Question 1

Broad collaboration on responsible business practices

Accepted Answer

Íslandsbanki’s Sustainability Policy aims at making the Bank a model of exemplary operations in the Icelandic business community, based on internationally recognised environmental, social, and governance (ESG) criteria. The Bank aims to be a leader in the area of sustainable development and a catalyst for positive social action, moving Iceland forward by empowering its customers to succeed. To this end, the Bank intends to initiate broad collaboration on responsible business practices that both contribute to sustainable development in the Icelandic economy and support the Government’s Climate Action Plan, while also supporting the SDGs.

Question 2

Comprehensive sustainability framework

Accepted Answer

Íslandsbanki’s Sustainability Policy creates a comprehensive framework for its activities in the area of sustainability. It also maps out the Bank’s Policy for environmental affairs and responsible lending, investments, purchasing, and grants, as well as integrating with and supporting the Bank’s other policies. Íslandsbanki sets quantifiable ESG targets in its operations and discloses its performance relative to targets in a separate report issued concurrent with the Bank’s annual financial statements.  The Bank emphasises keeping key stakeholders informed of the existence and purpose of this Policy.

Question 3

Environmental factors

Accepted Answer

Íslandsbanki has signed Festa and the City of Reykjavík’s 2015 Pledge for Action in support of the Paris Agreement, in a commitment to reducing greenhouse gas emissions.  Since then, the Bank has emphasised evaluating and minimising the negative impact its activities may have on the environment.  With reference to this, the Bank is determined to reduce systematically the greenhouse gas emissions related to its activities, reduce its energy consumption, and lower the ratio of unsorted waste generated by its activities.  The Bank will measure its carbon footprint annually, set targets for reducing carbon emissions, and implement mitigating measures to offset emissions. Íslandsbanki sets environmental targets that it publicises, and it discloses its performance in annual reports.

Question 4

Governance

Accepted Answer

Íslandsbanki’s Board of Directors is committed to excellence in governance and to ensuring that Bank’s governance practices are in compliance with the applicable regulatory framework, internationally recognised benchmarks, and best practice in governance. Sound governance and the internal organisational structure shall promote effective and prudent management of the Bank, as well as preventing conflicts of interests. Based on these commitments, the Bank complies with the relevant rules on governance, including acts of law, governance guidelines, and other relevant rules and guidelines from supervisory bodies, as well as maintaining an effective system to monitor compliance with these rules. The Bank’s subsidiaries shall follow comparable governance policies where applicable. In order to fulfil its obligation to maintain sound governance, the Bank has adopted the following principles for decision-making: The Bank’s decisions protect its interests and those of its stakeholders, in compliance with current laws, rules, charters, and contractual obligations. Decisions are taken in an effective manner by the appropriate parties (shareholders, Board members, managers, or employees), based on these parties’ professional duties, areas of responsibility and interest, expertise, knowledge, and access to relevant information. Decisions are taken on the basis of the best information available at any given time, following an appropriate examination of the matter in hand. The Bank shall maintain a special decision-making model that maps out the requirements for taking major decisions. The Bank complies with the relevant regulatory instruments on personal data protection and treatment. Furthermore, it has adopted protocols and codes of conduct for its Board, managers, and employees.

Question 5

Government ownership policy

Accepted Answer

Íslandsbanki is partially owned by the Icelandic Government, whose ownership policy states that those involved in operating financial institutions on behalf of the Government shall “aspire to lead in the areas of sound governance, business ethics, and social responsibility.” The policy also states that the Bank shall “set forth a detailed policy for environmental issues, sustainable development, and social responsibility, and publicise it.”

Question 6

Grants

Accepted Answer

Íslandsbanki supports good causes in the local community and internationally, either through direct grants or through cooperative efforts. The Bank makes a particular attempt to support causes that are clearly linked to the SDGs it has chosen to promote. In conferring grants, the Bank observes non-discrimination and transparency and takes steps to prevent conflicts of interests.

Question 7

Íslandsbanki as a leader in service to customers

Accepted Answer

Alongside its vision of being a leader in service to customers, the Bank will focus on integrating sustainability considerations into its activities, in addition to its profit objectives. The Bank will take account of ESG criteria in its risk management and will explore opportunities to take advantage of green investment opportunities. Íslandsbanki wishes to increase the general public’s financial knowledge and interest in the subject and, to this end, it offers interesting and accessible seminars on finance and economics.

Question 8

Responsible investment

Accepted Answer

Responsible investment aims at taking account of ESG criteria when investing in companies and projects, in order to manage risk with an eye to sustainable development. This creates the basis for better grounded investment decisions based on long-term interests. The responsible investment policy applies to Íslandsbanki’s own investments, as the Bank is a participant in IcelandSIF, the Iceland Sustainable Investment Forum. The Bank encourages its subsidiaries to adopt comparable policies or criteria for responsible investment.  In evaluating its asset portfolio with respect to ESG criteria, the Bank will use the methodology it considers most suitable at any given time. Íslandsbanki will encourage its customers to follow the policy in their own investments. The Bank believes that this is consistent with its objective of offering excellent service and protecting its customers’ long-term interests as well as possible. If it should happen that Íslandsbanki acquires assets that in some way are inconsistent with its responsible investment policy — for instance, through financial restructuring or appropriation of collateral — the Bank will endeavour, insofar as it can, to wield its influence with accordance with the Sustainability Policy.

Question 9

Responsible lending

Accepted Answer

Responsible lending is based on gathering reliable information and providing sound advice, and on building trust and confidence between the Bank and its customers. Loans shall always be processed without reference to nationality, gender, race, religious beliefs, or other comparable factors. When taking lending decisions and assessing and pricing risk, the Bank shall consider sustainability and ESG criteria, as well as other risk factors. Through its lending activity, the Bank is committed to supporting companies, individuals, and households in their efforts to adopt more sustainable practices. In particular, the Bank intends to participate actively in financing the transportation energy transformation.

Question 10

Responsible purchasing

Accepted Answer

As a large purchaser of goods and services, Íslandsbanki is in a position to act as a positive force in society in its purchasing and procurement activities. The Bank does this in part by considering environmental, social, and governance factors in its purchasing. Furthermore, the Bank promotes effective competition and focuses on economy, non-discrimination, and transparency in its purchasing activities.  The Bank takes the appropriate measures to prevent discrimination on the basis of subjective factors. Íslandsbanki has adopted internal protocols for purchasing and takes care to comply with statutory and regulatory provisions at all times. The Bank’s responsible purchasing policy applies to all of its procurement activity.

Question 11

Role of financial institutions in community

Accepted Answer

Financial institutions play an important social role as a pillar of the economy and, as such, they must shoulder responsibility and satisfy ever-increasing requirements for greater sustainability in their operations. Sustainability involves meeting the demands of the present while simultaneously considering the needs of coming generations as regards environmental and social issues, thereby creating a general consensus on continuing improvement in standards of living.

Question 12

Short-term profits versus long-term interests

Accepted Answer

Companies that focus solely on short-term profits run the risk of jeopardising their own long-term interests and return on equity. Firms that link sustainability with their core operations, however, can benefit in a variety of ways. Such benefits can entail improved risk management, lower costs, easier access to capital, increased innovation, and stronger business relationships. Furthermore, firms that emphasise sustainability are more successful at attracting and retaining qualified personnel.

Question 13

Social factors

Accepted Answer

Íslandsbanki emphasises equality, diversity, and inclusion in all of its activities.  The Bank’s equal pay policy emphasises that the utmost gender equality must be observed in connection with decisions on remuneration. Furthermore, the Bank aims to ensure the most equal gender ratio possible among its senior management. The Bank also attempts to equalise the gender ratio in terms of full-time position equivalents in those departments where male-female ratios are unequal.  The Bank has adopted a policy and an action plan to combat bullying, sexual and gender-based harassment, and violence.  Emphasis is placed on customers’ active participation in the Bank’s services, including investment in digital solutions. Íslandsbanki emphasises respect for human rights and avoiding business transactions linked to any type of human rights violations, including discrimination on the basis of gender, religion, or race; inequality in the labour market; and slavery and child labour.  The Bank emphasises creating a positive work environment and prioritises health and safety. All employees have access to anonymous reporting options for inappropriate conduct.

Question 14

UN SDGs

Accepted Answer

The United Nations (UN) Sustainable Development Goals (SDG) are based on three pillars of sustainable development: economic, social, and environmental. Financial institutions’ operations touch on many different aspects of the economy and inevitably affect most of the SDGs. The SDGs function as an integral whole; however, in order to sharpen its focus, Íslandsbanki has chosen to give particular support to four of them: Quality Education; Gender Equality; Industry, innovation, and Infrastructure; and Climate Action.

Sustainability objectives through 2025	Secondary objectives for 2022	Relation to SDGs
Achieve full carbon neutrality no later than 2040*	40% decline in operations-related carbon footprint from 2019-2022 Present officially validated science-based targets for short- and medium term financed emissions	Climate action
Offer our customers green and sustainable products	Lend additional 40 bn ISK sustainable loans Further increase customer access to and awareness of sustainable savings options	Quality education Gender equality Industry, innovation, and infrastructure Climate action
Encourage equality and inclusion through products and services**	Identify opportunities to empower women or disadvantaged target group through product offering, education programs and other services Enhance tracking of lending to SMEs that fit the SFF Social Project category of Equality and empowerment	Gender equality
Further increase diversity and inclusion in the workplace**	Establish a diversity council (jafnréttisráð) and host at least eight diversity focused training events Bring the share of women employees to 25% in investment banking and 30% in IT	Quality education Gender equality
Work with suppliers and partners that champion sustainability	Meet with >10 key suppliers to discuss sustainability performance and emission reduction targets Incorporate sustainability performance as a minimum 10% weight into all formal tender processes	Quality education Gender equality Industry, innovation, and infrastructure Climate action
Assess sustainability risk, define responsibility, and increase information disclosure	Disclose scope 1, 2 and 3 GHG emissions in 2021 to the Carbon Disclosure Project (CDP) Increase % of ESG assessed credit exposure from 34% to 70% (excluding lending to individuals and small enterprises which are not in scope)	Quality education Gender equality Industry, innovation, and infrastructure Climate action
Place special emphasis on four of the UN SDGs	Run a refined sustainability calendar engagement with employees throughout the year Aim for >60% participation in Helping Hand volunteering program, encouraging link to the SDGs	Quality education Gender equality Industry, innovation, and infrastructure Climate action

Sustainability Policy and goals

Íslandsbanki Sustainability Policy

Íslandsbanki's objective is to be a model of exemplary operations

Íslandsbanki as a positive force in society