Intesa Sanpaolo: a 360-degree solution to a circular future
Intesa Sanpaolo has placed the circular economy at the heart of its new strategy, with around €115 billion committed towards a sustainable transition.
Intesa Sanpaolo is acutely aware of its social and environmental impact. This is why supporting the transition to a circular economy plays a central role in its 2022-2025 business plan.
The bank has committed around €115 billion towards a green and sustainable transition between now and 2025, and aims to achieve carbon neutrality within its operations by 2030 and net zero emissions within its own business by 2050.
However, the circular economy is not a new concept for Intesa Sanpaolo. It was one of the first banks in Europe to embrace the initiative, supporting the Ellen MacArthur Foundation since 2015, to become its first global financial services partner.
In 2017, it became the first Italian bank to issue a €500 million green bond for financing environmental sustainability, with a focus on renewable energy and energy efficiency.
Similarly, the circular economy offers a booster for Intesa Sanpaolo to deliver on its own ESG commitments, while assessing the risk profile, the resilience of business models and growth potential of companies, as well as their environmental and social impact.
The Group has worked in close collaboration with Bocconi University to produce a report on the relationship between the circular economy and the financial industry, with a dedicated focus on its de-risking effect. Moreover, the research found a positive relationship between circular economy business practices and higher risk-adjusted returns in shares.
“The higher the degree of real circularity, the lower the risk for investors, nonetheless they lend money or invest in equity markets,” says Claudio Zara, a researcher and professor who led the study.
According to Zara there are four main drivers of de-risking an asset when it becomes circular: decoupling economic growth from the exploitation of finite raw materials; better management of natural capital; increasing resilience through the diversification of business models; and reducing negative externalities.
The team also found evidence that adopting circular economy business models can make the economy overall more resilient to external shocks. However, while the circular economy represents a valuable opportunity, it could involve high initial operational costs and long payback periods when transitioning to a circular business model. This is where Intesa Sanpaolo is helping, funding companies which are transforming their assets in a circular way.
"Intesa Sanpaolo is the leading player in the financial sector in terms of supporting the transition, by offering credit, corporate finance and advisory that are closely aligned with the values and aims of the circular economy."
Claudio Zara, researcher and professor in the department of finance at Università Bocconi
Between 2018 and 2021 the Group lent €7.7 billion to companies adopting a circular model, which included €1.2 billion of green mortgages to retail customers. Activities included the replacement of critical and fossil fuel materials with recycled or organic materials, the reuse of urban organic waste, revamping renewable energy plants, recovering industrial waste for its reuse in new product lines, giving a new life to products and components at the end of their first life cycle and the transfer from the ownership to the possession of a product in order to increase its usage load.
Intesa Sanpaolo doesn’t just offer funding, it also offers advice, as Zara explains: “It helps companies launch and manage transformative projects with high innovation content.” Innovation is key, and the Group’s Circular Economy (CE) Lab aims to support the circular transformation through advisory services and programmes for open innovation that bring the business world together with start-ups, innovative SMEs, universities and research centres.
The CE Lab was created in 2018 in partnership with the Cariplo Factory and the Intesa Sanpaolo Innovation Center. It runs training and open innovation projects, which aim to disseminate the principles of the circular economy. It is only by businesses and society understanding the benefits of a circular economy and participating in this transformative journey that environmental and sustainability goals can be achieved.
“The Group is strongly committed to collaborating with economic, academic and institutional ecosystems, and works tirelessly with businesses to accelerate the transition,” says Zara.