As the aviation industry turns the page after the difficult times of the pandemic the transition to low-carbon transport and decarbonization of air travel has started. We are fully aware of the impact that aviation has on the environment and the climate, and we take responsibility by running our day-to-day operations in a sustainable way. For a small island country in the middle of the Atlantic, that depends on air transport for social and economic activities, our contribution as the leading hub carrier is significant.

Our strategy outlines a clear vision, which is to bring the spirit of Iceland to the world, focusing on being a small and dynamic airline in a highly competitive market. In 2022, Icelandair reviewed and developed its strategy further by establishing the guiding principles that represent the key to successful decision-making and resource allocation. The aim was to make the strategy clearer and easier to communicate.

These changes ensure a more direct strategy which integrates employee feedback for a better alignment with daily operations. New projects were defined, and initiatives created where we continuously act to protect the planet and our people. Our employees are the heartbeat of the company, they strive for the best in often quite complicated circumstances to ensure safety and meet customer expectations. One of the three guiding principles of the strategy is:

Embracing our people and the planet – which underlines that all decisions should be made with full consideration given to the Company's responsibilities towards its people, the wider community and the environment.

In terms of sustainability, in 2022 Icelandair has actively worked on further structuring its work in the field, prepared for upcoming regulatory compliance and evaluated different scenarios through a road map for reaching set targets.

We regularly inform and report on our performance in sustainability, that is environmental, social and governance (ESG) areas and since 2010 we have submitted an Emissions Report to the Icelandic Environment Agency, verified by an independent accredited verifier. Since 2019 Icelandair has presented its sustainability data in accordance with Nasdaq's ESG Reporting Guide.

Our sustainability focus areas, objectives and impacts, are expressed by relevant measures in our ESG data account. These ESG measures can be monitored to track performance, and progress towards objectives, making comparison of sustainability performance possible between years and companies.

Since its early years Icelandair has played an important role in Icelandic society and is one of the largest private employers in the country. We take our responsibility towards our stakeholders seriously and engage with them on sustainability topics. Our key stakeholder groups are customers, employees, shareholders, suppliers and partners, the tourism industry, various NGOs, the government and regulators.

The Company has approached these stakeholder groups for their views on which sustainability matters, relating to Icelandair’s decisions and activities, are material for them in an extensive assessment (more information can be found in Icelandair Annual- and sustainability report 2021). Taking into account the views of stakeholders, the materiality assessment confirmed that the most material sustainability issue for Icelandair is climate impact.

We strive to have an ongoing dialogue and cooperation with a wide range of stakeholders through our business operations and customer engagement, communicating with employees, shareholders and authorities on sustainability-related issues. It is valuable for us to hear our stakeholders’ interests and concerns as it helps us in defining sustainability priorities and communication.

The overview below shows the most material topics for sustainability in the operations.

The Company’s sustainability data for 2022 is presented in accordance with the Nasdaq ESG Reporting Guide. It is published both in this Annual- and sustainability report as well as in the non-financial information of the Consolidated Financial Statements. Icelandair has already started preparing for next year’s reporting by identifying which areas need to be addressed for compliance with the new EU reporting legislation – the Corporate Sustainability Reporting Directive (CSRD). The CSRD introduces a new set of reporting standards called European Sustainability Reporting Standards (ESRS).

Based on our preparatory work we will determine how to prioritize actions to comply with the disclosure requirements. The CSDR directive enters into force in 2025, for reporting on the 2024 financial year but Icelandair intends to start developing its reporting efforts towards the new set of reporting standards to the extent possible in its reporting on the 2023 financial year.

Specific short- and long-term targets have been set for the Company’s key sustainability focus (ESG) areas and action plans have been developed. We seek to inform our stakeholders on the responsible actions we have taken to meet these targets as well as an overview of the sustainability work ahead – implementing the CSRD cycle on continuous improvement.

In 2023 an emphasis will be put on further identifying our sustainability impacts, with a focus on our key ESG areas, in line with requirements of the ESRS.