Representation, measurement and reporting to stakeholders of the numerous activities launched need to be improved
Milan, 04/29/2024 – From green bonds to supporting inclusion and equity, from welfare for employees in difficulty to female empowerment. Intesa Sanpaolo, Unicredit and Santander are among the best banks in Europe to embrace the challenge and opportunities of investing in the sustainable transition, even if at a European level there is still limited evidence of the results of the numerous ESG initiatives and projects launched by the banks, highlighting the opportunity to strengthen “ESG disclosure”: from performance measurement to reporting to stakeholders. This is what emerges from the “ESG Banking in Europe” research, carried out by Red Public – a company of the Gruppo Excellence, specialized in the definition and implementation of sustainability strategies for banks and companies -, which analyzed the contents of the 2022 sustainability reports of the main banks of the Old Continent: Intesa San Paolo and Unicredit, Crédit Agricole and BNP Paribas (Fra), BBVA and Santander (Spa), Commerzbank and Deutsche Bank (Ger), Barclays and HSBC (UK), UBS (Svi), Nordea (Fin ) and Swedenbank (Sve).
The research by Red Public/Excellence Consulting addresses a highly topical topic: in fact, there have been numerous regulations that in recent years have concerned sustainability in finance (e.g. the European SFRD Regulation – Sustainable Finance Disclosure Regulation) and the interest shown by all European banks in this topic. The analyzes were conducted both through a benchmarking study of the sustainability reports of the banks in the panel, and through semantic investigation techniques such as textual analysis or word-maps and word-trees, which allow for an in-depth analysis of the association between the keywords and specific contexts in which they were mentioned within the evaluated documents; in this way it was possible to carry out objective assessments which led to a ranking of the banks in the panel for each of the analysis dimensions.
Three dimensions were explored in detail: 1. quality of communication carried out by each bank towards its stakeholders on sustainability issues; 2. completeness and robustness of the ESG governance model adopted by each bank; 3. purpose and contents of the initiatives launched by the various banks with reference to the reduction of the environmental impact, the improvement of their social effect and finally the strengthening of their ESG governance model. From the intersection of the first two dimensions – quality of communication on sustainability and robustness of the ESG governance model – it was possible to obtain a positioning matrix, from which it emerged that those falling within the most virtuous cluster are Intesa Sanpaolo, Unicredit and Santander, again in the same group, although at a less significant level, Barclays. UBS should also be highlighted as virtuous in governance, while in communication with stakeholders HSBC, BBVA, Swedenbank, BNP Paribas and Commerzbank. Regarding the sustainability initiatives launched by the three best positioned banks (ISP, UCG, Santander), as far as the green sphere is concerned, in addition to the expected sustainable financing and green bond issues, the plans aimed at mitigating the environmental impact of the transition stand out digital (digital sustainability) and the measurement of the Green Asset Ratio by Santander. In terms of relations with employees, in addition to supporting inclusion and fairness in the bank’s organisation, training activities on virtuous ESG behavior and policies in favor of the health and well-being of workers, extraordinary economic welfare also stands out for Intesa Sanpaolo’s employees in difficulty and the initiatives to combat Unicredit’s high cost of living. Finally, it is worth underlining, in terms of attention to customers, Santander’s systematic study of their level of indebtedness in order to avoid situations of excessive debt.
“Our analysis – states Benedetta Cascio, general manager of Red Public – highlights significant differences in the way in which banks publish their ESG initiatives, reflecting variations in the quality and quantity of the information provided. We mapped the banks’ ESG activities as explained in their financial statements by creating ad hoc categories for each ESG dimension, which allowed us to detail the actions, projects and strategies adopted. We used various textual analysis techniques, including word-maps and word-trees, which allowed us to evaluate the effectiveness of banks’ communication and the solidity of their ESG governance.”
“On the subject of sustainability, the quality of communication and the robustness of governance – claims Maurizio Primanni, founder and CEO of the Gruppo Excellence – are essential and decisive elements for banks dealing with increasingly stringent regulations, an increasingly demanding demand from stakeholders careful and the risk of greenwashing. The main Italian banks stand at the highest levels in terms of communication and governance compared to their European competitors and have set up ambitious ESG initiatives and projects, however, the process is not yet completed. Red Public’s research highlights the opportunity also for banks to intervene to further strengthen “ESG disclosure”: from measuring to reporting the results of the ESG initiatives implemented. For the future, it will therefore be essential to efficiently collect and organize the data necessary to represent the results of the planned ESG initiatives, define an adequately broad and deep system of ESG performance indicators and prepare clear ESG reporting tools to facilitate the analysis and the evaluation of the key stakeholders of each bank”.
