Management of social and environmental risks in financing

The Code of Ethics requires investment decisions and the credit policy to take into account the socio-environmental risks associated with the activities of corporate customers. This commitment is also contained in the Rules for the environmental and energy policy. Both documents also mention the importance of adhering to the Equator Principles covering these risks. The assessment of environmental risks also enables compliance with the regulatory requirements set out in the Organisational, management and control model pursuant to Legislative Decree 231/2001 on the administrative liability of entities.  

Risks in loans

From an organisational perspective, the analysis and assessment of the socio-environmental risk of financing operations subject to the Equator Principles is the responsibility of the Chief Lending Officer Area. For other loans, the Structures responsible for this assessment, if requested by the business or lending Structures, are the Corporate Social Responsibility for the specific social and environmental risk and the Risk Management function for the reputational risk aspects.

The assessment of the credit rating, which includes the socio-environmental aspects, is conducted for all the corporate customers, in accordance with the Rules of the Internal Rating System.

The social and environmental aspects can also have a positive impact, leading to an improvement in the rating. The new rating model has introduced additional assessment elements regarding the qualitative aspects of the companies, such as trademarks, patents, quality and environmental certifications, research and development, innovation and digitisation, ownership and management, and membership of a supply chain.

With regards to the sectors potentially most exposed to environmental risks, a specific Questionnaire for integrating environmental risks into the credit assessment is currently being tested on a sample of customers.

Finally, during 2018, the work started the previous year continued to issue advisory opinions on the social, environmental and reputational risk profile of business operations and / or customers operating in sensitive sectors that do not fall within the scope of application of Equator Principles. The opinions, provided by the Reputational Risk Office of the Chief Risk Officer Area with the contribution of Corporate Social Responsibility, provide for the attribution of a risk class (from low to very high): in 2018, 67 were issued.

Controversial sector

Intesa Sanpaolo is aware of the importance of the correct and responsible allocation of credit, according to criteria of social and environmental sustainability. To this end, it devotes particular attention to examining the sustainability issues associated with sectors considered more sensitive, such as the armaments, nuclear energy, and fossil fuel extraction sectors.

Sensitive sectors are identified among those that have a significant socio-environmental risk profile and that are the subject of awareness-raising initiatives or pressure campaigns by specialist NGOs, civil society groups and customers.

Among the sensitive sectors monitored by the Bank, production and trade of military weapons are particularly important. In September 2016 a new policy on this sector was issued.

In keeping with the values and principles expressed in the Code of Ethics and in the knowledge of the need to support national and European defence, together with the allied countries in NATO, the Intesa Sanpaolo Group does not support operations that relate to the production and trade of military goods, even if permitted by applicable law, in countries that do not belong to the European Union and/or NATO. The company rules also prohibit engagement in any kind of banking or lending activity related to the production of and/or trade in controversial weapons and/or banned by international treaties and in particular: nuclear, biological and chemical weapons; cluster and fragmentation bombs; weapons containing depleted uranium; and anti-personnel landmines.  

In 2017 specific rules were issued also for the Group’s International Subsidiary Banks.  

In 2018, the total number of transactions reported to the Ministry of Economy and Finance pursuant to Law 185/1990 in terms of loan disbursements and payments amounted to 2401.6 million euro.  

In other sensitive sectors, Corporate Social Responsibility, in agreement with the Reputational Risk Office, provides the business and lending Structures, on their request, with prior opinions on the social, environmental and reputational risks.

Adherence to Equator Principles
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