Intesa Sanpaolo offers ambiguous response to investor demands to change coal policy

Rome, 26th April 2023A group of 9 investors– Actiam, Candriam, Ecofi, La Financière de l’Echiquier, La Française Asset Management, Legal & General Investment Management, Mirova, Ofi Invest Asset Management, Storebrand Asset Management – with a total of about 2000 billion euros of assets under management[1], wrote an open letter to Italy’s largest banking group, Intesa Sanpaolo, asking to reduce its exposure to the fossil fuel industry, notably to the coal sector. The latter, as now universally known, is the most polluting fossil fuel and in several countries, including Italy, coal-fired power plants are being decommissioned.

In the days leading up to the shareholders’ meeting on 28th April, for the fourth time behind closed doors thanks to the reiteration of the anti-Covid rules contained in the “Milleproroghe” decree, Intesa Sanpaolo has in fact returned to sender the numerous comments made by investors regarding its involvement in the coal business. In fact, the Turin-based bank provided full clarification to investors only on the exclusion of coal mine developers and did not respond to other fundamental requests, namely the full phase-out from the coal sector – as urgently requested by the international scientific community – and the extension of the policy to all financial services, including investments.

The bank’s full response is available at this link.

Furthermore, Intesa Sanpaolo expresses its willingness to continue updating its commitments, but in fact there has been no meaningful improvement since the last policy update in July 2021.

Despite the commitments made back in 2021, Intesa Sanpaolo’s financial exposure to the fossil fuel industry, particularly to the coal sector, continues to be significant and, overall, not aligned with the Paris Agreement’s objective of limiting global warming to 1. 5°C. According to our data, Intesa Sanpaolo’s financing to the coal sector from 2016 to 2022 amounts to USD 13.7 billion, while investments as of 1st January 2023 amount to USD 1.8 billion[2].

Lützerath coal mine, photo ©Cat in a Camera

For these reasons, the investors asked the Turin-based bank to “improve its coal policy and share it publicly in its entirety, in order to: exclude general purpose financing to coal mine developers; adopt an immediate and more stringent threshold definition for the exclusion of coal power generation companies; detail a comprehensive strategy to fully exit coal at the latest by 2030 in Europe/OECD countries, and 2040 worldwide; cover all financial services, including investments and securities underwriting”.

“If Intesa Sanpaolo intends to play its role as a bank for sustainability, it should pay more attention to its shareholders’ demands and strengthen its coal policy. Investors, who are open to a constructive dialogue with Intesa Sanpaolo, are waiting to hear back on whether the recommendations made in their letter will be integrated into the Italian banking group’s subsequent revisions. The gradual full phase-out from the coal sector by 2030 at the latest in European and OECD countries and by 2040 worldwide, as urgently requested also by the international scientific community, is a necessary action in the path towards a just transition”, said Benedetta Carratelli, Investor Engagement Officer at ReCommon.

“We appreciate that the bank has acknowledged the letter and taken the time to respond. While we also support the bank’s current climate change strategy/policy, we were disappointed that Intesa Sanpaolo’s response offered no indication of any immediate change to their coal policy. Specifically, there was no suggestion that Intesa Sanpaolo would extend their policy to all financial services, including investments, nor that they would commit to fully phasing out coal”, said La Française Asset Management.

“Mirova believes that the banking sector has the key to support bold climate action by using its influence over the companies they finance or invest in. Intesa could be on the right climate trajectory and has the opportunity to develop a fully credible decarbonization strategy, which today requires a concrete pathway to completely phase out coal and stop financing of new fossil fuels assets, as well as concrete targets to provide finance and advice to those companies willing to comply with their own carbon decarbonization strategy”, said Louise Schreiber, Head of ESG Research – Listed at Mirova.

“Intesa has demonstrated its willingness to address investor concerns in the past. This includes updating its climate policy to reduce lending to coal companies, and by introducing its first exclusion criteria for financing unconventional oil and gas projects. The bank has also provided transparency regarding its stance on excluding coal mine developers. We once again call upon Intesa’s ability to listen to investor expectations, with the goal of aligning with the objective of limiting global warming to 1.5°C. As the leading Italian bank, we request that Intesa provide further clarity on its coal phase-out strategy and extend this policy to encompass all of the bank’s financial services”, said Luc Riols, ESG analyst, Climate Engagement Specialist at Candriam.

[1]  The figure refers to the total amount of individual investors’ assets under management as reported on their institutional websites and documents available on the web.

[2]  The data, updated on 01.01.2023 and processed by ReCommon are based on the research carried out by the Dutch company Profundo B.V ( via the Refinitiv database (formerly known as Thomson EIKON).

“Financing” refers to loans and securities underwriting.

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