Presentation of Poste Italiane Group’s second Integrated Report 12 1. Presentation of the Organisation 14 2. External environment - Risks, opportunities and integrated
Risk management model 32 3. Strategy and business model 60 7. Consolidated non-financial statement 253 8. Summary of the resolutions of the ordinary Shareholders’ Meeting 269 9. Other information 271
FINANCIAL STATEMENTS OF POSTE ITALIANE AT 31 DECEMBER 2019 286 2. Basis of preparation and significant accounting policies 291 3. Changes to accounting policies 313 4. Material events during the year 322 5. Poste Italiane Group Financial statements for the year ended 31 December 2019 328 6. Poste Italiane SpA Financial statements for the year ended 31 December 2019 398 7. Risk management 474 8. Determination of fair value 513 9. Hedging transactions 518 10. Proceedings pending and principal relations with the authorities 523 11. Material non-recurring events and/or transactions 528 12. Exceptional and/or unusual transactions 528 13. Events after the end of the reporting period 528 14. Additional information 529 1 5. BancoPosta RFC separate report for the year ended 31 December 2019 552
Risk management model 32 3. Strategy and business model 60 7. Consolidated non-financial statement 253 8. Summary of the resolutions of the ordinary
Poste Italiane is now the largest logistics operator in Italy, and is a leading player in the financial, insurance and payment services sector. The Company plays an important role in the country, making a strong contribution to the production chain and the national economy: by investing and operating together with other operators in its value chain, it generates positive results not only through its own business, but also by generating externalities through the activation of a local supply chain.
With a turnover of over €11 billion, the Group’s activities generate significant impacts on the country in terms of Gross Domestic Product, tax revenues, employment and household income. These impacts are the effect of the involvement of many local companies - many of them small and medium-sized - in the supply chain and investment activities in Italian companies and government bonds. Supporting both public and private actors, Poste Italiane contributes to the development of the entire national economy.
Report on Operations at 31 December 2019 Statement from the Chairwoman and the Chief Executive Officer
Taking into account the continuous evolution of these needs, Poste Italiane monitors the relevance and effectiveness of the Sustainability Strategy adopted, the Policies that constitute it and the ESG Strategic Plan that represents its operational application into specific objectives. By understanding the future evolution of the market and listening to the voice of stakeholders through continuous activities and institutional moments - of which the annual Multi-stakeholder Forum represents the maximum expression - it was possible to renew this Strategy by introducing two new pillars: Innovation and Diversity and inclusion now flank by Integrity and transparency, People development, Support for Territory and Country, Customer experience, Decarbonisation of real estate facilities and logistics and Sustainable finance.
It is important to reiterate that the strategy is based on different types of capital in which Poste Italiane invests and which are an integral part of its business model: financial, physical-structural, intellectual, human, social-relational and natural. The use of this capital allows Poste Italiane to offer products and services on the market and create economic, environmental and social impacts.
The correct management of capital also from an ESG perspective is part of our vision of a “sustainable company ” and the path taken over the last three years is made up of many stages representative of this vision that have involved strategy, governance and reporting systems and have led to important evolutionary transformations that in a short time, have led the Company to achieve many goals in 2019.
This was followed by other entries in equally important indexes: Bloomberg Gender-Equality Index (GEI), Euronext Vigeo-Eiris World 120, FTSE4GOOD and the RobecoSAM Sustainability Yearbook 2020 as “Industry Mover”.
In light of the achievements, which give a measure of the reputation that Poste Italiane has today and its importance as a competitive lever to face and win the challenges of an increasingly evolved market, we look with satisfaction at the path we have taken so far and with confidence at the one still ahead of us, aware that only through a constant and concrete commitment to achieving common goals and shared values with our stakeholders can we grow together and face new challenges of sustainable development.
Standards” issued by the GRI – Global Reporting Initiative, with the related supplement for the Financial Services sector. In addition, the reporting process has reconciled compliance requirements (including those dictated by Legislative Decree 254/16), external communication and positioning in the sustainability indices in which the Company is involved.
First of all, the document sees reinforcement of some elements of the Integrated Reporting Framework published by the International Integrated Reporting Council (IIRC). The document, in fact, provides a series of innovative elements, including: the “impact matrix” - which provides for the assessment of the issues, not only with a view to their relevance in terms of impact on strategy, governance, performance and future prospects, but also in terms of probability of occurrence of such impact; the representation of the interconnection between the material issues for the Group and the main measurement metrics; the correlation between the forms of capital used and the achievement of the Sustainable Development Goals (SDGs). Compared to last year, it also specifies the capitals that constitute the “outcomes” of the activities in relation to the SDGs and the metrics used to measure them.
As part of the description of the main risks associated with Poste’s activities, further innovations concern the description of the way in which risks and opportunities arising from emerging trends are managed and - in line with the growing attention to climate change issues - the representation of risks and opportunities related to climate change according to the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD).
This Annual Report includes the following documents: the Report on Operations, which constitutes Poste Italiane’s Integrated Report, Poste Italiane Group’s consolidated financial statements, Poste Italiane’s separate financial statements which include BancoPosta RFC’s separate report, the related attestations provided in accordance with art. 154-bis, paragraph 5 of Legislative Decree 58/1998, and the reports of the Board of Statutory Auditors and the Independent Auditor on the year ended on 31 December 2019. The Report also includes the “Report on Corporate Governance and ownership structures”, published on the Company’s website in the Governance section, and which accounts for an integral part of this Annual Report. Reference should be made to this latter document for all further information on aspects relating to corporate governance.
Furthermore, the Report on Operations includes the Consolidated non-financial statement, prepared on the basis of the criteria referred to in the introduction as well as in the paragraph “Reporting standards and policies” of Chapter 7 of this document.
Amounts shown in millions of euros in the document have been rounded, with the result that the sum of the rounded figures does not always tally with the rounded total.
To facilitate the identification of non-financial information, the “Introduction” paragraph of the chapter “Consolidated non-financial statement” includes a detailed table which links the scopes of Legislative decree 254/16 with the paragraphs contained in the Consolidated non-financial statement section. The sections of the document where information on the Company’s non-financial is provided can be easily identified with the following infographic: NFS
Report on Operations at 31 December 2019 Presentation of Poste Italiane Group’s second Integrated Report
This is the Group's operational company. It mainly carries out activities to serve the logistics processes. It also operates on the Express Courier market, supplying non-network services with customised solutions to handle any type of transport.
This company provides commercial air transport, cargo courier transport and insures, as the Group's sole provider, the air logistics in support of mail and parcel delivery.
Address Software Srl This company develops, mainly for Postel SpA, application software packages for the processing of personal and territorial data (normalisation of addresses, data cleaning and geomarketing).
This company manages and optimises Poste's real estate assets that are no longer instrumental; it carries out town planning and construction transformations, in order to assure the relative marketing (new leases and sales). It also operates on the electricity market as "wholesale" purchaser for the Group.
Kipoint SpA Through a network of franchise stores, this company sells national and international deliveries, products and services. Following the stipulation of the contract with Grandi Stazioni, it also manages luggage deposits at major railway stations.
Conio Inc. This Californian company creates and offers innovative services in digital currencies. It controls 100% of Conio Srl, which is involved in the research, development and testing of results consisting of innovative electronic payment technological solutions (cryptocurrencies, bitcoins).
PostePay SpA This is a hybrid electronic money institution that offers payment and telecommunications services, integrating money and payment systems with the virtual operator activities for retail and business customers and the public administration.
Collective asset management company that operates through the establishment and management of mutual investment funds and the individual portfolio management service relative to institutional mandates assigned to the Group.
Company that manages Supplementary Medical Funds, services for the acquisition and validation of databases, services and liquidation of services on behalf of private medical funds; it also supplies services for the management of Poste Vita Group health and welfare products.
FSIA Investimenti Srl On 14 March 2019, FSIA Investimenti Srl, an investment vehicle 30% owned by Poste Italiane (the remaining 70% is indirectly controlled by CDP Equity via FSI Investimenti), announced its intention to exercise its call option on 7.934% of the shares in SIA SpA held by UniCredit and Intesa Sanpaolo. On 28 May 2019, the relevant purchase and sale agreement was signed, which was finalised after FSIA obtained the necessary authorisations from the Antitrust Authority and the Bank of Italy, the latter received on 24 October 2019. Moreover, on 27 May 2019, the shareholders agreements that gave FSIA Investimenti, together with other shareholders, joint control of SIA expired. Following these events, the Cassa Depositi e Prestiti Group acquired sole control of FSIA Investimenti, which in turn holds 57.4% of the share capital of SIA SpA. Poste Italiane’s indirect holding in SIA SpA (through FSIA Investimenti) rose from 14.85 to 17.23%.
In light of the above, at 31 December 2019, Poste Italiane’s investment in FSIA Investimenti was classified as associate, in place of the previous joint control.
SDA Express Courier SpA On 20 June 2019, an Extraordinary General Meeting of SDA Express Courier’s shareholders and, on 27 June 2019, the Board of Directors of Poste Italiane approved the partial demerger of the business unit responsible for commercial and customer care activities relating to SDA’s Express Parcel Delivery services to Poste Italiane. The transaction is part of the plan to create a “Single Offering”, with the aim of boosting the competitiveness and effectiveness of the Group’s positioning in the Express Delivery market by putting in place a single, comprehensive offering for all customers, with the reorganisation of the sales force and customer support. The de-merger took effect on 1 November 2019.
Poste Air Cargo Srl As part of the parcel market development strategy set out in the Deliver 2022 Business Plan, the industrial reorganisation project of the airline Mistral Air was carried out with a view to reviewing its strategic positioning, with the aim of achieving economic equilibrium and reorienting its activities towards the Poste Italiane Group’s mission. This initiative involved re-focusing on the parcel logistics business with the consequent divestment of all passenger activities, downsizing the workforce and reconfiguring the fleet.
Other transactions As part of the process of streamlining the Poste Group’s ICT processes by centralising the management of its subsidiaries’ IT systems at the Parent Company, Poste Italiane, the contract was signed on 25 June 2019 (with effect from 1 July 2019) for the sale of the Information & Communication Technology business unit of SDA Express Courier to Poste Italiane. Similarly, on 12 December 2019, the Board of Directors of Poste Italiane approved the acquisition of the business units of Poste Vita, Poste Assicura and Poste Welfare Servizi relating to ICT management activities. The operation, which has already been approved by the decision-making bodies, will take effect from 1 March 2020.
These Strategic Business Units are supported by two distribution channels for retail customers, on the one hand, and business and Public Administration customers, on the other. These channels operate alongside a series of corporate functions responsible for policy, governance, controls and the provision of business process support services.
The Payments, Mobile and Digital SBU includes the activities of PostePay SpA and the mobile telecommunications services of the associate FSIA Investimenti.
The Insurance Services SBU refers to the activities carried out by the Poste Vita Group.
In keeping with objective in the 2022 Business Plan to maximise the value of Italy’s largest distribution network, Poste Italiane continued the process of streamlining and simplifying the Group’s organisational model, with the aim of strengthening the operating model and making it more efficient.
In this context, the following organisational interventions have been carried out
� The redefinition of the model of territorial control by the staff functions, going from 9 to 6 territorial structures.
Business development � The establishment of the Customer experience Transformation function for the unitary governance of the digital innovation and transformation process initiated by the Company which, together with the objective of placing customer needs at the centre of its strategies, is increasingly focused on innovation in order to strengthen its competitive positioning and to respond in a timely manner to changes in the scenario and new customer needs.
� The redefinition, in the Human Resources and Organisation area, of the Corporate University’s organisational model and the strengthening of the role of the Academies, with the aim of innovating the training model within the Poste Italiane Group and ensuring the continuous development of corporate knowledge and skills.
Cross-cutting initiatives The establishment, within the welfare and social inclusion policies, of the People Care and Diversity Management function within Human Resources and Organisation with the aim of identifying and resolving the factors that prevent people, with any type of diversity/disability, from accessing work, while improving work inclusion processes and enhancing skills.
Multichannel commercial strategy The Group has an integrated, multichannel distribution network, which serves the country’s entire population via a physical network of Post Offices and staff on the ground and digital infrastructure with state-of-the-art multimedia channels.
Territorial network - Post Office Network the Post Office Network function manages the commercial front end for the Private Customer and SME segments and is in charge of the Post Office network and area and branch offices covering the entire country.
Territorial Network - Business and Public Administration The Business and Public Administration function of Poste Italiane guarantees the commercial supervision and sale of the Group’s products and services for businesses and the Central and Local Public Administration through the following organisational model: � central controls aimed at ensuring the coordination of territorial commercial action for the various business sectors; � central controls dedicated to strategic and high-value customers, such as the Central Public Administration (PAC) and TOP Executives; � central control dedicated to high value customers in the e-commerce segment; � an interface function towards the competent structures in the Post Office Network regarding the marketing of financial and insurance products/services for the relevant segment; � functions dedicated to commercial support activities, both at central and territorial level.
The digital web and app channels provide access to online services for 20.8 million retail users (17.6 million at 31 December 2018) and operate as both direct sales and after-sales channels. The daily average of web and app users was about 2 million (1.5 million average daily users in 2018).
In 2019, in line with its digital transformation programme, the Group continued activities aimed at simplifying and evolving with new services customers’ experience of digital channels when using Poste Italiane’s payment, financial, insurance, mail and logistics services.
In the payments area, the PostePay APP (the application available for IOS and Android devices that allows mobile management of prepaid cards) was revised from a 2.0 perspective, with the creation of a new user experience in terms of graphics and new distinctive service payment functionalities, as well as the introduction of Personal Financial Management, which allows customers to receive push notifications for credit and debit transactions and details of transactions of their card. In addition, Postepay Evolution and Postepay Evolution Business cards (registered reloadable prepaid cards with IBAN code) have been enabled for online payments through a service that allows users to store their cards, ensuring a higher level of security as only the token2 information is stored, unique to each merchant, and not the card data.
In the financial area, online sales of Postal Savings products have been extended and services have been made available 24 hours a day, both on apps and on the web.
Finally, in 2019, the multi-channel offer of the SPID3 Digital Identity was completed with the activation of new ways to request it remotely via electronic document (passport or ID card) and app PosteID and, from July 2019, also in support of compliance requirements under PSD2 regulations, Poste Italiane launched the new Digital Private Identity solution (Poste Account), which provides secure access to all digital properties (data, Internet accounts and other rights in the digital world) of Poste.
Postal logistics network activities The postal logistics network accepts, sort and delivers mail products. The letter carrier network, as mentioned above, also distributes small parcels.
The following chart provides an overview of the postal logistics network value chain and the main quantitative drivers.
In order to provide a complete representation of how the Company, through its business model and use of capital, creates shared value for the company and the country, Poste Italiane has defined a model that estimates the overall economic impacts generated on the territory. These impacts are measured through four quantities: � GDP generated, estimated as the difference between the value of production and the intermediate costs of production; � employment corresponding to jobs supported by Poste Italiane; � earned income, based on the salaries and wages paid to workers employed in the economy thanks to the economic activities carried out by Poste Italiane; � tax contribution, which refers to the total amounts paid to national and local Public Administrations.
The impacts generated by Poste Italiane on the supply chain concern the entire national territory and significantly involve small and medium-sized Italian companies
In 2019, the Group’s operations carried out to produce and deliver goods and services through the use of productive factors had direct, indirect and induced impacts on the Italian economy amounting to approximately €12.5 billion in terms of GDP and €2.1 billion in terms of tax revenue. It may also be estimated that a total of 189 thousand workers have been involved along the production chain. The use of this workforce entails the distribution of income to workers, for a total of €7.5 billion.
Contributions due to consumer spending which is achieved thanks to the earned income of workers directly and indirectly employed by the Group 1.Dire ct im pacts
Poste Group Contributions closely related to the Group’s operations in the country
Below are two focuses on the area of Poste Italiane’s suppliers, respectively the impacts generated by Italian suppliers in the individual Territorial Areas and the indirect contributions generated by Italian SME suppliers.
Each €/mln spent by Poste Italiane generates an impact of €5 million on the country’s
Each €/mln spent by Poste Italiane leads to the occupation of people in the country
Each €/mln spent by Poste Italiane generates an impact €1 million on the country’s tax revenue
The impacts arising from the activity of Poste Italiane’s suppliers are distributed throughout Italy. The result is an economic boost and an increase in employment for the whole country
More than positive results were observed from the analysis of the effects of business activities in the various territorial areas of the country. With reference to the various areas examined, there are values of Gross Domestic Product between €50 million and €1 billion. This results in an employment level of no less than a thousand people and a total income from work in excess of €30 million per area.
The economic value created in 2019 amounts to over €11 billion, 86% distributed to stakeholders
Report on Operations at 31 December 2019 1. Presentation of the Organisation
The process to define Poste Italiane’s material topics was divided into three main phases and carried out in accordance with the GRI Standards guidelines: In order to identify the potentially relevant sector-related topics and to guide Poste Italiane through its materiality analysis, the Company carried out both an internal and an external analysis which included inputs from various sources, including the Group’s strategic plan and risk management model, the outcomes of stakeholder engagement activities, trend analysis of the Group’s various sectors of operation, and the views of investors.
Identification, through internal and external analysis, of the sustainability issues potentially relevant for the Group
Stakeholder engagement Poste Italiane has always been committed to listening to the needs of its stakeholders and to building solid bonds of trust and transparency with them in outlining and consolidating its sustainability strategy, aimed at preventing and minimising any negative impacts and promoting positive ones. This contributes to the achievement of a good reputation in the social context in which it operates, with a consequent increase in value and benefits for shareholders, customers and employees.
This mapping was carried out in accordance with the international AA1000-Stakeholder Engagement Standard (SES). As a result of this activity, seven macro-categories of stakeholder were identified: shareholders and investors, local communities (trade associations, media, academia), customers (consumer associations), the Public Sector and the authorities (regulators, Fondimpresa), suppliers (business partners), personnel (Poste Italiane people, labour unions) and the environment.
Shareholders and investors Shareholders’ meetings; Corporate Governance Report; Financial relations and Periodic presentations; Road shows and dedicated meetings; The Company’s corporate website; Press releases.
The Public Sector and authorities Conferences; Dedicated meetings; Corporate communication; Periodic communications; Organisation of events.
Local communities Community projects; Partnerships; Press releases; Sponsorships; Donations; Dialogue with local authorities; Contacts during the launch of relevant projects, Publication of documents, Interviews, Events.
The Forum offered the opportunity to reflect and share ideas and projects in the areas identified by the fundamental pillars of sustainability in previous years (Integrity and transparency, People development, Support to the Territory, Customer experience, Decarbonisation and Sustainable finance) that inspire the work of Poste Italiane.
The working groups thus formed were asked to express their assessment of material issues potentially relevant to the Company through internal and external analysis. Participants were able to express their reflections through a digital tool accessible from smartphones and PCs that favoured an instant and dynamic display of the results.
Diversity and equal opportunity. Respect for diversity and ensuring equal opportunities in the company is another requirement considered essential and indispensable by public opinion and investors when assessing the ESG profile of the Company. The stakeholders present at the Forum confirmed this condition, considering it a topic of great importance for correct and responsible management of business activities. Poste Italiane guarantees the protection of human rights, values elements of diversity (in terms of different levels of age, gender, knowledge and experience) and promotes non-discriminatory behaviour within the Company as a way to foster the development of a “business culture” and a solid response against new challenges and opportunities in the market.
Environment. Attention to environmental impacts with reference to real estate and logistics are two fundamental areas for the management of climate change. The stakeholders present at the Forum confirmed this assumption, considering the topic of high importance for correct and responsible management of business activities with particular reference to sustainable mobility. Spreading a culture of respect for the environment and adopting concrete solutions for the efficient management of energy resources, water resources and waste, from a circular economy standpoint represent significant objectives for the Company. It therefore undertakes to monitor environmental impacts and to encourage a process of change geared towards safeguarding the environment by adopting less polluting and harmful solutions at the expense of the environment.
The extreme importance assumed by the issues “Innovation and digitisation of products, services and processes” and “Diversity and equal opportunity” has led Poste Italiane to add the two new pillars Diversity and inclusion and Innovation, previously included respectively in the pillars People development and Customer experience. This way, Poste Italiane aims to give greater importance to two sectors that have always been central to the management of its business activities. The innovation of products, services and processes is, in fact, emphasised as a tool that allows the Group to successfully face an increasingly digital and technological world through constant development of its business. Diversity and inclusion, in the workplace, are aimed at increasing respect for the value of people, the value of the uniqueness of the individual and access to the same opportunities for professional growth, considered essential values in which the Company must absolutely invest for its success.
Integrity and transparency Prepare appropriate internal control measures and spread a corporate culture within the organisation based on integrity, professional ethics and honesty in order to build trusting relationships with its stakeholders and conduct its activities correctly and transparently in every single operation, especially in combating active and passive corruption.
Respect implementation deadlines and procedures for activities (level of service and performance) and provide customers with a quality experience that goes beyond making use of a traditional product or service. In addition, build a relationship of trust by activating customer engagement channels to be always informed on customers' expectations, needs and satisfaction regarding products and services offered, and the correct management of complaints.
Staff training and development Guarantee our staff ongoing development of their knowledge and skills and the opportunity to reach their full potential through training courses aimed at ensuring growth and strengthening of know-how in line with the needs they and the market have expressed, also with a view to better managing business and organisational changes.
Monitor the environmental impact of logistics activities and encourage a process of change aimed at safeguarding the environment by adopting lower-impact solutions regarding the provision of postal and logistics services, including: the use of hybrid/electric vehicles, rationalisation of distances travelled, correct waste management, and development of recharging infrastructure for customers' vehicles.
Protection of human rights Guarantee the protection of human rights and the promotion of non-discriminatory behaviours within the Group, including through compliance with recognised standards, incorporation of the risk of violation within the Group's risk assessment model, and valorisation of diversity elements (in terms of differences in age, gender, knowledge and experience) which foster the development of a "corporate culture" and a response to new challenges and market opportunities.
Staff welfare and wellbeing Provide staff with modern, flexible working tools and models that respond to specific personal needs and ensure work-life balance (e.g. agile working initiatives, improved maternity and paternity arrangements, the provision of benefits in the field of healthcare, etc.).
Relations with social partners Consider dialogue with staff and labour union representatives as essential in finding shared solutions relating to issues that can have significant impacts on the organisation, the business and above all human capital, a vital corporate asset for the Company.
Guarantee the privacy of customers' data, protect intellectual property and provide an effective management system for IT security and cybersecurity in order to ensure business continuity, protect the information assets of the Company, customers and other stakeholders, and the security of transactions.
Spread a culture of respect for the environment and adopt concrete solutions for the efficient management of energy resources, water resources and waste, from a circular economy standpoint. For example, procurement of renewable energy, installation of renewable energy production plants, building efficiency projects, organisation of separate waste collection, etc.
In accordance with the indications of the International <IR> Framework, the material issues were assessed not only with a view to their relevance in terms of their impact on strategy, governance, performance and future prospects, but also in terms of the likelihood of such an impact occurring.
In the course of the materiality analysis carried out with management and stakeholders, the impacts of material issues from a financial, operational, strategic, reputational and regulatory perspective were assessed through quantitative and qualitative factors, taking into account the internal and external effects and the time frame of reference
The matrix below illustrates the relevance of the material issues in terms of the intensity and likelihood of occurrence of the related impacts.
Interconnection between material issues, risks and management methods With the aim of integrating ESG (Environmental, Social, Governance) within the strategy and business processes, the material issues identified were related to potential risks, indicating the stakeholders involved, the impact on Poste Italiane and its stakeholders and the main management methods adopted by the Group.
� Constant structured dialogue with bodies and authorities and agreed local community engagement initiatives
� Economic � Constant structured dialogue with bodies and authorities and agreed local community engagement initiatives
� ESG � Health and safety � Making the Postal, Communications and Logistics fleet “green”, partly with the aim of increasing load capacity � Redesign and development of the delivery network (e.g. increase in the number of afternoon delivery lines, introduction of deliveries to lockers, Post Offices and third-party networks)
� Management of risks and opportunities relating to ESG factors within traditional insurance processes
� Human rights � Specific organisational responsibility for diversity and inclusion � Identification of possible training initiatives to create culture for all staff � Introduction of control mechanisms for the protection of human rights, equal opportunities, diversity and inclusion
� Staff engagement programmes (e.g. “employee engagement programme”, activation of a welfare platform, an absenteeism competence centre, etc.) � Incentivisation of the use of remote working tools
� Economic � Health and safety � Human rights � Quality of life, wellbeing
Behaviour of suppliers not in line with Poste Italiane’s sustainability policies
� “Open and Transparent Contracts” portal � Centralisation of Group companies’ procurement activities within a corporate function � Supplier qualification system
� Health and safety � Specific organisational responsibility for the management of the company fleet � Adoption of energy efficiency solutions for real estate assets and use of renewables � Implementation of the Environmental Management System for Group companies
most at risk of financial exclusion as a percentage of total new acquisitions
Occupational health and safety GRI 403 Occupational Health and Safety •
Environmental impacts of real estate facilities • GRI 302 Energy • GRI 303 Water and wastewater • GRI 306 Wastewater and waste • GRI 305 Emissions
In an environment marked by a high degree of operational and regulatory complexity, and by the need to compete increasingly efficiently in the Group’s core markets, risk management and the related control systems have a central role to play in the decision-making and value creation processes.
For this reason, the Company has worked towards the adoption of a SCIGR oriented towards sustainable success, i.e. the creation of long-term value for the benefit of shareholders, taking into account the interests of other stakeholders relevant to the Company. In fact, the SCIGR of Poste Italiane is integrated both internally and externally with respect to the System. On the one hand, its components must be coordinated and interdependent with each other whilst, on the other, the overall system has to be integrated into the general organisational, administrative and accounting structures.
In line with statutory requirements and the related best practices, the SCIGR consists of three levels of control and involves a range of actors within the organisation.
Risk management and risk assessment Poste Italiane has adopted a Risk Management model based on the Enterprise Risk Management (ERM) framework, with the aim of providing an organic, integrated vision and an effective, standardised response to the risks to which the Group is exposed. The Group Risk Management function (GRM), which forms part of the Corporate Affairs function, is responsible for ensuring that these objectives are met. This is primarily done through the definition of an integrated risk management process that relies on the coordinated involvement of all the actors in the Internal Control and Risk Management System, above all the specialist forms of second-level control, the use of standardised models and metrics based on Group-wide criteria, and the design and implementation of shared tools for assessing and managing risk. In this latter regard, the Group implemented an integrated Governance, Risk and Compliance (GRC) platform in 2018 to support the integrated risk management process. This IT tool assesses and manages operational risk, in accordance with Legislative Decree 231/01 and the various fraud, IT security, strategic, ESG and reputational risks, as well as ensuring compliance with the statutory requirements applicable to financial and payment services. This is the tool that has enabled the Group to maximise integration of the risk management process, ensuring that risk assessment methods are shared across all the specialist second-level control functions. At the same time, it has improved communication with senior management and corporate bodies and between the various control functions, minimising the risk of inadequate or redundant information.
Operational risk refers to the risk of losses resulting from inadequate or failed internal processes, people and systems, or from external events. Management of operational risk takes place at both the level of specialist units within the Group (the Risk Management functions within BancoPosta, the Poste Vita Group, BancoPosta Fondi SGR and PostePay), in compliance with the respective supervisory standards, and at an integrated level, involving the GRM function. The following risks, among others, are closely monitored: i) IT risk, above all the risk that malfunctions and/or shortcomings in information systems could result in the loss of data integrity, leaks of personal data or breaches of confidentiality, potentially causing disruption to the services provided to customers; ii) health and safety risk, with specific regard to the risk of workplace injury to employees or contractors as a result of operating activities (e.g. the collection, transport and sorting of parcels and letter post, and the delivery of postal products using motor vehicles); iii) physical security risk, relating to access to the headquarters premises of Group companies, to Post Offices or other private areas by unauthorised or unidentified persons, and the limited protection of Poste Italiane's assets and property against criminal behaviour (robberies, losses resulting from fraud, theft, ATM attacks, vandalism, etc.). Operational risk also includes disruption and/or obstacles to entry to the Group's operating facilities (mail sorting centres and delivery centres, etc.) due to industrial action or strikes.
This refers to the risk that breaches of existing laws and regulations, such as the risks connected with Legislative Decree 231/01, Law 262/05, Data Protection and Market Abuse regulations or the introduction of new legislation or regulations (or new interpretations legislation and regulations) of either general importance (e.g. regarding administrative, accounting, tax matters, etc.) or specific to the sectors in which the Poste Italiane Group operates. This risk category includes the risks linked to the introduction of new regulations governing the management and development of universal postal services and the related rates providing a return for Poste Italiane, and the risk of the failure to meet the service quality standards set by the regulator (the Autorità per le Garanzie nelle Comunicazioni or AGCom).
This category regards the risks connected with a negative perception among the Group's stakeholders, in response to which the Group has adopted a stakeholder engagement framework in order to identify and assess this type of risk at source. The main element of reputational risk to which the Group is, by its nature, exposed is linked to market performance and primarily associated with the placement of postal savings products and investment products issued by third-party entities (bonds, certificates and real estate funds) or by Group companies (insurance policies issued by the subsidiaries, Poste Vita and Poste Assicura, and mutual funds managed by BancoPosta Fondi SGR), and those linked to the perceived and effective quality of the services linked to letter post and parcel delivery.
ESG Risks arising from factors related to environmental, social and governance issues (in particular, related to human rights and climate change).
Failure to adapt to these trends will result in missed business opportunities, reduced revenue, qualitative and quantitative repercussions in terms of the mix of its employees, and sanctions by regulatory and supervisory authorities. The tables below summarise the related risks, opportunities and management methods for each emerging risk.
MOBILITY REVOLUTION Introduction of new mobility models, technological evolution of vehicles, sharing mobility. More efficient, cleaner, safer mobility
� Failure to respond to emerging payment trends in a timely manner
� Management of customer biometric data acquired for the management of new payment systems
� Launch of new products (e.g. platforms and instruments for cryptocurrency payments)
� First integrated payment and mobile product that allows managing, through a single App, telephony and payment services in an intuitive and secure way (Postepay Connect Service)
� Collaboration agreements with startups for the development of innovative solutions in the financial services and payments area
AGEING POPULATION Increased longevity combined with low birth rate resulting in a change in the generation mix
� Inadequacy of standard products for changing consumer needs (e.g. smart devices to collect medical data in real time, etc.)
ATTRACTING DIGITAL TALENT Need to identify and recruit resources with e-skills and, in general, to strengthen new staff skills
� Low staff turnover also due to the ageing of the company’s population
� Inadequate training activity in terms of delivery and content, also with innovative tools (e.g. holograms, virtual reality, etc.)
� Paths for innovation (“Innovation Storm” or company Hackathons that have as their objective the engagement and involvement of the corporate population in experiences of creativity and problem solving related to issues of interest to the business)
INCREASED CONNECTIVITY Increased connections between business and people and the need to manage an increasing amount of data and information
� Difficulties in managing data from an increasing number of sources (e.g. smartphones, tablets, smart watches, etc.)
In line with the policies adopted, the Group’s risk management model periodically provides for identification of corporate activities and organisational areas in which a human rights violation risk might occur, by applying risk assessment procedures. In particular, the risks associated with human rights have been identified and analysed by considering various drivers - in relation to Poste Italiane (employees) and third parties (suppliers, sub-suppliers, customers, local communities, the financial community ) - which are shown below. In addition, Poste Italiane provides for specific mitigation measures to respond to the risks identified and associated with each driver.
Risk drivers Main risk management actions and tools 1. Dignity and respect � Group Code of Ethics
�Whistleblowing portal 2. Freedom of association and protection of the right to organise � Constant preventive dialogue with social partners
� Study and monitoring of regulatory and doctrinal developments in the field of labour law3. Freedom of association and collective bargaining 4. Discrimination � Group Code of Ethics
5. Salary conditions and working hours � Signing of new employment contract which provides for remuneration negotiated with the labour unions and uniform conditions for all workers
� In addition to the ethical and social principles set out in the Code of Ethics, formal acceptance of anticorruption and human rights principles by the Group’s suppliers, subcontractors and partners 6. Training � Training initiatives and individual training plans for Poste Italiane employees, regarding both processes and products
� Specific audits at suppliers’ premises to verify the conditions declared in the contract
� Development of occupational health and safety supervision (achievement of 18001 certification, implementation of the “Integrated Management System”, etc.)
� Health and Safety portal for the management of occupational health and safety issues, as well as references to the main new legislation and case law regarding this matter 8. Data protection � Consent management
The management and reporting of climate change risks according to the indications of the Task Force on Climate-related Financial Disclosures The extensive presence of Poste Italiane on the territory and the related environmental impact of its activities, require the Company to adopt a responsible approach in order to reduce its environmental footprint and contribute to the low-carbon transition of the economy and the entire country.
The CCRS also has the task of assisting the Board of Directors to evaluate and decide on sustainability.
At managerial level, the main specific roles on environmental issues are covered by the Chief Executive Officer and the Group Risk Management function: the CEO of Poste Italiane SpA is responsible for the establishment, maintenance and effectiveness of the Internal Control and Risk Management System (SCIGR), formulating sustainability strategies related to environmental issues and overseeing their implementation by constantly checking their adequacy and effectiveness, always on the basis of the assessment of risks and related opportunities.
Strategy The Company has adopted a business model in which ESG issues support the achievement of the financial objectives set out in the Deliver 2022 Strategic Plan. To this end, the Group has adopted a sustainability strategy that includes policies, objectives and adherence to recognized initiatives related to environmental issues and climate change.
Moreover, in relation to the investment sector, with the aim of promoting the proper management of risks linked to environmental issues in their investment decisions, BancoPosta Fondi SGR and Poste Vita have adopted specific responsible investment policies. The Policies describe the approach followed in the management of risks and opportunities related to environmental factors (as well as social and governance factors), within traditional investment processes, in the belief that evaluating ESG risks and opportunities encourages the development of innovative solutions and contributes to the management of the business while providing a concrete response to the social and environmental needs expressed by the community.
The process of responsible investment is therefore also based on the assessment of the environmental profile of issuers: in this context, initiatives, policies and performance relating to the impact of issuers on climate change are analysed. At the same time, Poste Vita has also adopted a responsible insurance policy that describes its model for assessing the risks and environmental opportunities of counterparties within the insurance processes.
Risk management As part of the risk management model adopted by the Group, risks related to climate change in relation to the short, medium and long term are also analysed. The model considers both the possible impacts that climate change-related phenomena (e.g. extreme climate events, temperature rise, rising sea levels, etc.) may have on the business of Poste Italiane (indirect impact) and those that Poste Italiane’s activities may have on the climate (direct impact).
The process of identifying and assessing risks and environmental management methods also extends to counterparties (suppliers, business partners, other companies), impacting procurement processes and any extraordinary finance transactions. The Group’s risk management model provides, among other things, for the identification of suppliers and partners that may present risks related to environmental protection, also through a multidimensional analysis of their profile that takes into account parameters such as: possession of environmental, quality and energy performance certifications and adoption of environmental management systems, ethical standards of conduct and Minimum Environmental Criteria (MEC).
The risks associated with climate change have been identified and analysed by considering various drivers - attributable to two macro-areas (transition risks and physical risks) - which are illustrated below. In addition, Poste Italiane provides for specific mitigation measures to respond to the risks identified and associated with each driver.
� Development and dissemination of the digitisation process - regarding processes and procedures as well as products and services - to help reduce pressures on the environment 3. Market scenario Long-term � Development of existing products and services with alternatives that take ESG criteria into account (e.g. investment, insurance)
� Use of energy sources that do not use fossil fuels (e.g. solar energy from photovoltaic panels on buildings)
� Participation in climate-related working groups and initiatives, partly with a view to defining sectoral benchmarks and/or helping to draw up guidelines
� Dialogue and collaboration with national and international bodies and associations regarding the definition and adoption of models, policies and strategies aimed at combating climate change
� Dialogue with local institutions (e.g. Civil Protection, Civil Defence) regarding coordination of emergency and rehabilitation activities
Driver Time horizon Main risk management actions and tools 1. Use of resources Medium-term � Adoption of more efficient means of transport
� Development of investment products and insurance products for climate adaptation
The main metrics refer to the indicators proposed by the Global Reporting Initiative (GRI) reporting standards and are reported annually as part of the non-financial disclosure made available to stakeholders. The “Indicators Tables” section of the following document outlines indicators related to atmospheric emissions (GHG) of Scope 1, Scope 2 and Scope 3 (GRI 305-1, GRI 305-2; GRI 305-3) and the energy consumption indicators that constitute the main emission sources. The indicators analyse in detail the areas of business that have an impact on the climate and to what extent as well as the emission sources, providing the company’s risk management system with useful information to identify and manage climate-related risks, opportunities and performance.
Incorporating sustainability within Poste Italiane’s Strategy 4. The financial and operating objectives shown in the tables refer to 2022.
To be sustainable for Poste Italiane means defining a clear strategy on ESG issues and structurally incorporating them within the strategic objectives set in the Deliver 2022 Plan4. Over the period of the plan, the Company has envisaged €2.8 billion of investment in strategic assets, in order to achieve financial objectives based on realistic assumptions, with limited execution risk.
�Revenue: €0.8 billion (2017: €0.6 billion). �Payment card revenue: €0.4 billion (2017: €0.2 billion). �EBITDA: €0.2 billion (2017: €0.2 billion), with CAGR of 1%.
Regarding Financial Services, the model focuses on the distribution of third-party products without credit risk, controlled by a distribution platform. The model aims at promoting sustainable growth, through a more efficient allocation of capital and a wider range of products. Important steps in the implementation of the Plan include the renewal of the postal savings agreement signed at the end of 2017 with Cassa Depositi e Prestiti, the three-year distribution agreement signed in April 2018 with Intesa Sanpaolo, the agreement with UniCredit regarding the distribution of loans, and reaching in March 2018 a series of agreements with the Anima Group regarding closer cooperation for savings management services. In 2019, reached an agreement with Moneyfarm for the distribution of PosteMoney Investimenti to customers of Poste Italiane. The agreement with Tink, on the other hand, supports Poste Italiane with opportunities from open banking, resulting from a constantly evolving context determined by the new PSD2 regulation.
�Revenue: €4.9 billion (2017: €5.0 million), maintaining stable turnover and, at the same time, reducing the importance of capital gains (down to zero in 2022, from over €0.5 billion in 2017). �EBIT: €0.7 billion (2017: €0.6 billion). �Common Equity Tier 1 Capital: 19%.
�Gross premium revenue: €20.7 billion (2017: €20.3 billion). �Distribution of P&C policies: over 2 million new contracts per year (2017: 0.4 million) as a result of a distribution model that completes the insurance product offering.
Responsible Investment Policy of Poste Vita Responsible Insurance Policy of Poste Vita Group policy on community initiatives Group policy on environmental sustainability Feb ’19 2nd Multistakeholder Forum Oct ’18 3rd Multistakeholder Forum Nov ’19
DJ Sustainability World Index and Europe DJ Sustainability Index Sept ’19
Over the last three years, Poste Italiane has undertaken an important sustainability path aimed at promoting the distinctive elements of its corporate strategy, transforming market challenges into opportunities for the creation of shared value and contributing to the development of the company’s reputation.
Diversity policy of the management and control bodies Guideline for investment in sensitive sectors BancoPosta Fondi SGR Guideline on the exercise of voting rights and engagement activities of BancoPosta Fondi SGR Guideline for investment in sensitive sectors of the Poste Vita Group Guideline on the exercise of voting rights and engagement activities of the Poste Vita Group Apr ’19
European Women on Boards Bloomberg Gender-Equality Index Sustainability Yearbook 2020 Women's Empowerment Principles Jan ’20 2018 Integrated Report Mar ’19
The value of reputation and the Sustainability Indices in which Poste Italiane is present In an economic-financial context in which the market value of companies increasingly derives from their intangible assets, reputation represents an extraordinary asset for Poste Italiane, as it is able to significantly influence the behaviour and choices of its stakeholders and, as a result, creates a strong impact on business and corporate strategies and becomes a competitive lever for the Company to face (and win) the challenges of an increasingly evolved market where the boundaries of traditional business are increasingly transient and trust becomes an element of choice for consumers.
Top Manager Reputation In 2019, for the first time, the CEO of Poste Italiane entered the Top 15 in the Top Manager Reputation ranking, drawn up by the Permanent Observatory of Reputation Science on the online reputation of top management companies active in Italy. The CEO took fifth place in the ranking.
HR & Organization Innovation Award The Group was awarded first place in the “Chatbot for digital learning” project for the adoption of an artificial intelligence system applied to learning.
PostePay first position at the 2019 Awards At the MVNO World Congress in Amsterdam, PostePay SpA, thanks to its Connect offer, distinguished itself as the most innovative and successful telecommunications operator in the international market.
BancoPosta and Postepay apps products of the year The BancoPosta and Postepay apps have won the “Elected Product of the Year” award, an important recognition of Poste Italiane’s ability for innovation, which has been able to create market-leading products that are central to customers’ lives.
FEIEA Award The NoidiPoste app, the internal communication tool for employees, stood out among the top five at European level, ranking for the “best use of social media application”.
5th most transparent company In the transparency ranking, Lundquist’s annual research, Poste climbs the ranking of the major Italian companies and reaches fifth place, thus gaining seven positions compared to 2018.
Top 10 Socially Devoted In 2019, the company was again in the Top 10 of Italian companies, drawn up by SocialBakers, climbing three positions.
Leader in media communication EIKON Strategic Consulting, through the Top Ten research, analyses and compares the press image of the top 10 Italian companies in the top 10 newspapers of the country. Poste climbs 9 positions. In a range between 0 and 1, the company went from the bottom of the ranking with 0.37 in 2017, to substantial leadership with 0.93 in 2019.
The award recognises Poste Italiane for a new way of doing business with innovative financing methods aimed at making business more and more sustainable.
Most influential brand among Italian listed companies Poste is the most influential Italian listed company in the daily choices of citizens, according to the international ranking The Most Influential Brands 2019 drawn up by Ipsos. The company has achieved 23rd place in the Global Top 100 for Corporate Social Responsibility by climbing 10 positions in two years.
Poste Italiane was awarded the highest level (Category 1) in 2019, which entitles it to a certificate of excellence. Only seventeen postal operators in the world have been awarded the highest prize this year, including nine Europeans. The Certificate of Excellence refers to the results achieved in the Sustainable Development Strategy and the reduction of pollutant emissions.
In 2019, Poste débuts in the Dow Jones Sustainability World Index (DJSI) and the more selective Europe Dow Jones Sustainability Index.
For the first time, Poste Italiane is included in the FTSE4Good index. An index that assesses the performance of companies that are globally recognised for their high standards of social responsibility. The FTSE4Good Europe and FTSE4Good Developed indices, in which Poste makes its début, include companies that stand out for their transparent management and application of sustainable criteria.
Poste Italiane joins the Bloomberg Gender-Equality Index (GEI) 2020, the main index for measuring company performance on gender equality issues and the transparent reporting of data and information related to it. The Gender-Equality Index 2020 includes 325 companies operating in 50 different sectors in 42 countries.
Poste Italiane conquers ninety-eighth place among the major groups of the Stoxx Europe 600 list in the Gender Diversity Index (GDI) compiled by the organization “European Women on Boards” (EWOB). The new award places the Group at the top positions in Europe for the presence of women in positions of responsibility. The EWOB indicator has a range between 0 and 1 and with a GDI of 0.69, Poste Italiane exceeds the European average of 0.53.
Poste Italiane ranks among the top ten companies in the global insurance industry in terms of sustainability in the Sustainability Yearbook 2020, the Sustainability Yearbook published by S&P Global in collaboration with rating company ESG RobecoSAM, which assesses the sustainability performance of leading companies globally. The Group was awarded the Industry Mover award for having obtained the best change in score from the previous year with respect to the peers in the selected sector, being, moreover, the only company to have obtained this recognition within the “Insurance” sector.
The Poste Italiane Group has obtained a rating of 1, considered to be the highest possible, in the Environment and Social areas, in Institutional Shareholder Services Inc. (ISS).
Poste Italiane’s sustainability strategy The Company’s Sustainability Strategy involves a system of Sustainability Policies and an ESG Strategic Plan that are in line with the Group’s business strategy and criteria, and with national and international social and environmental development targets.
The Group’s sustainability policies The incorporation of sustainability within the Company’s regulatory system has led to the definition of the following policies.
The Poste Italiane Group policy shows that personal data protection is a fundamental value that every Group Company must adhere to in its daily activities. The Group protects and promotes the protection of personal data and the rights of data subjects through information and awareness campaigns and policies for data protection.
The Policy sets out the general principles, objectives and methods for managing the Group's environmental impact and confirms Poste Italiane's commitment to promoting efficient use of natural resources and focusing on seeking innovative solutions to protect the environment in its value chain.
In its Responsible Insurance Policy, Poste Vita defines principles that enable inclusion of ESG aspects in the management of its insurance activities, and concrete adherence to principles and guidelines recognised at national and international level regarding the incorporation of sustainability criteria within traditional insurance processes.
In its Responsible Investment Policy, BancoPosta Fondi SGR sets out principles that enable inclusion of ESG elements in the management of its investment activities, making a positive contribution to the impact counterparties in its financial portfolios have on the community, and concrete adherence to recognised principles and guidelines.
BancoPosta Fondi SGR's Guideline for investment in sensitive sectors defines measures to identify, assess and monitor exposure to activities that present a relevant intrinsic risk from an ESG point of view, thus enabling environmental, social and governance aspects to be incorporated into the investment process.
The SGR's Guideline defines measures and procedures to exercise voting rights in accordance with established national and international reference principles and to promote the proper management of ESG issues through beneficial dialogue with issuers of securities in their financial portfolios.
The Company's Guideline defines measures and procedures to exercise voting rights in accordance with established national and international reference principles and to promote the proper management of ESG issues through beneficial dialogue with issuers of securities in their financial portfolios.
The document sets out recommendations regarding aspects of diversity of the members of the Board of Directors and of the Board of Statutory Auditors, such as age, gender, ethnicity, geographical origin, training and professional experience.
The Group’s Environmental Social and Governance (ESG) Strategic Plan Poste Italiane’s ESG Strategic Plan is based on 8 key sustainability Pillars in the ESG areas relevant for the Group. This year, in consideration of the importance given during the Multi-stakeholder Forum to the issues related to innovation, diversity and inclusion, two new Pillars related to these issues were introduced. The Company is committed to achieving specific actions and objectives under each pillar for the proper management of material issues. These objectives have been identified also with reference to the targets set at global level by the United Nations in the Sustainable Development Objectives and the contribution offered by Poste Italiane for their achievement.
The pillars of Poste Italiane’s ESG Strategic Plan that support the Deliver 2022 Plan
The structured path that has directed management towards the definition of the milestones to be pursued in the coming years, in accordance with the time frame covered by the business strategy indicated in the Deliver 2022 Plan, has produced actions and objectives formalised within the ESG Strategic Plan. With a view to creating shared value, these stages have been identified taking into account the opinions expressed by stakeholders during engagement activities.
Reference should be made to the section on “Performance” in which the objectives, management methods and key performances achieved in the pillars of the Group’s ESG Strategic Plan are dealt with.
In order to support the definition of a sustainability strategy consistent with the evolution of the context, Poste Italiane actively participates in national and international networks and associations that aim to stimulate development and continuous discussion on sustainability issues.
Signatory of: Principles for Responsible Investment: the PRIs are a set of six principles that set out the main actions to be taken by investors and provide specific tools (e.g. frameworks, guidelines) aimed at incorporating environmental, social and governance (ESG) factors within traditional investment policies.
Sodalitas: established in 1995 on the initiative of Assolombarda, this foundation was the first organisation to promote corporate sustainability in Italy, by contributing to the development of the role of companies as social as well as economic players, and putting the strengths of corporate culture at the service of civil society. A unique organisation in Italy, it brings together the commitment of more than 100 leading companies and a group of volunteer managers, and is a reference point for companies that consider sustainability to be a vital strategic dimension. It has gained respect as a partner of European institutions for implementing the sustainability agenda in Italy, and stands out for its ability to implement multi-stakeholder initiatives for generating shared social value.
Valore D: founded in 2009, this is the first association of companies to promote women’s diversity, talent and leadership in support of greater gender balance within its 150 member organisations. This collaboration enables Poste Italiane, as a supporting member since 2012, to actively participate in programmes and workshops organised by the association, as well as to take part in benchmarks and the sharing of best practices regarding the issues of diversity management, achievement of work-life balance and welfare.
ASPHI: an organisation that has been promoting the integration of disabled people in schools, employment and companies via the use of ICT technology for over 30 years. The collaboration with Poste Italiane has been consolidated over several years, in relation to participation in programmes for the inclusion and enhancement of disabled people in corporate environments.
The Deliver 2022 Strategic Plan has implemented a business renewal programme based on the centrality of new consumer needs and will allow full capitalisation of the unique strengths of the Poste Italiane network, which boasts over 12,809 Post Offices located throughout the territory.
Payments, Mobile and Digital • Transaction Banking • Mobile telephony • Digital services for the public administration • Digital services for the
Key performance indicators of Input See the table: «Main KPIs for the measurement of Input and Outcome on capital used by Poste Italiane»
Also with a view to circular economy, this model is based on the use of financial, physical-structural, intellectual, human, social-relational and natural capital which, together with a governance and a Strategic Plan integrated with an ESG perspective, allow Poste Italiane to offer products and services on the market (output) and create impacts (outcome) that are economic, environmental and social and attributable to the United Nations Sustainable Development Goals (SDGs).
The following diagram illustrates the interaction between strategy, value creation process and forms of financial and non-financial capital that characterise Poste Italiane’s business model.
Insurance Services • Protection of person, property and animals • Funding protection • Enterprise multi-risk • Guaranteed savings and asset management • Welfare
Key performance indicators of outcome See the table: «Main KPIs for the measurement of Input and Outcome on capital used by Poste Italiane»
Physical-structural • territorial capillarity • digitisation • accessibility and availability of services
«Main KPIs of the Payments, Mobile and Digital Services sector» «Main KPIs of the Financial Services sector» «Main KPIs of the Insurance Services sector»
Main KPIs for the measurement of Input and Outcome on capital used by Poste Italiane
Capital Description Measurement indicators References to sections in the Annual Report
� FS 11 Percentage of assets subject to positive and negative environmental or social screening regarding social/environmental aspects
� GRI 205-1 Companies assessed for risks related to corruption and percentage of operations audited for risks related to corruption
� Legality and incorporation of ESG criteria within the procurement processes
�Weight of electricity consumption relating to real estate facilities by type of business
Financial inclusion � New customers in the categories most at risk of financial exclusion as a percentage of total new acquisitions
� Quality of universal service � Customer experience in Post Offices � Customer complaints by type � Customer satisfaction � Settlements
� Number of digital services offered � Number of digital transactions
� GRI 303 Water and wastewater � GRI 306 Wastewater and waste
The chapter on Performance indicates the objectives to be achieved, with an indication of the state of implementation of the targets set. In addition, for each pillar, the different types of capital that contribute to the achievement of certain SDGs (outcome ) are highlighted.
On 5 November 2019, the Board of Directors of Poste Italiane, in light of the Parent Company’s performance and financial position in the first half of 2019, the outlook for operations and in line with prevailing practice, decided to advance part of the ordinary dividend for 2019 as an interim dividend. To this end, the Company has prepared a Report and Financial Statements pursuant to article 2433 bis of the Italian Civil Code, which show that the Company’s financial position, results of operations and cash flows allow such distribution. The opinion of the independent auditors was obtained on these documents.
Based on the number of shares outstanding at 5 November 2019, which amounted to 1,300,852,035, the total amount of the advance payment was €200 million.
MAGISTRATE APPOINTED BY THE ITALIAN COURT OF AUDITORS TO AUDIT POSTE ITALIANE Francesco Petronio6
Francesca Isgrò (Chairwoman) Carlo Cerami Mimi Kung Roberto Rao 1. The Board of Directors was elected by the Annual General Meeting held on 27 April 2017 to serve for a period of three years, and will remain in office until the Annual General Meeting’s approval of the financial statements for the year ended 31 December 2019.
2. Committee members were appointed by the Board of Directors’ meeting of 28 April 2017. 3. The Board of Statutory Auditors was elected by the Ordinary General Meeting of 28 May 2019 to serve for a period of three years and will remain in office until the General Meeting’s approval of the financial statements for the year ended 31 December 2021. 4. The Supervisory Board was appointed by the Board of Directors’ meeting of 30 July 2019 for a three-year term and will remain in office until 30 July 2022. 5. The only internal member, Head of Poste Italiane SpA’s Internal Auditing. 6. Starting 1 January 2020, the Court of Auditors assigned the appointment to Piergiorgio Della Ventura. 7. Company appointed to perform the statutory external auditing of the accounts for FYs 2011-2019. The Ordinary General Meeting of 28 May 2019 resolved to appoint Deloitte & Touche SpA to audit the Poste Italiane Group for the years 2020-2028.
The Board of Directors consists of nine members (eight non-executives and one executive) and normally meets once a month to examine and resolve regarding the operating performance and vote on resolutions regarding the results of operations, proposals relating to the organisational structure and transactions of strategic importance. The Board met 11 times in 2019. Of the nine members of the Board, seven meet the requirements to qualify as independent in accordance with the Corporate Governance Code for listed companies and eight qualify as independent in accordance with the independence requirements in the Consolidated Law on Finance and the By-laws.
In accordance with the provisions of the Italian Civil Code, the Board of Directors has delegated certain executive powers to the Chief Executive Officer and has established, in accordance with the recommendations in the Corporate Governance Code and the Bank of Italy’s supervisory standards, four Board Committees to provide recommendations and advice: the Nominations and Corporate Governance Committee, the Remuneration Committee, the Audit, Risk and Sustainability Committee and the Related and Connected Parties Committee.
The Chief Executive Officer and General Manager, to whom all first-level departments report (except for the Internal Auditing function, which reports directly to the Board of Directors under the supervision– designed to act as a link with the Board of Directors– of the Chairwoman), has powers for the administration of the Company, unless otherwise provided for by law and the Company’s By-laws and with the exception of the powers reserved to the Board of Directors. The Chief Executive Officer is also the Company’s legal representative within the scope of the powers delegated to him.
With regard to BancoPosta RFC’s governance, the rules governing the organisation, management and control of BancoPosta’s operations are contained in the specific BancoPosta RFC Regulation in the Report on Operations of BancoPosta RFC to which reference is made.
Following the receipt of clearance from the Bank of Italy, the General Meeting of Poste Italiane held on 29 May 2018 approved the proposed removal of the assets, liabilities and contractual rights attributable to the card payments and payment services business unit from the ring-fence that applies to BancoPosta RFC. On 1 October 2018, this business unit was transferred to the subsidiary PostePay SpA, in assets earmarked for monetics and payment services, in order to enable the latter to operate as an Electronic Money Institution (EMI).
In 2019, the Poste Italiane share price rose by 45% from €6.970 at the beginning of the year to €10.12 in December, reaching a peak of €11.205 in November. Performance for the year measured in terms of Total Shareholder Return5 was +54%, compared to +34% recorded by the FTSEMIB6 in the same period.
The moderation in world growth was reflected in the lack of dynamism in oil consumption (and prices), also due to a supply which, thanks to the US contribution, continued to increase. The price of Brent oil therefore remained in the second half of 2019 at around 65 dollars/barrel, insensitive to the numerous risk factors (oil attack in Saudi Arabia, Libyan crisis, US embargo on Iranian exports) that emerged in the same period.
The United Kingdom is officially out of the European Union, initiating a transitional period which should end, unless postponed, on 31 December 2020, during which time trade relations between the EU and the UK will, in any event, remain substantially unchanged. Real GDP growth showed some volatility during 2019, largely reflecting the uncertainties that have weighed on the investment decisions of households and businesses over the past two years. The change in GDP on an annual basis was 1.1%.
In the Eurozone, the different cyclical phase between the manufacturing and service sectors continued8: the decline in industrial production was matched by greater dynamism of services. However, in the last few months of 2019, the confidence of industrial enterprises indicated a phase of substantial stagnation. In the third quarter of 2019, the GDP of the Eurozone increased modestly (+0.2% as in the second quarter of 20199), supported by private consumption expenditure while the contribution from net exports, in a context of weak world trade, was slightly negative. The Eurozone Economic Outlook has estimated that economic growth in the Eurozone will continue at a moderate pace.
The Italian economy continued to show signs of weakness after emerging from the technical recession in the first quarter of 2019. In particular, in the fourth quarter of 2019, GDP decreased by 0.3% compared to the previous quarter. The drop in demand in Europe, particularly in Germany, the first outlet market for Made in Italy, has had negative effects on many production sectors. The economic information for the last few months of 2019 confirmed the overall scenario of stagnation. Despite a decline in industrial activity, thanks to the revision of ISTAT data, GDP is expected to increase by 0.2% in 2019. The support of domestic consumption, despite the growth in disposable income, the improvement in employment and the citizens’ income, did not give the expected results as households were affected by the climate of uncertainty that blocked purchasing decisions and fostered the propensity to save.
In February 2020, the cases of coronavirus contagion in Italy generated negative repercussions on financial markets and have the characteristics to create an unfavourable impact on the Italian economy by reducing the 2020 growth estimates that the International Monetary Fund in the World Economic Outlook of January 2020 had confirmed to +0.5% and could settle around 0.2%, as stated by the Governor of the Bank of Italy at the G20 meeting of 23 February 2020.
12. Adjusted revenue items: gains on securities (€404 million in 2018, €353 million in 2019), Anima gain (€120 million in 2018), gain on fair value measurement of Visa shares (€9 million in 2018, €25 million in 2019), gain on sale of Visa shares (€1 million in 2019).
Consolidated operating results On the basis of the strategic guidelines contained in the Deliver 2022 Plan, the Group’s economic performance is affected by certain phenomena, including provisions for voluntary redundancy incentives aimed at accelerating the transformation plan for Mail, Parcels and Distribution and gains on the securities portfolio. In order to provide the market with a further representation of the business that does not include these components (analytically represented in the Appendix), an adjusted view has been introduced.
Total financial assets amount to €536 billion, an increase of €22 billion compared with 31 December 2018. This is linked to the positive performance of current account deposits up €2.9 billion and the strong performance of the insurance business, mainly due to the effects of fair value measurement and also thanks to the contribution from multi-class products.
Total costs amounted to €9.3 billion and decreased by €101 million compared to 2018, attributable to lower personnel expenses, which fell from 6.1 billion in 2018 to 5.9 billion in 2019 (-€241 million, -3.9%) and lower other operating costs, which amounted to €2.6 billion and decreased by €65 million compared to 2018 (-€56 million in costs for goods and services and -€9 million in other costs). Depreciation, amortisation and impairment increased by €205 million, from €570 million in 2018 to €774 million in 2019, and were affected by the application of the new IFRS 16 accounting standard from 1 January 2019, as shown in detail in Other costs.
Other costs are up from €3.2 billion in 2018 to €3.4 billion in 2019 (+€140 million). This primarily reflects a rise in variable costs linked to growth of the monetics and parcels businesses.
Income tax expense of €530 million, a significant increase compared to 2018 (€92 million) that benefited from the positive impact of deferred tax income of €385 million recognised by Poste Vita on temporary differences resulting the application of paragraph 1-bis of art. 111 of the Consolidated Law on Income Tax (introduced by art. 38, paragraph 13-bis of Decree Law 78 of 31 May 2010). This legislation provides for a partial exemption (based on a specific percentage deduction) of the movement in the obligatory technical provisions relating to the Life business from taxation, whereas the full amount of such movements was previously included in the tax base for the purposes of IRES. In Poste Vita’s case, the percentage deduction is 98.5%.
The main economic results by Strategic Business Unit are shown below
Market context The postal services market is going through a phase of radical change, primarily linked to the digital transformation, which has influenced the volume of letters and parcels in circulation. The ongoing decline in traditional mail (CAGR 2014-2018 of approximately -6% in the period), which is being replaced with digital forms of communication (e-mail, instant messaging, etc.) is accompanied by a significant increase in the volume of parcels sent, linked to the growth in e-commerce. In Italy, the percentage of retail purchases made online rose from 4% in 2015 to 7% in 201913, and growth remains compared with the double-digit growth rates registered in the main European countries. Poste Italiane is now one of the leading operators in the sector with a market share (B2C) from 30% in 2017 to 35%14 in 2019.
Regulatory environment The Contratto di Programma (Service Contract) regulates relations between the Ministry for Economic Development and Poste Italiane SpA regarding provision of the Universal Postal Service. Until 31 December 2019, the 2015-2019 Contratto di Programma took effect. On 30 December 2019, the Parties signed the new Contract for the years 2020-2024. The procedure for the approval by the European Commission of the sums due to the Company to partially cover the universal service cost is underway.
Italian Communications Authority (AGCom) Resolution 214/19/CONS regarding “Assessment of the net cost of the universal postal service for 2015 and 2016” was published on 2 July 2019. In addition to acknowledging that the Universal Postal Service cost is unfair and therefore worthy of compensation, the Resolution quantified the cost of providing the Universal Postal Service in 2015 and 2016, respectively, as €389 million and €356 million, compared with compensation of €329 million and €262 million provided for in the Contratto di Programma already collected by the Company. With the same Resolution, AGCOM also decided not to set up the Compensation Fund for those years with the consequent impossibility for Poste Italiane to recover the differences between the quantification of the cost and the state contributions. Therefore, in October 2019, the Company notified an appeal to the Lazio Regional Administrative Court against the above Resolution. Lastly, with Resolution 215/19/ CONS also on 2 July 2019, the Authority announced that it had initiated an assessment of the net cost for 2017 and 2018.
In 2019, AGCom defined the new regulatory framework for judicial acts and offences regarding the Highway Code in line with the legal provisions of 2018 and 2019 (market liberalisation, digitisation).
In October 2019, AGCom launched an analysis of the mail services market and the maximum tariffs for universal postal services with the aim of updating the tariff system for universal services in light of the changing competitive environment and new user requirements. Participants have provided the regulator with the information requested, with a view to preparing a document to be submitted for consultation in the coming months.
Recorded Mail: delivery to the person with proof of delivery and tracking for retail and business customers. This category includes in particular: registered mail, insured mail and judicial acts.
Integrated services: Integrated and customised offers for specific customer segments, in particular Public Administration, large companies and professional firms. The most relevant integrated service is the Integrated Notification Service, for the management of the entire process of notification of administrative and judicial acts (e.g. violations of the Highway Code).
In the Recorded Mail segment, the lower volumes of items sent from Post Offices and of inbound international mail were partially offset by tariff increases applied as of 1 July 2018, which therefore partially mitigated the decline in revenue (-€42 million or -4%).
Direct Marketing saw a 11% slowdown in volumes (53 million fewer items), which generated a 9% fall in revenue (down €11 million).
The volumes of Integrated Services grew by 3% compared to 2018 (+1 million items) thanks to the good performance of the Notifier and the sending of electoral certificates to Italians living abroad for the European elections held in May 2019. However, this growth is not reflected in revenue, which fell by 10% (-€19 million) due to the shift in demand from medium-high to medium -low tariff products.
The compensation covering the cost of the Universal Service for 2019, as provided for in the current Contratto di Programma (Service Contract) for 2015-2019, amounts to €262 million, in line with the figure registered in the same period in 2018.
B2B: acronym for Business to Business. Company to company shipping services. Offer that focuses on quality and reliability, with delivery options with defined delivery times, multi and partial parcel shipments, simple and affordable tariffs.
B2C: acronym for Business to Consumer. A modular offer created for e-commerce with a choice of accessory services.
OTHER: This item includes international parcels, partnerships with logistics operators, dedicated services, integrated logistics and other revenue.
Amortisation, depreciation and impairments totalled €8,562 million, a decrease of 1% (-€79 million) compared to 2018, due mainly to a reduction in the personnel expenses, which decreased to €5,782 million (-€208 million), mainly due to lower cost for retirement, which reflects both a reduction in the cost per capita that resulted from the introduction of the “Quota 100” pension plan and higher recoveries of personnel costs, due mainly to changes in estimates made in previous years. The ordinary component of the personnel expenses increased from €62 million (+1.1%) in relation to the increase in the cost per capita linked to the effect of the latest contract renewal (2016-2018 National Collective Labour Contract), and the recognition of an all-inclusive amount to cover the entire year 2019 established by an agreement with the labour unions signed on 18 February 2020. This increase is partially offset by the benefit of the reduction in average employees during the period (over 4 thousand FTE less than in 2018). The evolution of the workforce is consistent with the provisions of the Deliver 2022 strategic plan and is the result of efficiency initiatives implemented by the Company mainly with regard to the Mail, Parcels and Distribution Business Unit.
In light of as represented, the Mail, Parcels and Distribution Strategic Business Unit reports negative EBIT of €347 million, an improvement of €83 million compared with EBIT in the previous year (-€430 million).
Operating review The Group continues to reorganise its transport, sorting, delivery and customer experience activities, in line with the long-term objectives outlined in the Deliver 2022 Plan, such as increasing efficiency, flexibility and quality in order to seize the opportunities arising from the development of e-commerce.
Performance of parcels With reference to transport, the development of air connections is continuing to favour, in line with market demand, the delivery of parcels within 24 hours throughout Italy, in particular Sicily and Sardinia. There are currently 7 air routes in operation, the last of which was introduced in July by the Brescia Airport Hub in Palermo.
As part of the long-haul road transport optimisation programme launched in 2019, collaboration was started with the German digital carrier sennder GmbH, one of the most innovative and technologically advanced start-ups in the sector. On 12 February 2020, this led to the acquisition of a 75% stake in sennder Italia srl with the aim of increasing vehicle saturation and reducing road transport costs. The partnership with sennder GmbH will enable Poste Italiane to offer itself as a transport operator, both in the Italian and foreign markets, benefiting from economies of scale and technological optimisation. This will allow to create a full-tracked and full-digital operating model, in line with the needs of e-commerce.
Work continued on the renewal of the company’s fleet with the addition of approximately 1,700 new two-wheeled vehicles and approximately 360 new electric three-wheeled vehicles.
As far as the delivery area is concerned, the Joint Delivery model is active on 100% of the national territory and, thanks to its flexibility, a new day parcel delivery service has been introduced in the main Italian cities.
Performance of mail Six new Mixed Mail systems for mail sorting and a new system for sorting small parcels were installed and 34 automated systems (Automated Guided Vehicles) were introduced for the internal handling of loads.
In particular, the Parties have agreed the criteria to be applied in redeploying surplus personnel in order to strengthen front-end roles, whilst also offering the option of voluntary early retirement.
The feature of M2M SIMs is that they are dedicated to data traffic. 19. Source: 20. PSD2 - Payment Services Directive 2 is the new European Directive (2015/2366/EU) on payment services.
With reference to the Digital19 market in Italy, almost 50 million people access online and 35 million people are present and active on social channels, showing an increase compared to 2018 also in terms of time spent online (about 6 hours connected to the internet every day, and 1 hour and 57 minutes on social channels, an increase compared to the figure recorded in 2018, which had stopped at 1 hour and 51 minutes). As far as new technologies are concerned, the use of mobile voice assistants or dedicated devices (from 30% to 35%) has increased by 5 percentage points compared to last year, while it is not new that the use of smartphones has reached (almost) saturation levels: 98% of social users connecting from mobile devices.
Positive signs also on the e-commerce front: in fact, indicators increased by 1-2 percentage points compared to 2018 with respect to pre-purchase online searches (from 86% to 87%) and the actual purchase of products from any device (from 75% to 77%).
With regard to telecommunications, in January 2019, the Italian Communications Authority (AGCom) published Resolution 599/18/CONS, which concludes the regulator’s latest review of the termination services market21 for voice calls on individual mobile networks. The regulator has identified twelve relevant markets, one for each operator, including PosteMobile, having significant market power regarding the termination of voice calls on their mobile networks. The rate set for operators for the period 2018-2021 was obtained by revising the cost model previously adopted by the regulator in Resolution 60/11/CONS. The rate for 2019 has been reduced by 8% compared with the previous year, with additional progressive annual reductions until 2021 and symmetrical rates for all notified operators.
At EU level, by 31 December 2020 the Commission must adopt a delegated act supplementing the directive establishing the European Electronic Communications Code, defining a single maximum termination rate for voice calls on mobile and fixed networks within the European Union.
SIM PosteMobile landlines and mobile telephones (stock in thousands) 4,416 4,082 333.4 8.2%
Customers registered on Poste Italiane's digital channels (websites and apps) (m) 20.8 17.6 3.2 18.1%
* Transactions relative to payments made by Postamat and PostePay. ** Includes Postepay cards and debit cards. *** Including business customers. **** Average monthly values during reference period.
Collections and payments: tax payment service through acceptance of the F23 and F24 models; funds transfer for money transfer abroad via Moneygram and Western Union, post giro transfers and direct debit made by Postepay Evolution.
TLC: mobile phones (traffic revenue, VAS value-added services, products) and fixed line (PosteMobile Casa offer).
Total revenue amounted to €1,039 million (+9.0%) and benefited, as anticipated, from the positive performance of the Monetics segment, which increased by 16.5% from €290.6 million in 2018 to €338.4 million (+€47.8 million), due to the growth in card stock and operations in terms of higher payments, number of withdrawals and average top-ups, as well as the Mobile segment which recorded a 10.6% increase from €216.8 million in 2018 to €239.7 million (+€22.9 million).
At December 2019, there are approximately 21.5 million Postepay cards in circulation (19 million at 31 December 2018), including 7.2 million Postepay Evolution retail, an increase of over 15% compared with 6.3 million at 31 December 2018, partly thanks to the integrated offering with Postepay Connect. Existing Postamat cards, amounting to 7.2 million, remain substantially unchanged compared to last year.
In 2019, Postepay cards developed total payment transactions of about €17.4 billion (€12.9 billion in December 2018, +34.6%) while Postamat card transactions amounted to €15.7 billion (€14.1 billion in 2018 +11.1%).
The growth in transactions, together with the increase in the number of POS activated, also generated an increase in commissions from acquiring services from €7.5 million to €11.2 million (+49.5%).
As mentioned above, the performance of the Telecommunications business also improved compared to the previous year (€239.7 million, +10.6%), essentially due to the increase in Fixed Line revenue due to the strong growth in the customer base (from 118 thousand lines in December 2018 to 200 thousand in December 2019, +70%). Revenue in the Mobile segment also grew, thanks to an increase in lines from 4 million in December 2018 to 4.2 million in December 2019 (+6%).
22. SPID, Public Digital Identity System, is the system that allows access to all the online services of the Public Administration and private members, with a single Digital Identity (username and password) that can be used from computers, tablets and smartphones.
23. These are the commission expenses to the circuits and the costs incurred for the complete management of the authorisation and transaction verification processes.
In light of the results described, the Payments, Mobile and Digital Strategic Business Unit reports EBIT of €241 million, an increase of 19% compared with the same period of the previous year.
Operating review In line with the strategic guidelines of the Group’s Business Plan, actions have been launched to start up the largest Italian ecosystem of payment services.
In the Acquiring area, in December, a pilot initiative was launched on about one hundred operators to collect cash through a new QR code acceptance method called Postepay Code. The functionality in the Postepay app allows scanning QR codes directly into the app so as to return the payment option on screen and then proceed with the transaction. The new service also allows small merchants to collect payments arranged by the customer directly from their Postepay app, without the need to have a physical card acceptance device, the so-called Pos.
Financial markets During 2019, long-term government bond yields and sovereign spreads declined significantly, both in the Eurozone and the US, reaching a low in August 2019 and then recovering in the final months of the year. This trend was influenced by trade tensions between the USA and China and the risk of a no-deal BREXIT that caused a sharp drop in yields in August 2019. Subsequent interventions by the FED and the ECB, which cut rates in September 2019 and subsequently increased the amount of liquidity injected into the market, allowed rates to stabilise, albeit at lower levels than in the first part of 2019. Particularly important was the intervention of the FED, which began buying short-term US government bonds for $60 billion a month and the reopening of Quantitative Easing (QE) by the ECB at a lower rate of €20 billion a month.
The aforementioned downward movement therefore started in the USA, where the ten-year rate went from 2.7% in December 2018 to 1.92% in December 2019 (1.66% in September 2019). The yield on Italian ten-year government bonds closed 2019 at 1.41%, up from 0.82% at the end of September 2019. This increase was due to both the rise in risk-free rates and a rise in the spread. In fact, the 10-year German Bund fell from 0.24% at the end of 2018 to -0.57% in September 2019 and then closed the year at -0.18%, while the spread of the Multi-year Treasury Bond (BTP) fell from 250 bps at the end of 2018 to 139 bps in September 2019 and then closed 2019 at 160 bps.
Equity markets performed positively in the first part of 2019 with moments of correction in the summer, and then continued to grow in the last quarter, thanks to the support of central banks, benefiting from the easing of trade tensions between China and the USA. In 2019, the Eurostoxx 50 Index gained about 25% while Dow Jones rose by 23%25.
Below is a table that represents the precise returns expressed in percentage terms at the end of the period for BTPs government bonds and interest rate swaps26.
27. ABI Monthly Outlook - January 2020. 28. Source: Assogestioni, Quarterly Asset Management Map - 4th quarter 2019.
The Guidelines regarding strong customer authentication and standards for communications between PSPs and third parties also came into effect from 1 January 2019. In particular, PSPs may introduce a specific interface allowing third parties to access online payment accounts or adopt a solution supplied by an external provider. Poste Italiane has opted for the latter solution which, moreover, allows it to request the Bank of Italy to grant an exemption from the application of a contingency mechanism to be used if the interface is unavailable or suffers disruption. BancoPosta submitted its request for exemption to the Bank of Italy on 14 March 2019, which was accepted by the Authority by order of 4 September 2019. With reference to the obligation for PSPs to adopt strong authentication systems to allow customers to make online arrangements, in August 2019, the Bank of Italy granted an extension for card payments compared to the deadline of 14 September 2019 originally foreseen for the entry into force of the PSD2. The EBA, in its opinion of 16 October 2019, set 31 December 2020 as the deadline for this extension and the Bank of Italy, in a communication of 12 December 2019, asked the PSPs to communicate by 31 January 2020 their intention to make use of the extension and, if so, to provide a series of separate information according to the activity carried out (e.g. migration plans, customer communications initiatives, etc.). Poste Italiane has prepared and sent a document with the feedback to be provided to the Supervisory Authority within the prescribed time limits.
The ESMA Guidelines issued on 6 November 2018 came into effect on 8 March 2019. The guidelines have clarified the application of certain aspects linked to the suitability requirements provided for in the MiFID II Directive, with adoption of the guidelines reflected in the process involved in customer profiling and in assessing the suitability of products.
Collection and payment services: Bulletins, collections and payments PP.AA., transfer of funds and ancillary services for current accounts.
Asset management: Collective asset management through mutual funds and management of individual portfolios relating to institutional mandates attributable to the Group.
External revenue amounted to €5,213 million, substantially in line with the previous year (-0.2%), which however benefited from the effects of the non-recurring transaction carried out, for €120 million in the asset management sector, following agreements between Poste Italiane and Anima Holding to strengthen the partnership in this sector.
At 31 December 2019, the average current account balance increased from €58.7 billion to €61.9 billion. This increase of €3,2 billion is attributable primarily to retail/PostePay customers (€3 billion), as well as to the public administration and REPO transactions.
Postal Savings generated revenue of €1,799 million, substantially in line with the previous year’s figure (€1,827 million in 2018).
Total costs amounted to €5,052 million, an increase of €40 million (+0.8%) compared to the previous year, mainly due to intra-sector fees related to the Operating Guidelines, which also take account of the organisational changes that took place from 1 October 2018, which led to the transfer of BancoPosta’s resources and activities to other structures.
The change includes a delta for interest expense of +27 €m
In the last months of 2019, in view of the favourable market conditions, a programme to increase the efficiency of the asset swap portfolio was launched. The strategy has provided for the replacement of asset swaps with ten-year maturity by asset swaps with longer maturity improving the interest income profile over the Deliver 2022 Plan.
In view of the low levels of interest rates, the Company has entered into new deposit repurchase agreements with terms between 1 and 5 years, thereby anticipating the renewal of a number of repurchase agreements in relation to structural funding of the portfolio.
Postal Savings With reference to Postal Savings, with the aim of improving the quality and efficiency of the offer to customers, the project aimed at providing 24-hour availability of the services available through ATM, APP and web channels was completed.
Asset management With regard to asset management, the distribution of new mutual investment funds has begun. This is the result of the partnership with Anima SGR and Eurizon Capital SGR, acting as delegated fund managers.
With regard to asset under custody, Poste Italiane participated in both the consortium for the placement of the new bond issued by Cassa Depositi e Prestiti (CDP) dedicated to retail customers and in the placement of the fifteenth issue of “BTP Italia”, a Ministry of the Economy and Finance (MEF) security indexed to Italian inflation.
Distribution of third-party products In terms of loans provided to private customers by external partners, a number of promotions were run for specific categories of customer, type of product or interest rate and/or purpose, supported by advertising campaigns that allowed relaunching the salary loans and mortgage products. In addition, also thanks to the expansion of partnerships, the new BancoPosta loan offer dedicated to young people was launched at the end of October 2019, alongside other Poste Italiane offers dedicated to the same target: BancoPosta Giovani account and Mutuo Giovani. Also in the context of the distribution of third-party products, with regard to the placement of shares in real estate funds during the period 2002-2005, Poste Italiane, in order to protect and maintain the Group’s high reputation and operating capacity credentials based on trust and transparency, undertook a second window to join the Europa Immobiliare 1 fund protection initiative (from 23 May 2019 to 13 July 2019) and launched a voluntary protection initiative for customers who invested in the Obelisco Fund, which expired on 31 December 2018 and ended on 6 December 2019.
Other activities With reference to the Business and Public Administration segment, the marketing of the new Entity Treasury Service, provided in partnership with CDP and aimed at municipalities with less than 5,000 inhabitants, was successfully implemented and the range of products for business customers was further expanded.
In the Delegated Services area, in the first few months of 2019, the three-year agreement for the pension payment service in Italy on behalf of INPS and the non-pension benefits payment service was signed.
As part of the programme for the digital transformation and acceleration of Poste Italiane’s service model, a partnership with Moneyfarm has been set up in order to offer an asset management placement service for Poste Italiane customers, accessible exclusively through a special area on the website www.poste.it.
Bank of Italy On 23 May 2019, the Bank of Italy began inspections of specific Post Offices with the aim of verifying fulfilment of the obligations in terms of banking transparency. The inspections were concluded in the following month of July and the related Report has not been received yet. The inspections mentioned above, although territorial in nature, also concerned areas that can be traced back to the inspections carried out by the Authority in 2015 at the head office and mainly related to aspects such as the filing of contractual documentation, the management of unilateral amendment proposals to customers, as well as the handling of complaints and the application of economic conditions through the dedicated company system.
On 20 June 2019, the Bank of Italy requested to ensure that the procedures used in handling complaints regarding Interestbearing Postal Certificates were fit for purpose. The Bank also requested information on the fraudulent use of payment instruments. The Company carried out the appropriate investigations and provided feedback to the Authority on both issues on 30 September 2019, subject to approval, as requested by the Authority, by the Board of Directors and the Board of Statutory Auditors.
On 31 May 2019, CONSOB requested clarifications on the disclosure made to customers on the cost and expense statement, ex ante (pre-contractual information) and ex post (annual report), which was replied to on 1 July 2019 (for information ex ante) and 22 July 2019 (for information ex post). On 27 June 2019, CONSOB requested further clarifications regarding the measures adopted to ensure compliance with regulatory provisions with reference to the planned controls in terms of experience and knowledge of the sales network employees. The related reply was sent on 17 July 2019 and contains detailed information on the training course aimed at maintaining and updating knowledge and skills with the related final verification test, assessments carried out on the results of the final verification tests, an illustration of the results achieved by the new resources placed in the role for the year 2018 and 2019, as well as clarifications on the specialist supervision in support of the network.
In January 2020, CONSOB launched an inspection of a general nature pursuant to article 6-ter, paragraph 1, of Legislative Decree 58 of 24 February 1998, aimed at ascertaining the state of adaptation to the new MiFID 2 legislation.
IVASS - Istituto per la Vigilanza sulle Assicurazioni (the insurance regulator) On 13 November 2019, pursuant to art. 19, IVASS Regulation no. 40 of 2 August 2018, the Authority was notified of the assignment of responsibility for Poste Italiane SpA’s insurance distribution activities to BancoPosta.
Life business Based on official data available at the end of December 201929, the new business for life insurance policies (individual and collective) including the EU sample of EU companies amounted to €104 billion, up (+4.8%) compared to 2018. The business of Italian companies reached €90.1 billion, marking an increase of 5.4% compared to the previous year.
Analysing the figures by class of insurance, Class I premiums amounted to €62.6 billion at the end of December 2019, up 12.5% compared with the previous year. Class III products (in exclusive unit-linked form), on the other hand, recorded a 11.3% reduction in premiums to €23.7 billion compared with the corresponding period of 2018. Residual revenue of capitalisation products (€2.2 billion) was up slightly (+3%) compared to 2018. The trend in new premiums relating to long-term health policies (Branch IV) was positive with a volume that, although still limited (approximately €68 million), grew significantly (+37.8%) compared to the same period in 2018.
P&C business Total direct Italian premiums in the P&C insurance market, thus including policies sold by Italian and overseas undertakings, based on the available official data (source: ANIA) amounted to €27 billion at the end of the third quarter of 2019, up compared to the same period in 2018 (+3.3%). The performance was helped by both the growth in other P&C classes (+5.7%) with total volumes of €14.4 billion and more marginally the growth of premiums of the Auto sector, which recorded an increase of 0.6% compared to the third quarter of the previous year and volumes totalling €12.6 billion.
In terms of distribution channel, in relation to the premiums collected by Italian companies and representatives of non-EU companies, agents continue to lead the way with a market share of 74.1%, slightly down on the figure for the end of the third quarter of 2018 (75.7%). Brokers are the second largest P&C premium distribution channel, with a market share of 8.3%. The market share of bank and Post Office counters increased compared to the same period in 2018 at 7.9% (6.7% in the third quarter of 2018); this growth is attributable to the involvement in the marketing of premiums in the Credit and Monetary losses lines of business.
Consultation Paper on the Opinion of the 2020 Review of Solvency II The EIOPA (European Insurance and Occupational Pensions Authority) launched the public consultation on 15 October 2019 on the technical opinion requested by the European Commission for the review of Solvency II planned for 2020.
The consultation covers all areas of Solvency II legislation, such as the modification of the calculation of the Volatility Adjustment - a mechanism provided for in Solvency II to contain the effects of market volatility - or the proposal to increase the calibration of the interest rate risk sub-module, e.g. in line with the existence of negative interest rates. The public consultation phase ended on 15 January 2020. EIOPA will issue an update of the Solvency II regulations, which will be implemented by IVASS regulations by the end of 2020.
Life 2019 2018 Changes of which: Classes I-IV-V 15,793 15,870 -76.6 -0.5%
* Includes gross premium revenue before the premium reserve and outward reinsurance premiums. ** Corresponds to the ratio of the expenses from claim liquidation and gross premiums. *** Corresponds to the ratio of operating costs + commission and gross premium revenue. **** Equal to the sum of the Loss and Expenses ratio.
Net P&C revenue amounted to €148 million (up +19.7%), driven by growth across all lines of business (retail +8%; Employee Benefits +160%) and total gross premium revenue amounting to €240 million30, up 28% on the same period of 2018 (€187 million), which more than compensates for the slight worsening of technical profitability due to the growth of the Employee Benefits business (Combined Ratio 99%).
The performance of premium revenue for the Life and P&C business is shown below: 30.Gross premium revenue for the period amounts to €222 million.
The surrender rate recorded in 2019 was 2.85%, substantially in line with 2018 and below the market value which remains above 6%.
In light of the results illustrated, the Insurance Services Strategic Business Unit generated EBIT of €1,006 million in 2019, an increase of 16% compared with the previous year (€866 million).
Financial management recorded net income of €30 million, down compared to 51 million in 2018 mainly due to the cost related to the Ancillary Funds, which was not present in the first 10 months of the previous year.
Taking into account the taxes for the period (€298 million), the Business Unit closed with a net profit of €737 million, down 26.4% compared to €1,001 million in the previous year, which however benefited from an extraordinary tax component of €385 million (net of this effect, net profit 2019 was up 16% compared to the previous year).
Operating review The commercial offer was further enhanced with the launch of new multi-class products. In addition, in October 2019, a Class I product was launched for customers with a minimum insurance age of 80 years, in line with other Poste Italiane Group projects dedicated to senior customers.
Finally, the balance of the item includes investments accounted for using the equity method for a total of €617 million, up €120 million compared to 31 December 2018, mainly due to the adjustment of the carrying amount of FSIA Investimenti31, which at the end of 2019 was classified as an associate investment, in place of the previous joint control.
The Group’s investment amounted to €734 million in 2019, an increase of 36% compared with 2018 (+€195 million).
In line with the investment programme for the period 2018-2022, designed to support delivery of the Strategic Plan, around 80% of the Group’s investment (€590 million) focused on the transformation of the Mail, Parcels and Distribution Strategic Business Unit, in which the reorganisation of the transport, sorting and delivery activities continued. In particular, with reference to sorting activities and the automation of production processes, the largest parcel sorting plant currently installed in Italy at the Bologna freight terminal was inaugurated in July. The hub, which is the first step in a process of technological renewal of the parcel logistics network, is equipped with three integrated automation systems for sorting the different types of parcels, with a total daily processing capacity of 250,000 units, equal to about 40% of Poste’s production capacity, as well as advanced technologies for safety and energy saving.
Six new Mixed Mail systems were installed for sorting mail at the Postal Sorting Centres in Turin, Bologna, Rome, Naples, Milan Peschiera Borromeo and Catania (8 systems installed since the start of the project), reducing the old sorting lines by 24%. This project, together with the introduction of Lean Production in the factories (the work organisation method that guarantees continuous improvement of production processes), has made it possible to achieve an 8% increase in productivity on sorting activities. In addition, a new system for the sorting of small parcels was installed at the Brescia postal sorting centre and 34 automated systems (Automated Guided Vehicles) were introduced for the internal handling of loads at 60% of the main sorting centres planned (to date Bologna, Turin, Fiumicino, Naples, Bari and Padua).
As far as the delivery area is concerned, the Joint Delivery model, introduced in April 2018, is active on 100% of the national territory and foresees the possibility to deliver small parcels through the network of letter carriers, introducing afternoon and weekend shifts.
31. Further information is provided in the Notes to Poste Italiane Financial Statements for the year ended 31 December 2019.
As part of the collaboration with Amazon that enhances the flexibility offered by Joint Delivery, a new same-day parcel delivery service has been introduced in the main Italian cities (Bari, Bologna, Florence, Milan, Naples, Padua, Rome, Turin, Verona, Genoa and Pescara).
Property investments mainly concerned the redevelopment of Post Offices, the creation of new spaces for commercial specialists, the removal of architectural barriers and the installation of Wi-Fi systems in Post Offices. With regard to the containment of environmental impacts, activities aimed at reducing electricity consumption continued through the replacement of old lamps with LED technology. Over 100,000 LED lamps were installed in 2019.
Work continued in 2019 to meet the needs of the ordinary management of safety in the workplace, in particular with the distribution of 16,000 seats and back office furniture at Post Offices, cybersecurity through threat prevention and countering cyber attacks, active and passive physical security through the installation of new video and remote surveillance systems in 1,730 Post Offices (for a total of over 4,000 new cameras) and the provision of security at about 950 sites throughout the country. The implementation of physical security measures at 11 postal delivery centres and 3 mail sorting centres (Milan Roserio, Verona and Brescia) was also completed, and work was completed on the implementation of security systems at 2 distribution centres in order to obtain certification according to the TAPA - FSR (Transported Asset Protection Association - Facility Security Requirements) standard.
Net working capital amounted to €1,494 million at 31 December 2019, a decrease of €243 million compared with the end of 2018. This reflects an increase in net current tax liabilities for €327 million as a result of tax expense for the year.
Provisions and other assets and liabilities at 31 December 2019 amounted to €2,041 million, substantially in line with 31 December 2018. This item also includes the balance of Provisions for risks and charges of €1,218 million (€1,519 million at the end of December 2018) and includes provisions for early retirement incentives of €421 million (€447 million at 31 December 2018); this reflects the estimate of liabilities that Poste Italiane will incur, under the current arrangements agreed with the unions, as a result of a certain number of staff taking voluntary early retirement by 31 December 2021. The balance also includes the provision for operational risks relating primarily to liabilities arising from BancoPosta’s operations amounting to €241 million (€423 million at 31 December 2018) and the provision for disputes with third parties amounting to €313 million (€335 million at 31 December 2018).
Equity amounts to €9,698 million at 31 December 2019, an increase of €1,593 million compared with 31 December 2018. This change reflects primarily the net profit for the period of €1,342 million and an increase of €1,087 million in the fair value reserve, which reflects changes in the value of investments classified as FVTOCI. These changes were partially offset by the distribution of dividends totalling €774 million, including €574 million from 2018 profit and €200 million as an interim dividend scheduled for 2019, actuarial losses on the provision for employee termination benefits net of the tax effect of €50 million and the purchase of 5,257,965 treasury shares (equal to 0.4026% of the share capital) for a total of €40 million.
The total Net debt/(funds) at 31 December 2019 showed a surplus of €5,667 million, or €295 million compared to the figures at 31 December 2018 (when there was a surplus of €5,372 million); this change primarily reflects the increase in the fair value of investments classified as FVTOCI, the recognition of financial liabilities required by the adoption from 1 January 2019 of the new IFRS 16 accounting standard (€1,279 million at 31 December 2019), the distribution of dividends totalling €774 million and a decrease in net working capital.
The movement reflects: � operating profit positive for €249 million, including €724 million in amortisation for the period, partially offset by the net result negative for €306 million, the change in provisions for risks and charges and for employee termination benefits and other non-monetary items; � a net outflow for the change in net working capital, largely due to incentives paid to personnel and other remaining transactions, totalling €191 million; � net investments for about €682 million; � a net inflow from dividends of €180 million (dividends received of €954 million and dividends paid to shareholders of €774 million (including €200 million related to the interim dividend scheduled for 2019) - allocated to the Mail, Parcels and Distribution SBU within the scope of the Parent Company’s operations - transversal to the Group’s businesses), as well as an outflow of approximately €40 million to finance the purchase of treasury shares and the recognition of net lease liabilities of a further €120 million.
An EIB loan of €200 million was repaid in March 2019.
On 5 November 2019, the Board of Directors of Poste Italiane, in order to further strengthen the financial solidity and flexibility of the Poste Group within the scope of the Deliver 2022 Plan and taking advantage of the favourable market environment, decided to renegotiate some of the existing credit lines as they approach maturity, confirming their total amount up to a maximum limit and extending their maturity from a maximum of 3 years to 5 years from the date of renegotiation.
On 3 October 2019, Poste Italiane signed a €400 million loan with the European Investment Bank (EIB) to support certain initiatives envisaged in the Deliver 2022 Plan. The loan is intended for the implementation of numerous projects in a variety of sectors, with initiatives that include the installation of photovoltaic panels at certain Post Offices, digital transformation at the service of the customer experience and the development of automated letter and parcel sorting systems. The loan was disbursed on 18 October 2019, at a fixed rate of 0.29% and with a duration of 7 years.
Total revenue generated by Poste Italiane SpA in 2019 amounted to €9,403 million, an increase of 1.2% on the previous year (€9,289 million in 2018), essentially due to the good performance of revenue from sales and services of €8,541 million (up €122 million).
Costs, net of amortisation, depreciation and impairments, fell from €8,037 million in 2018 to €7,872 million, a decrease of 2% due to lower personnel expenses, which amounted to €5,703 million (€5,947 million in 2018, -€244 million) due to the reduction in costs for early retirement incentives, in relation to both the lower per capita cost achieved also by virtue of the introduction of the “Quota 100” pension and higher recoveries of personnel costs mainly due to changes in estimates made in previous years. The ordinary component of the personnel expenses, which increased by €18 million (+0.3%), reflects the reduction in the average number of staff employed (more than 5 thousand FTE less than 2018), which almost entirely offset the increase in the cost per capita linked to the effect of the latest contract renewal (2016-2018 National Collective Labour Contract), as well as the recognition of an all-inclusive amount to cover the entire year 2019 established by an agreement with the labour unions signed on 18 February 2020.
Income tax expense is up from €148 million for 2018 to €162 million for 2019. The total effective tax rate for 2019 is 19.70%, reflecting an IRES tax rate of 14.32% and an IRAP rate of 5.38%. The difference in the effective IRES tax rate compared with the statutory rate (24%) is primarily due to the fact that 95% of the dividends received from a number of subsidiaries was exempt from taxation.
certain number of staff taking voluntary early retirement by 31 December 2021. The balance also includes the provision for operational risks relating primarily to liabilities arising from BancoPosta’s operations amounting to €232 million (€415 million at 31 December 2018) and the provision for disputes with third parties amounting to €274 million (€302 million at 31 December 2018).
The decrease of € 479 million in net deferred tax assets/(liabilities) is largely attributable to the net negative tax effect on the positive change in the fair value reserve for investments in available-for-sale securities (increase in deferred tax liabilities).
Intersegment loans and receivables and financial liabilities 647 829 (182) -22.0%
RFC net debt for capital outside ring-fence including intersegment transactions 1,254 (634) 1,888 -297.8%
In line with the Deliver 2022 Plan, which provides for the gradual and complete extension, from a fully digital and multi-channel perspective, of financial services on digital channels, BancoPosta has launched a project dedicated to digital investment and asset management services. In this regard, in September 2019, a minority stake was acquired from Poste Italiane in MFM Holding Ltd (Moneyfarm Holding), an independent asset management company specialising in ETF portfolios, for the provision of innovative digital investment services through the development of a controlled-open platform of asset management products.
Profits/(losses) on financial assets and liabilities measured at fair value through profit or loss 27 9 18 200.0%
The net profit from the sale of financial assets, amounting to €339 million, is down 10.6% compared with the €379 million of the previous year, reflecting reduced gains realised, in keeping with the strategy in the Deliver 2022 Plan to progressively reduce the dependence on non-recurring income.
Net profit (loss) from financial assets and liabilities measured at fair value through profit or loss includes €26 million for the fluctuation in the fair value of Visa Incorporated shares and €1 million for the gain generated in 2019 from the sale of part of these shares. Again with reference to Visa Incorporated shares, during the first half of 2019, BancoPosta entered into a forward sale agreement for 400,000 ordinary shares. The fluctuation in the fair value of the forward sale was negative and was recorded under Profits (losses) on trading of €15 million. In addition, Profits (losses) on trading include 4 million of realised gains on foreign exchange transactions.
Net operating expenses, which include personnel expenses of €36 million, other administrative expenses of €4,502 million and other operating income of €32 million, decreased by 4.5% (-€212 million) compared to 2018, in particular, due to lower costs relating to BancoPosta’s assignment of operating functions to Poste Italiane, as well as lower personnel and service expenses.
Net credit losses and financial assets amounted to €9 million for 2019, compared with €22 million for the previous year.
The year 2019 was characterised by some organisational adjustments within the new structure in the second half of 2018 regarding the intermediary’s focus on the directing role in product development and distribution, in collaboration with Group companies, and in managing the sales network. These changes concerned the mission of the Territorial Marketing function on the formation of the sales network and the setting up of the Governance Outsourcing and Business Support function to further strengthen the supervision of BancoPosta’s credit lines and outsourcing; the internal responsibility perimeters of the
In addition, in 2019, the workforce of the BancoPosta Function was provided with specialist technical, regulatory/compulsory and behavioural/managerial training courses for a total of approximately 38,000 hours in the classroom or through an e-learning platform.
The item Financial assets measured at fair value through other comprehensive income amount to €36,799 million (€32,040 million at 31 December 2018, +€4,759 million) and include Italian government securities. The balance increased mainly as a result of the positive change in fair value relating to securities held in portfolio, as well as further transactions in securities during the year.
Other assets of €2,491 million at 31 December 2019 relate to tax assets following the tax withholdings and items in progress that will be settled after the end of the reporting period.
Financial liabilities measured at amortised cost amounted to €71,537 million (€64,203 million at 31 December 2018, +€7,334 million) and include: (i) amounts due to customers of €64,351 million (€58,218 million as at 31 December 2018, +€6,133 million) attributable to deposits through current accounts and repurchase agreements; (ii) amounts due to banks of €7,186 million (€5,985 million at 31 December 2018, +€1,201 million) also relating to current account transactions and repurchase agreements.
Hedging derivatives relating to securities in portfolio amounted to €5,552 million (€1,829 million at 31 December 2018, +€3,723 million).
Provisions for risks and charges amounted to €327 million and are down on 31 December 2018 (-€184 million) due to utilisations of approximately €67 million in relation to an agreement entered into with INPS during the first half of 2019 regarding pension payment services, and further utilisations of approximately €100 million in relation to voluntary protection initiatives approved by the Board of Directors of Poste Italiane and undertaken during 2019 in favour of customers subscribing to the Obelisco and Europa Immobiliare 1 real estate funds. Provisions for the year (totalling €42million) were largely attributable to risks associated with specific issues of BFP due to changes in the regulatory environment.
BancoPosta RFC’s equity at 31 December 2019 amounted to €3,961 million (€2,879 million at 31 December 2018, +€1,082 million, +38%) and includes: (i) the BancoPosta RFC reserve for €1,210 million; (ii) the Retained earnings for €1,057 million; (iii) Valuation Reserves for €1,083 million, which mainly reflect the change in the value of Reserves for Financial assets measured at fair value through other comprehensive income at 31 December 2019; (iv) the Net Profit for the year of €611 million. The change in equity is mainly related to the change in the valuation reserve of €1,083 million (€15 million at 31 December 2018, €+1,068 million).
Risk management system BancoPosta RFC has an independent Risk Management unit, responsible for ensuring, among other things, in collaboration with Poste Italiane SpA, an integrated, retrospective and prospective view of the risk environment and of BancoPosta RFC’s capital and organisational adequacy. The function provides a detailed evaluation of the risk profile of the financial products sold to customers and provides the operational and business functions involved in product development and placement with advice and support. It is also responsible for periodic reporting. During 2019, the Risk Appetite Framework was revised. The 2018 annual report and the programme of activities for 2019 were submitted to the Board of Statutory Auditors, the Audit, Risk and Sustainability Committee and the Board of Directors, as were the ICAAP (Internal Capital Adequacy Assessment Process) report and the Public Risk Report for 2018. These bodies also received quarterly reports on the performance of the effective risk profile versus the determined risk appetite. The principal types of risk to which BancoPosta RFC is exposed in the course of its activities are described below: � credit risk (including counterparty risk); � market risk (including banking book rate risk); � liquidity risk; � operational risk.
With regard to the evolution of significant risks, 2019 was characterised on average by a reduction in Italian government bond yields compared to 2018, to below 1% at 30 September 2019, with a subsequent rise to 1.4% at the end of the year. The evolution of rates and spreads led to a shift from a situation of net losses at portfolio level of around €2 billion at the end of 2018 to net gains of over €1 billion at the end of 2019. The BTP-Bund spread at the end of 2019 closed at about 160 bps, 90 less than in 2018.
Details of the various areas of risk and the methods used for their measurement and prevention are provided in other sections of the Annual Report for the year ended 31 December 2019.
For further information, please see the Business Outlook for the Financial Services SBU.
Related party transactions Information on transactions between BancoPosta and its related parties is provided in Poste Italiane Financial Statements for the year ended 31 December 2019 (BancoPosta RFC’s Separate Report, Part H of the notes).
Separate financial statements Poste Italiane SpA’s statement of financial position includes the Supplementary Statement of BancoPosta RFC, prepared pursuant to art. 2, paragraph 17-undecies of Law 10 converting Decree Law 225 of 29 December 2010 which states that “the assets and relationships included in RFC are shown separately in the company’s statement of financial position”.
Integrity and transparency • Dissemination of the culture of Integrity and transparency throughout the value chain
• Number of tenders conducted on the basis of environmental criteria +15%
Objectives, management methods and key performances achieved in the pillars of the Group’s ESG Strategic Plan
By 2022 % of significant Group companies certified to ISO 37001
By 2022 % of suppliers belonging to significant product categories qualified according to ESG criteria
The company’s Code of Ethics establishes principles and rules of conduct such as legality, impartiality and fairness, respect for and enhancement of people, transparency, thoroughness and confidentiality, as well as quality, diligence and professionalism. The Code also requires the parties concerned to refrain from activities - even on an occasional basis - that may generate a conflict with the Group’s interests or may interfere with the ability to make decisions consistent with the Company’s objectives. To this end, Poste Italiane has set up a system for reporting and managing conflicts of interest. The Company also intends to promote the dissemination of ethical principles and social responsibility among parties located within the Group’s value chain.
Furthermore, in addition to the Code of Ethics, the Group’s Integrated Policy, adopted in 2018 reflects and documents the commitment made to all Company’s stakeholders, to improve its performance and, at the same time, build and develop trusting relationships with them, as part of a process of generating and sharing value for the Company as well as for the communities in which it operates, with a view to achieving continuity and reconciliation of the related interests.
The Ethics Committee, whose functions are carried out by the Whistleblowing Committee, is responsible for receiving and managing reports that are handled via the new Whistleblowing Portal, as well as for providing support to the functions and corporate bodies responsible for investigating alleged violations of the Code of Ethics.
Poste Italiane’s internal whistleblowing system ensures that all appropriate investigations are carried out into reports through audit, fraud management checks in the case of suspected criminal offences, and requests to the relevant function to launch a management investigation.
In order to make its commitment to legality and transparency effective, Poste Italiane adopted an Integrated Management System with the primary aim of ensuring uniform governance of the systems implemented at Company level, whilst guaranteeing quality, occupational health and safety, data security, and prevention of corruption across all corporate processes and activities. The description of the various pillars discloses the specific certifications obtained by the Group.
Further confirmation of the effectiveness of the actions carried out by the company in recent years on its internal control system is represented by Poste Italiane SpA and the insurance company Poste Vita’s participation in the Collaborative Compliance regime, thereby further accelerating its tax transparency policies. This important recognition comes at the end of the positive assessment conducted by the Revenue Agency on the “Tax Control Framework” of the companies, which includes the system for the detection, management, control and mitigation of tax risk.
The admission of Poste Italiane to Collaborative Compliance consolidates the path inspired by the values of ethics, Integrity and transparency also in the financial and fiscal field, which represent for Poste Italiane the highest principles on which the corporate identity is based and which guide the very conduct of its business based by its very nature on trust and the management of relations with all its stakeholders.
As evidence of Poste Italiane’s commitment in relation to the dissemination of the principles of integrity, the prevention of corruption and regulatory compliance, Poste Italiane confirms the absence of proceedings on established cases of corruption and sanctions relating to antitrust/anti-competitive practices.
As evidence of the degree of attention Poste Italiane pays to the correct management of its businesses, the Company has applied for and obtained renewal of its legality rating for a two-year period. It was awarded the top score, which has only been given to 6% of the applicant companies. The legality rating tool, which applies to Italian companies, was introduced in 2012 to promote and introduce the principles of ethical conduct into the business environment by granting an award, which indicates the legality compliance level of the companies that have applied for it. On attribution of the rating, advantages in the granting of public funding are linked to facilitation of access to bank lending.
For the Poste Italiane Group, promoting responsible supply chain management is primarily synonymous with the sustainability, functionality and traceability of procurement. For the Poste Italiane Group, promoting responsible supply chain management is primarily synonymous with the sustainability, functionality and traceability of procurement. The Company bases its procurement processes on pre-contractual and contractual relations geared towards full compliance with legality and transparency, by monitoring compliance with current regulations and corporate directives to ensure the use of suppliers with adequate quality characteristics and ensuring compliance with regulations for the protection of workers and compliance with environmental standards. The path mapped out in the procurement process also includes ESG issues, involving investigation of suppliers’ possession of specific requirements via progressive sustainability audits (e.g. respect for their employees’ working conditions, etc.).
With the aim of ensuring a selection of products and suppliers able to guarantee the best environmental performance, the Green Procurement function was established in December 2019. With a view to the continuous integration of sustainability aspects into the company’s strategy and organisation, the new function has the responsibility of: � ensuring the definition and adoption of sustainability requirements to be integrated into the technical assessment criteria for the identification of suppliers operating in accordance with the ESG principles adopted by the Group; � ensuring the identification of specific performance indicators on sustainable development issues related to procurement processes in order to monitor the degree of sustainability of the entire supply chain, with related reporting; � implementing the verification processes aimed at ensuring compliance with internal and external regulatory provisions in the procurement sector.
In 2019, in line with 2018, the Company revised and updated its internal procedures which govern the procurement process, regarding contracts that are subject to the Public Contracts Code as well as those excluded from its scope of application. In this regard, an update of the General Procurement Procedure was published during the year.
• The supplier register provides the Group with a range of economic operators capable of meeting Poste Italiane’s requirements and enables it to adopt certain and transparent selection criteria when procuring goods, services and works
The purpose of such analysis of parties and counterparties is to limit the risks deriving from transactions with third parties; to guarantee adequate rotation of suppliers; and to minimise losses deriving from non-payment of receivables.
• Contracts management • Checks on the goods and services provided with respect to what is declared
In this regard, specific environmental and social criteria are provided for in the supplier selection process, in the participation requirements, in the evaluation parameters of the technical offer and/or in the contractual conditions, of the tender procedures carried out during the year. The number of percentage of tenders conducted on the basis of environmental criteria compared to the total in 2019 increased by 15 percentage points compared to 2018 (49.1% vs. 34.1%). The absolute value of procedures carried out on the basis of social performance also increased significantly, recording an increase of 12 percentage points (57.7% vs. 45.5%).
In its relations with suppliers of works, services and supplies, Poste Italiane operates on the basis of standard contractual clauses which may be revised in the light of regulatory provisions or adapted to meet specific internal requirements. In particular, the main clauses concern: the regularity of the supplier’s contributions and remuneration; compliance with labour regulations (Legislative Decree 276/03 and subsequent amendments and integrations Public Contracts Code); the applicability of Collective Labour Contracts; the absence of breaches of workplace safety regulations (Legislative Decree 81/2008 and subsequent amendments and integrations); the absence of environmental crimes (Legislative Decree 152 of 3 April 2006 and subsequent amendments and integrations).
The Group intends to promote the adoption of ethical standards of conduct by its suppliers, also by encouraging the attainment of certifications, such as quality (ISO 9001), environmental (ISO 14001), social (SA 8000) and occupational health and safety certifications (OHSAS 18001/ISO 45001).
Total number of existing tenders Number of tenders conducted on the basis of environmental criteria
Cleaning and sanitation For this product category, assignments are carried out in accordance with Green Public Procurement, which requires the adoption of the “Minimum Environmental Criteria” or “MEC” contained in Ministerial Decree 24/05/2012, and respecting the figure of 15% provided by the Ministerial Decree relating to the awarding of specific scores for beneficial green procurement techniques (e.g. dosing systems and cleaning techniques; electrical equipment and machinery bearing information about the brand, model and power capacity, and specification of the energy consumption and noise level for each device; a separate waste collection plan; vehicles used for low environmental impact transport; and Ecolabel products and consumables).
Catering In order to guarantee the provision of a Company catering service with a reduced environmental impact, which in terms of processes and content is characterised by respect for all aspects of environmental, economic and social sustainability, Poste Italiane has granted a concession for catering services operating within its real estate facilities in compliance with Green Public Procurement principles.
Poste Italiane rewards the supply of BIO, IGP, DOP, sustainable fishing etc. products, in a percentage higher than the minimum quantities prescribed by MEC in relation to the food supplied in the company canteens present in some territorial realities. In this context, local suppliers who guarantee IGP, DOC, DOP, etc. certified products are potentially involved in the supply chain of food products for canteens and bars.
Logistics With reference to the purchase of the main services (full rent fleet, transport services, etc.), when the tenders are completed, an eco-sustainability rewarding score is given to offers that provide for the vehicles used for the services covered by the tender classes of lower CO2 emissions.
Works The Supplier Register for Works categories - as well as being organised into product categories that are specific to the type of work (civil and industrial buildings, water and heating plants, plants, etc.) - provides for a qualification system for business operators according to the type of contract, for regional areas, or for Area Offices (corresponding to regions or groups of regions), which have primary or secondary headquarters in the area of registration, or which have carried out major contracts in the relevant local area.
In the context of works contracts, specifically those relating to construction and plant works characterised by moderately priced services to be implemented in buildings or on sites located nationwide, this system encourages the presence of local labour, as well as the supply of preferably locally-sourced materials, with a view to reducing procurement costs by optimising the environmentally-sustainable aspects of the system (reduction of travelling times and distances, and the resulting CO2 emissions).
Additional specific health and safety measures have been introduced into works contracts, whose assessments and measurements are contained in the Safety and Coordination Plans (SCP) and the specific Operational Safety Plans (OSP).
In 2019, the new uniform for postmen were supplied based on the principles of ergonomics, design and quality of materials. The new uniforms have been awarded the green OEKO - TEX Standard 100 certification, an additional guarantee for the health of letter carriers and protection of the environment, as it is an eco-label that certifies not only the fabrics but also their dyeing process and guarantees careful control from an ecological and healthy point of view. The colour grey has been introduced to make the brand more recognisable and distinctive and the wearability of the garments has been improved with a design that combines functionality and aesthetics.
The continuous development of knowledge and skills plays a key role in the process of enhancing the value and growth of the people of the Poste Italiane Group and is, at the same time, crucial for the creation of competitive advantage and the achievement of corporate objectives. For Poste Italiane, training is an integral part of systemic action for the development of people aimed at responding to the innovation requirements of the market and the organisational needs at company level. With this in mind, the Group implements a continuous process of creation and enhancement of skills, promotes the development of new training methodologies and provides for the development of innovative knowledge sharing tools.
Training activities play a key role in achieving the objectives set out in the Deliver 2022 Plan. The Company Strategic Plan envisages around 20 million training hours by 2022, of which 6.5 million dedicated to staff working in the financial sector, in order to ensure development of skills in line with market trends, customer needs and regulations.
In 2019, training activities focused on the following areas: Digital & Innovation Mindset, Customer Centricity, Financial and Insurance Consulting, Lean Culture, Technical Skills, and provide three main backbones of intervention: � managerial training, aimed at developing leadership and creating a managerial culture of excellence; � specialized technical training, oriented to the development and maintenance of the most strategic skills for business and digital innovation; � mandatory and compliance training, focused on regulatory issues that involve the company’s workforce transversally.
The function responsible for the governance of training is the Corporate University, established in 2015, with the mission of guaranteeing learning paths. In 2019, the Corporate University was organised in Academy, on the basis of the various skills to be developed, thus providing for the structure of the latter in Academy, such as: Managerial Academy, Financial Academy, Postal Academy, Logistics and ICT, Corporate Academy, Business and Customer Operations, Digital Academy and Innovation. The Company also adopted a specific staff training procedure (Training Procedure and Operational Training) in 2018 with the aim of defining the operating mechanisms and organisational ownership regarding training and operational training activities, based on logics designed to guarantee the effectiveness, efficiency and compliance of the expected outcomes, introducing significant organisational and control measures.
On the basis of the guidelines drawn up by the Parent Company, the subsidiaries implement the procedures, adapting them to their size and their organisational and operational context, in order to develop and extend the organisation’s knowledge and capitalise on the Company’s experience.
Mail, Parcels and Distribution The Company has paid particular attention to the regulatory compliance requirements relating to the financial and insurance world (ESMA -MIFID II and IVASS regulations), with the aim of ensuring the maintenance and development of the skills required by the staff of intermediaries who advise clients on investments and insurance products, assessing the related skills development needs with a view to continuous training. In relation to Postal Savings, classroom and online courses were provided in accordance with the agreement with Cassa Depositi e Prestiti. Particular attention was paid to training on new products for the sales channel. In addition, the new course “Consultancy in Poste Italiane”, dedicated to all Specialist Financial Consultants, was created with the aim of strengthening the knowledge and skills necessary for the proper performance of the consultants’ activities, in line with the new model for the provision of consultancy services. An important new element regarding training systems, introduced in 2019, was the definition of a new induction path for Specialist Financial Consultants and Specialist Mobile Consultants, called “Induction & Professional Development”, dedicated to the newly inserted resources, with the aim of accompanying and supporting the insertion and professional development of resources and developing their knowledge through the activation of training programmes in classroom, coaching and online modalities.
Financial Services In continuity with the “Ascoltiamoci” initiative provided in 2018, a specific classroom course called “Ascoltiamoci reloaded ” was implemented for knowledge sharing between the various functions of the Group and the after-sales structures with the aim of developing a new method of structured listening between the various structures involved to identify solutions to issues of common interest. In addition, the direct path to the management of Banco Posta and Banco Posta Fondi SGR, the “Business Beyond” initiative, was carried out with the aim of sharing the new business challenges with a focus on managerial behaviour and the main levers of change.
Insurance Services At Poste Vita, with the aim of ensuring alignment with regulatory and socio-economic developments, the training activities integrate innovations relating to products and services with as many relational skills and the ability to take customer needs into consideration. In particular, during 2019, the main issues addressed in relation to the evolutionary scenarios concerned both general and insurance regulatory adjustments (e.g. IVASS Regulations - Regulation no. 40/18 and IDD, Legislative Decree 231/01, Anti-Money Laundering and Anti-Corruption, GDPR Privacy, Occupational Safety). Within the Key Professional project, internal teaching initiatives have been activated for the benefit of staff on technical-specialist topics. Finally, the “Executive Master in Insurance & Finance EMIF” continued, the two-year Master programme of high specialist level aimed at young talents, particularly in core business functions.
Payments, Mobile and Digital With reference to the PostePay Group Company, specialist training courses have been provided on ICT (Big Data Analyzing, Big Data Architecture and Machine Learning), ITIL and COBIT certifications, as well as the development of Pricing Techniques and the use of specific tool-sets available. The company has also participated in two CeTIF HUBs (Research Centre on Technologies, Innovation and Financial Services of Università Cattolica) for the Blockchain and Compliance area. Within the Change Management plan, the initiative implemented from 2018, with the aim of facilitating the mutual knowledge and exchange of professional knowledge between people from the Mobile, Payments and Digital world, training, communication and engagement interventions have been defined to support the process of business integration of the two industries - TLC and payments - and direct knowledge of people. Finally, within the “Digital Cafes”, the periodic meetings in which Postepay’s personnel shares innovative topics related to business, it was possible to promote the integration of people’s knowledge starting from the heritage of knowledge and experience already present in the company and spread further know-how on particularly innovative and “frontier” issues.
Continuous performance improvement In order to make the qualitative and quantitative effects of training activities measurable, it continued the use of an evaluation system that measures the perceived effectiveness, efficiency and quality of the training programmes provided through the use of specific performance indicators with the aim of promoting continuous improvement.
The development system The development system at Poste Italiane supports the growth of the business through the enhancement of its people, seizing their potential, developing their talent, supporting their motivation, consolidating their experience through growth opportunities. The set of actions that focus on people are the driver of change.
These initiatives are dedicated to diversified target populations belonging to all corporate functions and Group Companies.
In relation to the enhancement of people and the promotion of professional development in continuity with previous years, all scouting programs have been consolidated with the aim of identifying potential, skills and expertise that can feed the talent pipeline at various levels of the organisation. It concerns: � POP: is the process of identifying potential young people with limited company seniority, inserted, according to predefined criteria, in a process of assessment and professional orientation, functional to growth towards management area roles. The process is managed by internal Councillors, appropriately trained and certified to conduct the assessment and subsequent development sessions. The high potentials feed the so-called “Pyramid of Talents”, with particular reference to the “Young Talent” basin.
� Leadership Assessment: the process of assessing managerial skills for Level II and Level III Executives, aimed at identifying the development potential for planning succession plans and/or paths for further managerial growth.
� SKILL-UP: the process of assessing skills in the profession (technical-specialist), which makes it possible to intercept skills champions and identify gaps with respect to the expected role. The evaluation is carried out through a series of tests and trials (simulations, business cases, etc.) and by group assessment centers.
Performance Management is the program for measuring people ’s performance and is a process that periodically involves the entire company population. It is envisaged to activate extended 180° assessments that allow gathering different points of view (manager, colleagues, assessed person) regarding managerial conduct. The programme also included a 360° assessment for Level I and Level II managers. Among other things, the Performance Management system enables gathering of opinions, degree of satisfaction, appreciation and level of sharing of the appraisal received by the workforce involved.
The change underway has also involved the activation of all business functions with the aim of evolving processes, systems and operating tools to make them more in line with the new challenges. In particular, the Human Resources function is increasingly involved in the development of a more evolved mindset in terms of internal customer care, management and caring of people in a “customer oriented” logic. The “Culture of development in the territory” project is part of this line of action and has been implemented in the design and implementation of an internal and itinerant training course on issues of organisational development. Another initiative with impact on the change of organisational culture was TEAM (Territori Ed Altro In Movimento), a change management programme aimed at territorial reorganisation in which, through a cycle of Group Coaching, the employees involved were called to “ground” the new organisation, co-constructing a managerial approach based on a common vision and a shared integration model.
The valorisation of people has been the subject of multiple interventions aimed at improving the state of wellbeing of personnel in order to allow easier living conditions and more efficient working performance. These actions represent an indispensable prerequisite for increasing loyalty with a consequent increase in production, engagement and, in general, the business climate and social wellbeing.
As part of the process of listening to personnel, Poste Italiane has launched a survey called V.A.L.O.R.E.. Listening to Poste Italiane personnel, aimed at analysing the perception of the working environment, the promotion of improvement processes and the level of employee involvement in company processes. In particular, the listening activity aims to analyse the perception of the actions undertaken by Poste Italiane within the Deliver 2022 strategic plan, the business transformation programme launched in 2018 with the aim of strengthening Poste Italiane’s leadership in the distribution of mail and parcels and in the delivery of financial and insurance products. The survey, carried out during 2019, involved a large number of Poste Italiane Group employees working in the financial and digital sector, distributed by age, gender and geographical area. This survey revealed a positive opinion of the Company in terms of “sentiment”, reputation and satisfaction with the activities carried out in relation to the implementation of the Business Plan. Poste Italiane is perceived as an ethical company, open to innovation and capable of looking to the future, and above all able to focus on professional and human activity and transparency in its work and to make employees participate in a common project.
Thanks to the digital revolution happening across the entire company, the Group has been able to introduce and consolidate new channels of communication with its employees. Such means facilitate the simplification of processes and services related to the everyday working life.
Redazione Diffusa (Widespread Editorial), the initiative to give voice to the territory from the territory
Participation and corporate communication also come from proximity and knowledge of the territory. With this in mind, in 2019, “Widespread Editorial” was created, the community of fellow editors whose aim is to give space to stories and news from the territory by creating a network of people and widespread, specialised, passionate content. The contents produced by the editorial staff are published on the company intranet and, in some cases, also on the social channels of Poste Italiane. In September, a first workshop was held in Rome where new editorial staff were involved with the aim of developing together the collaboration model and defining the content standards for the expanded intranet editorial staff.
Poste Italiane has been awarded the title of Top Employer Italy. The prestigious award was given to Poste by the Top Employers Institute, the global certification body for excellence in HR practices. The Top Employer Italia certification is in addition to the other awards given to Poste Italiane by Universum Global, a Swedish company specialized in employer branding. Universum Global place Poste Italiane second in relation to worklife balance, following the Most Attractive Employers Italy 2019 study carried out on a sample of over 40 thousand students and recent graduates from 44 Italian universities, identifying the most appealing employers based on the responses collected.
Moreover, the Company entered the ranking “World’s Best Employers 2019” drawn up by Forbes, which identifies the top 500 companies in the world in terms of quality of working life, in which the Group ranks second globally in the “Life & Health Insurance” sector and fourth among all Italian companies. Working for Poste Italiane means joining a large team, made up of about 130,000 people who, with skills, commitment and determination contribute to achieving the company’s goals by participating in the economic and social development of Italy. With widespread presence in the territory through a network of over 12,800 Post Offices, Poste Italiane aims to be an inclusive development engine for the Italian economy.
For the disabled children and siblings of employees, an initiative has been created, now in its eighth edition, which provides for two residential stays of 15 days each, with personal assistance and entertainment services provided by a team of specialised operators, with total costs borne by the Company. In addition, families accompanying the children are offered packages at advantageous economic conditions.
Created in 2019, “Posteapertetuttol’anno” is a path of involvement and participation of colleagues and their families. Initiatives already launched and planned for 2020 include school orientation courses, scholarships, participation in cultural and educational events and much more. The first stage of this journey was the Open Day for the children of employees aged between 3 and 10, which took place on 5 December 2019 in 13 locations throughout the country and was attended by over 1,000 children. Environmental sustainability has been the theme that has guided the games and workshops and is one of the pillars on which the Poste Italiane Group’s strategy is based.
In addition, a network of agreements has been set up to provide employees and their families with access to products and services identified in line with their personal, social and parental care needs (e.g. summer camps for children and young people). Welfare payments are also provided to support employees with special needs, arising from serious personal and/or family situations or from serious natural disasters.
In the wake of the success of the “Azzurri Partner Cup 2018”, the tournament reserved for the Top Sponsors of the Italian national soccer team organized annually by the FIGC (Federazione Italiana Giuoco Calcio), Poste Italiane’s national soccer team was created in 2019. The initiative has generated a high number of adhesions and has seen the coach in charge Angelo Di Livio, former professional player and established champion, select a group of colleagues registered in amateur soccer clubs. The National team took to the field to raise funds for charitable purposes. The National team was also confirmed for the second consecutive year as the winner of the “Azzurri Partner Cup” in Coverciano. This way, soccer becomes for Poste Italiane a tool for work-life balance as well as a way of closeness and support to the territory, values that the Company has always promoted.
Health and prevention One of the priorities of the sustainability strategy adopted by the Company is the attention to employees in terms of protecting the health, safety and psychological and physical integrity of people, encouraging the development of a solid internal culture and aligning with best market practices. In this context, in 2019, the Health & Caring Project was launched with the aim of defining a programme of medical and nursing health services and training and clinical-diagnostic events aimed at strengthening employee health awareness and prevention, as well as coordinating implementation and logistical/organisational activities at company offices.
In line with previous years, the initiatives dedicated to prevention continued, as part of the Health Plan project. These initiatives have allowed 400 employees in 11 cities to access free specialist visits at the company’s offices, together with seminars dedicated to the prevention of illnesses that protect the younger generations, such as the prevention of risks related to smoking and attention to correct eating habits. In addition, thematic campaigns were conducted and agreements for urological, ophthalmic, physiatric, and oncological medical visits were conducted at the Roma Eur office. Furthermore, it is the Company’s intention to make the medical clinic at the headquarters available to all as soon as possible, and to replicate this project in the six Territorial Macro-Areas.
The Company’s Supplementary Health Fund, supplementary assistance to support Poste employees and their families
In July 2018, Poste Italiane signed an agreement with the labour unions regarding the performance-related bonus, which, on a voluntary basis, allowed employees to opt to transfer the entire amount of their bonus or a portion thereof to cover the cost of welfare goods and services with a social impact, in addition to those already provided for (supplementary pension). These may include, for example, education and training expenses, care expenses for the elderly and/ or dependent family members, transport expenses, etc.
Promoting constant dialogue with workers’ representatives is an important aspect for the Group, which is committed to ensuring the wellbeing of its workers and protection of their rights, both under normal operating conditions and in the event of significant organisational changes.
The quality of labour union relations enables fostering of a positive corporate atmosphere and finding appropriate solutions for issues that may have a significant impact on the organisation, on the business and, in particular, on human capital, a fundamental asset for the Company.
The Group is committed to ensuring the welfare and protection of the rights of its workers and their freedom of association and collective bargaining, in accordance with current legislation.
In its Code of Ethics, the Group sets out the reference principles of fairness, impartiality and independence for the promotion of our relations with the labour unions.
Dialogue with the social partners is managed via periodic meetings with the labour unions, in order to ensure compliance with the law; the Group stipulates agreements with labour unions in the interest of its employees, in accordance with the bargaining procedures set out in the National Collective Labour Contract and the Consolidated Law on Representation.
The Group envisages the sharing and signing of specific agreements with the labour unions, regarding matters expressly provided for in the National Collective Labour Contract, as well as other matters relating to the achievement of objectives outlined in the Strategic Plan that have repercussions for staff in terms of legislation and/or organisational changes
In the event of significant organisational changes (reorganisation and/or restructuring and/or corporate transformation processes) that have social consequences with repercussions on working conditions, the Group refers to national collective bargaining, which provides a specific procedure for dialogue between the Company and the national labour unions signing the National Collective Labour Contract.
Reorganisation in Logistics, Staff Structures and Post Office Network and the new sales model for the Small Business channel On 26 June, 18 July and 2 October 2019, further agreements were reached to supplement the Framework Agreement of 8 March 2019 for the reorganisation of Logistics, Staff Structures and Post Office Network.
In particular, on 2 October 2019, the Company and the Labour Unions signed an agreement that defined how to manage the impact on employment resulting from the application of the new sales model that Poste Italiane has identified for the Small Business channel.
On 13 June 2018, the Parties reached an agreement which identified methods and criteria for managing workforce trends in the three-year period 2018-2020. In particular, during the period in question, hiring of 6,000 new staff was envisaged, compared with a number of voluntary redundancies regarding employees on permanent contracts amounting to at least 15,000 staff.
The managerial and organisational levers required to meet the Company’s needs were identified in the following areas: � hiring employees with fixed-term contracts on permanent contracts; � recruitment from external markets, mainly through professional apprenticeship contracts; � conversion from part-time to full-time contracts; � job rotation.
On 26 November 2019, an agreement was signed for the hiring with fixed-term contract with substitute clause of employees of the Delivery Agencies already hired by Poste Italiane under the agreement of 19 June 2018 and in service on 23 October 2019.
Other agreements In May 2019, two minutes of agreement were signed with the national labour unions for Poste Italiane and Group companies that apply the same national collective labour contract, giving employees, on an experimental basis for the year 2019, the option to opt to convert the payroll into a day of non-cash paid leave for each of the holidays of 2 June and 8 December 2019, falling on Sundays.
The agreement confirmed the option for employees to allocate all or part of their performance bonus to Open Fund for Supplementary Assistance Poste Vita, Fondo Poste or other supplementary pension funds or opt for welfare services with high social impact.
Two agreements were signed in September 2019. The first provides, on an experimental basis for the year 2020, that workers in certain situations of difficulty and who have already taken all their days off will be able to request the transfer of “Solidarity Holidays” in their own favour. At the same time, workers who wish to express their solidarity will be able to donate, on a voluntary basis and free of charge, up to a maximum of three days’ holiday and two days’ leave for cancelled holidays. The Parental Leave Agreement, on the other hand, provides that, on an experimental basis, from 1 October 2019 to 31 March 2020, workers may take leave on an hourly basis for 1/3 of their working day, in addition to the half-day leave already provided for.
Finally, considering that Poste Italiane’s national collective labour contract expired on 31 December 2018, on 11 December 2019 the labour unions presented the unitary platform and formally requested the start of negotiations, which began on 8 January 2020.
Participatory organisations with mixed composition (members from Poste Italiane and Labour Unions) Together with the labour unions, Poste Italiane has set up joint bilateral bodies at national level regarding issues that are also relevant in terms of sustainability, including: � Comitato per l’Attuazione dei Principi di Parità di Trattamento e Uguaglianza di Opportunità (The Committee for Implementation of the Principles of Equal Treatment and Equal Opportunities), with the objective of “implementing and strengthening a culture that pays attention to diversity, including gender diversity, through positive actions aimed at creating examples of good practice within the Group and removing obstacles that actually prevent achievement of equal opportunities ”. In this context, the Committee will address issues relating to the integration and inclusion of disabled people, as well as those regarding other factors of discrimination.
Poste Italiane considers the protection of health and safety at work (OHS) a fundamental value, which people must be inspired by in carrying out their daily activities.
� Training on the use of vehicles, provided by Polstrada, for about 3,100 resources and training on safe driving on a track involving about 2,000 letter carriers.
� Involvement of about 800 managers of the Delivery Centres regarding injuries and more generally on occupational health and safety.
Approximately 8,000 injuries in 2019, almost 500 fewer than in 2017
The Company policy regarding occupational health and safety comprises the following key principles and objectives: � continuous assessment of risks and definition/update of related rules and procedures; � ensuring that innovations and changes in work processes are accompanied by objectives that are increasingly oriented to promoting occupational health and safety; � timely adaptation to all regulatory changes and updates; � identification of roles and responsibilities within the organisation and allocation of the necessary resources for planning and implementing the programmes aimed at achieving the objectives; � effective and transparent communication that ensures dissemination of any information that might be useful for prevention purposes, including cooperation and coordination measures with contractors; � periodic review of the management system by top management to assess its correctness and effectiveness with a view to achieving constant improvement.
Starting with the Group’s Integrated Policy and Health and Safety Policy, each employer has approved this policy for its production unit, making it available to all workers.
In 2019, with the aim of strengthening oversight of occupational health and safety, Poste Italiane SpA confirmed certification of the Occupational Health and Safety Management System, in compliance with the BS OHSAS 18001 standard, currently ISO 45001, adopted by the “Strutture centrali e le loro dipendenze territoriali” (Central facilities and their local branches) production units.
Empowerment Principles • 44.4% of the Board of Directors of the Parent Company is composed of women
• Participation of more than 500 employees in the MAAM project
Objective achieved Objective not achieved Deadline for achieving the objective has not yet expired
Increase women's involvement in staff development plans 2022 % of women involved in staff development plans compared to the average achieved in the two-year period 2016-2018
Investing in mentorship programs for the development of a new leadership style in line with gender - equality policies 2021 % of female mentors trained
Carry out training and cultural awareness interventions with the aim of improving awareness in men and women in the company of the value of gender diversity 2022 % of the company workforce 60% New
Increase mentoring programs in order to encourage generational cooperation and the exchange of knowledge 2021 % of mentors to support the younger generations
Implement structured listening programs through surveys and communities aimed at detecting the needs of the different generations 2022 no. of surveys conducted 2 New
Carry out training interventions with the aim of activating an increasingly responsible management on the issues of disability management 2022 % of the company workforce 60% New
Extend the subtitling service to all videos made and published on the intranet 2020 % of videos published on digital channels with subtitles 100% New
Specific employer branding on Diversity and inclusion, in synergy with universities 2022 no. of universities involved 4 New
Carry out training and awareness actions on the protection of human rights 2021 % of the company workforce 60% New
The Company maintains a high level of attention to its own strategy for a correct valorisation of the different needs expressed by people. The exclusive promotion of diversity is an enabling factor for the involvement and engagement of people to achieve corporate objectives. In addition, increasing awareness in the management of diversity creates a competitive advantage for the Company and shared social value. The Diversity and inclusion programmes carried out are therefore part of a broad context, in order to act simultaneously on culture and enhancement of individual differences and to reduce situations of individual fragility in support of balanced organisational models that enhance dialogue and the emergence of diversity. The path undertaken aims to evolve the way in which diversity issues are dealt with, moving from an approach aimed at protecting and integrating diversity to a proactive strategy to overcome any barriers and resolve the factors that prevent people from being included in the labour market. In this context, the Company also actively participates in inter-company working groups on these issues, enhancing the value of collaborations with leading sector associations.
Gender The Company values gender balance and the overcoming of any stereotype, discrimination or prejudice, in order to create the best conditions in which each person can express themselves. The Poste Group is committed to increasing the strengthening of awareness initiatives at all levels and promotes policies and actions aimed at promoting equal opportunities, work-life balance, the sharing of family responsibilities and the removal of potential obstacles, including those related to sexual orientation.
As confirmation of the attention paid to Diversity and inclusion issues, an ad hoc organisational function called “People Care and Diversity Management” was introduced in the Human Resources area in 2019, which, in coordination with the Group Risk Governance function, operates as an activator and promoter of cultural and organisational change. The Company is outlining the structured development of a reference strategy and an execution roadmap the objective of which is to act on corporate culture, through awareness plans aimed at generating an approach free from common prejudices and stereotypes.
This approach includes Poste Italiane Group’s Declaration, drawn up in accordance with the “Framework Agreement on Harassment and Violence in the Workplace”, in which the Company establishes its duty to cooperate in maintaining a working environment where everyone’s dignity is respected and interpersonal relations are encouraged, based on the principles of equality and mutual fairness, and all forms of harassment or violence in the workplace are condemned.
Contributing to the implementation of these initiatives provides Poste Italiane with a strategic opportunity to promote a corporate culture that is increasingly focused on valuing the presence of women, which in turn helps to consolidate a collective culture in local communities that are increasingly aware of this issue.
Regarding the initiatives Poste Italiane is involved in, for several years the Company has been working with the Equal Opportunities Department of the Cabinet Office on the active promotion of the 1522 anti-violence and stalking telephone number across its network of Post Offices. The 24/7 toll-free number, managed by Telefono Rosa’s Helpline, offers support to victims of violence and stalking through specialised operators who, in addition to providing useful information, direct victims to the main public and private social and health services in their local areas. The Company has also contributed to the creation of E-LOVE (E-Learning Operators Violence Effects), the platform for remote learning of operators involved in the fight against gender violence.
With the aim of discussing the issue with the main national and local institutions and associations, on 20 November 2019, coinciding with the 18th Corporate Culture Week, the Group promoted the conference entitled “Poste Italiane per l’inclusione lavorativa delle donne vittime di violenza” (Poste Italiane for the work inclusion of women victims of violence). The meeting enabled presentation of the main support tools and methods provided for by the activation of projects aimed at creating financial independence pathways, a key element in supporting the reintegration of victims of violence within the social fabric.
During 2019, in agreement with the two main protection organisations operating at national level (the D.i.Re. anti-violence network and the voluntary association Telefono Rosa) an innovative integrated model of intervention in favour of the economic and working autonomy of women victims of violence, launched through the activation of an ad hoc fund contributed to by special resources approved at the beginning of 2020 by the Sponsorship and Donation Committee of Poste, whose distinguishing feature is to contribute, together with the various stakeholders concerned, to the creation of paid professional development paths aimed at the employment of women leaving anti-violence centres throughout Italy. Finally, with a view to proactively involving companies in the supply chain, several temporary positions have been made available to women leaving anti-violence centres, subject to appropriate selection, by a service company in the Poste chain in Rome.
In addition to the requirements of professionalism, honourableness and independence and the incompatibility and/ or forfeiture criteria provided for by law, regulatory provisions and the Company’s By-laws, the Policy addresses issues relating to age and seniority, gender, geographical origin and international experience (for further details see the “Report on Corporate Governance and the Ownership Structure”).
The value of respect for individuals and their professional development is considered a fundamental value by the Poste Italiane Group, together with the awareness that the set of relational, intellectual, organisational and technical skills of each employee represents a strategic resource.
Poste Italiane subscribes to the “Equal Opportunities and Equality at Work Charter”, a declaration of intent voluntarily signed by companies of all sizes regarding the dissemination of a corporate culture and the adoption of inclusive human resources policies, free from discrimination and prejudice and designed to enhance talent in all its diversity. The Charter provides a framework of reference values for the implementation of commitments aimed at creating a work environment characterised by pluralism and inclusion, which ensures equal opportunities for everyone and recognition of each one’s potential and skills, thereby helping to promote equity and social cohesion and at the same time the Company’s competitive growth and success.
As evidence of the Group’s ongoing commitment on the protection of human rights and the enhancement of diversity, Poste Italiane continues to fully implement as already provided in the Memorandum of Understanding with the Ministry of Equal Opportunities, aimed at carrying out more effective and common communication, awareness and dissemination actions in order to: � promote initiatives aimed at the protection and full affirmation of human rights, as well as preventing and combating all forms of exploitation of human beings and people trafficking; � promote full implementation of policies regarding equal opportunities between men and women, with particular reference to work-life-balance and career issues; � prevent and combat sexual and gender-based violence, stalking and any other form of violence against and abuse of women and children; � prevent and eliminate all forms of discrimination directly or indirectly based on gender, racial or ethnic origin, religion or beliefs, age, sexual orientation and gender identity.
The MAAM project saw the participation of over 500 employees in 2019
As part of the initiatives to support the development of intergenerational skills, a pilot project, “Maestri di Mestiere” (Masters of Trades), has been developed to enhance the skills of senior resources to encourage the transfer of skills to junior professionals. The project aims to support the recruitment and motivation of senior figures, enhancing their wealth of skills and knowledge to prepare younger figures for inclusion in key roles, by providing training, support and tutoring.
Regarding Business Market and Public Administration, the Talents 2.0 Project was launched with the aim of engaging with junior and senior professionals in order to generate improvements in problem-solving skills, through the innovative design thinking methodology, with respect to issues central to the development of activities: streamlining processes, developing skills, engaging the sales force.
Enhancement of disabled staff As part of the “Progetto LIS – Laboratori musicali inclusivi” (Italian Sign Language Project - Inclusive Music Workshops), was the launch of a music workshop aimed at facilitating the learning of sign language. Group employees and their families were invited to join the choir including voices and Mani Bianche that revolves around the experience of the
By 2019 No. of Small Municipalities without a Post Office to be equipped with ATMs and postal services via the network of tobacconists and home delivery by postmen and women
Allow Companyowned spaces in "disadvantaged" areas to be used for social activities
Certify the financial advisory service and the skills of people operating in accordance with the ISO 22222 standard
Increase the Group's support for initiatives in the "wellbeing and social inclusion" category
The Company has always accompanied the local communities where it is present on a daily basis towards modernisation and digitisation processes, thereby promoting the wellbeing of citizens and socio-economic development. Supporting the needs of the community is in fact the foundation of the Group’s values and corporate mission.
With the aim of having a positive impact and bringing benefits to the community, Poste Italiane promotes specific social inclusion initiatives in an organic and widespread manner, both through its extensive network of Post Offices and through the involvement of corporate volunteering and/or the financing of specific projects with a community value through donations and sponsorships.
The Company has adopted a Policy on initiatives for the community that defines the strategy adopted by Poste Italiane as part of its interventions to support the socio-economic development of the territory. With specific reference to the Sustainable Development Goals of the United Nations, the Policy describes the main areas of intervention of its initiatives such as: promote the accessibility and inclusion of the categories most at risk of exclusion through dedicated products and services, promote culture and education through initiatives aimed at fostering cultural values and the right to education and encourage economic sustainability and social connection through collaboration with central and local governments, the Third Sector and local communities to meet the needs of the most disadvantaged categories.
Sponsorship initiatives and donations are represented in specific classes according to the target set, using the London Benchmarking Group (LBG model) classification and measurement standard, which establishes specific methodologies to manage, measure and report their involvement in the community, according to principles of transparency and participation.
In 2019, the Company focused its attention on supporting projects of a socio-cultural nature, increasing its contribution to three types of initiatives in support of the territory, such as: � Art, culture and dissemination of knowledge: include support for institutions and other organisations promoting artistic activities such as music, dance and theatre and the dissemination of knowledge of national and local heritage.
� Training, development and knowledge: refer to initiatives in support of bodies and organisations active in the field of individual and collective knowledge for the development of areas of study and specific skills.
� Wellbeing and social inclusion: include initiatives in favour of organisations and bodies that promote a healthy lifestyle to disadvantaged sections of the population.
During 2019, the specific initiatives to support the development of the territory were put into practice and all the objectives set by the programme were achieved.
Thanks to the commitments undertaken, Poste is able to reach the most peripheral local realities, such as the Municipality of Morterone, the smallest in Italy, where 30 people live, which thanks to the new ATM Postamat provides its inhabitants, mostly elderly, with the possibility of carrying out operations without having to travel long distances for cash withdrawals.
Digital and postal financial education programmes With the aim of contributing to the widening of knowledge and skills in financial, postal and digital matters, the Company foresees a dense programme of initiatives involving experts of the Company where issues such as macroeconomics and finance are addressed, aimed at giving the right support to citizens in their choices of saving and responsible investment. The meetings are also focused on providing training to customers and citizens on the use of the tools needed to take advantage of the new opportunities offered by technological and digital evolution. In a simple interactive way, it explains how to manage money using a smartphone, how to buy products in every corner of the world and how to stay in touch with the network of relationships. In addition, there will be specific details on the new delivery model and new postal services and products.
SMART mailboxes Poste Italiane is committed to install in the country by 2022, 11,000 SMART mailboxes of which about half will be present in the Small Municipalities. The boxes verify the actual presence of mail, collect environmental data (temperature, humidity, pollution) and offer digital space for information useful to the relevant Municipalities.
New green fleet with reduced emissions (- 40%) Poste plans to replace the entire fleet of 26 thousand company vehicles by 2022. The current vehicles will be replaced by the latest generation of low-emission vehicles: 50% of these vehicles will go to Small Municipalities. The overall objective is to reduce transport emissions by 40%.
More than 1,000 employees involved in Corporate Volunteering in 2019 21 volunteers have made their contribution during the flooding of Venice
The programme consists of a two-year project aimed at preventing and combating social isolation and supporting the self-sufficiency of elderly people living in 95 Municipalities subject to seismic events, of which 56 in the Marche, 15 in Abruzzo, 14 in Umbria and 11 in Lazio. The initiative, promoted and carried out by the Italian Red Cross, makes use of the remaining resources from the fund raising campaign promoted by Poste Italiane for the Red Cross following the earthquake. The aim of the project, which sees the collaboration between the Italian Red Cross and Poste Italiane, is to promote the wellbeing of the communities by improving the quality of life of the people living in the areas affected by the earthquake in central Italy, with particular attention to the elderly and non-self-sufficient people, guaranteeing safety and psychological and physical wellbeing to them and their families through integrated social and health care, health education and prevention activities. The development of a culture of social inclusion is envisaged through forms of personalised care developed on the basis of individual needs taking into account specific gender and age requirements in order to strengthen the transversal nature and innovation of social services and improve access to social assistance and the quality of services by monitoring results. In addition to the recovery of difficult situations, the programme promotes health education actions to ensure care and risk prevention in communities where the elderly population is constantly increasing. The deep rootedness of Poste Italiane in the area affected by the earthquake, has allowed to identify as many Post Offices with structural characteristics adapted to the needs of the project that serve as a reference for the installation of defibrillators available for the entire population, more than 28% of which are over 65 years of age.
The Cresco Awards: the partnership with Sodalitas to promote sustainable cities During 2019, Poste Italiane took part in the “Cresco Awards - Sustainable Cities” award ceremony, the event that recognises the initiatives of Italian Municipalities most effective in supporting the sustainable development of territories, promoted annually by the Sodalitas Foundation in collaboration with ANCI (National Association of Italian Municipalities). The awards, given by an independent Jury, were presented this year at the 36th annual meeting of Anci in Arezzo. For the fourth consecutive year, the Cresco Awards have rewarded the best initiatives developed by Municipalities, Metropolitan Cities, Mountain Communities or Unions of Municipalities throughout Italy. 25% of the projects submitted concerned Small Municipalities up to 10,000 inhabitants on issues related to the Sustainable Development Goals of the United Nations Agenda 2030. The initiative has seen the involvement of 16 companies particularly committed to sustainability, including Poste Italiane, which has awarded the recognition “Per lo sviluppo digitale dei Piccoli Comuni” (For the digital development of Small Municipalities) to the Municipality of Tavenna (CB) for the initiative “Accoglienza, inclusione e coesione sociale” (Welcoming, inclusion and social cohesion), to the Municipality of Tollo (CH) for the initiative “Tollo equa. + ricicli - paghi” (+ recycling - pay) and to the Municipality of Malegno (BS) for the project “Piccoli progettisti crescono” (Small designers grow).
The P.A.I.N.T Project On the basis of the founding values of proximity and the social role promoted by the Company, as part of the commitments to support Small Municipalities, in 2018, the P.A.I.N.T. (“Poste e Artisti Insieme Nel Territorio” – Poste and Artists together in the territory) project, a territorial initiative for the redevelopment and decoration of Post Offices, was launched. In line with Poste Italiane’s role and its proximity to local areas and citizens, through this project the Group enhances its presence in Italy’s social fabric, in order to make the Company’s predilection for local communities and innovation more concrete and visible. Through an online contest that involved street artists from all over Italy, the Company identified the sketches for 22 murals that were created in 2019 on the outside walls of Post
Offices throughout Italy, transforming them into landmarks for the neighbourhood and citizens.
Transparent dialogue with Authorities 32. In 2019, Poste Italiane’s support for trade associations amounted to approximately €3.5 million. Poste participates in the activities of Confindustria and local associations aimed at the development of the digital economy and the implementation of services offered to associated companies, based on qualifying products and services of Poste Italiane.
In accordance with the principles of fairness, professionalism, collaboration and transparency set out in the Code of Ethics, the Group actively cooperates with authorities (regulatory, supervisory and judicial) and public institutions in order to identify solutions to support the needs of the community, as well as promoting the development of local areas and at the same time the competitive growth of the Company.
Regarding relations connected with legislative issues, the relationship with public decision-makers is aimed at promoting knowledge of a wider range of assessment elements, which enable an analysis of the impact and possible consequences of a given law, and optimum representation of proposals to change existing legislation.
Vehicles made available by Poste Italiane for the transport of foodstuffs to those in need
In relation to discussion activities with local institutions, the Company regularly carries out specific activities of dialogue and collaboration also with Regions and local authorities. These activities are aimed at ensuring, with particular reference to Small Municipalities, the collection of their needs and the coordination of initiatives aimed at providing the most appropriate solutions. In order to guarantee this process in the best possible way, in the course of 2019, territorial controls were set up for each company macro-area, within which a person responsible for supporting associations and institutions was identified.
Within the international postal organisations, the Group is also actively involved in initiatives aimed at promoting sustainable development. In particular, the Group participates in the EMMS (Environmental Monitoring and Measurement System) programme promoted by the International Post Corporation, a cooperative association comprising 23 postal operators that handle approximately 80% of global traffic volumes. The initiative was launched in 2008 with the aim of monitoring CO
2 emissions and assessing the sustainability of the participants’ activities, in order to reduce the impact of postal activities on the environment.
With specific reference to the Mail, Parcels and Distribution segment, the Group aims to: � guarantee access to SGEIs - services of general economic interest (e.g. the universal postal service, publishing - access to information, various services for citizens ), with the aim of ensuring end users’ access to information; � guarantee fulfilment of the legal/regulatory obligations imposed on the Company regarding the provision of universal and non-universal services (e.g. in terms of quality performance, obligations relating to provision of information to customers, definition of the Contratto di Programma (Service Agreement) between the Company and the State, organisation of Post Offices, verification of the cost of the universal service, regulation of alternate -day mail delivery, etc.); � handle requests from AGCom (Italian Communications Authority) regarding the regulation and supervision of the postal sector (e.g. requests for information, sanctions proceedings, etc.) and AgID (Digital Italy Agency), in relation to the activities of the Payments, Mobile and Digital segment.
Based on principles of professionalism, reliability, and ethics, Poste Italiane provides offerings dedicated to all the categories of customers it serves, in accordance with specific needs.
In order to strengthen the Company’s proximity to the various customer groups, the Group is constantly seeking innovative solutions for the products and services it offers, partly thanks to its nationwide reach.
The return of Poste Italiane in the historical centre of L’Aquila 10 years after the earthquake of 6 April 2009, the new Post Office was inaugurated in the historic centre of L’Aquila, which covers an area of 300 square meters and was built with the help of the most modern technologies to combine safety and quality of service: 6 multifunctional doors, 2 consulting rooms and a new generation POSTAMAT automatic teller machine. The reopening of the Post Office in the historic centre of L’Aquila thus contributes to the rebirth of a beautiful city and in particular of its oldest urban core. Expanding and renewing the presence of Poste Italiane in the capital city of Abruzzo is consistent with the industrial strategy, which has its cornerstone in the widespread presence of postal services and is above all in line with the values of inclusion and closeness to citizens and communities that have always characterised the Company.
Moreover, in line with the Code of Ethics, all Post Office staff give priority at counters to customers with motor and visual disabilities, expectant mothers and parents with newborn infants. In order to support the application of this principle, courtesy notices are displayed in all Post Offices to encourage such behaviour.