But what can banks do to accelerate the ecological transition? So far, the focus has been mainly on investments, on the so-called green bonds and on the letters, more and more detailed by the number one of BlackRock, Larry Fink. But it is above all through a new way of assessing credit risks (not only reputational ones), of measuring the efforts of companies in terms of their environmental impact, that a way can be found for the economy to accelerate change. The management engineering department of the Politecnico di Milano carried out a very in-depth study to try to understand where the Italian credit institutions are located. 44 questions to 13 groups representing over 71% of the total assets of the banking system.
“We have observed that the degree of awareness of the sector and the perception that it is a fundamental issue are very high. Banks are confronted with a regulatory issue, which is becoming more and more pressing but must open up towards the evaluation of real new business opportunities “, explains the study coordinator, Marco Giorgino, professor at Polimi of Financial Markets and Institutions . Here: it will be necessary to move from the compliance model, of constraints to be respected, which banks often draw inspiration from, to the evaluation of the new possibilities of carrying out the job of the banker, therefore.
A first fact: 46% still do not consider ESG criteria systematically as part of their business strategy, but those who do are starting to consider them central. It sounds like a contradiction, but it isn’t. The level of awareness begins to be very high, at least 78% of the sample believes that it is no longer possible to do without these criteria, even if the implementation is still not very clear.
A delicate step concerns internal governance: only 37% have developed a governance dedicated to sustainability. The regulatory framework, from the ECB to the EBA, to the Bri, to the Bank of Italy, is becoming more and more detailed and the taxonomy is beginning to make comparisons and comparisons possible. Exactly as it happens for “traditional” economic data. This is the necessary leap.
«What emerges is that there are still few groups that are starting to consider environmental risk not only a risk for the planet but also potentially a risk for their own budgets. Investing in more sustainable companies means, as the pandemic has shown, investing in more resilient companies. In some cases even more profitable and with less risk », Giorgino emphasizes.
Here’s the thing: it’s not just a moral or ethical issue. Yet only 9% consider this aspect: to include considerations on the financial impacts of ESGs in the definition of the risk appetite statement. But how is it going on the daily life front? With loans, for example. 91% of banks are below 25% of credit flows but above all a low commitment with the financed companies is expected: the turning point could instead begin right here. «It is as if there was a double speed,“ green ”investments are growing,“ green ”credit much less. Many aim to enter the sustainability indexes but the turning point will pass from the core activity of banks, credit. Which then is the key to direct growth ”, Giorgino adds.
Instead, the offer of products is changing: from green bonds to sustainable credit lines, which offer advantages in terms of interest rates to those who employ them. He has half of the banks in his portfolio. However, one figure remains high: 78% consider ESG criteria a reputational factor, not a business one. «And instead this is precisely the innovative aspect, evaluating the green risk / opportunity to price credit. It has been shown that it offers a benefit in terms of stability and profitability to those who have made this choice already in the last 6-7 years. And ESG factors also have a predictive nature on the economic and financial performance of companies ”, he stresses.
The point is to avoid the risk of green washing, a strong temptation. To the point that the American SEC – the equivalent of Consob in the US – has proposed whistleblowing, the possibility of anonymously reporting anyone who should communicate false environmental sensitivities.