Organised and effective approach

Landsbankinn carries out an in-depth analysis of both the direct and indirect environmental impact of the Bank’s value chain based on the internationally approved methodology GHG Protocol, the methodology generally used by businesses to calculate their carbon footprint. Calculation and disclosure of greenhouse gas (GHG) emissions from the Bank’s loan and asset portfolios is based on the methodology of the Partnership for Carbon Accounting Financials (PCAF). 

Total emissions

Landsbankinn's total emissions (scopes 1 and 2) have increased by 31% from 2023. This increase is due to hot water use. Emissions under Scope 3, excluding financed emissions, have contracted by 41% from 2023. Emissions from vehicles has grown by 35% from 2023 and will be addressed later in this chapter. As construction of the Bank’s new headquarters is complete, no emissions are calculated for 2024. 

Landsbankinn has set sustainability goals for achieving reductions in direct and indirect GHG emissions. The Bank set a goal to reduce Scope 1 emissions by 80% by 2025, using 2018 as the baseline. This goal was not achieved. The Bank’s Scope 1 emissions primarily stem from fuel consumption, with the vast majority of oil purchases used to operate its vehicle fleet. Plans to transition the Bank’s vehicle fleet to renewable energy sources have not progressed as quickly as anticipated when the goal was set in 2020. By the end of 2023, it became clear that the 2025 goal would not be met, prompting the Bank to take action. The Bank’s sustainability goals were revised and measures were introduced to ensure future progress. From 1 January 2025, the Bank will cease purchasing vehicles that run exclusively on fossil fuels. From 1 January 2027, the Bank will only purchase vehicles that run on renewable energy sources, such as electricity.  

Backup generators, powered by diesel, may be activated if there is a power outage at the Bank’s buildings, but this accounts for a negligible portion of the total oil consumption. Landsbankinn remains committed to its target of reducing Scope 1 emissions by nearly 100% by 2030, compared to 2018 levels. The Bank believes that, with the actions outlined above, this goal is achievable.  

To achieve reductions in indirect greenhouse gas emissions, Landsbankinn committed to setting targets based on the Science-Based Targets initiative (SBTi) methodology for financial institutions. In early 2024, SBTi verified Landsbankinn’s emission reduction targets, covering both direct and indirect emissions. The targets align with the Paris Agreement, which aims to limit the global average temperature increase to 1.5°C by 2100 compared to pre-industrial levels.

Waste sorting and recycling

Landsbankinn has in recent years worked systematically to reduce its impact on the environment through waste, working both to reduce emissions and contribute to evolution of the circular economy by reusing and recycling.  

In the span of just four years, the ratio of sorted waste has increased from around 55% to just under 90% in 2024. Alongside higher sorting ratios, recycling and reuse of waste from the Bank has also increased to 95% in 2024, up from 49% in 2021. This increase in sorting, recycling and reuse is achieved while the volume of waste from the Bank increased by over 25%, or almost 28 tonnes. 

Employee commuting

Landsbankinn emphasises flexibility and offers employees the opportunity to use different workstations, including remote work as and when tasks allow. Landsbankinn also offers employees a transport contract that promotes eco-friendly transport.

Landsbankinn has an agreement with Hopp and employees can utilise scooters from Hopp to run work errands free of charge between 8-17:00 on weekdays. Facilities for cyclists are excellent in the Bank’s new headquarters, with spacious bicycle storage and airing cupboards.

We carried out an annual commute survey among employees at year-end 2024 and 526 employees responded. The survey shows that employees commute to work by the following means: 7.4% utilise public transportation, 28.5% walk or cycle, 55.1% drive own cars and 8.6% catch a ride. Walking and cycling employees fall in the same category, with 13.1% that walk, just over 8% cycle and 8% use electric bicycles or scooters.

The majority of employees that drive their own car to and from work drive fossil-fuelled cars. A fourth of employees drive electric cars and just under 20% drive plug-in hybrids or hybrids.

Total emission from employee commuting was 257 tCO₂e in 2024, up from 4.8% in 2023. 

Financed emissions

We know the total emissions from our credit portfolio. In 2024, we assessed GHG emissions from the Bank’s credit portfolio for the fourth time. We have participated actively in the development of the Partnership for Carbon Accounting Financials (PCAF) methodology. In general, the main challenge for banks on the road to carbon neutrality has been to assess their indirect environmental impact. In Landsbankinn’s case, less than 1% of emissions are from its direct operation.

More than 550 financial undertakings have now undertaken to use the PCAF methodology in the assessment of their indirect environmental impact. In 2022, we 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. A specialist from Landsbankinn is co-chair of PCAF Nordic. 

Landsbankinn’s analysis of GHG emissions also extends to its balance sheet. 2023 emissions are calculated using the PCAF methodology, also referred to as financed emissions. It is classified as indirect emissions under the fifteenth and final category of Scope 3 as it includes emissions in Scopes 1 and 2 from customers and assets in the Bank’s loan and asset portfolios. Emission from loans to customers is estimated at 215 ktCO₂e in 2023. 

As with the release of the Bank's previous report on financed emissions, an update has been made to the baseline data for the emission factors used by the Bank. This change only affects the calculation of financed emissions related to residential mortgages. Further details on the new emission factors are provided in the section on residential mortgages and to ensure consistency across years, the Bank has recalculated the financed emissions for residential mortgages for the years 2019–2022. The aim is always to improve basic and supplementary data for carbon calculations. In 2024, the Bank implemented a new sustainability platform called Vera, which provides access to information ESG factors in the operations of Icelandic companies in a standardised manner.  

The Bank’s science-based targets (SBTi) to reduce emissions from its credit and asset portfolio use 2019 as a base year. Financed emissions from the Bank’s credit portfolio in 2023 are ca. 53 ktCO₂e lower than in the base year, which can be attributed to lower emissions from corporate customers in the travel sector.

The three sectors in the Bank’s credit portfolio with the highest emissions are the travel sector, fisheries and seafood, and services, IT and telecommunication. These sectors have had the highest emissions since the Bank began calculating its financed emissions in 2019 and are responsible for around 66% of estimated total emissions from the Bank’s credit portfolio. The travel sector on the one hand and services, IT and telecommunications on the other are estimated to have the highest emissions in 2023, or about 66 ktCO₂e and 43 ktCO₂e respectively. The travel industry has traditionally had the highest total emissions but has also been the sector that has achieved the highest reductions since 2019, when it stood at close to 130 ktCO₂e.