Transition toward a sustainable economy

One of the strategic priorities of the European Union is to drive the transformation of the economy into a modern, competitive and resource-efficient one, while preserving the natural environment, combating climate change and making Europe carbon neutral by 2050.

To accelerate the transition, in 2019 the European Commission presented the European Green Deal, an action plan for making the EU economy sustainable, and in 2020 the Green Deal investment plan, which aims to mobilise at least 1 trillion in sustainable investments over the next decade. Meanwhile, the Recovery and Resilience Facility, also introduced by the European Commission, provides subsidies and loans submitted to the presentation of national recovery and resilience plans (NRRPs) in which 37% of the resources are to be allocated to the climate.

In this context, aware of its role and contribution to sustainable development processes, Intesa Sanpaolo is at the forefront of the challenge for the just transition to a low carbon economy to achieve global climate goals and contribute to protecting natural capital in a socially equitable way.

UN SDGs SUPPORTED

The Bank is developing a holistic approach for the integration of ESG/Climate factors within the credit framework, focusing on three key elements.

Counterparty ESG Score - In a logic of continuity with and integration to the sectoral assessment, the counterparty ESG score, which is applied to non-financial companies and also includes components related to climate risk, aims to assess the ESG profile of corporate clients, adopting the same approach across the entire portfolio, from large listed customers to small and medium-sized enterprises,. The score leverages on data from external and internal sources and covers the most important indicators of risks and opportunities in the three ESG dimensions, including (but not limited to):

• carbon footprint, level of preparation for the management of physical and transition risks, water consumption, biodiversity protection (environmental dimension);
• labour conditions and standards, occupational health and safety, human capital development, diversity and inclusion (social dimension);
• ownership and control, structure of the Board of Directors, audit/tax/risk management, business ethics (Governance dimension).

Sustainability classification of products/transactions - Rules have been defined for the classification of sustainable credit products and lending transactions, assigning sustainability categories based on market standards (Loan Market Association principles) and divided into “dedicated financing” and “general purpose financing” according to the intended purpose of the funds. Credit products and transactions are divided according to environmental, social and governance categories, and other sustainability categories.