Key sustainability initiatives

In 2023, we hosted Landsbankinn’s Sustainability Forum for the second time, assessed greenhouse gas emissions from our credit portfolio for the third time and adopted science-based emission targets which were approved in February 2024. Six interesting projects received grants from Landsbankinn’s Sustainability Fund in the second round of allocations and we remain a global leader according to the ESG risk rating of Sustainalytics.

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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 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, in sustainability much as in other fields. 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.

Sustainability goals

Our eight goals fall into the categories sustainability, environment, social and governance.

Be informed and inform about the Bank’s impact on sustainability
Emphasise responsible lending
Achieve a reduction in direct GHG emissions
Achieve a reduction in indirect GHG emissions
Attain a gender ratio of executives that accords with set limits
Measures to counteract discrimination - share information about EKKO
Review sustainability information
Direct business to responsible suppliers

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:

  • Comply with the regulatory environment for sustainability as and when it enters into force with appropriate disclosure, i.e. SFDR, the EU Taxonomy and CSRD.
  • 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 Science Based Targets initiative (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

Landsbankinn will measure its green asset ratio (GAR) in accordance with its obligations and, when reliable information has been obtained, the Bank will set targets for responsible lending.

Goal 3: Achieve a reduction in direct GHG emissions

The Bank aims to reduce emissions under Scope 1, i.e. its 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.

  • As of 1 January 2025, the Bank will cease purchasing vehicles solely fuelled by fossil fuels.
  • As of 1 January 2027, the Bank will only purchase vehicles that are fuelled by renewable energy sources, such as electricity.

Goal 4: Achieve a reduction in indirect GHG emissions

  • In 2022, we applied to join SBTi.
  • In 2023, Landsbankinn adopted goals to reduce indirect emissions using the SBTi guide for financial institutions and applied to have them approved. The approval process was concluded in February 2024. The key goal applies to financed emissions under PCAF and we are also adopting goals to reduce indirect emissions from the Bank’s operation.
  • The goal the Bank adopted for own operations was to reduce indirect emission by 50% before 2030 as compared with 2019.

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 any 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 sustainability report will contain information about events reported to Human Resources and number of events measured in the Bank’s workplace audit.

Events reported to HR
EKKO incidents

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 audited with reasonable assurance by Deloitte.
  • The Bank's PRB report is audited with limited assurance.
  • The Bank’s PCAF report is 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 will be paid to suppliers who have committed to the Bank’s ethical guidelines by 2025 or who have adopted comparable rules.

Current status:

A code of conduct for suppliers was implemented at year-end 2021 and the goal for the extent of spending with responsible suppliers was reached in 2022 and 2023. We will continue to direct our business to responsible suppliers and again aim to ensure that 80% of the cost of purchased services and goods will be paid to responsible suppliers.

Fast-paced sustainability keeps us on our toes!

“Sustainability is developing fast and is becoming an integral part of business activity. These developments are hastened along by a growing regulatory environment and the demands of both the public and customers, who increasingly expect business operations to be sustainable.

In 2023, Iceland adopted sustainability legislation that transposed into domestic law the EU Taxonomy. It makes more stringent demands of companies about sustainability and sets out improved criteria for the sustainability environment and data quality.

Sustainable Development Goals

We are focused on four of the UN Sustainable Development Goals (SDGs). These goals all directly correlate with the Bank’s operation and work to achieve them maximises the Bank’s positive impact on the environment and society. We also follow the Principles for Responsible Banking (PRB) which guide banks in their work on the SDGs and the Paris Agreement.

Goal number 5:  Gender equality
Goal number 8: Decent work and economic growth
Goal number 9: Industry, innovation and infrastructure
Goal number 13: Climate action

Landsbankinn’s Sustainability Forum

Landsbankinn’s Sustainability Forum was held in Gróska 7 September 2023. This Forum was focused on the work Icelandic businesses have been doing to boost sustainability in their operations and on opportunities to do even more. The topics included emissions from air travel, real estate operation and development, and the future of land transport. Lilja Björk Einarsdóttir, CEO of Landsbankinn, opened the Forum and Guðlaugur Thór Thórðarson, Minister for the Environment and Natural Resources, addressed guests. We heard from speakers from large domestic companies who are facing significant challenges in their operations as well as smaller businesses who are integrating the circular economy in their activity.

Emissions from credit portfolio

We know the total emissions from our credit portfolio. In 2023, we assessed GHG emissions from the Bank’s credit portfolio for the third 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. Our experts participate in leading the development of the PCAF methodology which allows financial undertakings to assess their indirect environmental impact and present their carbon accounts in a comparable and coordinated manner.

More than 450 financial undertakings have now undertaken to use the 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.

Impact on biodiversity

In 2022, Landsbankinn was the first Icelandic bank to become a member of the Partnership for Biodiversity Accounting Financials (PBAF), an association working to enable financial institutions to assess and disclose impact and dependencies on biodiversity of loans and investments. 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.

We continued to investigate our impact on biodiversity in 2023. The Icelandic Marine Research Institute reviewed the status of the ocean around Iceland with us and we familiarised ourselves with the fourth report from the Intergovernmental Panel on Climate Change (IPCC). Our main project going forward is to assess the current status based on this information. To date, the PBAF methodology does not extend to marine biodiversity. Our main focus is on ocean acidification, rising sea temperatures and ocean currents.

Our aim is to ascertain whether the changes that are occurring will have a material impact on our loan portfolio to the fisheries and seafood sector, and the potential to have a positive impact through our customers.

The aim is also to assess whether rising temperatures and acidification can cause specific commercial fishing stocks to migrate and whether new stocks may replace them. This will improve our understanding of the potential changes in seafood and fisheries sector and the possible effect on our lending to the sector. We participated in an event hosted by the Icelandic Meteorological Office (IMO) where the topic was potential adjustment measures in response to climate change.

Our next steps are to continue to work with PBAF and disclose nature-related financial information in accordance with TNFD. The recommendations from TNFD are intended to help companies to contribute to the goals of the Convention on Biological Diversity concluded at the COP15 conference. By collecting, analysing and disclosing this information, we will over time be able to map the Bank’s risks from changes the natural environment. This information will be useful for funding purposes, as investors increasingly consider nature-related risk in connection with financial undertakings.

Operation again carbon neutralised

We have carbon-offset the Bank’s 2023 activity and received internationally acclaimed certification from CarbonNeutral®. The Bank’s operation was carbon-offset through carbon sequestration or the reduction of GHG emissions. Working with Climate Impact Partners, we have 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.

Landsbankinn aims to measure its GAR based on the EU Taxonomy and adopt responsible lending goals, see the Bank’s sustainability goals.

Science-based climate targets

To achieve a contraction in indirect GHG emissions., Landsbankinn has joined the Science-Based Targets initiative and intends to set goals to reduce indirect emissions using the SBTi guide for financial institutions. Using SBTi, we adopt scientific and measurable emission goals based on real data from our operation. The approval process was concluded in February 2024 and Landsbankinn now has an SBTi approved goal to reduce indirect emissions.

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Allocation report

In 2023, we published the second allocation report for the Bank’s green bond issuance. Investors in the Bank’s green bonds receive detailed information about the allocation of proceeds form the bonds. Deloitte verified that the funds were allocated in accordance with the Bank’s Sustainable Finance Framework.

In 2023, Landsbankinn finalised the sale of green bonds in the amount of EUR 300 million, the Bank’s third EUR-denominated green bonds issuance. These are 3.5Y bonds maturing in March 2027.

Eignadreifing and Vaxtareikningur sjálfbær

We continued to offer sustainable investment methods in 2023, 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, allocates 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 community.

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. We continue to cancel the borrowing charge on electric cars and offer a 0.6 percentage point discount on their financing.

In 2023, 46% of the total amount of vehicle loans was for the purchase of electric cars. Landsbankinn’s customers purchased more electric cars in 2023 than in the previous years.

Sustainalytics’ ESG risk rating

According to Sustainalytics’ ESG risk rating, we continue to lead the field on an international level. The Bank scored 8.5 in the 2023 ESG risk assessment, its lowest score yet on a scale where the goal is to achieve as low a rating as possible. We are among the top 1% of regional European banks assessed by Sustainalytics. Sustainalytics considers Landsbankinn at negligible risk of experiencing material financial impacts from ESG factors, on which the risk assessment is based.


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