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.
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.
Indirect risks related to climate change
| Potential risks |
Timeframe* | Potential impacts |
Actions |
Transition Changes in public policies |
Short/medium/long term |
LOANS Reduction of business or increase in costs for customer companies with possible consequences on creditworthiness and solvency ASSET MANAGEMENT Consequences of climate change on companies in the portfolio with consequent reduction in the value of assets under management Documentary impacts Impacts on the offering of products and services to customers Impacts on internal and IT procedures Reputational impacts |
LOANS Assessment of ESG and climate risks on loans in sensitive sectors Inclusion of environmental risks when assessing creditworthiness Assessment of the materiality of ESG risks in business sectors Counterparty ESG scoring Implementation of self-regulation policies for the assessment and management of the socio-environmental risk of loans in sensitive sectors Energy transition support through funding to the Green Economy , Circular Economy and ecological transition Participation in Net-Zero initiatives with objectives to reduce financed emissions ASSET MANAGEMENT Assessment and control of ESG risks in the investment portfolios Implementation of sustainability self-regulation policies Participation in Net-Zero initiatives with reduction of the emissions associated with investments Active monitoring of evolving regulations and internal policies IT investments Adaptation of the range of products and services |
| Transition Changes in public policies Technological changes Changes in customer/ consumer preferences |
Short/medium/long term |
Reputational impact, negative perception from Stakeholders and in particular from SRI investors due to nil or inadequate management of such risks Possible exclusion from sustainability (ESG) indices or a worse ESG position or lower rating |
Inclusion of environmental risks when assessing creditworthiness Implementation of self-regulation policies for the assessment and management of the socio-environmental risk of loans in sensitive sectors Stakeholder engagement initiatives Participation in international working groups on climate change issues Participation in Net-Zero initiatives with objectives to reduce financed emissions |
| Transition Changes in environmental regulations Introduction of new greenhouse gas emission limits or new related reporting systems |
Short/medium term |
Financial implications of environmental regulations and emission limits and/or taxes imposed on customers operating in certain economic sectors |
Offering of dedicated financial solutions and specialist advisory services for customers in the field of renewable energies and energy efficiency Participation in working groups and initiatives relating to climate change Active collaboration with policy makers to highlight the need for stable and clear environmental regulations |
| Transition Introduction of regulation on climate risks for the financial sector |
Short/medium term |
Reduction of Group revenues deriving from excessive exposure to more vulnerable sectors to climate risk |
Inclusion of climate risk in risk management systems Rebalancing of portfolios Supply of products and services connected with transition |
| Changes in customer/ consumer preferences |
Short/medium term |
Reduction in Group revenues due to the increased competition generated by the growing demand for ESG products and the fall in demand for non-ESG services/products |
Offering of products and services for the Green economy, Circular Economy and the ecological transition Green and ESG bond issues |
| Physical Extreme weather events (floods, heavy snowfall, whirlwinds) |
Short/medium/ longterm |
Financial implications for corporate and retail customers damaged by extreme weather events, with possible consequences on their creditworthiness and solvency |
New subsidised loans intended to restore damaged structures Suspension or moratorium of repayments of loans issued to damaged customers |
* 0-2 years short term; 2-5 years medium term; over 5 years lon g term
Direct risks related to climate change
| Potential risks |
Timeframe* | Potential impacts |
Actions |
| Transition Changes in environmental regulations |
Short/medium term |
Possible fines in the event of failure to comply with new regulations |
Constant and precautionary monitoring of possible changes to national and European regulations |
| Transition Introduction of new greenhouse gas emission limits or new related reporting systems Increased cost of raw materials |
Short/medium term |
Costs for upgrading heating and air conditioning systems and for new monitoring tools Costs related to eventual taxes connected with greenhouse gas emissions Increase in costs of energy supply |
Own Emissions Plan implementation and monitoring Energy efficiency actions Increase in the use of renewable energy sources Preventive actions to replace old systems with next-generation systems with a low environmental impact, as well as consumption monitoring systems during the renovation of branches and buildings |
| Transition Changes in environmental regulations and standards that the Group voluntarily adheres to (ISO standards) |
Short/medium term |
Costs of changing the processes of certification in the event of changes to standards |
Continuous and precautionary monitoring of possible changes in standards Participation in specific training courses and workshops |
| Physical - acute Extreme weather events (floods, landslides, heavy, snowfall, whirlwinds) |
Short/medium/long term |
Possible damage to the Bank’s infrastructure and possible disruption of activities |
Precautionary assessment of the hydrogeological risks for buildings Adoption of a business continuity plan and measures to prevent/ mitigate/manage physical damage to the Bank’s structures |
| Physical - chronic Increase or reduction in average temperatures |
Medium/long term |
Increase in energy supply costs connected with greater heat or electricity consumption |
Energy efficiency actions Increase in the use of renewable energy sources Preventive actions to replace old systems with next-generation systems with a low environmental impact, as well as consumption monitoring systems during the renovation of branches and buildings ISO 14001 and ISO 50001 certification for the management of environmental and energy issues |
* 0-2 years short term; 2-5 years medium term; over 5 years lon g term
Last updated 12 April 2022 at 11:22:03
