Arion Bank’s sustainability policy
We want to act as a role model in responsible and profitable business practices, taking into account the environment, the economy and the society in which we live and work. We try to see things from our customers’ viewpoint and strive to do better today than we did yesterday.
We work in an attractive workplace where knowledge creates future value for the benefit of our customers, investors and society as a whole.
The diagram to the side shows the key stakeholders and main sustainability focuses
Annual and sustainability report 2023.png)
Our commitment to sustainability
- Commitment at the end of 2023 to get our climate targets validated by the Science Based Targets initiative (SBTi) within two years.
- Member of UN-convened Net-Zero Banking Alliance (NZBA), a global group of banks, since December 2023.
- Signatory to Principles for Responsible Banking (UN PRB) since September 2019
- One of the founding members of a joint business and government forum on climate issues and green solutions, Green by Iceland, in September 2019
- Equal pay certification from the union VR since 2015 and equal pay symbol from the Ministry of Welfare since 2018
- Signatory to Principles for Responsible Investment (UN PRI) since 2017
- Founding member of IcelandSIF, Iceland Sustainable Investment Forum
- Signatory to UN Global Compact, the UN’s initiative on sustainability since 2016
- Signatory to the City of Reykjavík and Festa’s Declaration on Climate Change since 2015
- Recognized as a company which has achieved excellence in corporate governance by the Center for Corporate Governance since 2015
- Signatory to Women’s Empowerment Principles (UN Women) and the UN Global Compact since 2014
- Partner of Festa, a sustainability centre
Environment and climate policy
We aim to be a role model on environmental and climate issues and to minimize greenhouse gas emissions and the negative environmental impact of our activities. Man-made climate change is one of the greatest challenges of our time and it is critical that global warming is restricted to below 1.5 degrees Celsius.
We are committed to helping Iceland meet its obligations under the Paris Climate Agreement and other local and international environmental and climate agreements. We support Iceland’s ambitious plans to have net zero emissions by 2040, and the Bank aims to be net zero itself the same year.
Banks perform a vital role in funding progress and our focus is on funding projects on sustainability and green development. We also require our suppliers to consider the environmental and climate impact of their activities.
We are setting ambitious targets and will publish the results of our progress in areas where we have the greatest impact, such as buying, our own activities, lending and the Bank’s investments. We endeavour to enhance our employees' knowledge and understanding of environmental issues and to support our customers' journey towards a green future in accordance with the UN Sustainable Development Goals.
Key ESG indicators
Environmental factors
Targets for 2030:
- Percentage of sustainable lending will be at least 20% of the Bank’s total loan book.
- Reduction of greenhouse gas emissions from own activities (Scopes 1 and 2) by 80% calculated from 2015 and remaining emissions will be carbon offset.
- Continuous efforts to obtain a more accurate picture of emissions from acquired goods and services (Scope 3) in the Bank’s activities.
- Aim for reductions in financed emissions in the sectors which have the most impact (Scope 3) in line with the net zero target by 2040. The latest targets are published annually in the Bank’s report on financed emissions.
- Targets on financed emissions should be validated by SBTi.
Sub-targets for the Bank's operations in 2024:
- Work towards ensuring percentage of sorted waste in the Bank’s operations is at least 90%.
- The Bank continues to only buy vehicles which run on 100% renewables.
Social factors
Targets for 2024:
- Work in accordance with the Bank’s action plan on equality and human rights which applies for three years at a time.
- Increase percentage of investment by women.
The current targets for 2021-2024 include:
- Maintaining equal pay certification.
- Equal pay analysis indicates gender pay gap of less than 1%.
- The ratio of the median value of total wages to men and total wages to women is less than 1.3.
- The survey on people’s perception of their work-life balance scores at least 4.2.
- Employees will generally receive 80% of their salaries during parental leave for 6 months regardless of gender.
- Employees know the policy and prevention and action plan concerning bullying, gender-based and sexual harassment and violence.
- The Bank seeks to ensure that international human rights are respected and that equality is observed throughout the Bank’s value chain, including purchasing and corporate lending.
Governance factors
Targets for 2024:
- At least 90% of new suppliers under agreement with the Bank undergo the supplier’s assessment where their performance in terms of ESG is assessed and the same percentage agree to the Bank’s code of ethics for suppliers.
- All employees complete mandatory learning and development courses, such as on the code of ethics, information security, anti-money laundering and data protection.
- The Bank’s internal targets on KYC/AML are achieved.
- A harmonized risk assessment for different sectors and regions is set up with respect to ESG risk and the financial impact on the Bank.
Further information on the targets and their progress can be found in the Annual and Sustainability Report 2023.
Publication
Impact and Allocation Report 2023
Financed emissions and emissions reduction targets of Arion Bank
Sustainability policies in different sectors and exclusion list
Arion Bank’s Sustainability Policy on Seafood
Arion Bank’s Sustainability Policy for the Arctic
Arion Bank’s Sustainability Policy on Industry, Energy and Manufacturing
Sustainable finance disclosure at Arion Bank and the taxonomy for sustainable investment
Act No. 25/2023 on Sustainable Finance Disclosure transposed two EU regulations into Icelandic law. Firstly, the Sustainable Finance Disclosure Regulation (SFDR); and secondly the regulation on the establishment of a framework to facilitate sustainable investment (Taxonomy Regulation).
The SFDR covers harmonized regulations for financial market participants and financial advisers concerning sustainability‐related disclosures in the financial services sector. The regulation requires that financial market participants and financial advisers publish information on how sustainability risk is incorporated into investment decisions and financial advice, and whether, and in such case how, the negative material impact on sustainability is taken into account. SFDR defines sustainability risk as an environmental, social or governance event or condition that, if it occurs, could cause a negative material impact on the value of the investment.
Arion Bank is considered to be a financial market participant and financial adviser as defined in SFDR and the Bank is currently implementing the legislation.
Further information on Arion Bank's sustainability disclosures in financial services and the classification system for sustainable investments can be found here.