Responsible banking

Sustainability reporting

At Arion Bank we aim to ensure that sustainability is part of the Bank's day-to-day activities, its decision-making and processes. Information on sustainability has once again been prepared in accordance with the Global Reporting Initiative standard, GRI Core, which helps companies and institutions share information relating to sustainability transparently and in a way which enables comparisons. When sharing information on non-financial factors of the business the ESG reporting guide for the Nasdaq Nordic and Baltic exchanges and the 10 Principles of the UN Global Compact are also used a reference. Furthermore, we look to the UN Sustainable Development Goals.

Our commitments, certifications, qualifications and participation in sustainability

UNEP FI and Principles for Responsible Banking - PRB

In July 2019 Arion Bank became a signatory to UNEP FI, United Nations Environment Programme Finance Initiative which is a partnership between United Nations Environment and more than 250 financial institutions across the world working to understand today’s environmental, social and governance challenges.

In September Arion Bank became a signatory to the Principles for Responsible Banking (PRI) which were devised by UNEP FI and 30 international banks. These principles, presented during the autumn at the start of the UN General Assembly, align banking with international goals and commitments such as the UN Sustainable Development Goals and the Paris Climate Agreement. Arion Bank was one of the first banks to announce its support for the principles, with 130 banks from 49 countries signing up.

Further information on Arion Bank’s involvement with the principles

Forum for climate action and green solutions – Green by Iceland

In September 2019 Arion Bank became one of the founding members of a joint business and government forum on climate action and green solutions called Green by Iceland. The role of Green by Iceland is to strengthen the partnership between the business sector and the government in order to reduce greenhouse gas emissions and to bring about carbon neutrality by 2040. The forum will also work with Icelandic companies to market green solutions internationally and to underpin Iceland's reputation as a global sustainability leader.

United Nations Principles for Responsible Investment, UN PRI

In late 2017 the Bank became a signatory to the United Nations Principles for Responsible Investment (UN PRI). The principles are designed to help investors understand the effect of environmental, social and governance (ESG) issues on investment and thereby encourage signatories to the principles to take non-financial factors into account when making investment decisions. In 2019 the first progress report by the Bank’s Asset Management division on responsible investment was published. For more information on responsible investment see the Asset Management section.

UN Global Compact, the UN’s initiative on sustainability

Arion Bank has been a signatory to the UN Global Compact, the UN’s initiative on sustainability, since the end of 2016 and we submit a progress report to the UN every year. The compact sets out 10 principles on human rights, the labour market, the environment and anti-corruption.

Ministry of Welfare’s equal pay symbol

In the autumn of 2018 Arion Bank was awarded the Ministry of Welfare’s equal pay symbol after having been certified by the standards agency BSI á Íslandi, the first Icelandic bank to gain this recognition. The Bank first gained equal pay certification in 2015 and has since undergone a pay assessment annually. The Bank has achieved a great deal in equality issues in recent years and this subject is covered in more detail in the section on Human Resources and Non-financial Information.

IcelandSIF - Iceland Sustainable Investment Forum

Arion Bank has been an active participant in shaping and developing responsible investment in Iceland and has had representatives in the board and working groups in IcelandSIF, Iceland Sustainable Investment Forum. Arion Bank was one of the founding members of the organization in 2017.

City of Reykjavík and Festa’s Declaration on Climate Change

In November 2015 Arion Bank was one of 103 signatories to the City of Reykjavík and Festa’s Declaration on Climate Change. One of the main tasks concerning climate change is to map the environmental impact of operations and to systematically reduce the negative effects. The Bank has published its environmental accounts since 2016. Further information on environment and climate issues at Arion Bank can be found here and the section on Non-financial Information.

Excellence in corporate governance

Arion Bank was recognized as a company which had achieved excellence in corporate governance following a formal assessment based on guidelines on corporate governance issued by the Icelandic Chamber of Commerce, the Confederation of Icelandic Employers, and Nasdaq Iceland, first in 2015 and again in 2019. This recognition is given following a comprehensive audit by an independent assessor of corporate governance at the Bank, such as governance by the Board of Directors, sub-committees and management. It applies for three years. For further information see the sections on Corporate Governance at Arion Bank and on Non-financial Information.

Festa – sustainability centre

For a number of years Arion Bank has been an active partner of Festa, a sustainability centre. Festa’s role is to add to the expertise on sustainability at companies, institutions and organizations so that they can adopt sustainable business practices.

UN Women/UN Global Compact Empowerment Principles

The Bank has supported the UN Women/UN Global Compact Empowerment Principles since 2014. These are international declarations and treaties under the auspices of the United Nations which companies and institutions can use as guidelines when implementing responsible working practices, irrespective of geographic location or sector and primarily concern advancing gender equality. For further information see the sections on Equality at Arion Bank and on Non-financial Information.

ESG reporting guide for Nasdaq

The ESG Reporting Guide for the Nasdaq Nordic and Baltic exchanges provides guidance on data disclosure and the environmental, social and governance impact of listed companies. Since 2016 Arion Bank has taken these criteria into account when reporting on sustainability. The criteria formally came into effect in 2017. For further information see the section on Non-financial Information.

Kolviður

In 2019 Arion Bank and Kolviður reached an agreement on offsetting the carbon emissions produced by the Bank's activities. Kolviður will fix the carbon in plants and soil through soil reclamation and forestry to offset the carbon emissions resulting from the Bank's activities in 2019. Kolviður is expected to plant up to 5,000 trees for the operating year. This refers to emissions produced, for example, by vehicles used in the Bank's operations, its business premises, waste and business flights.

GRI - Global Reporting Initiative

Global Reporting Initiative has developed a standard which helps companies and institutions report their progress in environmental, social and economic issues in such a way that it enables a direct comparison of data between companies. For the second time the Bank is presenting information on sustainability in the Bank’s operations in accordance with the GRI Core standard. See Arion Bank’s GRI index here.

UN Sustainable Development Goals

At the beginning of 2020 the executive committee of Arion Bank approved six Sustainable Development Goals which the Bank intends to focus on. These goals are number 5 on gender equality; number 7 on affordable and clean energy; number 8 on decent work and economic growth; number 9 on industry, innovation and infrastructure; number 12 on responsible consumption and production; and number 13 on climate action.

The Bank’s operations, including action on gender equality, our policy and targets on environment and climate issues, support for innovation and the business sector as a whole, state-of-the-art digital services and active participation on the development of the economy closely align with these sustainable development goals

The Bank’s key sustainability focuses are closely aligned with goal number 5 on gender equality, number 8 on decent work and economic growth, number 9 on industry, innovation and infrastructure and number 13 on climate action.

Steering committee on sustainability

Arion Bank has a steering committee on sustainability. The project manager for sustainability oversees the committee’s activities and the CEO is the person responsible for these activities. At the beginning of the year two managing directors were on the steering committee on sustainability, i.e. the managing directors of Asset Management and Corporate Banking. The committee also included the heads of Human Resources, Marketing and Corporate Communications. At the end of the year changes were made and now the managing directors of Retail Banking, Markets and Corporate & Investment Banking are all on the committee along with the heads of Marketing and Corporate Communications.

Suppliers

The Bank's strategy is to create future value for the benefit of its customers, shareholders, partners and society as a whole, and in keeping with this the Bank seeks to source its supplies from local providers as far as possible, provided they meet the requirements on quality and price.

Nearly all of the Bank’s key suppliers operate in Iceland. Although the supply chain does extend overseas, the first link is usually here on the domestic market. In fact there is only one international company in the top 10 biggest suppliers and only 11 in the top 50. Business with international suppliers increased in 2019, mainly due to the implementation of major software solutions which required overseas expertise.

The majority of the Bank’s international suppliers are connected to the buying of software, advisory services and IT services. Hardware is almost entirely acquired from Icelandic suppliers.