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Our Corporate Governance Policy is designed to ensure professionalism, efficiency, cost effectiveness, transparency and responsible management. The principal operations of Reykjavik Energy are governed by Act no.136/2013. The owners of the company renewed the collective ownership contract on operations in 2014. The ownership policy was also revised. The policy contains stipulations regarding corporate governance. The drafting of these documents, the Articles of Association of Reykjavik Energy and Rules of Procedure for all the boards, took into account the guidelines, which the Chamber of Commerce established in collaboration with the Confederation of Icelandic Employers and Nasdaq.

Reykjavik Energy believes that the company’s Corporate Governance Policy fulfils these guidelines.

Owners of Reykjavik Energy

G1 Board-Diversity

Gender equality Promotes UN‘s Sustainable Development Goals

Reykjavik Energy Group has seven subsidiaries. ON Power and CarbFix joined the Group in 2019. The parent company's Board of Directors appoints OR Eigna's Board and shall, among other things, possess the knowledge, skills, and experience necessary for performing their duties. Members of the Boards of Directors of the Group's subsidiaries are also expected to fulfil the same requirements.

Two committees operate on behalf of Reykjavík Energy's Board. The Board appoints one representative to Reykjavík City's auditing committee and appoints its own remuneration committee. The Board's auditing committee representative is female and she is also Chairman of the Remuneration Committee. There are a total of 37 seats on the various boards of the Group.

Diversity on boards of directors within the Reykjavik Energy Group

My carbon footprint

12.67 tons CO2 equivalents per year An Icelander’s carbon footprint is about 12 tons per year

Simon Harald Kluepfel

Specialist in reservoir research, Reykjavik Energy

I didn’t realise my carbon footprint was very high, before I calculated it. It's higher than the Icelandic average. Travel, particularly air travel, has a major impact. We need to be more aware of consumption and food. The calculator only gives a rough picture but it made me more interested in examining my footprint more closely to see what can be changed immediately and what has the most impact.

G2 Board Independence

The Board of Directors of Reykjavik Energy comprises six members. Five of them, including the Chairman and Vice-Chairman, are appointed by the Reykjavik City Council and one is appointed by the Municipal Council of Akranes. The local authority of Borgarbyggd nominates one observer to the Board. The Chairman of the Board may not take on any other position at Reykjavik Energy.

The Board of Directors appoints the CEO of the company, writes the job description and handles any termination of employment. The CEO handles the day-to-day management of the company and manages holdings in Reykjavik Energy’s subsidiaries.

The CEO of Reykjavik Energy may not be a member of the Board of Directors of Reykjavik Energy and board members of Reykjavik Energy may not sit on the boards of subsidiaries.

The Rules of Procedure of the board and the job description of the CEO stipulate a division of tasks between the CEO and Board of Directors.

Reykjavík Energy's CEO cannot take seat on subsidiaries' Boards but three of its members must be Reykjavik Energy employees, one of whom shall be at the executive level. He or she shall be Chairman. Two of the board members of the ON, ON Power, Veitur Utilities and Reykjavik Fiber Network Boards of Directors shall be external experts in fields pertaining to the speciality of the company in question.

Independent of the company or its owners


The Board of Directors, from left: Valgarður Lyngdal Jónsson, Halldóra Lóa Þorvaldsdóttir, observing member, Hildur Björnsdóttir, Eyþór Laxdal Arnalds, Bjarni Bjarnason, CEO of Reykjavik Energy, Brynhildur Davíðsdóttir, Chairman, Sigríður Rut Júlíusdóttir, Gylfi Magnússon, Vice- Chairman.

The Board of Directors of Reykjavik Energy places an emphasis on transparency. The minutes of its board meetings and meeting documents are not confidential and can be accessed by the public on the company website. The minutes of the board meetings contain, among other things, a record of all the decisions of the board and board members have the right to have their positions on specific issues briefly noted in the minutes.

G3 Incentivized Pay

Gender equality Reduced inequalities Promotes UN‘s Sustainable Development Goals

The ownership policy of Reykjavik Energy stipulates that the salaries of CEOs shall be on a par with comparable jobs, but take into consideration the fact that the company is owned by public bodies. The salary terms of CEOs and other members of the personnel of Reykjavik Energy shall not be leading in the labour market.

In no employment agreements between Reykjavík Energy and management or staff are there direct correlation between the salaries and specific yardsticks in operations, financial or otherwise. All staff regularly undergoes performance appraisal relating to targets the respective employee is supposed to work towards. These targets can be of financial, environmental, or social nature, depending on the job. The result of the appraisal can lead to changes in wages although pay decisions follow a separate process..

Board of director fees and the salaries of the CEO and other top executives are specified in the annual financial statements of the Reykjavik Energy Group.

G4 Collective Bargaining

Decent work and economic growth Promotes UN‘s Sustainable Development Goals

Reykjavik Energy is a member of the Confederation of Icelandic Employers through its membership of the Samorka Federation of Energy and Utility Companies. Reykjavik Energy negotiates with trade unions in collaboration with the Confederation of Icelandic Employers. Reykjavik Energy also directly communicates with unions. Employees are free to be members of the trade union of their choice, in accordance with labour market regulations, or they can opt not to join a union.

The company makes individual employment contracts, based on collective wage agreements with the unions, with all its full-time employees. These specify, among other things, their salaries. Reykjavik Energy uses numerous contractors. The rights of contractors’ employees are discussed in the chapter on corporate social responsibility.

Union membership

My carbon footprint

9.74 tons CO2 equivalents per year An Icelander’s carbon footprint is about 12 tons per year

Sigrún Helga G. Flygenring

Servicing officer at Technical Services, Reykjavik Energy

I am reasonably well aware of environmental issues such as the sorting of waste. I eat little meat and I try to buy less, but I know I can do a lot better. The results show that my carbon footprint is below the Icelandic average, but also show that I need to make extensive changes in my life to meet the specified criteria. Global warming is a reality and the struggle against it is an issue that affects all of us. Everyone needs to do their bit to combat this threat.

G5 Supplier Code of Conduct

Good health and well-being Responsible consumption and production Promotes UN‘s Sustainable Development Goals

Reykjavik Energy's policy is to issue open calls for tender for the purchase of goods, services and construction work, and to accept the most favourable offers. Otherwise private requests for tenders shall be made, mostly through invitations for bids, direct contracts or direct procurement. The favourableness of offers is often evaluated on the basis of more factors than price. These include, among others, safety and environmental issues and there are provisions in the tender documents to avoid the constant changing of National ID numbers by certain companies.

There is an effort to fully utilise materials that have been purchased or are in stock or to sell them off. There was a good usage of older inventories in 2018 and the stock position for goods that were older than two years decreased by 27% between years.

Reykjavik Energy has laid down joint liability in its work contracts with a view to protecting the rights of the employees of contractors and their sub-contractors. Evaluations of contractors are based on their performance in security and environmental issues as well as the quality of their work and reporting. If a contractor’s performance is deemed unsatisfactory in the evaluation, the transaction is halted, at least temporarily.

Eco-friendly labels are favoured in the procurement of operational goods, such as paper and detergents, for example. About 55% of the procurement in 2019 of photo-copying paper, envelopes, printed material, detergents, stationery and printing cartridges carried eco-friendly labels. Printing and photocopying is controlled and has contracted by 40% since 2015, see annex.

The Reykjavik Energy Group has not screened its suppliers according to environmental indicators. The companies do not have any assessments of the potential or real risks posed by the negative environmental impact of their supply chain or responses to those impacts.

In 2019, there were no cases of a bid being rejected on suspicion of an abusive change of national ID number nor because of an unsatisfactory result in the evaluation of a contractor. In 2017, a bid for one project was halted in accordance with Reykjavik Energy’s measures against the abusive changing of a national ID number.

G6 Ethics & Anti-Corruption

Good health and well-being Promotes UN‘s Sustainable Development Goals

The Code of Conduct of Reykjavik Energy is founded on integrity, which is one of the company’s values. The code of conduct is registered and public and should help the staff to allow integrity, respect and non-discrimination characterise all their dealings, whether they be with customers, colleagues, management, contractors or other stakeholders. These are not exhaustive and do not exonerate us from the responsibility of following our own conscience when ethical issues arise.

The code of conduct was established by the management for Reykjavik Energy in the year 2000 and were examined, reviewed and approved by the Board of Directors of Reykjavik Energy in 2017. They form part of the board’s rules of procedure. They are introduced to new employees, accessible to all staff and are specially referred to in signed employment agreements. If an employee considers the code has been breached or is confronted with an ethical issue, he/she can approach a supervisor or colleague he/she trusts. If an employee considers there has been a violation of the code, such as bullying or harassment, he/she can also directly approach an external counsellor, and the established procedure will then take over, anonymously if requested.

Following an internal audit conducted on Reykjavik Energy in 2018, rules on how to respond to harassment in the workplace were updated in accordance with current regulations.

At Reykjavik Energy there are registered work procedures for the processing of issues when an employee or executive is alleged to have violated company rules or committed fraud at work. The rules of procedure are accessible to all employees. Suspected violations should be made known to the next supervisor or internal auditor of the company, who must be informed of it, but this information is treated as confidential to protect the anonymity of the informer.

The management of Reykjavik Energy, managing directors and directors are responsible for the internal supervision of their specific divisions. Quality Control is responsible for ensuring that Reykjavik Energy’s internal monitoring system is effective. Reykjavik Energy's quality control system is independently certified by external entities. Reykjavik Energy complies with the standards of the internal auditors association when conducting internal audits. The Internal Audit Division of the City Council of Reykjavik fulfils the function of internal auditors of Reykjavik Energy. Within Reykjavik Energy there are compliance officers who supervise the disclosure of information to the Stock Exchange and Financial Supervisory Authority.

G7 Data Privacy

A new act on Data Protection and the Processing of Personal Data came into effect in 2018. The nature of our operations requires us to receive and send data to customers and business associates who trust us to protect any personal information. The Reykjavík Group operates in full compliance with the stricter requirements now in place. The Group began preparations for the implementation of the new law in 2016. The implementation procedure was completed in 2018, when our Data Protection Policy was approved by all the companies within the Group. This was preceded by the extensive revision of work procedures. Well attended courses were also held on the topic.

My carbon footprint

8.73 tons CO2 equivalents per year An Icelander’s carbon footprint is about 12 tons per year

Sveinbjörn Sveinbjörnsson

Master plumber, Veitur Utilities

My family and I have taken a number of measures to reduce our carbon footprint. I go to work on an electric bike when the weather allows or by carpooling or walking. I also put less food on my plate and I’m trying to eat more vegan food. We conscientiously sort waste, beyond what is recommended. I have also used introduced mitigation measures by collecting seeds and planting them. I planted 30 trees in 2019 and aim to plant 100 trees in 2020.

G8 ESG Reporting

Responsible consumption and production Promotes UN‘s Sustainable Development Goals

Multiple factors determine whether the operations of Reykjavik Energy and its subsidiaries - Veitur Utilities, ON Power and the Reykjavik Fibre Network - are sustainable. This condensed report takes into account the factors, which Reykjavik Energy considers to be the most important. The Report is also an annual sustainability report. The Report is a part of Reykjavík Energy's annual financial statements and is referred to in company releases to the stock exchange. Company websites contain some information on environmental, financial and personnel issues, which are often updated more than once a year.

A report was published in 2018 on the international evaluation of the sustainability of the Hellisheidi Geothermal Power Plant. The evaluation was based on the Geothermal Sustainability Assessment Protocol (GSAP) which is being developed on behalf of the Icelandic government and geothermal steam companies in Iceland. The Hellisheidi Geothermal Power Plant is the first operating power plant to be assessed using the Protocol.

The main conclusion of the sustainability evaluation was that the Hellisheidi Geothermal Power Plant has a negligible effect on the environment and community and has an important socio-economic impact, particularly in the production of clean and cheap electricity and hot water to meet the needs of the capital area. However, the assessment also revealed one deviation from best practice. ON Power is currently assessing the issue.

G9 Disclosure Practices

Reykjavík Energy's Sustainability Report is published in accordance with Nasdaq's ESG Reporting Guide for Nordic & Baltic Markets, issued in March 2017.These guidelines are based on guidance from the United Nations' Sustainable Stock Exchange Initative and the World Federation of Exchange. References to the UN's Sustainable Goals have been added. We follow the provisions of the Icelandic Law 3/2006 on financial statements, as amended with reference to EU directive 2013/34.

Reykjavík Energy's Board of Directors has decided to focus on 4 of the 17 UN Sustainability Development Goals:

  • #6 Clean water and sanitation
  • #7 Affordable and clean energy
  • #12 Responsible consumption and production
  • #13 Climate action

Editorial board of Reykjavik Energy’s 2018 Annual Report: Eiríkur Hjálmarsson, Communications Officer at OR, Hólmfrídur Sigurdardóttir, Director of Environmental Affairs, Ólöf Snæhólm Baldursdóttir, Communications Officer, Þorsteinn Ari Þorgerisson, specialist in earth sciences, and Davíd Örn Ólafsson, specialist in treasury and financial analysis at Reykjavik Energy.

Website: Overcast.

Design: Hvíta húsið

G10 External Assurance

The corporate social responsibility and corporate governance elements in this annual report were audited by Versa ehf.

The environmental aspects of the report were audited by VSÓ Consulting.

The external auditors of Reykjavik Energy are Grant & Thornton.