2. Our Structure, Operations and Supply Chains

A. OUR STRUCTURE

The Corporation is a leading provider of wealth management, asset servicing, asset management and banking solutions to corporations, institutions, families and individuals. The Corporation is a financial holding company conducting business through various U.S. and non-U.S. subsidiaries, including the Bank.

The Bank is an Illinois banking corporation headquartered in Chicago and the Corporation’s principal subsidiary. Founded in 1889, the Bank conducts its business through its U.S. operations and its various U.S. and non-U.S. branches and subsidiaries, including the Australian, Canadian, and U.K. branches as outlined in Annexure A.

At December 31, 2023, the Bank had consolidated assets of US$150.3 billion and common bank equity capital of US$11.6 billion.

The Corporation was formed as a holding company for the Bank in 1971. The Corporation has a global presence with offices in 24 U.S. states and Washington, D.C., and across 22 locations in Canada, Europe, the Middle East and the Asia-Pacific region.

As of December 31, 2023, the Corporation had consolidated total assets of US$150.8 billion and stockholders’ equity of US$11.9 billion.

At December 31, 2023, Northern Trust employed approximately 23,100 full-time equivalent employees. The regional breakout of our employee base is 42% Asia-Pacific, 41% North America and 17% Europe, Middle East and Africa. Specifically, in Australia we had 311 employees, in Canada we had 109 employees, and in the U.K. we had 1,489 employees.

The large majority of our employees are full-time, permanent employees in professional or administrative desk-based roles.

An overview of the types of positions within the Bank is set out below:

Figure 1: Northern Trust Locations as of December 31, 2023

_{^{*In the U.S., Northern Trust has offices in 24 states and Washington D.C. Its headquarters is located in Chicago, Illinois.}}

B. OPERATIONS

BUSINESS OVERVIEW
Northern Trust focuses on managing and servicing client assets through its two client-focused reporting segments: Asset Servicing and Wealth Management. Asset management and related services are provided to Asset Servicing and Wealth Management clients primarily by the Asset Management business.

Asset Servicing is a leading global provider of asset servicing and related services to corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors around the globe. Asset servicing and related services encompass a full range of capabilities including but not limited to: custody; fund administration; investment operations outsourcing; investment management; investment risk and analytical services; employee benefit services; securities lending; foreign exchange; treasury management; brokerage services; transition management services; banking; and cash management. Client relationships are managed through the Bank and the Bank’s and the Corporation’s other subsidiaries, including support from locations in North America, Europe, the Middle East, and the Asia-Pacific region. At December 31, 2023, total Asset Servicing assets under custody/administration (AUC/A), assets under custody, and assets under management were US$14.36 trillion, US$10.88 trillion, and US$1.03 trillion, respectively.

Wealth Management focuses on high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately-held businesses in its target markets. In supporting these targeted segments, Wealth Management provides trust, investment management, custody, and philanthropic services; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking. Wealth Management also includes Global Family Office, which provides customized services, including but not limited to: investment consulting; global custody; fiduciary; and private banking; family office consulting, and technology solutions, to meet the complex financial and reporting needs of ultra-high-net-worth individuals and family offices across the globe.

Wealth Management is one of the largest providers of advisory services in the United States, with AUC/A, assets under custody, and assets under management of US$1.04 trillion, US$1.03 trillion, and US$402.5 billion, respectively, at December 31, 2023. Wealth Management services are delivered by multidisciplinary teams through a network of offices in 19 U.S. states and Washington, D.C., as well as offices in London, Guernsey, and Abu Dhabi.

Asset Management, through the Corporation’s various subsidiaries, supports the Asset Servicing and Wealth Management reporting segments by providing a broad range of asset management and related services and other products to clients around the world. Investment solutions are delivered through separately managed accounts, bank common and collective funds, registered investment companies, exchange traded funds, non-U.S. collective investment funds, and unregistered private investment funds. Asset Management’s capabilities include active and passive equity; active and passive fixed income; cash management; multi-asset and alternative asset classes (such as private equity and hedge funds of funds); and multi-manager advisory services and products. Asset Management’s activities also include overlay services and other risk management services. Asset Management operates internationally through subsidiaries and distribution arrangements and its revenue and expense are fully allocated to Asset Servicing and Wealth Management. As discussed above, Northern Trust managed US$1.43 trillion in assets as of December 31, 2023, including US$1.03 trillion for Asset Servicing clients and US$402.5 billion for Wealth Management clients.

OTHER ACTIVITIES: Corporate Philanthropy is an important element of our business. Our 2023 Philanthropic Impact Report³ describes our significant philanthropic works during the year.

Northern Trust is committed to broadening opportunities to achieve long-term financial success for those who have been marginalized. Deploying a long-term community investment strategy designed to drive individual advancement and broader wealth creation, Northern Trust is focusing its resources, capabilities, and business expertise on four key areas of fundamental impact, namely food, housing, healthcare and education. These areas, when strengthened from the start, enrich our communities and the lives of everyone in them.

In 2023, Northern Trust supported more than 2,000 registered charities and non-governmental organizations across the globe with nearly US$16 million donated to broaden opportunities. In the past decade, Northern Trust has donated over US$170 million and provided over 1 million hours of volunteer time globally.

C. SUPPLY CHAIN

In 2023, Northern Trust engaged over 3,100 direct suppliers.⁴ Our procurement spend totaled US$2.5 billion. As the principal subsidiary of Northern Trust, the Bank’s suppliers comprise the following broad categories:

Professional service providers such as business and strategy consultants, recruitment agencies, legal counsel, and training and insurance providers;
Suppliers supporting the Bank’s client-servicing requirements, including sub-custodians, brokers and distributors; and
Other support service providers including information technology (IT), market data, communications equipment, software, utilities, catering, cleaning, security and office equipment suppliers.

Northern Trust suppliers range in size and include publicly traded organizations and privately owned firms, which also have extensive global supply chains. A centralized procurement function manages procurement globally. Each of the Bank’s branches and subsidiaries around the world engage a combination of local suppliers, domiciled in the jurisdictions where they operate, and global suppliers of Northern Trust. Suppliers are contracted on a combination of long-term, short-term and one-off bases.

During 2023, the Bank continued to use the automated supplier due diligence tool, 360 Third-Party Risk Management Platform (Platform) from third-party vendor, Ethixbase, to assess Modern Slavery risk in its suppliers.⁵

The Platform relies upon a Modern Slavery Questionnaire, focused on five risk factors: (a) jurisdiction; (b) industry; (c) product; (d) workforce characteristics; and (e) risk-mitigating measures implemented by the supplier. The analytics applied to the information gathered result in each supplier being assigned a Modern Slavery risk rating.

The geographic footprint of these suppliers is shown in Figure 2 below. The map is based on the responses of those suppliers that have completed the Modern Slavery Questionnaire to date. When suppliers of all of our locations are considered, the significant majority of our suppliers are headquartered, and have operations, in the United States.

Figure 2: Geographic Footprint of our Suppliers as of December 31, 2023