Arion Bank

With roots tracing back to 1929, Arion Bank is an Icelandic bank that provides universal financial services, including retail and corporate banking, asset management, and investment banking to its Icelandic customer base. Arion Bank is the successor to Kaupthing Bank, one of the three banks that the Icelandic government took charge of during the country’s financial crisis in 2008. This transition was made official on November 20, 2009, when Kaupthing officially changed the name of its domestic branch to Arion Bank. Following the collapse, Arion Bank cut its international operations in order to mitigate risk and become a low-risk savings bank. After few years of creditor and state ownership Arion was listed on Main Market of the NASDAQ OMX Iceland in 2018.

With thirteen branches throughout Iceland and over 100,000 customers, Arion Bank serves a range of companies, individuals, and institutional investors. In recent years, Arion Bank has significantly expanded its digital services, and as a result, has been voted the best banking app in Iceland for the last eight consecutive years [1]. In addition, the company has made significant headway in enhancing customer experience through fostering long-term relationships and increasing customer satisfaction as well as made strong momentum in developing their bancassurance division. Arion Bank also possesses the largest asset management division in the country with assets under management totaling $9.36 billion [1]. Additionally, Arion Bank possesses a universal insurance company, Vördur. As one of Iceland’s leading banking franchises, the bank holds about 30% of the market share. Its CEO, Benedikt Gíslason, was appointed in 2019 after serving on the Board of Directors of Kaupthing from 2016-2018.

As Arion Bank looks to the future, there are many projects that the bank is initiating; however, sustainability remains a central focus to its mission. As part of its plan to increase its sustainable practices, the European Investment Fund (EIF) signed a guaranteed agreement with Arion Bank to support small Icelandic entrepreneurs [2]. Within this agreement, investments are targeted in sustainability, lending for innovation and digitalization, and Iceland’s cultural sector. Specifically for its sustainability investments, the guarantee will allow for Arion Bank to support the economic transformation of environmental and sustainable investments. Additionally, the Arctic region provides a source of future growth potential for Arion Bank. Going forward, Arion Bank seeks to work towards becoming a vital part of the financial landscape in the Arctic region. Maintaining digital leadership, looking into creating a new real estate company, continuing progression towards development assets Arnarland and Blikastadir, increasing investment towards cybersecurity, and modernizing technological infrastructure all represent future steps the bank is actively working towards to maintain its strong foundation with diversified sources of income. The groups medium term financial targets include an ROE of >13% and cost-to-core income ratio of <45%. As for Vordur, the target is a combined ratio below 95%.

Arion Bank’s Commitment to Sustainability [3]:

• 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 center

Environmental 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.

Environmental Targets for 2030 [4]:

• 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 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 [5].