Group 2

Coherent: Banca Etica

GABV

4 January 2022

While there is a great deal of change in the banking industry, the business model of conventional banks does not take a coherent approach with respect to social and environmental impact. In fact, many – perhaps most – banks finance both sustainable and harmful activities at the same time. When a bank fails to be transparent about this in its business, and especially if it gives disproportionate emphasis to its sustainable business without being clear about its approach, it is incoherent and inauthentic. At its worst, greenwashing misleads stakeholders about an institution’s true overall impact.


 

When Banca Etica opened its first branch office in 1999, it did so knowing it was the first banking institution to operate exclusively in sustainable and alternative finance in Italy. Since its foundation in 1999, Banca Etica has been working to reach a legislative acknowledgement of the value of ethical finance. 

For over 20 years in Italy, and 40 years in Europe, ethical finance has proven through financial success that it’s possible to simultaneously consider social and environmental evaluation of the loans alongside risk and return. They go hand-in-hand. Unfortunately, while there is a great deal of change in the banking industry, the more broadly accepted approach with respect to social and environmental impact is not coherent. It is not seen as mutually beneficial and in fact, oftentimes, sustainable activities are often financed alongside harmful activities. 

The call for legislative acknowledgement of the value of ethical finance meant that the broadly accepted approach in the banking industry was being challenged. At the end of 2016, the Italian Parliament passed a law that recognised and promoted ethical finance.

It was the first law of its kind approved in Europe and a major success for Banca Etica. In the words of Ugo Biggeri, president of Etica SGR and Board Member of the GABV: 

“It is important that finally there was a legislative acknowledgement of ethical finance, with its social and environmental values and its economic and financial effectiveness.  This measure is not only a great innovation for Europe but also sets precedence internationally, where decision-makers are trying to set up better banking and financial regulations. Now we need to move forward in order to achieve more substantial incentives for people and financial institutions to choose ethical finance.”

Banca Etica’s success in passing this legislation in recognition of ethical finance has impact across the globe, resulting in a real contribution to the stability and fairness of the economic system as a whole. The company continues to work tirelessly in transparency by engaging all levels of shareholders and stakeholders in financial decisions and has implemented equal voting power amongst all shareholders. 

Currently, Banca Etica manages about 3 billion euros of savings and has kept its commitment to its people – clients and shareholders – by increasing credit to people and social enterprises, even during the crisis years. Its unwavering consistency and coherency in its pressure on lawmakers, its banking activities, and its full transparency have led to an increase in deposits, the share of capital and growing confidence of Italian investors in ethical finance. 

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