Banking on a sustainable future for all

“If we need to make changes for the environment and for a more sustainable economy, then we need to finance them,” said Elena Flor, Intesa Sanpaolo’s Head of Corporate and Social Responsibility, at the bank’s recent impact banking webinar. “The environmental, social, governance [ESG] journey brings huge opportunity.”

Flor was among seven senior leaders from the bank joining the roundtable. Our first article outlined insights from three of the speakers. Here we share those from four more at the event, hosted by the International Subsidiary Banks Division (ISBD).

Flor, who has worked in sustainable finance for almost two decades, noted that the context of ESG is fast changing. “At the beginning, it was philanthropy – on the edges. Now it is strategy,” she said. “It touches the way we do business.”

Any company believing it can rest on its ESG laurels, considering the job done, is mistaken: “There is growing regulatory pressure. There is growing interest from stakeholders: investors look at ESG factors when selecting shares; customers and employees do the same when choosing products or jobs. And competitors are doing more than before.”

This “positive pressure” and external scrutiny ensure momentum, Flor added. The bank is proud to be listed on the Dow Jones Sustainability Indexes (the only Italian bank included in the ranking).

But the journey towards becoming an impact bank is not easy. “The bar keeps being raised. To be leaders in this field is increasingly difficult.” But it is, she said, worthwhile. “Research shows companies with good ESG performance have better financial outcomes in the medium to long term. They are more resilient and they have a lower risk profile.”

The transition to a circular economic model – as opposed to the linear make-use-dispose one – is a long-standing commitment for Intesa Sanpaolo, a global partner for financial services with the Ellen MacArthur Foundation.

Massimiano Tellini, Head of Circular Economy at the bank’s Innovation Center, set out the role played by financial services in enabling this fundamental shift. “Finance is crucial in making a new economy,” he said. With the ramifications of COVID-19 unfolding, that task is ever more pressing. “Finance has always been the basis for recovery and reconstruction.”

The approach must be collaborative and cohesive across supply chains, he argued. “We must share a new perspective in which we can all help. The European economy has been taking the lead in building back better. Now [with the Biden presidency in the US] we have a new global context.”

Banks must support clients “to change their business models, reframe conversations about value creation and reduce the risk profile of doing business”.

The circular economy provides the tools needed. Tellini cites the “hot topic” of plastic. “We look at the causes of problems, not just their effects. Plastic is not compostable, so we are working with a company making food packaging that is. We can substitute a material that has a harmful impact with something designed to replenish.”

The results are business approaches and techniques that are regenerative of the “natural capital”, and a transformed business model, less exposed to the variables and risks of resource availability, price fluctuations and operational discontinuity across long value chains.

Ensuring that people – their needs and the ways they live – are the drivers of innovation is also key to sustainable business, said Luigi Ruggerone, Head of Trend Analysis and Applied Research, and Tellini’s colleague at the Intesa Sanpaolo Innovation Center.

“Our mission is to explore new technology and ideas, and identify the innovation which will prevail,” he explained. The center’s Artificial Intelligence (AI) and Neuroscience (NS) laboratories research new possibilities, their potential uses and their value for the bank and its stakeholders.

“The main objective of technology must be to make lives better,” said Ruggerone. “That might be robots to help children with autism dress independently, or the use of AI to help clients produce modelling to forecast climate conditions.”

While Ruggerone’s job brings many exciting ideas to his attention, he highlighted two trends he considers particularly important in creating new opportunities as industries and societies strive for greater sustainability.

The first is technology supporting human health and life cycle. “This will help society to become healthier and better protected from disease, and give assistance to those in need,” he said. The use of AI in the critical work of sequencing the COVID-19 genome is a recent example.

Also key is innovation in the field of transport and mobility – the focus of a start-up accelerator at the Innovation Center. “These are developments which will be important for us all,” he said.

But planning for a better future also means sharing the treasures of the past, stressed Laurence Aliquot, Director of Cultural Promotion, Marketing and Partnership at Intesa Sanpaolo’s Art, Culture and Historical Heritage Department. “As an impact bank, we must contribute not only to the country’s economic growth but also to its cultural and civic development. Italy’s artistic heritage is one that belongs to humanity. It is an important pillar of Intesa Sanpaolo’s social role.”

Art, she added, is an extremely important economic asset, attracting tourists and creating jobs. But its less concrete value – in a future in which companies aim for more positive impact – is also huge. “We as a bank do not offer tangible goods, but rather a relationship that is based on trust, especially when dealing with finance. That is easy to lose and complicated to build. This work shows we care and it helps create a bond with our clients and stakeholders.”

Corporate involvement in the arts must benefit broader society, said Aliquot. “We don’t want beautiful paintings displayed in boardrooms. We have always wanted to share them with the community.”

The bank’s three public Gallerie d’Italia museums will be joined by a fourth, dedicated to photography and digital art, in Turin within the next year. Through the long-standing Restoration programme, meanwhile, communities throughout Italy also benefit directly, Aliquot said: “We do not only select famous works to save; we choose those that have local value. We can give them back to the community.”

“History is part of our future,” she said. “Sharing our heritage and values will help us all to change the world.”