ESG Analysis - Banca Popolare Etica

ESG Analysis for Companies and Nonprofits in Impact Finance

• Banca Popolare Etica in Italy is a focus of the analysis.
• The analysis examines ESG (environmental, social, and governance) factors for companies and nonprofits within impact finance.

Areas of Exclusion for Banca Etica

• Banca Etica excludes activities with a negative environmental impact.
• The bank does not support the production or sale of weapons.
• Exploitation of child labor is also excluded.
• Intensive livestock raising is a prohibited activity.
• Scientific research on vulnerable populations or animals is excluded.
• Activities harmful to minorities or human rights.
• Sex is not to be commodified, and gambling is excluded.

Preferred Areas of Investment

• Banca Etica invests in projects related to welfare, renewable energy, organic agriculture, and international cooperation.
• Education, culture, inclusive sports for youth, fair trade, and social/responsible enterprises are also favored.
• The bank offers personal loans to satisfy basic financial needs.

Impact Loans

• Impact loans are designed to generate positive change in the environment, communities, and society.
• These loans promote social and environmental priorities.

Theory of Change

• The Theory of Change describes how desired changes are expected to happen in a particular context.
• It identifies the missing middle between goals and the related initiatives.

Impact Finance/Investing

• Intentionality: Investment focus is on generating measurable social and environmental impact.
• Accountability: Investments are intended to promote sustainable development and social / environmental responsibility.
• Measurability: Measurable social and environmental impact is expected to be significant.
• Additionality: Investments should positively affect a community.

Social Impact Investing

• This area focuses on social and/or environmental aspects
• Investments are intended to encourage social/environmental gains, while producing financial returns.

Assessment of Application for Loans

• Annual accounts, business plans, notarial documents, and social responsibility reports are required.
• The bank uses databases (e.g. Risk Center, CERVED, CRIF) for verification and creditworthiness.

Social and Environmental Assessment

• Clients are evaluated based on social and environmental responsibility.
• Loan applications are assessed for risks that may be reputational in nature.
• Ethical and legal compliance is verified.
• The bank seeks to consolidate social/environmental responsibility.

Impact Finance Data and Results

• In 2022, over 95% of loans to corporate entities were supported by social/environmental assessments.
• Only a very small percentage of loans were issued without a preceding assessment process.

Corporate Social Responsibility

• The bank evaluates governance, work, supply chain management, and product quality.
• Projects are evaluated across several areas.

Areas of Impact

• Several areas of impact are detailed, spanning social, environmental, and international issues, like fair trade, social assistance for housing, job placement for people from disadvantaged backgrounds, welcoming migrants, and ethical/legal concerns.

Governance and Areas of Value

• Evaluating governance structures is important, including the time limits of office for leaders and the percentages of women in management roles.
• The bank examines issues related to environmental measures like green procurement and product quality. It also looks into innovations in this area.

Networks and Community

• Financial institutions must demonstrate belonging to networks and/or dependance on donations.
• These institutions must also exhibit transparency in conduct and legal compliance.

(Indirect) Impacts of Organizations

• The analysis details specific indicators related to the environmental (e.g., energy efficiency) and social (e.g., community programs) aspects of organizations' initiatives.

(Direct) Impacts of Loans

• The analysis demonstrates several direct impact indicators and identifies funding allocated towards various social and environmental projects.
• Several categories of community, environment, and other projects are examined.

Reputation Matters

• Social Assessors verify and analyze information provided by applying organizations.
• Social Assessors prepare reports & recommendations on loan applications.

The Main Source

• The source for these analysis findings is the Banca Etica's 2023 Impact Report.
• The full report can be accessed at www.bancaetica.it/report-impatto-2024.

Contact Information

• Contact information is provided for further inquiry.