Rischi ESG e Climate Change nel sistema 
di valutazione e gestione dei rischi
Guido Genero – Head of Risk Clearing – Enterprise Risk Management
CREAZIONE DI VALORE E SOSTENIBILITÀ: 
VERSO NUOVI MODELLI DI REPORTING E GOVERNANCE
Università Cattolica – Milano 9 ottobre

What does ESG mean? Towards sustainable finance
• ESG means using Environmental, Social and Governance factors to evaluate companies
and countries on how far advanced they are with sustainability
• In recent decades, both supply and demand for sustainable products are rapidly
increasing on the part of institutional investors and private savers. Investing according to
ESG criteria means making choices that are consistent not only with your own return and
risk objectives, but also with your own values and moral convictions
• Climate change due 
to greenhouse
emissions
• Resource depletion, 
including water 
• Waste and pollution 
• Deforestation
ENVIRONMENTAL 
SOCIAL 
GOVERNANCE
• Working conditions, including 
slavery and child labour 
• Local communities, including 
indigenous communities 
• Conflict and humanitarian 
crises 
• Health and safety 
• Employee relations and 
diversity 
• AML & Embargo 
Compliance
• Bribery and 
corruption 
• Board diversity and 
structure
1

ISP positioning on ESG / Climate Change risk and what the 
bank is doing: different areas of intervention
Assessment of 
business related ESG 
risks
Management of ISP 
direct exposure to 
ESG risks
Evaluation of ESG linked 
business opportunities
2

Intesa
Sanpaolo
is
aware
of
having
a
significant
impact
on
the
social
and
environmental context, thus choosing to act not only on the basis of profit, but also with
the aim of creating long-term value for the Bank, its employees, customers, community
and the environment

The management of ESG/climate change risks has been developed over the following
streams:
Focus della 
presentazione

Management of Intesa Sanpaolo direct exposure to 
environmental and climate change risks
Intesa Sanpaolo considers environment and the more specific topic of climate
change as a fundamental part of a wider management model of social and
environmental strategy, therefore it has:
issued a specific policy (Group’s “Rules for the environmental and energy policy”) 
in order to reduce its ecological footprint and that of its customers and suppliers
adhered to important international initiatives such as UNEP FI, CDP, UNGC aimed at 
promoting dialogue among firms, international organisations and society in general 
and to pursue respect for the environment
applied technological innovations for the modernisation of plants and introduced 
more energy-efficient systems
What we have done

We are working to fulfill the goal set by Climate Change Action Plan of a 37%
reduction in CO2 emissions over the 2012-2022 period (2018-2021 Intesa Sanpaolo
Business Plan)

Implementing TCFD - Task Force on Climate-related Financial Disclosures 
recommendations
3
What we are doing

Evaluation of environmental and Climate change risks 
linked business opportunities
Investment products characterized by sustainability criteria and attention to 
environmental, social and good corporate governance (ESG) factors (e.g. Eurizon
Sustainable Global Equity fund and the Eurizon ESG Target)
Issuing of green bonds (e.g. Intesa Sanpaolo Green Bond, issued in 2017 for 500
million euro, fully allocated to 77 projects, which made it possible to avoid the
generation of over 213,000 tonnes of CO2 emissions annually)
Green loans: loans and mortgages for environmental purposes (retail customers), 
projects for renewable energy and energy efficiency works (for professionals and 
businesses). In 2018, the Group disbursed approximately 1,922 million euro to the 
green economy (3.2% of all Group loans)
Allocation of a specific 5 billion euro credit plafond dedicated to the Circular 
Economy
4

Participation to EBF working group on sustainable finance incentives

Further development of sustainable products in order to promote the transition 
towards a more sustainable economy
Many Institutional investors regard sustainable finance as a way to manage
long-term risk. Banks should tap this demand offering specific products
What we have done
What we are doing

Assessment of business related environmental and climate 
change risks and involvement of  Risk Management area
The Evaluation of ESG risks at present is performed mainly through:

the reputational risk management framework, especially with reference to the 
reputational risk clearing process aimed at assessing  potential ESG risks (by a 
qualitative scorecard) related to the most significant business / credit transactions

the adoption of Equator Principles’ guidelines for the assessment of social and 
environmental risks for Project finance

the inclusion of “Social” and “Environmental” information in the “qualitative and 
quantitative component” of the Corporate rating model
5

Strengthening the ESG risk framework, applying a ESG scorecard to all corporate
exposures and extending scope and expertise of the ESG internal unit.

Developing a specific Climate Change (CC) Risk framework in the Risk Appetite
Framework in order to actively manage this risk and influence the bank strategy

Developing
CC
Risk
stress
test
capabilities
also
by
means
of
an
active
participation to the TCFD Banking Group Phase II coordinated by UNEP (next
slides);

Adopting Credit underwriting risk policies for industries highly exposed to ESG / CC
risks

In the medium term, improving ESG / CC risk factors assessment in the Corporate
rating model / process
What we have done
What we are doing

Intesa Sanpaolo has decided to support TCFD and undertake 
the journey towards a sustainable finance
Paris Agreement
• Signed to limit the increase in the 
average temperature for this century 
well below 2°C with respect to the Pre-
Industrial Era by reducing GHG emissions
• Ratified by 1811 Parties
TCFD
• Established in December 2015 by the 
Financial Stability Board with the aim of 
developing climate-related disclosures 
that “could promote more informed 
investment, credit [or lending], and 
insurance underwriting decisions”
• Includes 32 members2 including: 8 
financial companies, 8 non-financial 
companies and 8 experts 
Final Report on 
recommendations of 
the TCFD
Paris agreement &
TCFD creation
Regulatory framework is changing... and banking system is adapting
ISP supports TCFD &
best practices
Recommendations of the TCFD
• Developed by the TCFD to provide 
guidelines for institutions to 
disclose clear, comparable and 
consistent information about the 
risks and opportunities presented 
by climate change
• Recommendations are clustered in 
4 areas: Governance, Strategy, 
Risk Management and Metrics and 
Targets
• As of September 2018, more than 
5003 organizations stated their 
support for TCFD 
recommendations
1.180 Countries and EU; 2. More information available at: https://www.fsb-tcfd.org/about/
3. More information available at: https://www.fsb-tcfd.org/tcfd-supporters/
• Intesa Sanpaolo has declared its 
support to TCFD recommendations 
and its commitment «to the 
dissemination of a transparent 
reporting on the risks and 
opportunities related to climate 
change»
• Launch of a cross-functional working 
group, led by CSR, for the 
implementation of best practices
EU
Action 
Plan
Agreement by 
European
Parliament and 
Council
6

Climate Change: which risks?
Transition and Physical – TCFD Taxonomy
Market Risk: risk describing the potential shifts in supply and 
demand for certain commodities, products and services as a 
result of climate changes
Chronic Risk: risks that refer to longer-term shifts in climate 
patterns (e.g. sustained higher temperatures) that may cause 
sea level rise or drought
Technology Risk: risk related to technological 
improvements or innovations that support the 
transition to a lower-carbon economy and that can 
have a significant impact on firms to the extent that 
old systems are disrupted by new technologies
Policy and Legal Risk: risks stemming from continuously 
evolving policy actions, attempting to either constrain 
actions that contribute to adverse effects or to 
promote adaptation to climate change and from 
litigation risks (e.g. claims and court hearings)
Reputation Risk: risk of an organization’s image and 
reputation being affected by its customers’ perception of 
its contribution to (or detraction from) the transition to a 
lower carbon economy
Acute Risk: risks that are event-driven, including increased 
severity of extreme weather events, such as cyclones, 
hurricanes or floods
RISK 
MANAGEMENT
Transition Risk
Risks related to the
transition to a lower-
carbon economy
Physical Risk
Risks related to 
the physical 
impacts of 
climate change
Credit
Risk
7

Focus: TCFD has identified 4 areas impacted by climate 
change, encompassing all key aspects of bank activities
Framework of recommended Climate-Related financial disclosure
Examples
Governance
Strategy
Risk Management
Metrics and targets
Organization’s 
governance around 
climate
related risks and 
opportunities 
Board and 
management role 
Risks and 
opportunities:
• over the short, 
medium, and long 
term
•on businesses, 
strategy, and financial 
planning
Organization
processes for:
• identifying and 
assessing climate-
related risks;
•integrating climate 
risk management into 
overall Risk 
Management 
Framework
Metrics and targets
used to assess and 
manage
relevant climate-
related risks and 
opportunities
BoD Reporting
Stress test on climate-
scenarios
Credit risk models
List of metrics and 
targets
Roles and 
Responsibilities
Specific strategies
Credit risk processes
Risk Appetite 
Framework
Risk identification
Operative controls
8

TCFD Banking Group – Phase I
Extending our Horizons
The first report of April 2018 
describes a scenario estimation 
method linked to Transition Risk
Navigating a New Climate
The second report of July 2018 
deals with the evaluation 
methods of Physical Risk
UNEP FI (1), along with 16 of the world's leading banks, tried to implement TCFD
recommendations. Phase I of the pilot project provided interesting results in terms of
scenarios, models and metrics to enable a current and prospective assessment of
risks and opportunities related to Climate Change
Climate Change: Managing a New 
Financial Risk
The final report of March 2019 includes 
a survey of 45 global financial players
Transition Risk: description of a 
coherent macroeconomic 
environment through time, 
sectors and geographical 
areas
Physical Risk: description of 
extreme weather events and 
incremental climate shifts
Identify the most climate sensitive
sectors
Calibration sector/borrower level:
•
specifies the relationship 
between economic scenarios 
and credit risk
•
proxy estimate of the scenario 
impact on individual borrowers
Impacts on stressed PDs
compared to baseline 
projections, identifying 
consequences on 
sectors and operating 
margins (revenues and 
COGS)
Scenarios
Methodologies
Impacts on Portfolio
Source: UNEP FI/Oliver Wyman
Source: UNEP FI/Acclimatise
Source: Oliver Wyman
(1) http://www.unepfi.org/banking/tcfd
9

TCFD Banking Group – Phase II
WHAT’S NEXT?
Partnership / coordination 
with external companies 
that provide "climate 
scenarios" (e.g. IPCC, 
CICERO, IEA, IIEASA, PIK) 
and/or able to examine 
aggregate asset-data (e.g. 
Stanford, Oxford, CDP, 
WRI, 2di)
Deepening on the 
typology of 
methodological 
framework
Greater awareness of 
analysis tools and 
governance processes
Disclosure of the 
impact estimations 
based on high-level 
dataset aggregations 
(e.g. geographical
and/or sectorial 
analysis)
ASSET DATA & SCENARIOS
METHODOLOGY
LEGAL
UNEP FI, expanding the number of banks and starting from methodologies,
evidences and recommendations emerged during Phase I, is promoting
an improvement in the implementation of the TCFD recommendations
Phase II of the project aims to broaden and improve the results of the
previous phase
10