Management of ESG and climate change related risks
The Intesa Sanpaolo Group, in line with the principles outlined in the Code of Ethics, is aware of the importance of a correct and responsible allocation of resources, according to criteria of social and environmental sustainability. Therefore, it promotes a balanced development aimed at redirecting capital flows towards sustainable investments to balance interests such as the preservation of the natural environment, health, work, the well-being of the community as a whole and the safeguarding of the system of social relations.
Also the Environmental and energy policy and the Principles on Human Right provide for the consideration of the environmental, social and governance risks associated with the activities of customer companies in the investment and lending decisions by the Group.
To this end, the monitoring of these risks provides for:
- their inclusion in the Risk Management framework, with particular reference to the governance of Environmental, Social and Governance Risks in lending transations, to the Management of reputational Risks and to the management of the Most Significant Transactions
- their assessment as part of the processes relating to the implementation of the Equator Principles and Reputational Risk Clearing
- a specific focus on reputational risks and Climate Change risk within the "Risk Appetite Framework"
The Group has developed specific Guidelines for the governance of environmental social and governance (ESG) risks which define the general criteria aimed at excluding the financing of companies and/or projects with particularly relevant environmental, social and governance impacts.
Intesa Sanpaolo, in the evaluation of lending transactions, undertakes not to finance companies and projects that are characterised by their negative impact on:
- UNESCO World Heritage Sites
- wetlands under the Ramsar Convention
- IUCN protected areas I to VI
In addition, the Bank undertakes not to finance companies and projects if these are located in areas of active armed conflict, or if evidence emerges, such as legal proceedings brought by the competent authorities, relating to:
- human rights violations
- forced or child labour practices
The sector policies regulating the financing to specific sectors of activities characterised by more relevant ESG and reputational risk profile are referred to this general framework.
The sector policies currently in force are the policy in the armaments sector (“Rules on the granting of credit and transactions in the armament sector”), the coal policy (“Rules for lending operations in the coal sector”) and the rules for the unconventional oil and gas sector ("Rules on Oil&Gas sector").
Moreover, within the Risk Management Framework the transactions with customers operating in sensitive sectors are subject to risk clearing, comprising an evaluation of ESG and reputational risk profile. Sensitive sectors are defined as those sectors that present a relevant ESG risk, including climate risk; a specific focus is provided for in relation to Most Relevant Transactions and to transactions subject to the application of the Equator Principles, voluntary guidelines for the management of social and environmental risks in project finance.
Also the assessment of creditworthiness conducted for corporate customers includes socio-environmental aspects. In particular, an innovative rating model has been developed in collaboration with Confindustria Piccola Industria and validated by the ECB. In the model, social and environmental aspects can also have a positive impact, leading to an improvement in the rating. In addition to the usual economic and financial assessments, the model aims to make it easier to access credit, with more favourable financial terms, by highlighting the intangible qualities of the business, such as trademarks, patents, quality and environmental certifications, research and development activities, innovation and digitalisation, development and competitive positioning projects, management of business risk and being part of a supply chain.
Further details
Guidelines for the governance of environmental social and governance (ESG) risks
Rules on the granting of credit and transactions in the armament sector
ESG risk management: potential impacts and mitigation actions
The Group has implemented specific processes and responsibilities to understand and manage risks in such a way as to ensure long-term soundness and continuity, extending the benefits to its stakeholders. Below is an overview of the main ESG risks that are significant due to their potential impact on company activities and the related mitigation measures.
Management of risks 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.
Last updated 26 June 2024 at 17:39:35
