Banking Sector’s Strategic Role in the Green Transition – Keynote address by Gian Maria Gros-Pietro, Chairman of Intesa Sanpaolo
Date：2022-11-28
Keynote address by Gian Maria Gros-Pietro at the Second Dialogue of the China-Europe-America Net-Zero Transition Platform
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About the Speaker
Gian Maria Gros-Pietro is Chairman of the Board of Directors of Intesa Sanpaolo since April 2016. He currently serves as a member of the Executive Committee of the Italian Banking Association and a Director of Abi Servizi. He chairs the Committee of Market Operators and Investors at Consob and is a member of the Corporate Governance Committee of Borsa Italiana. At Luiss University, where he currently sits as a member of the Board of Directors, he served as Head of the Department of Economics and Business from 2004 to 2011. Previously, he was Full Professor of Business Economics.
Full Text
The story of Humanity is one of continuous progress and development which has enabled us to constantly improve our living conditions and prolong our life expectancy. The human being has transformed from hunter to farmer to labourer and, in recent times, to user of technology who lives an existence where the virtual and the real worlds are merged together 24/7. Although the growth process has always been vulnerable to shocks, such as the Covid-19 pandemic, these, though tragic, do not seem to have been able to alter the course of human development. However, just when the problem of survival, connected with food and illness, seemed to have become less pressing, the environmental cost of human activity - connected with the industrial revolution - may be able to change our trajectory. We have discovered that progress, as we have known it until now, is not a free lunch: the survival of the human race on this planet cannot be guaranteed if our climate becomes unstable.
Though not a complete success, the COP 26 conference in Glasgow did recognise the importance of quickly reducing greenhouse gas emissions in order to limit the rise in temperature on Earth to 1.5°C above pre-industrial levels. The European Commission has made combating climate change one of the cornerstones of its strategy with the aim of reducing emissions by 55% by 2030 and becoming the first “climate neutral” continent by 2050. A strategy launched back in 2018 with the Action Plan for Sustainable Finance and consolidated - following the Covid-19 pandemic - with the Next Generation EU Plan and, following the war in Ukraine, by the REPower EU Plan.
The climate challenge is closely connected with that of sustainable and inclusive growth. Achieving environmental neutrality means going down a path that leads to an era-defining change that others may not be ready to embrace. It isn't a zero-sum game. We need to outline the pathway to achieving our goal, as well as ensuring it is sustainable from a social point of view, and we must also get moving as quickly as possible, without dithering.
Lots of sectors will be involved, all of which exerting a major impact on our daily lives. As major sources of CO2 emissions, sectors like energy, manufacturing, transport, construction, agriculture, silviculture and land and waste use will be directly involved and will have to undergo changes that are only possible through innovation and significant social, political and economic challenges.
The Net Zero Transition will have an effect on employment, creating around 200 million jobs to offset the 180 million lost by 2050. A shift that necessitates very heavy investment. To make the transition between 2021 and 2050, Mc Kinsey estimates global investments in the energy and land use system sector alone of $275 trillion, $9.2 trillion a year on average, with an annual increase of $3.5 trillion (equalling roughly half of worldwide corporate profits in 2020).
These are levels of capital spending that the public sector cannot sustain on its own and which require the intervention of banks and financial institutions. These, in fact, can channel private resources towards a goal which - though it must be achieved in quick time and doesn't offer easy and immediate profits - promises returns only in the future. But the goal is the long-term survival of the human race. For this reason, what is needed are institutions with proven experience in assessing the feasibility of projects and specialists in project financing and PPP; institutions like banks in general and the Intesa Sanpaolo Group in particular, which I have the honour of chairing. In this context the role of financial operators is to embrace this long-term commitment by financing sustainable projects and businesses and offering their customers products that invest in ESG-compliant businesses and projects.
In recent years, the importance and urgency of environmental questions - climate change above all - and social issues – particularly connected with the effects of the Covid-19 pandemic and the consequences of the war taking place – together with the spread of the culture of sustainability, has seen regulatory bodies and all business stakeholders focus increasing attention on ESG (Environmental, Social, Governance) issues.
In 2021, ISP outlined its goal of pursuing the Net Zero Transition by 2050 as regards its own emissions, the emissions connected with its loan portfolio and investment portfolio, and its asset management and insurance activities. The Group has supported the initiatives launched by the UNEP FI. In particular, in October 2021 Intesa Sanpaolo joined the Net-Zero Banking Alliance (NZBA). As further confirmation of our commitment to this goal, in the new 2022-2025 Business Plan, and over a year ahead of the deadline established by the NZBA, Intesa Sanpaolo has stated the intention of achieving its Net Zero aligned emissions reduction targets in 2030 in the oil & gas, power generation, automotive and coal mining sectors.
Mitigating environmental impact is one the key aspects of our Group's commitment to sustainability which, for us, must always be understood as both environmental and economic sustainability. In 2021-2022, our Climate Change Action Plan led to a 33% reduction in emissions on a year-on-year basis and an 88% increase in purchases of renewable energy, and the expected figures for 2022 are of the same order.
Intesa Sanpaolo's focus on sustainability translates into a programme of initiatives aimed both at consolidating the Bank's leadership role, as demonstrated by the various international awards it has received over the years, and supporting the transition of its customers, even in temporary moments of difficulty. We are the first sustainable impact bank, and for this reason we work across the board to guarantee environmental and economic sustainability through financial inclusion projects, projects to support people in difficulty, investments in the future generations and support for cultural projects. The acceleration in our commitment to the Net Zero Transition also includes the planting of over 100 million trees following the adoption of a specific policy to promote biodiversity. Our loans are also geared to sustainable organisations and projects. We are long-standing partners of the Ellen Mc Arthur Foundation, one of the leading promoters of the transition to a circular economy. We offer our corporate customers ESG workshops, we have been one of the biggest issuers of green bonds in Europe since 2017, and we have recently issued our first Social Bond: the biggest issue dedicated to financing or refinancing the social categories described in the Group's Green, Social and Sustainability Bond Framework, by an Italian banking issuer.
In terms of Governance, in 2020 the bank created an ESG control room, which oversees the ESG managers of each Division, and made sustainability a key issue of the Risks Committee, renaming it the Risks and Sustainability Committee. We have therefore linked part of the variable remuneration of top and middle managers to ESG factors.
Intesa Sanpaolo is very serious about making a difference. We want to lead the way because achieving this transition means leaving the planet to our children and grandchildren in a better state than the way we found it. The hope is that human capital and innovation, its means of expression, will facilitate this change.
