Corporate Social Responsibility (CSR)

Social responsibility is an important aspect of Landsbankinn's operation and great emphasis is placed on integrating its principles in the Bank's strategy. Landsbankinn intends to play an important role in building future welfare in Iceland.

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Landsbankinn's policy on social responsibility is to contribute to sustainability in Iceland, to be a dynamic force for action and operate in accordance with the principles of good corporate governance. Emphasis has recently been placed on responsible finances, with a clear social responsibility policy positively influencing lending and investment in the long term while simultaneously decreasing operational risk. Landsbankinn was one of the founding members of Festa, Centre for Corporate Social Responsibility, in 2011.

Partnership is key: Landsbankinn's Policy on Social Responsibility

Landsbankinn's Policy on Social Responsibility was approved in May 2011, and following extensive strategy development work in winter of 2014/2015, a new Policy was introduced in March 2015. The Policy was reviewed and approved on 20 November 2016. The revised Policy is a result of the revision and restructuring work undertaken in the Bank in recent years.

Partnership is a key concept under the Policy. It entails that Landsbankinn, along with its customers, avail themselves of the opportunities involved in working towards sustainability. Landsbankinn aims to be a dynamic force in the community and collaborate with other companies and stakeholders to achieve success in the field of social responsibility.

As before, key emphasis is placed on being a strong financial partner and a model corporation, as regards social responsibility and in other fields. So far, the focus has been on operation - real estate, vehicles and human resources. Now the focus will shift to the Bank's products, loans and investments.

Implementation of the Policy is divided in two; an action plan with a time horizon of year-end 2018 and long-term future aims and projects. The Bank believes that a clear social responsibility policy will have a positive impact on credit quality and investments for the long term and reduce operational risk.

In shaping the Policy, prime importance was placed on involving the Bank's profit-generating units to ensure that social responsibility would become part of the Bank's core operations. The Policy is based on the results of a two-day work meeting attended by the department heads of Corporate Banking, Personal Banking, Markets, Human Resources, Marketing and Operations & IT. The Policy is thus tightly linked to all aspects of the Bank's operation.

Landsbankinn has been a member of the UN 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 principles 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.

Exhaustive Report on Social Responsibility and UN Global Compact

Landsbankinn's Report on Social Responsibility is published annually in accordance with the principles of the Global Reporting Initiative (GRI). This year it will be published on the Bank's website on 22 March. The Report contains comparable information YoY with emphasis placed on providing detailed descriptions of the methods employed in the 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 describes the numerous social responsibility projects current with the Bank. They are variously linked to operations, employees and the community and aim to achieve cost-effectiveness in operations, better utilisation of funds, a healthier lifestyle and boost participation by the Bank and its employees in external initiatives.

Emphasis on responsible finances

Landsbankinn is working on implementing a policy on responsible investment to allow the Bank to take the precepts of social responsibility into account in investment decisions. The Bank deems a combined focus on environmental and community issues, as well as good corporate governance, in evaluating investment options to lead to better decisions, to have a positive impact on return on investments in the long term and to reduce operational risk.

The business environment is changing 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.

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.

Meeting on responsible investment

A well-attended meeting on responsible investment and implementation thereof in Iceland was held in September of 2016. Keynote speaker was Gil Friend from Natural Logic Inc., a leading US expert in the field of social responsibility.

In his address, Gil spoke of the manifold benefits companies gain by setting clear policies on social responsibility and sustainable operation, such as lowering operating expenses and boosting innovation. The effect action or inaction has on the image and reputation of companies is even more significant. Gil emphasised the necessity for companies and employees to actively participate in the process, identify risk in their operation, shape policies and action plans, and advertise their goals and successes to motivate other companies with their example.

Mitigating measures and active dialogues

Landsbankinn wishes to engage in an active dialogue on social responsibility with other companies 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.

Supplementary guidelines for investment evaluation

In November 2016, Landsbankinn Economic Research began strategic analysis of the operation of listed companies with regard for sustainability and social responsibility. The aim is to implement social responsibility principles in general analyses in the future, in line with the Bank's obligations on responsible investment.

Social responsibility in lending

In 2016, the Corporate Banking division completed the first lending guidelines based on social responsibility principles for all major industries in Iceland. The guidelines vary from sector to sector and the aim is for both the Bank's employees and its customers to gain knowledge of the opportunities and risks social responsibility involves for the operation in question. The seminal guidelines were approved in May 2016 and were for the fisheries and seafood industry. A number of other sector-specific guidelines, as well as general guidelines, were finalised around year-end.

Reputational risk

The Bank's Policy on Reputational Risk, approved in March, states that Landsbankinn 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.

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.

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.

Effective equal rights policy

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

Landsbankinn was awarded the Golden Seal of PwC's Equal Pay Audit for the second time in 2016. It was the first Icelandic bank and the largest company to receive the Golden Seal in 2015. PwC's Golden Seal is an important confirmation of the status of gender equality within the Bank and an encouragement to stay the course.

The Bank's Equality Policy emphasises equal job-related opportunities regardless of gender, age, nationality, sexual orientation, handicap, religion or other cultural markers. 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 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 managing directors currently number six, three men and three women.

Landsbankinn participated in the climate change project of Festa and the City of Reykjavík along with 102 other companies in 2016. 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.

Focus on the environment

Landsbankinn hosted a well-attended meeting on the Paris Agreement on climate change in Harpa in February 2016. The aim of the meeting was to shed light on the impact various types of actions to combat climate change may have on Icelandic industry and investment.

The Bank has expanded considerable effort on making the workplace more eco-friendly. Significant success has been achieved in reducing paper use and electricity consumption, to name but a few instances. These matters are discussed in more detail in the Bank's Report on Social Responsibility.

Around 36% of the Bank's vehicle fleet is eco-friendly

Towards year-end 2016, Landsbankinn purchased four eco-friendly passenger cars. Now over a third of the Bank's vehicle fleet is eco-friendly.

Three of the new vehicles are methane cars and one is electric. The cars are intended for use by employees that need to utilise cars as part of their work for the Bank. The aim is to replace other vehicles in the Bank's fleet with methane and electric cars in the near future.

Percentage of eco-friendly cars in the Bank’s vehicle fleet


Increase in transportation agreements

The aim of the transportation agreement is 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 eco-friendly modes of transportation yet have access to a car when necessary.

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 84,000 per year, or ISK 7,000 in monthly instalments.

At year-end 2016, 424 employees had active transportation agreements, or 40% of all employees, which is an 36.5% increase from the previous year. Of the active participants, 257 are women and 167 men, which corresponds to the gender breakdown of the Bank's employees.

Proportion af employees with transportation agreements