Landsbankinn's Sustainability Policy

Our Sustainability Policy extends to all divisions of the Bank, sets out our key focus as regards sustainability and describes how we will implement sustainability in our operation. The policy addresses the UN SDGs, climate concerns, social issues, governance, ESG risk rating, responsible investment and responsible lending.

Goals are instrumental to achieving success and sustainability is no exception. We have challenged ourselves with ambitious goals which we review regularly and are based on the Bank’s Sustainability Policy. Landsbankinn’s disclosure is also linked to its sustainability goals and we publish information about our progress, both in order to promote transparency and to share information.

Goal 1: Be informed and inform about the Bank’s impact on sustainability

We intend to be leading in disclosure on sustainability. This requires that we:

• Publish an annual GRI report.
• Discuss our climate risk in our Pillar III risk report according to the guidelines of the Task Force for Climate related Financial Disclosure (TCFD).
• Publish our emission figures, including emissions from our loan book under the PCAF methodology.

Sustainability-related disclosure is likely to increase in the near future, including under the SBTi, our obligations as a PBAF member and with audited sustainability accounts, including the GRI report and emission accounts, both of which are audited with reasonable assurance by Deloitte.

Goal 2: Emphasise responsible lending

Issue Landsbankinn’s Sustainable Financing Label to 20 entities for eligible loans in 2023, all of which must meet the sustainability criteria set out in the Bank’s Sustainable Finance Framework. Loans that contribute to sustainable development are, all other things remaining equal, generally considered less risky. Having a large part of loans in our portfolio in that class is in the Bank’s interest.

Goal 3: Achieve a reduction in direct GHG emissions

We aim to reduce emissions under Scope 1, i.e. the Bank’s direct emissions, by 80% by 2025 compared with 2018 emissions and by around 100% in 2030. Landsbankinn shall also maintain its carbon neutral status under CarbonNeutral® from 2020 onwards.

Goal 4: Achieve a reduction in indirect GHG emissions

In 2022, we applied to join SBTi. In 2023, Landsbankinn intends to set goals to reduce indirect emissions using the SBTi guide for financial institutions and have them approved. We initially intended to have our goals approved in 2022 but that work was delayed.

Goal 5: Attain a gender ratio of executives that accords with set limits

By 2030, we want the gender ratio in our top management levels to maintain a balance of no more than 60% representation by one gender and aim to maintain that ratio once it is achieved. Top management breaks down into three groups: Managing directors, department heads and branch managers and other middle managers.

Goal 6: Measures to counteract discrimination - share information about EKKO

We intend to do more to show how we use the Bank’s EKKO policy to counteract bullying, sexual or gender-based harassment, and violence. Our Annual & Sustainability Report contains information about events reported to Human Resources and ratio of events measured in the Bank’s workplace

Goal 7: Review sustainability information.

All financial and sustainability information will be reviewed and analysed by a third party to the proper extent.

Current status:

• The GRI report and emission accounts are reviewed with reasonable assurance by Deloitte.
• The Bank’s PRB and PCAF reports are audited with limited assurance.
• Landsbankinn’s Sustainable Finance Framework is reviewed by a competent third party.
• The Bank’s green bond impact report is reviewed by a competent third party.

Goal 8: Direct business to responsible suppliers.

Our aim is that 80% of the cost of purchased services and goods be paid to suppliers who have committed to the Bank’s ethical guidelines by 2025 or who have adopted comparable rules.

Current status:

Ethical guidelines for suppliers were implemented at year-end 2021. At the same time, we set ourselves the goal of ensuring that 80% of the cost of purchased services and goods be paid to suppliers who has adopted the Bank’s guildeines or similar rules by 2025. We reached this goal already in 2022 and will focus on maintaining our goal of 80% compliance going forward.

Landsbankinn’s Sustainability Forum

Landsbankinn’s Sustainability Forum was held in Gróska 22 September 2022. The Forum was tailored to the needs of executives, business owners and investors. The aim of the Forum was for the audience to gain a better insight into the main issues and form a clearer idea of next steps in sustainable development for their company or investment. The keynote speaker was Tjeerd Krumpelman, Global Head of Business Advisory, Reporting & Engagement at ABN AMRO. ABN AMRO is a leader in sustainable financing and Tjeerd has a talent for presenting corporate sustainability issues in an accessible manner, drawing on his decades of experience with sustainability and the financial sector. Several other speakers presented on relevant issues from the standpoint of both Icelandic industry and academia.

Emissions from loan book

We know the total emissions from our credit portfolio. In 2022, we assessed GHG emissions from the Bank’s credit portfolio for the second time. We have participated actively in the development of the Partnership for Carbon Accounting Financials (PCAF) methodology. One of the main challenges banks have faced in the work to reduce their emissions is the assessment of their indirect environmental impact, as less than 1% of banks’ emissions is from their direct operation.

Around 350 financial undertakings have now committed to using the methodology in the assessment of their indirect environmental impact. In 2022, we also became a member of PCAF Nordic, a platform for financial undertakings in the Nordic Countries to adapt the methodology to their circumstances and for collaboration on the issues.

Impact on biodiversity

In 2022, we became the first Icelandic bank to join the Partnership for Biodiversity Accounting Financials (PBAF). The association is developing a standard to enable financial institutions to assess and disclose impact and dependencies on biodiversity of loans and investment. Biodiversity describes changes to ecosystems, species and genes in the world or in a certain area. Earth’s ecosystems are biodiverse systems that affect human welfare.

Operation again carbon neutralised

We have carbon-offset the Bank’s 2022 activity and received internationally acclaimed certification from CarbonNeutral® and the Bank’s operation was carbon-offset through sequestration or the reduction of GHG emissions. Working with Climate Impact Partners, we’ve purchased carbon credits that have undergone a strict certification process and have certainly led to carbon sequestration or avoidance of GHG emissions.

Responsible investment and responsible lending

We have emphasised responsible investment for a number of years now, as the strategy positively impacts return on investment in the long term and reduces operational risk. We are guided by the UN Principles for Responsible Investment (UN PRI). We wish to be a leader in responsible lending as well, as the methodology reduces operational risk for companies.

For more details, see the Bank’s Sustainability Policy.

Science-based climate targets

In 2022, we committed to participating in the Science-Based Targets initiative (SBTi) and intend to set targets for emission reductions. Using SBTi, we’ll be setting scientific and measurable emission targets based on real data from our operation. We aim to apply for and achieve approval for our targets from SBTi in 2023.

Impact report

In 2022, we published our initial Impact Report for green issuance. Investors in the Bank’s green bonds receive detailed information about the allocation of proceeds from the bonds and the resulting impact. Sustainalytics verified that the funds were allocated in accordance with the Bank’s sustainable finance framework.

Íslenski lífeyrissjóðurinn leading in sustainability

Pension fund Íslenski lífeyrissjóðurinn drew attention in 2022 for its sustainability efforts, which included new policies on sustainability and responsible investment that emphasis publication of sustainability data. The pension fund featured in large and well-known European magazine Investment and Pensions Europe.

Eignadreifing and Vaxtareikningur sjálfbær

We continued to offer sustainable investment methods in 2022, on the one hand with Eignadreifing sjálfbær sustainable asset allocation fund managed by Landsbréf and on the other with Vaxtareikningur sjálfbær sustainable savings account. Eignadreifing sjálfbær was launched in 2021. The fund considers ESG factors in its investment decisions. Vaxtareikningur sjálfbær sustainable savings account, also introduced in 2021, allocated deposits to the financing of projects that contribute to sustainable development. Our customers can use these investment channels to let their savings positively impact the environment and society.

Green vehicle loans

Landsbankinn supports the energy transition. Electric cars are an important aspect of the transition as their emission factor is lower and their operation more efficient, especially in Iceland. In 2022, we cancelled the borrowing charge on electric cars and offered a 0.6 percentage point discount on their financing.

Landsbankinn’s Sustainable Financing Label

We continued to offer sustainable financing to businesses. When a company has demonstrably met the criteria of sustainable financing, it can be issued with Landsbankinn’s Sustainable Financing Label. Each project must meet sustainability criteria and fall into one of the eleven categories defined in the Bank’s Sustainable Finance Framework. At the beginning of the year, we set the ambitious target of issuing the Label to 50 businesses. This proved a more complex undertaking than expected and, at year end, 18 businesses had been issued the Label, 15 thereof in 2022. We now aim to issue Landsbankinn’s Sustainable Financing Label to 20 companies in 2023, all of which must meet the criteria set out in the Sustainable Finance Framework.

Sustainalytic’s ESG risk rating

According to Sustainalytic’s ESG risk rating, we continue to lead the field on an international level. Our rating is slightly up between years - the goal is to achieve as low a rating as possible. Sustainalytics considers Landsbankinn at negligible risk of experiencing material financial impacts from ESG factors, on which the analysis is based.

Cybersecurity for senior citizens

In 2022, we published informative articles and hosted three seminars about cybersecurity, continuing our trend of sharing information and educating the public about cybersecurity that began in 2016. Two of the seminars we organised were in collaboration with the Senior Citizens’ Society of Reykjavík and Environs. Providing relevant information to senior citizens is very important as police records show that half of the victims of cybercrime in the capital area are over 67 years old. We also hosted a well-attended seminar about cybersecurity for corporates.

Clearer demands for suppliers

In 2021, we completed work on ethical guidelines that oblige suppliers to ensure human rights and freedom of association in their own operation and with sub-contractors; also to work to prevent corruption. The ethical guidelines are based on the 10 principles of the UN Global Compact. Our aim was that 80% of the cost of purchased services and goods should be paid to suppliers who had committed to the Bank’s ethical guidelines by 2025 or who have adopted comparable rules. We attained that goal already in 2022 and now aim to maintain it.

Active in public debate

We continued to be active and visible in public debate. We contribute to discussion about important issues with Landsbankinn’s Sustainability Forum, presentations, articles, publications of the Economic Research department and radio, podcast and TV interviews about the economy, sustainability and more.