strategy is toexecute all procurement activitiesthrough a professional organisation that is centrally led with standardisedprocesses but which operates throughdecentralised procurement units.

ING deals with its business partnersaccording to a set of high ethicalstandards and has strict procurementpolicies on human rights, child labour,environmental issues, health and safetyregulations and supplier diversity.

BUSINESS PARTNERS 2.0OUR STAKEHOLDERS

Worldwide, ING is involved with many different business partners,including our suppliers. Together, theyform an important stakeholder group.As the company has grown in the pastdecade, so too has the need tocoordinate procurement activitiescentrally. This led to the establishment in 2000 of the Corporate Procurementdepartment which is responsible for theglobal coordination of this function.

WE WANT TO BUILD PROFESSIONAL RELATIONSHIPSWITH OUR BUSINESS PARTNERS BY USING STANDARDPROCUREMENT TOOLS, PRINCIPLES, TERMS ANDCONDITIONS ACROSS THE WORLD

“THE SUSTAINABLE SCORE CARD SERVES TWO PURPOSES. IT HELPS US TOASSESS THE ENVIRONMENTAL EFFECTS OF THE SOFT FURNISHINGS IN OUROFFICES THOROUGHLY. BUT THE CARD IS ALSO USEFUL TO TELL OUR SUPPLIERS WHAT WE EXPECT FROM THEM.”

PHILIP DRONTMANN, CSR MANAGER ING BANK NETHERLANDS, LODEWIJK HENDRIKS AND GERARD DEKKERS, ING FACILITY MANAGEMENT IN THE NETHERLANDS, AMSTERDAM

MORE INSIGHT INTO ENVIRONMENTAL IMPACTS

In the Netherlands, ING Facility Managementfocuses on the optimal use of furnishings andfurniture. The interior design of the officesshould be based on durable and environmentallyfriendly materials. In 2004, ING hired the Dutchconsultancy firm DHV to publish a report on the environmental performance of the newfurniture in offices adopting the ING housingconcept. ING now has a thorough insight into the environmental impact of certain rawmaterials used in its furnishings and the end of life recycling possibilities. As a result we can tell our suppliers what our preferences are and which improvements we expect. We are better able to manage our disposal costs (supply-chain management). In addition we think our customers appreciate ourenvironmental responsibility.

BUSINESS PARTNERS(continued)

2.0OUR STAKEHOLDERS


As part of a worldwide improvementprogramme, all procurement units wereassessed in 2004 with the objective of each achieving certain minimumstandards by the first quarter of 2005.The programme covers all mainprocurement areas including ITinfrastructure, business applicationsoftware, facility management, humanresources and market data services.

Requirements of staff and suppliers Procurement staff has to comply with the ING Procurement Code of Conduct aswell as the Business Principles that allstaff follow. This code prohibits theacceptance of personal benefits in anyform, requires confidentiality withrespect to quotations and proposals fromsuppliers and sets strict boundaries forcontacts and relations with suppliers.Procurement staff must sign the codeevery year to remind them of itsimportance. Furthermore, the code is anintegral part of ING’s General Terms &Conditions for Procurement with whichbusiness partners are required to comply.The current version, released in 2004,includes ethical clauses related to theenvironment, health and safety and childlabour and applies to all new contractsand contract renewals, while existingcontracts will be modified as soon as thefirst legal opportunity occurs.

Global reciprocity policyMany of ING’s suppliers are also clientsof ING. Our reciprocity policy states thatwhen a customer or potential customerwants to become a supplier, thiscompany will be assessed only on thebasis of price and quality and not on its customer status.

ScreeningIn addition to its suppliers, ING isfrequently involved with other businesspartners. ING Real Estate, for example,deals with many types of businesspartners when developing new projects,

including local municipalities, architectsand construction companies.

Regarding its partner selection ING RealEstate acts in accordance with the INGFinancial and Economic Crime Policy, theBusiness Principles of ING and applicablelaws and regulations. Screening ofpotential business partners is part of the selection process. The selection of all partners, joint-venture partners in particular, takes place after aninvestigation by a screening departmentof ING Real Estate. Important issues are a partner’s reputation, financialsoundness, capacity and knowledge.

SUPPLIER RELATIONSHIP MANAGEMENT

ING maintains close, value-addingrelations with a limited number ofstrategic global suppliers. Our size, scale and expertise means they derivesignificant benefits from working with us. In 2004, we streamlined ourcommunications with this key group and in 2005 we plan to conduct moresupplier performance surveys.

Better payment performanceAs part of our supplier managementprogramme, we have continued toimprove our payment performance bystreamlining administrative processesand undertaking more electronicinvoicing. Our payment performance inthe Netherlands improved substantiallyin 2004. In 2004, 70% of the invoiceswere paid in time, compared to 60% in2003 and 50% in 2002. This can mainlybe attributed to the roll-out of thesystem that allows ING employees toissue electronic purchase orders tosuppliers and streamlines the electronicapproval of corresponding invoices. Thenumber of employees using this systemin the Netherlands increased from 499 in2002 to 738 in 2003 and to 1,050 in 2004. During 2004, ING Unites States FinancialServices (USFS) maintained an average

invoice payment time of 36 days, well within the scope of the averagesupplier’s expectations. In 2004, INGUSFS implemented the ARIBA Invoicingmodule which allows suppliers to submittheir invoices electronically instead of on paper. At the same time, USFS hascentralised invoicing which shouldsignificantly reduce invoice paymentturnaround time in 2005.

Sourcing Several years ago, ING established servicecentres for a number of businessprocesses across the organisation, such as payments and cash management,securities clearing, retail mortgages and claims processing. These centresconcentrate business processes in oneplace which previously had been carriedout in different departments. Theirintroduction has contributed to bettereconomies of scale and efficiency.Outside the Benelux, ING's bankingoperations, for example, have centralisedback-offices in Singapore and Budapest.In the Netherlands, ING set up serviceand competence centres for all bankingproducts, application development andinfrastructure. Around 10,000 people areemployed by the service centres in 2004.

Now that the service centres are well-established, the next step is to considerwhether they should be operated in-house by ING or outsourced. We arelooking at three broad possibilities:near-sourcing (creating dedicated hubswithin ING to carry out the process),outsourcing (hiring an external partnerin the Netherlands or anotherdeveloped country to carry out theprocess) and offshoring (using anexternal partner in a low-wage countryto carry out the process). For OPS&ITBanking, the objective in 2005 is toexplore the various possibilities andcontinue to outsource applicationsdevelopment and infrastructure.

DIVERGENT STAKEHOLDER INTERESTS: SOURCING

The way business processes are sourced, affectsvarious stakeholders. It affects customers, sincethey expect the same quality standards, regardlessof whether ING or a third party handles the process.It affects business partners: in making decisionsabout suppliers, ING will not only consider whethercompany A can do it cheaper than company B, butwhether they share our proposed approach and canguarantee the same quality standards for our

customers, since ING retains ultimate responsibilityfor the quality of the service. It affects ouremployees, because by transferring processes tooutside providers/partners, staff may have to workelsewhere in ING or lose their job.

It also affects our relationship with regulators. Theyare primarily interested in the governance modelswe choose when outsourcing because they want to

make sure that the partners we choose will be ableto do the job and match other standards, such asguaranteeing the same integrity of data as if INGwere to perform the process itself. And how wesource these processes affects shareholders, sinceone of the main objectives of outsourcing andoffshoring is to increase efficiency and improve the cost/income ratio.


SOCIETY2.0OUR STAKEHOLDERS

WE HAVE CREATED FIRM FOUNDATIONSFOR CONTRIBUTING TO SOCIETY IN ALL THECOUNTRIES WHERE WE OPERATE

Maintaining good relations with societyis important for any company. At themost basic level, businesses make theircontribution to the greater good byproviding essential services and productsfor customers, and by creating wealth – wealth for the shareholders who invest in them, the people they employand the governments they pay taxes to. But it is possible to do more, andthat can be defined as responsiblecorporate citizenship.

STRENGTHENING THE FINANCIAL SECTOR ING makes an economic difference in the countries where it operates. Many countries do not have the same advanced financial systems andbusiness processes that are taken for

granted in developed countries. But, by sharing its knowledge with andproviding advice to governments andbusinesses in those countries, ING helpsin their economic development.

Advise to authoritiesING Institutional and GovernmentAdvisory (ING IGA) advises governmentsand financial institutions on how todevelop and restructure banks andinsurance companies.

Based on Postbank expertise, ING hasworked in more than 40 countries toassist governments and private banks toreform the concept of delivery of basicfinancial services through post officesand to build stronger private-publicsector relationships.

“VOLUNTEERING IS CREATING VALUE FOR SOCIETYWHILE GAINING INSIGHT IN OTHER WORLDS.”

SHARING KNOWLEDGE THROUGH VOLUNTEERING

Peter Koen Koning from ING Retail Bankingvolunteered to help improve the internetwebsite for Oikocredit the Netherlands – an association which raises funds formicrofinancing projects. His background inproject management and mediation between IT and business situations could be put tovaluable use. Designing the new website alsohelped Oikocredit staff to reassess their ownprocesses. Peter is one of the many INGemployees involved in many volunteeringprojects around the world providing aninvaluable contribution to society.

PETER KOEN KONING, SENIOR PROJECT & CHANGE MANAGER, ING RETAIL BANKING THENETHERLANDS, WITH EMPLOYEES OF OIKOCREDIT, UTRECHT


SOCIETY(continued)

2.0OUR STAKEHOLDERS

sector aims to combine the knowledgeand expertise of its partners to stimulatefinancial sector development indeveloping, emerging and transitioncountries. The activities will includeassistance to countries in identifyingshortcomings in their financial sector and advising on possible solutions,performing studies, organising seminarsand conferences and executing missionsto target countries.

Microfinance support Microfinancing aims to fight poverty by helping people help themselves. In developing countries, countless small entrepreneurs are hampered intheir ambitions because they cannotraise bank finance. Microfinancingprovides access to finance with loans of sometimes no more than 50 dollars.

In October 2004, ING Netherlandsannounced an alliance with Oikocredit,one of the world’s largest non-commercialfinancial institutions engaged inmicrocredits. ING will also sponsor the2005 United Nations Year of Microcredit.ING employees in the Netherlands caninvest in the ‘Oikocredit NederlandFonds’ or put their know-how to work inOikocredit projects as ambassadors andpublicists for the microfinance concept.ING staff can provide technical expertiseto microfinance assignments for up toseveral weeks.

COMMUNITY DEVELOPMENT AND SPONSORING

Global policyIn 2004, after a comprehensive review ofcommunity development and sponsoringactivities, a new policy was developed forthe next three years. The thrust of thisnew policy is to focus on specific eventsor good causes. It offers several benefitsincluding the possibility to share relevantbest practices and experiences andfacilitating closer relations with therecipient organisations. Three broad

In Brazil, more than 19 millioninhabitants had no financial serviceinfrastructure at all, until recently.Postbank experts helped design andimplement the Banco Postal system toprovide basic financial services in apartnership with one of the main banksin Brazil, Bradesco. The programmestarted in 2002 and since September2004, all 5,300 post offices are involved.The programme has resulted in a positivespin-off for the postal services as well asfor the local rural economy and trade.

Pensions provision is another example.Many countries are struggling to pay thepensions of their ageing populations.Pay-as-you-go pension systems cannot survive in many demographiccircumstances, and inadequate pensionsystems create enormous problems. INGadvises several governments on pensionreform, including the Indian government.In September 2004, ING Global Pensionspublished Indian Pension System: Issuesand Concerns, an extensive study of theproblem and potential solutions.

Partnerships In 2004, ING joined a pensions researchproject set up by the Organisation for Economic Cooperation andDevelopment (OECD). Its objective is to ensure that, out of the vast amountof pension data available, the mostimportant data is extracted, analysedand made available to countries thatneed it. ING also became involved inother pensions research projectsdesigned to share and enhanceinternational expertise, for example the European Financial Services RoundTable (EFR) which is discussing how aPan-European pension can be set up to tackle Europe’s pensions problems.

In addition, ING has signed the Covenantfor establishing the Netherlands Financialsector development Exchange (NFX). Thispublic-private initiative between theDutch government and the financial

categories of activity have been identifiedunder the new policy: communitydevelopment, sports and the arts.

Community developmentING wants to be a good corporatecitizen. That is why ING is involved inmany programmes that contribute tocommunity development and helpvulnerable groups. Most business unitsprovide charitable contributions to thecommunity, civil society and othergroups. In 2004, their total charitablecontributions together with thedonations of the corporate centreamounted to EUR 12.5 million.

Chances for ChildrenChildren and education are universalthemes for community development.Children are the future. With its Chancesfor Children programme, ING aims toimprove the physical and mental well-being of disadvantaged children fromthe ages 4 to 12 by improving theiraccess to education. The programmeencompasses local and global initiativesand includes all business units. In 2004,ING contributed to many projects forchildren around the world. In 2005, INGwill study the possibilities for a globalpartnership for Chances for Children.

ING has a large presence in both India and Thailand,two of the countries that were severely hit by thetsunami which on 26 December 2004 destroyed entirecommunities. ING immediately created a special INGTsunami Support Account. The Executive Boardcommitted the first USD 1,000,000 to the ING TsunamiSupport Account. In addition, more than USD 400,000has been transferred to the account by ouremployees. Starting from the first two weeks

after the disaster, staff at the Insurance Asia/Pacificheadquarters has been working with local businessunits and ING representatives in the worst affectedcountries (Indonesia, Sri Lanka, India and Thailand)to identify projects that need our support. ING created a special intranet website to keepemployees informed about status and allocation of their donation.

BREAKDOWN OF CHARITABLECONTRIBUTION BY CATEGORY

in thousands of euros, year-end 2004Culture / Arts 1,400Sports 400Education 1,800Health 1,000Conservation and Nature 700Children 1,800Disaster relieve 1,000Poverty/hunger 200Entrepreneurship 200Social Environment 600Other/unknown 3,400Total 12,500

ING TSUNAMI SUPPORT


Water management At the opening of ING House in 2002, ourGroup headquarters in Amsterdam, wepledged to make a donation to supportinternational water managementprojects. In 2004, the money began to be used on projects in India and China.

Together with Plan International, anorganisation that works in partnershipwith children, families and communitiesto develop ways of ending the cycle of poverty, ING is sponsoring a watermanagement and early childhoodprogramme in Rajasthan, India. Theproject aims to improve food and water safety by raising groundwaterlevels by building rainwater tanks andimplementing better forestry practices.ING has donated EUR 50,000 to thisproject through the ING VysyaFoundation.

In China, ING teamed up with the RedCross to help build a large water systemfor two villages. ING Asia/Pacific and

ING Group donated EUR 180,000 to the project.

SponsoringING sponsors a wide range of global,national and local events. The benefitsfor ING include publicity, marketingopportunities and relationship building.This sponsorship can take place at group or local subsidiary level. In many cases employees volunteer for the sponsored activities, which helpscultivate company pride.

SportsING sponsors a broad variety of sportsvirtually everywhere it has operations.Involvement in sports is essential forhealth, fitness and a sense of well-being– positive attributes with which INGwants to be associated. ING sponsorssports that match our brand associationsand comply with our Business Principles;for example, low barrier sports, ‘clean’sports that are not associated withdoping or aggression, and sports that

For society we have more in-depthinformation available on:

• Partnerships• Microfinance support

• Community development• Sponsoring• Social and environmental issues• Environmental performance data


“WE HOPE OUR SMALL CONTRIBUTION TO THE EDUCATION OF THESE CHILDRENWILL HELP THEM BUILD A BETTER LIFE.”

FRANK KOSTER, CEO, ING VYSYA LIFE , BANGALORE

ADDING VALUE FOR LOCALCOMMUNITIES

In India, the ING Vysya Foundation incooperation with the Crystal House helps fund primary schools in Bangalore andencourages ING staff to volunteer and getinvolved. Many children in India do not get a proper education because there are so fewschools. Even if there are schools, parentscannot afford to pay for their childeren’seducation.


SOCIETY(continued)

2.0OUR STAKEHOLDERS


have a high profile and contribute tonational self-esteem. An example is thesponsoring of marathons and runningevents as part of the ING Globerunnersprogramme.

Culture and the artsThe other focus of ING’s sponsoring policyis culture and the arts. With the aim oftaking culture to a wider audience, our support reflects the inclusive anddemocratic nature of the ING brand,builds relations and strengthens ourposition within the community.

In the Netherlands, ING has sponsoredthe Royal Concertgebouw Orchestrasince 1989. In Poland, ING Bank Slaskisponsors the National Polish RadioSymphony Orchestra and, together with ING NN, the Warsaw Philharmonic.In the Netherlands, Belgium and theUnited Kingdom, ING has substantial art collections, and is considered a patron to national artists.

ENGAGING THE COMMUNITIES

Community relationsRelations with communities includeconsulting with national and localgovernments, non-governmentalorganisations, charities and regulatorson the issues that concern them. These stakeholder consultations takeplace throughout all levels of theorganisation, throughout all businessunits and at Group level.

Approximately 55% of ING’s businessunits have implemented formal policiesfor community relations and stakeholderdialogue. Many of the units that have nosuch policies do, nevertheless, conductcommunity relations on a case-by-casebasis or follow the regional or groupframework.

ING Real Estate seeks close cooperationwith local governments and communitiesbecause of the impact of its activities.This is especially applicable to the public-private partnerships with local authorities

in which ING Real Estate participates.Project Melbourne Waterfront City inAustralia is an example of this. ING RealEstate also develops projects selected bylocal citizens in close cooperation withthe local government, as is the case withprojects Zuidas Amsterdam and Plein 44 in Nijmegen.

NGO contactsA large number of non-governmentalorganisations (NGOs) around the worldare involved in environmental, socialand ethical issues. ING maintains regular contact with several of theseorganisations and gets involved withmany others on a case-by-case basis. For example during 2004, ING met withSOMO, a Dutch NGO that wants toincrease the understanding of corporatestrategy and their consequences forsocieties and the environment. INGprovided input and feedback to assisttheir research report The ING Group:CSR Policy and Practices. The report canbe found on www.somo.nl.

In 2004, ING engaged with NGOs dealingwith issues relating to ING’s role as afinancial services provider. NGOs wereinvited to discuss ING’s activities andpolicies in more depth to assess anynegative environmental or socialimpacts they may have. The discussionswill continue in 2005 to help build arelationship of mutual understanding.NGOs can help a company understandthe impact it has on society which thenenables that company to makeresponsible business decisions.

Social and environmental issues

Defence industryWith reference to a report published by a Belgium NGO (Netwerk Vlaanderen),ING was asked to provide information on its investments in a Singapore-basedcompany that allegedly produces anti-personnel landmines. Anti-personnellandmines are a controversial type ofweapon and illegal in most parts of theworld. ING immediately stated that it

does not wish to be involved in anti-personnel landmines. However, shouldthis be the case, ING would end anyinvolvement based on its BusinessPrinciples.

Internal research indeed confirmed thatsaid company most likely produces anti-personnel landmines. Therefore, INGdecided to sell its – albeit limited – stakein this company. This applies to both ING proprietary assets and third-partyassets invested in actively managed INGmutual funds.

The issue prompted our Executive Boardto review ING’s defence policy for 2005,both in the field of financing andinvestments. Based on this decision, ING established the following policywith regard to the defence industry: “With respect to the financing of, anddirect investment in, companies that are directly involved in manufacturing,maintenance and/or trade of weapons,ING abides by the applicable(international) laws and regulations. In addition, ING applies strict criteria for companies directly involved in themanufacturing, maintenance and/ortrade of anti-personnel landmines,cluster bombs, depleted uraniumammunition and biological, chemical or nuclear weapons. Trade finance inmilitary equipment and supplies mustcomply with NATO regulations and ispermitted only when there is an exportlicense from a European Union, UnitedStates or Canadian government as well.”

From now on, ING will make an explicitdistinction between standard militaryequipment and controversial weapons,like anti-personnel landmines andcluster bombs. ING will abstain fromfinancing controversial weapons.

Companies which are directly involved inmanufacturing, maintaining or tradingthese types of weapons will be excludedfrom new financing. Following theabove, an exception will be made forcompanies with limited involvement in

http://www.somo.nl


controversial weapons and mainlyinvolved in non-controversial activitiessuch as civil aircrafts. If so, we mayprovide financing for the non-controversial activities only.

In line with this financing policy, ING has also drawn up restrictions for assetmanagement. We will not invest ourproprietary assets in weapons-orientedcompanies that are directly involved in controversial weapons. ING offerssustainable mutual funds and portfolioscreening for customers who wish to exclude defence industrysecurities from their portfolio.

Another issue concerning defence in 2004was about ING’s financing of theIndonesian navy’s purchase of twocorvettes. The ships will be used toprevent piracy, drug traffic and illegalfishing in Indonesia’s territorial waters.The Dutch government supports thepurchase and will issue an export licenseif there are no reasons to deny suchlicense because of human-rights abuses.Several NGOs oppose the sale, arguingthat the vessels will be a financial burdenfor a poor country like Indonesia and thatthey might be used to suppress localpeople. ING takes a different view.

BTC pipelineThe BTC pipeline is an oil pipeline fromAzerbaijan to the Mediterranean Sea in Turkey. It was financed by a bankingsyndicate, of which ING is a member. In 2004, environmental groups drewattention to cracks that had appeared inthe coating used to protect the pipelinefrom corrosion. This problem wasresolved by BTC Co. ING is confident thatBTC Co. has and continues to addressthe matter of the pipeline coating

materials appropriately. It will bereviewed on an ongoing basis under thepipeline inspection and monitoring plan, which also comprises site visits by anindependent engineering consultant on behalf of the lenders.

Participation in international dialogueING Group participates in CSR andsustainability issues at a global level. In 2004, we continued our membershipof the World Business Council forSustainable Development and weparticipated in HRH Prince of Wales’Business and the Environmentprogramme. ING continued to be anactive member of the InternationalChamber of Commerce’s (ICC)commission on Business in Society.

The Round Table discussions betweenAmnesty International and a number of Dutch multinational companies,including ING, continued in 2004. A newRound Table initiative was launched, The Business and Human Rights Pages,which is a practical and informativeintroduction to the relevance of human-rights issues for business practices.

On a local level, 59% of our businessunits are represented in nationalorganisations, committees and/orworking groups that focus on the role of businesses in society, the communityand sustainable development.

CARE FOR THE ENVIRONMENT

Environmental policyING recognises that certain naturalresources are finite and must be usedresponsibly, and this is stated in ourBusiness Principles. We therefore pursuea two-pronged approach, external andinternal, to promote environmentalprotection. The external policy is aimedat anticipating developments in theenvironmental field related tocommercial services, and we aim tomanage the environmental risksresulting from these activities. Forinformation on how we manage theseissues in our business operations seepages 13 to 16 of the chapter Customers.

Direct environmental impactWith our internal environmental policy,we endeavour to control anyenvironmental burdens caused by ING.ING’s policy is to comply with all relevantenvironmental protection laws andregulations. As a financial servicesprovider, ING is mainly an officeorganisation. Consequently, we aim atreducing our environmental impacts in acost-efficient way, for example by usingless paper and energy.

Environmental performance dataEnvironmental management is theresponsibility of individual business unitsand that is why monitoring practicesvary per country. In the NetherlandsFacility Management measures energyusage by means of a Energy MonitoringSystem. During 2004, this systemimproved significantly and now includes the water usage as well.

ENVIRONMENTAL IMPACTS OF REAL ESTATE PROJECTS

ING Real Estate uses its own list of preferredmaterials in all projects (DUBO list). It has projects in which special attention is paid to environmentalaspects such as Ecoflex residences in IJsselstein, the Netherlands. The guiding principle during thedevelopment of these residences is the realisationof a low ‘EPN-value’ (a measure for energyconsumption). A glass core, facing south, isincorporated in the residences in which solar heat

is collected. This heat is used for the heating systemand to heat the tap water. The residences have anatural ventilation system which creates a healthyindoor climate. The houses contribute to a healthywater balance in the surrounding area as rainwateroff the rooftops is collected and used for irrigation.

SOCIETY(continued)

2.0OUR STAKEHOLDERS


Energy consumption

ING’s most direct impact on theenvironment is energy use. The majorityof business units have establishedenergy-efficiency programmes or aredeveloping these. We also investconsiderable amounts in technicalapplications that save energy.

An example of our efforts to reduceenergy is ING Real Estate that usesgroundwater for the storage of warmthand cold to reduce the energy impactand CO2 emissions. Employees can also contribute to energy savingmeasures, which is what ING stimulatedin the campaign ‘Werk groen, gewoondoen’ (Work green, just do it) aimed atmore than 30,000 employees.

Compared to 2003, CO2 emissions due to energy use slightly decreased in 2004.This was mainly caused by the reductionof 122 KWh per FTE resulting in anaverage electricity use of 5,800 kWh perFTE in 2004.

Water usage

Water usage refers to the amount ofwater purchased from local watersuppliers or extracted from groundwater or other local sources. Most of the water used by ING is dischargeduntreated to sewer and municipaltreatment plants. Almost one third

of the business units not yet started a water consumption efficiencyprogramme. The quality of monitoringalso varies significantly among thebusiness units. The performance data has been restricted to business unitsoperating in Europe to warrant reliability.

IMPLEMENTATION STATUS OF ENERGYEFFICIENCY PROGRAMMESdata based on CSR survey covering 96,000 FTEs

Established 58%In development 33%Not started 9%

27

0

50

100

150

200

250

2002 2003 2004

ENERGY CONSUMPTION IN CO2

in million kilogrammes

Fuel oilNatural gasElectricity

300

ENERGY CONSUMPTION IN 2004

Total Per FTE Total Per FTE

Electricity 530 mln kWh 5,800 kWh 240 mln kg C02 2,628 kg C02

Natural gas 19.8 mln m3 239 m3 35 mln kg C02 426 kg C02

Fuel oil 1.8 mln litres 28 litres 5 mln kg C02 75 kg C02

District heating 166,000 GJ 3.8GJTotal 280 mln kg C02 3,129 kg C02

WATER USAGE

In m3 2004 2003Total Per FTE Total Per FTE

Netherlands 347,836 10.3 424,153 12.2Other Europe 434,347 16.5 424,816 17.3Total Europe 782,183 13.0 848,969 14.3

IMPLEMENTATION STATUS OF WATER CONSUMPTION EFFICIENCY PROGRAMMESdata based on CSR survey covering 96,000 FTEs


27

Based on partly estimated data from CSR survey covering 65,400 to 91,400 FTEs, depending on the

energy source. For the calculation of CO2 we have used emission factors that are applicable to the

average Dutch situation.


Paper purchase

As a large consumer of paper ING has a direct impact on the environment.Business units representing 95,791 FTEsestimated that they had purchased a

total of 17 million kilogrammes of paperin 2004. The vast majority of the paperused in office is collected for recycling.

Waste disposal

The total amount of waste discarded byING in 2004 is estimated at 16.3 million kg.Only 0.3% of ING’s total estimated wasteis considered hazardous. ING’s wastelargely consists of paper and cardboard,accounting for 50% of the total, andresidual or domestic waste, whichaccounts for 43% of the total waste.

Waste is composted, reused, recycled,recovered, incinerated or used for land-filling. We prefer to recycle waste as thishas the least impact on the environment.Currently, an estimated 70% of ING’stotal waste is recycled.

Transportation

Not many business units haveimplemented transport managementprogrammes. Registration of travelledkilometres for business purposes is not a common practice within ING.

Transport is one of the causes ofgreenhouse gas emissions such as carbondioxide (CO2). The CO2 emissions frombusiness travel by car have been reducedcompared to 2003. Airtravel is notincluded in this report.

IMPLEMENTATION STATUS OF PAPER REDUCTION PROGRAMMESdata based on CSR survey covering 96,000 FTEs


27

IMPLEMENTATION STATUS OF WASTEMANAGEMENT PROGRAMMESdata based on CSR survey covering 96,000 FTEs


27

0

20

40

60

80

100

DESTINATION OF THE WASTEin percentages

RecycledCompostedDumped on landfillIncineratedOther or unknown

70%2%

19%3%6%

IMPLEMENTATION STATUS OF TRANSPORTATIONMANAGEMENT PROGRAMMESdata based on CSR survey covering 96,000 FTEs


27

PAPER PURCHASE

In kilogrammes 2004 2003Total Per FTE Total Per FTE

Office paper 8,566,000 89Organisational printed matters 3,993,000 42Commercial printed matters 4,528,000 47Total 17,087,000 178 12,840,000 158

To get more insight in our paper consumption, a distinction between different types of paper was made in the data collection process: office paper, which is described as multifunctional paper for copying and printing;organisational printed matters for example letterheads, pre-printed forms, envelopes, continuous paper formssuch as account statements for customers; and commercial printed matters such as marketing material andpublications for internal and external distribution. Because of this distinction the 2004 figures cannot becompared to the 2003 figures.

BUSINESS TRAVEL BY CAR

No. FTE km km/FTE kgCO2

2003 65,000 74,500,000 1,100 14,145,0002004 69,000 70,000,000 1,000 13,369,000

CO2 emmission caused by car-travel is calculated by a conversion tool on the internet:

www.TreesForTravel.nl

http://www.TreesForTravel.nl

REPORTINGPRINCIPLES

3.0REPORTING GUIDELINESAND VERIFICATION



SCOPE OF THE REPORT

In this year’s edition of ING in Society, ING reports on its global activities andperformance in the field of corporateresponsibility. The report includesqualitative and quantitative informationabout the 2004 calendar year. It isstructured around ING’s main stakeholdergroups: customers, shareholders,employees, business partners and societyat large. The chapter Society includesseparate sections on our communityrelations and in-house environmentalcare. The report is supported bywww.ing.com/CorporateResonsibility,which provides additional information on policies, performance data and localpractices.

Topics in the reportIssues reported upon were selectedbased on topics identified as relevant inING’s relations with its stakeholders, asdescribed in ING’s Business Principles of November 2004 (see inside backcover), and on the sustainabilityreporting guidelines 2002 of the GlobalReporting Initiative (GRI) and itssupplement for the financial servicessector.

GRI contents indexOn the internet there is a GRI ContentsIndex, which links all GRI topics to therelated text, graphics or tables. If GRIcore indicators are not applicable to ING,according to SPI-Finance or according tous, this will be stated explicitly.

Boundaries of the reportThere is no global managementinformation system for corporateresponsibility comparable to the systemused for obtaining financial informationfor the annual report. Consequently, theinformation in this report was gatheredat different levels within theorganisation. As a result, the coverageand quality of the report may differ foreach specific reporting element orperformance indicator.

The descriptions of corporate policies,procedures and monitoring systems with global coverage were taken frominternal policy papers, internal reportsand interviews with heads of thecorporate departments responsible forspecific corporate-responsibility-relatedissues. This applies mainly to compliance,credit-risk management, operational riskmanagement, corporate procurementand human resources. Performance datacollected via corporate systems is alsoincluded in the report. Almost all financialinformation is based on the consolidatedfigures of the annual report 2004.

The information on the implementationcorporate-responsibility-related policiesand the performance data from ourbusiness units worldwide were obtained from an internal Corporate SocialResponsibility (CSR) survey. A total of 70business units completed the CSR survey.Together these respondents represent104,152 FTEs out of the total number of112,196 FTEs working for ING year-end2004. The reference boundary for ING in Society 2004 is therefore set at 93%.Reporting entities covered in the internalCSR survey extended from 28 countries in2003 to 33 in 2004, including ING jointventures in India and China.

The pie chart illustrates that the coverageis a fair geographical representation ofING as a company. A list of participatingentities and countries of operation canbe found on our website.

Additional information was tracedthrough the internationalcommunications network, personalinterviews and publicly availableinformation on ING, such as pressreleases and news articles on INGinternet sites.

Ernst & Young Accountants has reviewedthe reliability of the information in thisreport. Its assurance report can be foundon page 35.

Consistency in reporting process In 2004, there were no significantrestatements and there have been nosignificant changes in the measurementmethods applied to key economic,environmental and social data.

Although we are confident in theoverall reliability of the data reported,we recognise that some of these datawere subject to a degree of uncertaintythat relates to the limitations associatedwith measuring, calculating orestimating data.

Compared to 2003, we have been ableto enlarge the share of informationgathered at corporate level. The internalCSR questionnaire used to gather thelocal data, has been reviewed, testedand improved.

COVERAGE CSR SURVEY COMPARED AGAINST TOTAL INGin percentages of FTEs

Netherlands Belgium Rest of Europe North America Latin America Asia Australia

3012

11

19

16

10

2

3 29

12

18

16

10

12

Outer circle: Total ING, representing 112,196 FTEsInner circle: CSR survey respresenting 104,152 FTEs (93% of ING)

For reporting principles we havemore in-depth informationavailable on:

• GRI contents index• Boundaries of the report




ASSURANCE REPORT3.0REPORTING GUIDELINESAND VERIFICATION

ENGAGEMENT AND RESPONSIBILITIES

We have received the assurance engagement to review the ‘Corporate ResponsibilityReport 2004’ of ING Groep N.V. (ING). The scope of this report and the reportingprinciples, including any inherent limitations that could affect the reliability ofinformation, are set out on page 34 of the report. This report is the responsibility ofthe management of ING. Our responsibility is to express an independent opinion onthe accuracy and adequacy of this report. A review is aimed at obtaining a moderatelevel of assurance for our conclusions. The extent of evidence gathering procedures isless than that for an audit and therefore a review provides less assurance than anaudit.

SCOPE OF WORK PERFORMED

We conducted our review in accordance with the standard for assuranceengagements generally accepted in the Netherlands, as issued by the InternationalFederation of Accountants and the Royal Netherlands Institute of Registeraccountants (Royal NIVRA), the Exposure Draft of Royal NIVRA’s Assurance Standard‘Assurance engagements relating to sustainability reports’ and the Dutch Code ofProfessional Conduct for Accountants (GBR-1994).

Our principal review procedures were:• Obtaining an understanding of the sector and its relevant social responsibility

issues;• Assessing the acceptability of the reporting principles used and significant

estimates and calculations made in preparing the ‘Corporate ResponsibilityReport 2004’ of ING;

• Performing analytical procedures at both Group and Business Unit level to assess the quantitative data;

• Examining, on a test basis, evidence supporting the descriptive and quantitativedata provided, and studying relevant company documents;

• Conducting interviews with responsible company officers, mainly for the purpose of assessing the plausibility of the descriptive and quantitative data in the ‘Corporate Responsibility Report 2004’ of ING;

• Evaluating the overall view of the ‘Corporate Responsibility Report 2004’ of ING,in part by testing its contents against the reporting guidelines set out in theSustainability Reporting Guideline issued by the Council for Annual Reporting inthe Netherlands and the guidelines issued by the Global Reporting Initiative.

CONCLUSIONS

Based on the procedures performed, nothing came to our attention that leads usnot to believe that:• the description of policy and measures in the ‘Corporate Responsibility Report

2004’ of ING properly reflects the efforts made in 2004;• the quantitative data included in the ‘Corporate Responsibility Report 2004’ of

ING are free of material misstatement.

Amsterdam, 18 April 2005

for Ernst & Young Accountants

Rob Lelieveld Jan Nooitgedagt

GENERAL INFORMATION


ING PUBLICATIONS– Annual Review, in Dutch and English;– Annual Report, in Dutch and English;– Corporate Responsibility Report, in Dutch and English;– Annual Report on Form 20-F, in English

(in accordance with SEC guidelines);– ING’s implementation of the Dutch Corporate

Governance Code, in Dutch and English.

These publications are available on www.ing.com. The publications can be ordered on the internet:www.ing.com/group, Order ING Publications button, by fax: +31 411 652 125, or by mail: P.O. Box 258, 5280 AG Boxtel, the Netherlands.

TEXT AND PRODUCTIONING Groep N.V., Public Affairs, Amsterdam

DESIGN AND PRODUCTIONAddison Corporate Marketing,London

PHOTOGRAPHYMarco Sweering, Amsterdam

PRINTINGPlantijnCasparie Capelle a/d IJssel

ING GROEP N.V.Amstelveenseweg 500, 1081 KL AmsterdamP.O. Box 810, 1000 AV AmsterdamThe NetherlandsTelephone +31 20 5415411Fax +31 20 5415611Internet: www.ing.com

Commercial Register of Amsterdam,no. 33231073

DISCLAIMERThis ING Group Corporate Responsibility Report is made for the purpose ofinforming our stakeholders and to give details of ING’s commitment regardingcorporate responsibility. Nothing in this document is intended to extend oramend ING’s existing obligations to its clients, shareholders or other stakeholders.All policies, procedures, guidelines, statements or anything similar that have beenmentioned in this report are intended for ING internal purposes only, and underno circumstance should they be construed as creating any rights whatsoever tothird parties. In assessing compliance with any of the policies and guidelines, thestandards applied are subjective and any decision in relation thereto remainswithin ING’s discretion. ING does not accept liability for whatever consequencesmay result from its not adhering to these policies, procedures, criteria,instructions, statements and guidelines.

ING reserves the right to change, amend or withdraw policies, procedures,guidelines and statements at its discretion at any time and can, at its owndiscretion, decide to make available to third parties (details of) policies,procedures, guidelines, statements or anything similar that have beenmentioned in this report.

This report refers, by hyperlinks or other mean’s to information provided by thirdparties. The reasonableness, accuracy or completeness of such information hasnot been verified by ING and links to other sites do not constitute ING’s approvalor endorsement of such sites or their products or advertisements. ING accepts noliability whatsoever in connection with any such information that has been orwill be provided by third parties.

http://www.ing.com

http://www.ing.com/group

http://www.ing.com

ING BUSINESS PRINCIPLES

WE ARE COMMITTEDTO OUR INTEGRITYING expects the highest levels of personalconduct by all its employees, whatevertheir position. It is acknowledged that alleffective business relationships, inside aswell as outside ING, depend on honesty,integrity and fairness.

An ING employee...Respects the rule of law and abides byall applicable laws and regulations.

Avoids doing business with anyindividual, company or institution if that business is connected with activitieswhich are illegal or which could beregarded as unethical.

Handles information with care. Inparticular, the security and confidentialityof all proprietary information anddataprocessing, including customers’personal confidential information, mustbe safeguarded in accordance withapplicable laws and regulations. Properand complete records must be made of all transactions on behalf of ING.

Does not accept gifts or personalbenefits in connection with a businessrelationship as a result of which he/shemight appear to be under an obligation.

Does not accept or solicit personal offersor payments, nor does he/she makessuch offers or payments to third parties.Bribery of any form is unacceptable.

Avoids any contacts that might lead to,suggest or create an appearance ofconflict of interest between personalactivities and the business of the Group.

May not enter into – and must avoid theappearance of engaging in – securitiestransactions based on inside informationor misuse of confidential information.

WE AIM FOR AN ABOVE AVERAGE RETURNAs a commercial organisation, webelieve that we must provide an aboveaverage return for our shareholders. We support the market economy as themost effective means to achieve the bestreturns for our customers, investors andemployees, as well as for the countriesand territories where we operate.

However, the best markets flourish onlywithin an ethical framework. No one at ING may disparage a competitor, or use unethical means to obtain anyadvantage for ING.

WE ARE OPEN AND CLEARWithin the bounds of commercialconfidentiality, we attach greatimportance to open and transparentcommunications with all our stakeholders.

ING makes every effort to ensure full,complete, fair, accurate, timely andunderstandable disclosures in reportsand documents we file with or submit to our regulators, as well as in otherpublic communications we make.

For our customers we endeavour toprovide clarity in prices and conditionsof our products and services.

WE PROMOTE SUSTAINABLEDEVELOPMENT AND RESPECT HUMAN RIGHTSIn doing business, we accept ourresponsibility for the sustainabledevelopment of society. The conditionswe set for our core activities are first of all economic. While respecting thewishes of our clients, we also take intoaccount a range of social, ethical andenvironmental considerations.

ING supports the aims of the UnitedNations Universal Declaration of HumanRights and endeavours to apply itsprinciples throughout its operationsworld-wide.

We recognise that certain naturalresources are finite and must thereforebe used responsibly. We have a two-pronged approach. In our externalbusiness dealings we aim to anticipatedevelopments in the environmental field related to commercial services, andwe aim to manage the environmentalrisks resulting from these activities.Internally, we endeavour to control any environmental burdens caused by ING itself.

WE RESPECT EACH OTHERRespect for the individual is the basis for all contacts between ING and itsstakeholders.

ING encourages diversity by creating anenvironment where everyone has theopportunity to fully participate inachieving business and personal success, and is valued for his or herdistinctiveness.

We feel that our management and staffshould reflect our customer base andthe local communities where we areactive. That is why our personnel policyis based on equal opportunities and a non-discriminatory policy.

Personal career development foreveryone at ING is encouraged throughprogressive personnel and trainingarrangements. ING aims to provide all itsemployees with safe conditions of workand competitive terms of employment.

WE ARE INVOLVED IN THECOMMUNITIES WE OPERATE INGood relations with local communitiesare fundamental to ING’s long-termsuccess. Our community relations arebased on mutual trust, respect andactive partnership. We demonstrate our commitment by making donations,sponsoring and supporting numeroussocial activities. All ING employees areencouraged to play a positive role incommunity activities.

ING is a commercial organisation andour activities are business oriented.Therefore ING does not intervene inpolitical matters, nor do ING companiesmake gifts or donations to politicalparties or candidates for political office.However, within the legitimate role of business, through all available,legitimate means and after carefulconsideration, ING reserves the right tospeak out on matters that affect ourbusinesses, employees, shareholders,and/or customers. In countries wherethere is a legal framework to do so, ING reserves the right to facilitateemployee contributions to politicalparties or candidates for political office.

Visit our website www.ing.com/CorporateResponsibilityto download the entire document.




1.0WHO WE ARE

www.ing.com220189

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Documents

ING IN SOCIETY - UAB BarcelonaIt goes without saying that the new Executive Board wants to continue building a culture within ING in which behaving according to sound business ethics