There was no shortage of challenges in the operations of Reykjavik Energy in 2018 any more than usual. The board of directors of the company continued to strengthen the pillars of its policy and changes were made to the management practices of the Group. There was satisfaction both within the board of directors and among the owners, which is vital for all the people who avail of the important services the company has been entrusted with.
Reykjavik Energy serves the fundamental needs of the population in more than 20 municipalities. Reykjavik Energy is owned by three municipalities: the City of Reykjavik, Akranes and Borgarbyggd. The owners have capital invested in the company, which may be used by them in other projects for the benefit of the population. With the power of their democratic mandate, the local councils of these municipalities have chosen to own this company. The objective of their ownership is clear and stated in the ownership strategy under which Reykjavik Energy operates. The function of the board is to implement all the fundamental principles of the ownership strategy, which include working in a spirit of corporate social responsibility.
Since 2010 and up until recent quarters, the finances of Reykjavik Energy have been in the spotlight. Radical measures needed to be taken to correct its finances. Once they were back on solid foundations and operations started to yield a surplus, the question that arose was how best to protect it. Should service prices be lowered or should dividends be paid out or both?
The ownership strategy of Reykjavik Energy states that the owners of the company should receive dividends from their investments, since it is considered to be fair that the municipalities that have invested in Reykjavik Energy and bear the risk of those investments, should get their share. In order to fix some limits and clarify the interaction between dividends and prices, dividend benchmarks were established for all work segments during the year: if profits exceed these limits, dividends are paid out and/or prices are lowered. Statutory limits have been placed on the owner’s profits in various services of the Reykjavik Energy Group that hold exclusive licences. This is why prices are reduced if operations perform well. Over the past years, prices of exclusively licensed services have been repeatedly lowered because of the improved financial position. Competitive operations, on the other hand, carry more risk and results vary from year to year. At the same time, it is natural that the owners of Reykjavik Energy place greater demands on the return on capital which they have invested in competitive operations.
In tandem with the great turnaround that occurred in Reykjavik Energy’s finances since 2010, there was a giant leap in the field of equal rights. The percentage of women in management rose from a quarter to a half, gender wage differences were eliminated, pay equity certification was applied, and ambitious projects were taken on to combat gender divisions in the workplace. In the wake of the #metoo movement, workshops were held with the participation of all employees to open our eyes and sharpen our awareness of everyday violence: sexual harassment, gender-based intimidation and bullying.
It was a strain on the board of directors of Reykjavik Energy when it received reports of sexual harassment and discrimination in the company. The board was unanimous in its decision to take the charges seriously and meticulously examine whether there was any bad culture within the Reykjavik Energy Group that needed to be uprooted. The evaluation report, which is public, revealed that despite the fact that the workplace culture of the company is healthy, a number of improvements need to be made in certain areas. Work is currently being conducted on those reforms.
At the instigation of the board, there was an examination of, among other things, whether it was appropriate for the CEO of Reykjavik Energy to also be the chairman of the board of a subsidiary. Their conclusion was that it was not and a proposal by the board of directors of Reykjavik Energy to the owners to amend the partnership agreement accordingly has been approved by the municipal councils of all the owners.
One of the most important functions of the Reykjavik Energy Group and its forerunners has always been to guarantee the quality of life for the future. Nothing has changed in that regard and the Group has set ambitious targets for footprint-free production, clean shores and always ensuring that pure water is supplied and that there is a sufficient amount of hot water. In addition to this, the Group will not only reduce greenhouse gas emissions from its own activities, but also facilitate others in reducing their emissions by, for example, promoting energy switching.
The board of directors of Reykjavik Energy held 15 meetings in 2018, in addition to the statutory meetings with the owners in June and November. The work plan of the board of directors regarding regular projects was carried out. However, the examinations of the comprehensive strategy of Reykjavik Energy and working methods of the board, which had been scheduled for 2018, were postponed and are currently taking place.
I would like to express my highest gratitude to the entire personnel of the Reykjavik Energy Group and its management and board members for their fine work in 2018.