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For the First Time in Europe a Law Recognizes Ethical Finance

The Italian Parliament passed a law to recognize and promote ethical finance.

It is the first law of this kind approved not only in Italy but in Europe.

Banca Etica – the first and still the only Italian financial institution entirely dedicated to ethical finance – welcomes this motion included in the recently passed Budget Law at the Italian Senate.

“It is important that ethical financing has obtained a legislative recognition of the social and environmental values, as well as of the economic and financial ones. It is encouraging that, in spite of the complexity of the current situation, all of the political parties have reached an agreement on the matter, noted Ugo Biggeri, president of Banca Etica Group. This measure is a great innovation in Europe and in the international scenario, where lawmakers and decisionmakers are spending so much time to set up better banking and finance regulations.”

Since it was founded in 1999, Banca Etica has been working to reach a legislative recognition of the value of ethical finance.

For more than 20 years in Italy, and 40 years in Europe, ethical finance has been demonstrating that it is possible to keep together everyday involvement, social and environmental concerns of the loans, a non-speculative approach, managing the complex world of banking and finance by giving a real contribution to the balance and stability of the whole economic system.

The following is the text of the regulation included in the Budget law (clause 1, section 51):

Ethical and sustainable finance

  1. Financial institutions are considered banking operators of ethical and sustainable finance when operating in accordance with the following principles:
  • Evaluate loans, granted to legal entities, according to international recognized ethical rating standards, with particular attention to social and environmental impact;
  • Give public evidence, at least yearly, also via the web, of allocated funds referred to in subparagraph a), subject to the applicable regulations on protecting the privacy of personal data;
  • Devote at least 20 percent of its loan portfolio to non-profit organizations or social enterprises with legal entities, as defined by law;
  • Do not distribute profits among shareholders, but reinvest them in its activities;
  • Adopt a governance and an organizational model deeply inspired by a strong democratic and participative approach qualified by a broad shareholder base;
  • Adopt remuneration policies aiming at reducing the difference between the highest salary and the average ones earned in the bank, whose ratio cannot, anyway, exceed the value of 5.
  1. A share of 75 per cent of the sums allocated to increase their capital doesn’t account for the taxable income of the ethical finance and sustainable banking industry as per clause 81 of the Consolidated Law on Income Tax, according to the Italian Republic Presidential Decree, December 22, 1986, n. 917.
  2. The Ministry of Economy and Finance, after consulting the Bank of Italy, establishes, by decree, the rules to implement the provisions set up by this clause according to which it cannot be imposed any burden on public finance exceeding 1 million euros per year starting from 2017.
  3. The benefit referred in this clause is recognized within the limits laid down in Commission Regulation (EU) No. 1407/2013 of 18 December 2013 on the application of Articles 107 and 108 of the Treaty on the Functioning of European Union “de minimis” aids.

BANCA ETICA IN FIGURES

Banca Popolare Etica Group currently manages about 3 billion euros of the Italian savings. Banca Etica has been keeping its commitments, constantly increasing credit to households and Italian social enterprises, even during the crisis years when the rest of the banking system contracted funding.

The growing confidence of Italian investors in ethical finance has been demonstrated by the increase in deposits and the share capital of Banca Etica.

Article is courtesy of Banca Etica 

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