Transition toward a sustainable, green and circular economy

With the European Green Deal action plan presented in 2019, the European Union has defined among its strategic priorities the transformation of the economy in a modern, competitive and resource-efficient way, while simultaneously preserving the natural environment, tackling climate change and making Europe carbon neutral by 2050.

To support the necessary investments in 2020, with the Green Deal investment plan, Europe has planned to mobilize at least 1,000 billion euro of sustainable investments over the next ten years and launched the Recovery and Resilience Facility which provides grants and loans subject to the presentation of National Recovery and Resilience Plans (NRRP), in which 37% of resources must allocate to the climate.

In December 2023, the United Nations Climate Change Summit (COP28) declared the urgent need to address the interconnected global crises of climate change and biodiversity loss, in the context of broader achievement of the Agenda's Sustainable Development Goals 2030 UN.

Intesa Sanpaolo, aware of its role and the relevant contribution it can make in sustainable development processes, is at the forefront of the challenge for a just transition towards a low-emissions economy to achieve global climate goals and contribute to protecting natural capital in a socially equitable way.

UN SDGs SUPPORTED

To promote the transition towards a more sustainable economy, the Bank has revised the credit process by integrating ESG/Climate factors within the credit framework.
Key elements of the ESG-Climate Credit Framework are:

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 corporates to small and medium-sized enterprises. The score leverages data from external and internal sources and includes the most relevant 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);
• labor 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).

During 2023, the proprietary ESG scoring model was further enriched to evaluate new portfolio segments and kinds of counterparties and to improve the databases that feed the evaluation model. The scoring model has been updated to capture the specificities of Project Finance and to evaluate corporate customers operating in a first group of countries where the Foreign Banks Division is present.

In parallel, a data collection program was launched on Banca dei Territori's corporate customers through a specific ESG questionnaire, aimed at integrating the database already available to the Group, minimizing the workload for customers and the commercial network. By completing the questionnaire, companies receive a positioning benchmark that allows them to objectively evaluate their sustainability performance according to the main quantitative metrics (e.g. the intensity of CO₂ emissions or water consumption) compared both with the average of the sector to which it belongs and to the average of Intesa Sanpaolo's client companies.

Rules for the classification of credit products and sustainable credit operations, including three categories: 

• Environmental sustainability, which includes operations aimed at renewable energy, energy efficiency, pollution prevention and control, sustainable management of natural resources, conservation of marine and terrestrial biodiversity, sustainable transport, sustainable management of water resources and waste, adaptation to climate change, ecological efficiency and circular economy, green buildings, zero emission activities/projects (exclusively for sectors relevant for Net- Zero); 
• Social sustainability, including operations aimed at accessibility to basic infrastructure, Access to essential services, Affordable housing, Creation and maintenance of employment levels, Food security and sustainability of food systems, Socioeconomic advancement and empowerment; 
• Other forms of sustainability, including non-finalized operations associated with sustainable covenants/KPIs, which must be documentable at the proposal stage and/or during the duration of the operation and consistent with the classification categories defined in the Rules.