Investments and Business Practices

Long-term thinking is important, as it takes time for solid business relationships to develop. Long-term thinking also contributes to a positive impact on the community and purposefully supports sustainability.

Kvika supports sustainability and aims to be leading in the offering of sustainable investment opportunities. One of the key factors for the progress of sustainable development is that capital is directed to sustainable structures. Kvika has adopted a policy on responsible lending and investment that sets objectives providing for the inclusion of ESG factors when decisions are made on lending, changes to loan terms, refinancing and investments. An abstract from the policy follows:

Kvika´s policy on responsible lending and investment is intended to be guiding on the implementation and follow up on the ESG factors in Kvika´s decision-making process, when making decisions on lending and investments. The aim of the policy is to promote responsible lending and investments at Kvika, in accordance with the Bank´s values of long-term thinking and sustainability. Kvika seeks to look at the following decision-making criteria according to the policy:  

  • to implement and take into account ESG factors and other relevant laws and regulations in the analysis and decision-making processes of lending and investments;
  • to call for relevant information on ESG factors and CSR when applicable, as well as to provide such information to customers and stakeholders of investments;   
  • to strive for the recognition and implementation of the ESG factors and CSR in its operation, as well as externally, where Kvika´s has influence;
  • to regularly review the implementation process of the ESG factors, and to report on it in a responsible and transparent manner.

The importance of the UFS factors in decision-making processes shall be assessed according to the circumstances at hand and the nature of the loans and/or investments at question in each case.

Kvika has also approved a policy on responsible product and services offering, the main objective of which is to support and further develop product and service offerings, aimed at sustainability and the bank´s value of long-term thinking. An abstract from the policy follows:  

Kvika´s policy on responsible product and services offering seeks to include the ESG factors in the decision-making and development process of new products or services, as well as in their development. The aim of the policy is to support and develop a responsible product an service offering at the Bank, which supports sustainability and the Bank´s value of long-term thinking. In order to achieve the goal of the policy Kvika will seek to look at the following criteria when making decisions:

  • ESG factors shall be taken into account in the analysis of products and services, whether in the case of a new product or services and when significant changes are made to an existing product or services;
  • seek appropriate information on ESG factors from stakeholders, if applicable, in the development and/or decision-making process of a new product or services;
  • take into account and look to the Bank´s policies and rules when making decisions that cover CSR;
  • to strive for the recognition and implementation of ESG factors through Kvika´s product and service offering;  
  • strive to strengthen the success of the implementation of the ESG factors; and
  • to inform about the results of the implementation of these objectives.

Furthermore, Kvika has adopted a Code of Conduct for Suppliers, aimed at expanding the chain of responsibility in the bank’s activities. The Code´s objective is to ensure that Kvika´s suppliers take ESG factors into consideration in their business operations, as well as respect of human rights.        

The private equity funds managed by the Group are strategic investors that emphasise encouraging executives to improve the operations and performance of companies owned by the funds. Kvika encourages the entities in which it invests to exercise CSR, adhere to good business practices and corporate governance, ensure diversity in their management, and take environmental issues into account in order to lead the way in providing sustainable investment opportunities to clients. More information on the private equity funds can be accessed here.

In the autumn of 2020 Kvika, and its subsidiaries, became a signatory of the UN Principles for Responsible Investment (UN PRI), which is an independent organisations on responsible investments. As part of its obligations, Kvika must deliver a progress report to the organisation on its investments, and on its progress adhering to the organisation´s six principles of responsible investment.

The six principles for responsible investment

 The six Principles for Responsible Investment are a voluntary and aspirational set of investment principles that offer a menu of possible actions for incorporating ESG factors into investment practices. Accordingly, Kvika will: 

  • incorporate ESG factors into investment analysis and decision-making processes;
  • be an active owner and incorporate ESG factors into its ownership policies and practices;
  • seek appropriate disclosure on ESG factors by the entities in which it invests;
  • promote acceptance and implementation of the Principles within the investment industry;
  • work with others to enhance the effectiveness in implementing the Principles;
  • report on its activities and progress towards implementing the Principles.

Kvika is also a founding member of IcelandISF, an organisation for responsible investment, which contributes to increasing investor´s knowledge of the methodology of sustainable and responsible investments.

In addition to the above, in September 2020, Kvika signed a joint Memorandum of Understanding for investment to support sustainable development, which the government and parties controlling close to 80% of assets in the Icelandic financial market have adopted. The Memorandum is a joint initiative of private parties in the financial market and government in an international context, which focuses on developing investment, financing and lending activities towards sustainability and social responsibility, and the criteria which are used as guidelines. The Memorandum fits well with Kvika's values and policy on responsible investment and lending.