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The corporate governance of Reykjavik Energy should ensure professionalism, efficiency, cost effectiveness, transparency and responsible management. The principal operations of Reykjavik Energy are governed by Act no.136/2013. In 2014 the owners of the company renewed a joint agreement on operations. 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 considers the company’s corporate governance fulfils the guidelines.

Owners of Reykjavik Energy

G1 Board-Separation of Powers

Sustainable cities and communities Promotes UN‘s Sustainable Development Goals

The Board of Directors of Reykjavik Energy comprises six members. Five of them, including the chairperson and vice-chairperson, are appointed by the Reykjavik City Council and one by the municipal council of Akranes. The local authority of Borgarbyggd nominates one observer to the board. The chairperson of the board may not take on any other job for Reykjavik Energy. 

The Board of Directors appoints the CEO of the company, writes the job description and handles the termination  of employment. The CEO handles all 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 CEO of Reykjavik Energy is the chairperson of two of the Group’s subsidiaries: ON Power and the Reykjavik Fibre Network.

It is stipulated that there be a division of tasks between the CEO and Board of Directors in the rules of procedure of the board and the job description of the CEO.

G2 Board-Transparent Practices

Stjórn OR

The Board of Directors, from left: Rakel Óskarsdóttir, Áslaug María Friðriksdóttir, Björn Bjarki Þorsteinsson (observing member), Brynhildur Davíðsdóttir (Chairman), Kjartan Magnússon, Sigríður Rut Júlíusdóttir, Gylfi Magnússon (Vice-Chairman).

The Board of Directors of Reykjavik Energy places an emphasis on transparency in its work  and the minutes of its board meetings and meeting documents are not confidential and are accessible to all on the company's 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. 

Did you know?

Brynhildur Davíðsdóttir, The Chairman of Reykjavik Energy, is a Professor of Enviroment and Natural Resources Programme at The University of Iceland (HI). Gylfi Magnússon, Vice-Chairman of Reykjavik Energy,  is an Associate Professor at the School of Business at the University of Iceland and former Minister of Finance & Trade.

G3 Incentivized Pay

Gender equality Reduced inequalities Promotes UN‘s Sustainable Development Goals

The ownership Policy of Reykjavik stipulates that the pay of executives shall be on a par with comparable jobs, but take into account the fact that the company is owned by public entities and the terms shall not be the highest in the labour market. The Compensation Committee of Reykjavik Energy shall review the salaries of its CEO on an annual basis with regard to the objectives and yardsticks of the company. There is no direct correlation between the salary of the CEO and other executives and specific yardsticks in operations, financial or otherwise. Interviews with employees, including executives in the Group, are guided by the Group’s values and  performances are assessed with them in mind. These are:  foresight, efficiency and integrity. 

Board of Director fees and the salaries of the CEO and other top executives are specified in the annual accounts of Reykjavik Energy.

G4 Fair Labor Practices

Good health and well-being 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 has other communications 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, salaries. Reykjavik Energy’s contracting is extensive and from companies of varying sizes. Reykjavik Energy does not have any figures on the scope of individual contractors nor what percentage of their individual revenue is due to work for the Group.

The rights of contractors’ employees are discussed in the chapter on corporate social responsibility.

Union membership

Did you know?

Reykjavik Energy employees´ organization, STOR, provides various club activities such as golf, knitting, motorcycling and more.

G5 Supplier Code of Conduct

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

Reykjavik Energy has an official registered policy to issue open calls for tender for the purchase of goods, services and construction work, and to accept the most favourable offer. 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 social security numbers by certain companies. 

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. 

In 2017, a bid for one project was halted in accordance with Reykjavik Energy’s measures against the abusive changing of social security numbers.

G6 Ethics-Code of Conduct

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

The Ethics 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 set 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 presented to new employees and accessible to all staff. If an employee considers the code has been broken 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.

G7 Anti-Bribery/ Anti-Corruption

Reduced inequalities Promotes UN‘s Sustainable Development Goals

At Reykjavik Energy there are registered work procedures for the processing of issues when a staff member 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. Within Reykjavik Energy there are compliance officers who supervise the disclosure of information to the Stock Exchange and Financial Supervisory Authority.

G8 Tax Transparency

Sustainable cities and communities Promotes UN‘s Sustainable Development Goals

Reykjavik Energy only operates in Iceland and its operations are therefore entirely subject to Icelandic tax law. With the mandatory unbundling of Reykjavik Energy at the beginning of 2014, the current Group form was created. It is characterized by three elements:

  • The parent company is a partnership. It pays higher income tax than a public limited company. On the other hand, dividend payments to its owners are tax-exempt.
  • The largest subsidiaries – Veitur Utilities and ON Power – are public limited companies which are jointly taxed for risk aversion.
  • The operation of water and waste-water systems is managed by a special partnership company. These statutory municipal functions are not subject to income tax. 

Reykjavík Energy's tax footprint comprises both taxes among operation expenses and collected taxes, returned to the authorities. In year 2017, OR's tax fottprint amounted to ISK 7,462 million. In addition, ISK 7,391 million were collected and paid in VAT.

Tax footprint of the Reykjavik Energy Group

G9 Sustainability Report

Sustainable cities and communities 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 - stand the test of time and are sustainable. This condensed report takes into account the factors, which Reykjavik Energy considers to be the most important. Upon publication of the report, stakeholders in its activities will be consulted with a view to hearing their opinion on whether any crucial factors are missing. Reykjavik Energy therefore looks on this report as its annual sustainability report. The websites of the companies contain some information on environmental, financial and personnel issues, which are often updated more than once a year.

G10 Other Framework Disclosures

This sustainability report of Reykjavík Energy for year 2017 is made with reference to Nasdaq's ESG Reporting Guide for Nordic & Baltic Markets, issued in March 2017.These guidelines are based on guidance from the Uited Nations' Stustainable Stock Exchange Initative and The World Federation of Exchange. References to the UN's Sustainable Goals have been added and we follow the provisions of law Icelandic law 3/2006 on financial statements, as amended with reference to EU directive 2013/34 in year 2016.

Did you know?

In 2000, Reykjavik Energy was the first Icelandic company to issue a stand-alone Environmental Report.

G11 Reliability

To increase transparency, trust and accurate disclosure of information, Reykjavík Energy sought assistance from the consultation firm Ábyrgar lausnir ehf. (Responsible Solutions  ltd.). The assistance included guidance and assistance in implementing and validating the sustainability information that are disclosed in this report, for the year 2017. 

Ábyrgar lausnir offers consultation and comprehensive solutions to organisations in their journey towards sustainability. Third party assistance ensures both the reliability and quality of the report.

Envionmental aspects were audited by VSÓ Consulting and KPMG is the external auditor of Reykjavík Energy.