Management of risks and impacts related to climate change

Intesa Sanpaolo takes into account the social, environmental and governance risks, associated with the activities of its customer companies and the economic activities it invests in and pays particular attention to the in-depth study of sustainability issues related to sectors considered sensitive, i.e. those with a significant socio-environmental risk. In this context, the Bank pays particular attention to the risk arising from climate change (both physical risk and transition risk). Key activities in climate risk management  concern:

• the identification, assessment and measurement of such risks; 
• the implementation, development and monitoring of a company-wide risk management framework, including risk culture, risk appetite and credit limits.

Within the Risk Appetite Framework (RAF), the Group has introduced a specific reference to climate risk, working to develop its integration into the existing risk management framework with particular reference to credit risk and reputational risk. In 2019 work began on identifying the business sectors in the credit portfolio that are potentially most affected by climate risk, both from transition risk and physical risk, in order to quantify the Group's exposure to these risks. The work follows the TCFD approach, i.e. the logic of financial materiality (impact of climate change on the value of the counterparty and consequently on credit risk).

The potential impacts, the related time horizon (short, medium, long) and the mitigation and adaptation actions taken for each potential risk observed are identified annually, with reference to both indirect and direct risks.