2020 Consolidated Non-Financial Statement – Letter to Stakeholders

Letter to stakeholders signed by Chairman Gian Maria Gros-Pietro and CEO Carlo Messina:

In the context of the extraordinary emergency that characterised 2020, Intesa Sanpaolo, relying on its strong financial solidity, confirmed its ability to fulfil its role as a social accelerator by supporting Italy in managing the impact of a very strong health, economic and social crisis as an active participant, through a strategy that saw sustainability as a central theme. In this context, the union with the UBI Banca Group took shape, helping strengthen Intesa Sanpaolo’s role in sustainable and inclusive growth, also thanks to the sharing of corporate values common to the two entities.

This document is intended to testify to the Group’s great commitment to sustainability topics, highlighting the numerous commitments and results achieved, even in the exceptionally complex context of 2020.

The Intesa Sanpaolo Group is one of the few European financial groups to have adhered to all the main United Nations initiatives concerning the financial sector in the area of sustainability, which are part of the achievement of the UN Sustainable Development Goals: the Principles for Responsible Banking, the Principles for Responsible Investment, subscribed to by Eurizon back in 2015, joined by Fideuram Asset Management SGR and Fideuram Asset Management at the beginning of 2021, the Principles for Sustainable Insurance with the adhesion of Intesa Sanpaolo Vita and finally the Women’s Empowerment Principles, for the promotion of gender equality and women’s professional development.

In order to consolidate Intesa Sanpaolo’s leadership in sustainability and meet the ongoing challenges of the external context and Stakeholder expectations, the ISP4ESG programme, which was created in 2019, was fully implemented. The ESG Steering Committee was thus set up to support the Management Committee in its strategic proposals on ESG issues and to coordinate operations, also making use of Sustainability Managers, new figures identified for each Division/Government Area. As part of the Programme, several lines of work were launched involving lending activities, primarily with an ESG sector mapping of the Group’s loan portfolio, investment and training. Intesa Sanpaolo has continued to stand close to businesses and households, supporting the real economy with approximately €87 billion of new medium-long term credit and bringing about 11,500 Italian companies out of impaired credit positions and safeguarding approximately 57,000 jobs. The capacity to be a driver of sustainable and inclusive development is confirmed by the provision of loans for social and environmental purposes of around €40 billion in 2020, representing approximately 46% of the total. About €37.2 billion is high social impact financing, of which approximately €32 billion is to support the productive fabric during the health emergency.

In the context of these loans, the Fund for Impact initiatives stand out, the credit facility of which, following the expansion subsequent to the integration of UBI Banca, will allow the disbursement of €1.50 billion of credit to persons who are excluded or who would find it difficult to return to traditional financial circuits despite their potential. After per Merito (in 2020, €51.5 million in loans were disbursed to 6,446 students), the offer was expanded to include new solutions aimed at working mothers in the early years of their children with Mamma@work, and a loan aimed at families to support distance learning, XME StudioStation.

In order to support the production fabric, Intesa Sanpaolo, even before the regulations provided for it, set up moratoria on loans, which in 2020 reached €73 billion – including renewals – (of which €54 billion for businesses and €19 billion for households) and amounted to approximately €95 billion if UBI Banca is also considered.

In 2020, the Group made available for the European Green Deal a programme of disbursements of €50 billion over the next few years. Overall, more than €2.5 billion were directed to support the Green and Circular Economy, on which the Group has been able to maintain a high level of attention, seizing the opportunity to operate in support of the transition towards a sustainable economy.

The €5 billion credit facility in support of the Circular Economy – increased to €6 billion after the acquisition of UBI Banca – has allowed the financing of approximately €1.5 billion (€2.2 billion since the launch of the credit facility in 2019) including projects in the areas of renewable energy production, energy efficiency, sustainable agriculture and biodiversity, and green mortgages (over €800 million was disbursed in 2020), in addition to the circular criteria developed in partnership with the Ellen MacArthur Foundation.

In this context, with a view to developing solutions dedicated to the ESG transition of companies, the S-Loan was developed, a new form of financing for SMEs through the identification of specific KPIs related to the investment with a dedicated credit facility of €2 billion and €130 million already disbursed during the year.

The commitment to the environment has also taken the form of actions to improve efficiency and reduce the Group’s environmental impact, which have led to a 13.1% reduction in the Group’s CO₂ emissions by 2020, thanks also to a lesser use of offices.

Intesa Sanpaolo, in recognising a strategic role for digitisation and multichannel, has accelerated the digital transformation to allow everyone, customers and people of the Group, to operate remotely in full effectiveness, efficiency and safety even during health emergencies. This has been achieved through extensive use of smart working, for more than 65,500 Group employees; with cybersecurity practices aligned with international best practices, 10.3 million multichannel customers were able to operate, equivalent to around 88% of total customers; the strong digital proposition is materialized with 60% of activities digitised (35% in 2019) and more than 2 million product sales on digital channels (+182% compared to 2019).

The Group’s work was also recognised in the improvement of customer satisfaction indicators, confirming the commitment shown during the health emergency.

The Group confirmed its leadership in sustainable investments in Italy with an overall market share of 22.8% (30.4% including UBI Banca). In addition, Group net inflows increased significantly in 2020 to €8.4 billion (over €9 billion in 2020 considering UBI Banca), compared to €2 billion in 2019. The amount of assets under management in the ethical and ESG funds segment amounted to approximately €18.4 billion in 2020 (around €24.6 billion including UBI Banca). On the insurance front, in order to encourage the integration of ESG principles within the organisation, a Sustainability Policy has been adopted with guidelines to promote a responsible and sustainable business model.

The Group disbursed more than €184 million to the community in 2020; the most significant interventions include the €120 million to strengthen the Italian national health system in the context of the COVID-19 pandemic. The Charity Fund, through which the Bank allocates a portion of its profits to projects of solidarity, social utility and individual value, disbursed €16 million, of which €6.4 million to combat the health emergency. One important initiative concerned the reduction of inequalities which, during 2020, enabled the provision of approximately 16.1 million meals, 994,000 beds, around 228,000 medicines and 178,000 items of clothing to support charities and associations.

With the Giovani e Lavoro programme, together with Generation Italy, a project has been created to accompany young people into the world of work, which by the end of 2020 can count on 1,400 companies involved, despite the difficulties of the emergency context, with about 1,500 young people in the classroom since the start of the programme.

Intesa Sanpaolo was able to achieve its objectives thanks to the professional quality of its people. In the context of COVID-19, in 2020 the Group ensured safe working conditions by accelerating digitisation and reviewing – also with a view to business continuity – organisational processes and regulations, as well as technological and IT measures, to enable the extension of smart working in the Group.

During the year, a voluntary flu and pneumococcal vaccination campaign was also launched for Group staff. The pandemic also had a major impact on training activities, which reached 12 million hours in 2020, 11 million of which were in flexible modes.

The enhancement of diversity and the promotion of inclusion policies found concrete expression with the 2020 approval of the Principles on Diversity & Inclusion.

The 2018-2021 Strategic Plan confirms the importance for Intesa Sanpaolo of protecting employment: in 2020, over 1,400 people have been involved in a retraining and professional training programme. Furthermore, following the integration of UBI Banca, voluntary redundancies have also been agreed for approximately 7,200 people in the Group, against which 3,500 will be recruited.

Also in the light of these goals, in 2020 Intesa Sanpaolo was recognised as an absolute benchmark, becoming one of the most significant and virtuous companies and positioning itself at the top of sustainability indices and rankings, confirming its presence in the Dow Jones Sustainability Indices, in the CDP Leadership Band and in the Corporate Knights Global 100 Most Sustainable Corporations in the World Index. It is also the only Italian bank in the Refinitiv Diversity & Inclusion Index, which selects the 100 best listed companies in the world for diversity and inclusion. Furthermore, Intesa Sanpaolo is the first European Bank in relations with financial analysts and institutional investors and for ESG aspects according to Institutional Investor.

Pursuing a further goal of transparency, this document also includes a new executive summary section, which provides an immediate and concise overview of the main performance indicators. A section dedicated to the achievement of the United Nations Sustainable Development Goals (SDGs), the consideration of the recommendations issued by the Task Force on Climate-related Financial Disclosures (TCFD), the indicators provided by the Sustainability Accounting Standards Board (SASB), where deemed applicable, and the results and progress achieved with respect to the Principles for Responsible Banking (PRB) complete the information framework.

These results bear out Intesa Sanpaolo Group’s desire to keep sustainability at the centre of its attention and choices, in compliance with the expectations of all Stakeholders.