Corporate Social Responsibility (CSR)

The policy on corporate social responsibility aims to ensure that the Bank's activities contribute to sustainability in Iceland, that the Bank functions as a dynamic force and complies with guidelines on good corporate governance. Responsible investments were the focus of 2017 and Landsbankinn was a founding member of a new association on responsible and sustainable investment, IcelandSIF.

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Social responsibility is an important aspect of Landsbankinn's operation and strong emphasis is placed on integrating its principles in the Bank's strategy. Responsible finances were the focus of 2017 and Landsbankinn was a founding member of a new association on responsible and sustainable investment, IcelandSIF. Collaboration on cyber security was enhanced and emphasis placed on actions against money laundering and terrorist financing. Equality was an important topic and carbon emissions from the Bank's vehicle fleet were greatly reduced.

Strategy: Landsbankinn is a trusted financial partner

Landsbankinn's policy on social responsibility is to contribute to sustainability in Iceland, to be an active participant and operate in accordance with the principles of good corporate governance. The economy, the community and nature are part of the same system and it cannot grow beyond the finite limits set by nature. Ecosystem sustainability and robust industry co-exist and are reconcilable, not antithetical.

Landsbankinn aims to be an active participant in the community by taking the initiative to form partnerships with companies and institutions to develop industrial activities and infrastructure which will contribute to increased sustainability in Icelandic industry and society. The aim is to ensure that opportunities in Iceland are utilised as propitiously as possible for the benefit of both nature and society, and for the future. Together we can create new business opportunities that emphasise sustainability.

Landsbankinn's vision is to be exemplary and a trusted financial partner. We intend to lead by example in the field of corporate social responsibility in Iceland.

Landsbankinn's policy on corporate social responsibility was first approved in 2011. Following a great deal of revision and policy making in corporate social responsibility, a new policy was introduced in 2015 and has formed the basis for development since. In recent semesters, increased emphasis has been placed on the Bank's products; credit products and investment, shifting the focus from own operations (real estate, vehicles and human resources)

Landsbankinn was one of the founding members of Festa, Centre for Corporate Social Responsibility, in 2011. The Bank has been a signatory of the UN's Global Compact since 2006. The UN Global Compact is a joint venture by the UN and the private sector to align business operations with the UN's principles. The objective is to encourage businesses to actively work according to the guidelines of corporate social responsibility. Endorsement of the Compact is a declaration of willingness to follow the UN's principles to advance sustainable business models and implement responsible business practices.

Landsbankinn's CSR report

Landsbankinn prepares an annual CSR report in accordance with the criteria of the Global Reporting Initiative (GRI) which is published on its website in tandem with its annual report.

Comprehensive Report on Social Responsibility and Communication of Progress Report

Landsbankinn's Report on Social Responsibility is published annually in accordance with the principles of the Global Reporting Initiative (GRI). The Report contains comparable information YoY with emphasis placed on providing detailed descriptions of the methods employed in implementation and development of social responsibility at Landsbankinn. The Report on Social Responsibility also functions as a Communication of Progress report to the UN Global Compact.

The Report addresses the corporate social responsibility projects the Bank is working on and presents its policy on social responsibility and social performance indicators. The text endeavours to provide an insight into successful accomplishments and pin-point room for improvement.

Emphasis on responsible finances

In the past two years, Landsbankinn has effectively been working on implementing a policy on responsible investment to allow the Bank to take the precepts of social responsibility into account in investment decisions. Landsbankinn became a member of the United Nations Principles for Responsible Investment (UN PRI) in early 2013. The Bank's Policy on Responsible Investment has regard for UN PRI and rules on risk appetite, large exposures and maximum aggregate risk, operational risk, reputational risk, liquidity risk and guidelines on good corporate governance. Members of UN PRI are obliged to publish a Communication of Progress report on the above issues.

Landsbankinn deems a combined focus on environmental and community issues as well as good corporate governance in evaluating investment options to have a positive impact on return on investments in the long term and to reduce operational risk. The business environment has changed and a company's stance on sustainability and social responsibility has begun to factor in risk assessment, as well as in the evaluation of growth opportunities.

In engaging in an active dialogue on social responsibility with other companies, Landsbankinn wishes to advance mitigating action and ensure long-term benefits for the Bank and investors. As regards responsible investment, Landsbankinn's practices build on active communication whereby exclusion is a rare exception.

Landsbankinn founding member of IcelandSIF

The association Iceland Sustainable Investment Forum, or IcelandSIF was created on 13 November 2917, with Landsbankinn as one of 23 founding members. Hrefna Ösp Sigfinnsdóttir, Managing Director of Markets, chairs the Board of Directors of the association.

The aim of IcelandSIF is to promote awareness and debate about the methods of sustainable and responsible investment. The founding members are financial undertakings, pension funds and insurance companies that invest on own account or on behalf of third parties that operate in Iceland and support the organisation's platform. Founding members include eleven pension funds, four banks, three insurance companies, four fund management companies and one asset management firm.

IcelandSIF is intended to function as a neutral platform for debate and instruction on responsible investment and as such, the association will not take a position on questions of contention in the field. The Icelandic name of the organisation is Samtök um ábyrgar fjárfestingar.

Supplementary guidelines for investment evaluation

Landsbankinn Economic Research undertakes strategic analysis of the operation of listed companies with regard for sustainability and social responsibility. This work is based on a standardized questionnaire that pertains to the main elements of corporate social responsibility, environmental matters and equality. The questionnaire represents Landsbankinn's first steps to gathering information about how listed companies approach these matters. Responses to the questionnaire were made available to investors via Economic Research's website in June 2017. To date, the responses are only for the attention of investors and the department does not evaluate them. In the long term, the aim is to give more weight to these issues in the evaluation of investment opportunities. The aim is to implement social responsibility principles in general analysis work in the future, in line with the Bank's obligations on responsible investment.

Landsbankinn endeavours to and has outlined a strategy to be exemplary and have in place robust measures to combat money laundering and terrorist financing, including KYC assessments, control and regular employee instruction and training.

Examples of parties that can cause reputational risk

  • Parties under suspicion for money laundering and terrorist financing.
  • Parties involved in weapons manufacturing.
  • Parties involved in the production of and/or distribution of illegal substances.
  • Gambling houses and/or lottery firms not in compliance with Icelandic law.
  • Manufacturers, distributors and providers of payment services to pornography, human trafficking and/or prostitution rings.

Emphasis placed on measures to prevent money laundering and terrorist financing

Landsbankinn has taken into use an electronic control system that identifies unusual transactions and checks these against watch lists. Around the middle of 2017, the Bank began implementing electronic risk assessment in business relationships which will further strengthen its defences. The proliferation of international business transactions and free movement of capital between countries has elevated money laundering to a global threat and it is deemed to be a pillar of international crime activity, such as drug trafficking, terrorism, weapon sales, human trafficking etc.

Landsbankinn has engaged more specialists in control functions lately, to handle such jobs as regular notifications to the money laundering office and communications with the police. This investment in infrastructure by the Bank reduces the risk of fraud and use of the Bank for money laundering purposes. Attempts at defrauding customers of money have grown more numerous in the past two years.

Continued emphasis will be placed on providing the Bank's employees with a wide variety of education options and advice.

Reputational risk

Landsbankinn's Policy on Reputational Risk states that the Bank reserves the right to reject doing business with parties that might harm the Bank's reputation. These are the exceptions mentioned under the exclusion method.

Increased collaboration on cyber security

Cybercrime and fraud has grown more common this year and also more sophisticated. Landsbankinn places a great deal of emphasis on cyber security and its successes have garnered international attention. In November, Landsbankinn became the first Icelandic financial undertaking to join Nordic Financial CERT. Nordic Financial CERT is an association of Nordic financial undertakings that aims to boost online security and protect against criminal activity.

Increased emphasis on data protection

A new act on data protection enters into force in May of 2018. Its aim is to strengthen data protection as regards individuals. Individuals are given increased say in how their information is used and additional obligations are placed on companies that utilise personal data.

Landsbankinn has in 2017 worked on undertaking necessary improvements to comply with the new data protection act. This includes analysing new provisions concerning handling of personal information and registering information about all handling of personal data in the Bank. The Bank has also worked on solutions to handle customer requests for copies of their personal data and transferring such data to a third party, as per customer request.

Landsbankinn wishes to excel in all matters pertaining to equal rights. The Bank pays men and women equal wages for equally valuable work and ensures that there is no unexplained wage difference between the sexes.

Key points from the Equality Policy

  • At Landsbankinn, men and women have equal opportunity for employment and board membership.
  • Landsbankinn aims to attain a gender balance in its workforce and avoids earmarking certain jobs for either gender.
  • Landsbankinn pays men and women equal wages for equally valuable work.
  • Landsbankinn is a workplace that allows its employees to harmonise work and private life.
  • Landsbankinn ensures that both genders have equal opportunities for job development, to train and study.
  • Landsbankinn has a zero-tolerance policy towards bullying, discrimination, gender-based or sexual harassment.

Focus on equality

Landsbankinn deems it important to hire women as well as men for executive positions. Landsbankinn has a zero-tolerance policy towards bullying, discrimination, gender-based or sexual harassment.

In 2017, the Icelandic parliament Althingi passed a law on equal pay certification and it entered into force on 1 January 2018. The key aim of the equal pay certification is to counteract a sex-based wage gap and boost equality of the sexes in the labour market. The Bank has begun preparing for the certification process and aims to achieve certification under the equal pay standard in 2018. Landsbankinn's equal rights policy and action plan are under review and revaluation, having regard for, amongst other things, the issues brought to light by the #metoo campaign.

In 2015 and 2016, Landsbankinn was awarded the golden seal of PwC's Equal Pay Audit, the first of the Icelandic banks. In 2011, Landsbankinn signed the Women's Empowerment Principles – Equality Means Business (WEPs), an international venture by UN Women and UN Global Compact. In becoming a signatory, the Bank undertook to work towards gender equality in-house, in accordance with seven guiding principles, to empower women in the workplace and increase participation by women in business.

In 2010, the Bank determined to work towards the goal of ensuring at least 40% representation by both genders in the Bank's management teams. The Bank's executive board is currently comprised of 3 women and 4 men.

Landsbankinn participated in the climate change project of Festa and the City of Reykjavík along with 102 other companies in 2015. The project was part of an action plan set in relation to the Paris summit on climate change and entails that the companies oblige themselves to set goals and action plans for social responsibility for the next 10 years.

Emphasis on the environment

Concerted efforts have been made to implement waste sorting in all Landsbankinn workplaces. This has been accomplished at headquarters and in all branches in the capital area. Waste sorting has been achieved in workplaces on the Suðurnes peninsula, in South and West Iceland. The ratio of sorted waste keeps increasing and the goal is to sort almost all waste produced by Landsbankinn.

Landsbankinn is working to install LED lights throughout its facilities. The Bank has greatly reduced its electricity usage in recent years. LED lights have already been installed in the Grafarholt and Hafnarfjörður branches, as well as in the entire building at Borgartún 33. In headquarters in Kvosin, LED lights have been installed to light over 1000 m2.

Landsbankinn's main goals in environmental matters:

  • All Landsbankinn vehicles are to be ecofriendly.
  • SWaste sorting shall be implemented at all Landsbankinn's workplaces.
  • Landsbankinn shall limit electricity use in so far as possible..
  • Ecolabelled products shall be used in operations, in so far as possible.
  • Procurement of ecolabelled products.

Reducing carbon emissions

In early 2017, Landsbankinn took into use four ecofriendly passenger cars that had been purchased at year-end 2016. Four gasoline and diesel cars were retired from the Bank's vehicle fleet in 2017. At year-end 2017, ecofriendly vehicles were 36%. These measures have led to a 35.4% reduction in the Bank's carbon emissions from vehicles between 2016 and 2017.

The aim is for all vehicles in Landsbankinn's fleet to be ecofriendly by 2025 and even sooner, judging by the progress so far. Five older cars will be substituted with ecofriendly vehicles in early 2018.

35.4% reduction in carbon emissions between 2016 and 2017.

Transportation agreement

With the transportation agreement, Landsbankinn wishes to provide employees with more numerous transport options, allowing them to avail themselves of the transport method best suited to each occasion; to take advantage of ecofriendly modes of transportation in general yet have access to a car when necessary.

At year-end 2017, 446 employees had active transportation agreements, or 41% of all employees. Of the active participants, 265 or 59.42% are women and 181 men, which corresponds to the gender breakdown of the Bank's employees.

The transportation agreement entails that employees oblige themselves to use other forms of transportation than a private vehicle in 60% of their travel to and from work. The Bank repays out-of-pocket expenses up to ISK 90,000 per year, or ISK 7,500 in monthly instalments.

Proportion af employees with transportation agreements