The challenges of “Next Generation Sustainability”

15 June 2021

Isabella Falautano's editorial

Head of Communication & Stakeholder Engagement

After more than a year of pandemic, economic and social crisis, but also of accelerations and innovations, we are now seeing the light at the end of a tunnel that can take us to profoundly different worlds: from scenarios of continuity, like the reel of film ready to start turning again, to changes of level, a sort of “next level” in a videogame, and to others that are even more extreme and lead us to realise futures previously considered utopic or, worse still, dystopic. Certainly now, more than ever, it is essential for us to keep our eyes on the horizon in order to courageously redesign our socio-economic models in a moment of “widespread and sustainable transition”.

The pandemic emergency has taught us many things, first and foremost that you can’t win on your own. No public or private institution is capable of tackling the challenges of our times without a common direction and common policies that put health, environment and digital to the fore. We are faced with collective and global challenges.

Italy can play an important role: it holds the presidency of the G20, whose agenda revolves around the trinomial People, Planet, Prosperity and the rethinking of growth models and the management of “transitions” (ecological, social, innovation). It is playing a central role in giving substance to the Next Generation EU, the European structural plan for a sustainable, inclusive and fair post-pandemic recovery. The same priorities are incorporated in the National Recovery and Resilience Plan (NRRP), which sees six areas that are fundamental for the future of this country (digitisation, sustainable mobility, green economy, education, inclusion and health), with innovation and sustainability as strategic levers for far-sighted sustainable growth.

Public policies alone, however, are not enough. The role of the private sector is fundamental. Businesses, throughout their life cycle from start-ups to multinationals, can and must be important players in the change and reinvention of a new growth model and of responsible capitalism, based – to paraphrase the NGEU plan – on “Next Generation Sustainability”. In this context a central role will be played by finance, which must be increasingly able to channel resources into responsible investments that generate positive impacts on environmental, social and governance (ESG) areas. ESG risks must be increasingly integrated into financial processes.

The challenge involves everyone, and start-ups have the big advantage of being able to draw on blank pages and immediately integrate business strategies with those of sustainability. That’s what we’ve done in illimity, a new generation, innovative bank created two years ago as a sustainable native company.

illimity’s activity is responsible by nature. The Bank’s aim is to provide clear and practical answers to businesses for their development or revival plans, contributing to the sustained and sustainable growth of the country’s entrepreneurial fabric; it sets up alternative investment funds, into which loans of companies in difficulty but with prospects of recovery are contributed; it manages distressed corporate loans, introducing innovative systems of transparent, openly-accessible digital auctions as a means of putting the underlying assets back into circulation; with its direct banking services, it accompanies customers in order to make the lives of individuals and families simpler and less stressful. It makes profits, performing a duty with national and local social utility.

It is precisely with this intention that fondazione illimity has been set up with the aim of creating new spaces of inclusion, cohesion and shared well-being through the regeneration of real estate assets to be allocated to socially useful projects. The foundation will operate across local areas and communities as a catalyst and enabler of an ecosystem of social businesses, non-profit organisations and public and private entities interested in supporting high-impact projects related to the regenerated asset, as a demonstration that a different meaning can be given to the acronym NPL: not only non-performing loans but also nuove potenzialità lavoro.

In illimity, not having a legacy has allowed us to design a sustainability strategy consistent with our raison d’être, our purpose, by building ESG issues into our various policies instead of adopting a single sustainability policy under the responsibility of one department alone. This set-up has led to awareness and widespread accountability in the Bank and has enabled a native and more efficient articulation of sustainability activities to exist in the various divisions and functions.

Another fundamental aspect regards ESG governance: in January 2020, less than a year after the listing, illimity’s Board of Directors set up the Sustainability Committee, which establishes medium and long-term sustainability objectives and fosters a mind-set within the Group that is based on these. Also in a start-up, therefore, a governance structure for these issues that is in line with the most advanced practices can be created from the very beginning.

All of this enabled us to build solid foundations for the Bank’s sustainability strategy, then translated into practical business measures which were reported in 2020 in the first Voluntary Non-Financial Statement (NFS), consistent with the reporting and transparency process initiated last year with the publication of the Sustainability Profile.

The NFS is the result of a materiality analysis carried out by engaging over 740 stakeholders, internal and external, in the identification of the topics that are important for illimity. The reporting of material topics, in the name of the digital innovation that has always enabled the Bank to set itself apart, involved all the main business functions and divisions, using an ESG Digital Governance collaborative platform.

Not by chance, people were among the priorities emerging from the materiality analysis, almost unique to the financial sector. In just two years, illimity has seen its team grow from a small group to over 650 illimiters (because that’s what we call ourselves), with diversity and inclusion being the distinguishing feature: over 20 nationalities, balanced numbers between women and men, coming from more than 200 different businesses, a good 4 generations arm-in-arm (ranging from the Baby Boomers to the Generations X, Millennials and Z). With a balanced Board of Directors in terms of gender and skill representation, as well as a Chairperson with great vision and expertise, one of the few women in this position in the Italian banking world (an area where you can count women at the top on the fingers of one hand).

The results reported in the Sustainability Report are confirmation of the extent to which illimity has built sustainability into its business in a native way. In fact, during 2020 financing of 247 million euro was directed at relaunching businesses in difficulty. In addition, at an environmental level 29 million euro was disbursed for operations dedicated to sectors in the circular economy, green transportation and renewable energies. On the distressed credit front, the Bank has undertaken to support owner-managed businesses in difficulty, initiating a constructive dialogue that enables them to revive their positions.

In addition, an energy sector desk has been created, as an area for possible specialisation, also considering the contribution the sector provides to green energy conversion, whose impact will be also measured in terms of “avoided CO2”. The direct bank,, the first in Italy to be created with an architecture based on Cloud and on Open Banking, has seen the achievement of a Net Promoter Score – the measure of customer satisfaction – of 48 points, 5 times greater than the sector average.

Alongside these results, illimity has been active in supporting businesses that have suffered the effects of the economic crisis arising from the pandemic emergency by introducing a lean and simplified process for obtaining the suspensions envisaged by the “Cura Italia” decree law and the Italian Banking Association (ABI) moratoria. illimity also took timely action during the health emergency, obtaining medical equipment worth a total of 270 thousand euro and making this available for hospital facilities.

On the environmental front, the need to develop, especially in the financial sector, a greater awareness of the risks inherent in climate change and the opportunities arising from the transition towards a low carbon-emission based economy are by now clear.

Indeed, despite the fact that the financial sector has a relatively limited direct environmental effect, the real challenge today is to take action on the indirect effects by means of investment decisions (“Scope 3”). The European legislator is also moving on this front by way of the recent European taxonomy for sustainable activities (Regulation 2020/852) and the Sustainable Finance Disclosure Regulation (SFDR) that introduces sustainability related disclosures in the financial services sector (Regulation 2019/2088).

Even if limited, from our first year of reporting we have measured, mitigated and offset our emissions footprint and chosen to be “carbon neutral”. We are the first bank fully on cloud in Italy and have selected a partner like Microsoft that is committed to being carbon negative by 2030. We have fostered a widespread sustainability culture, discouraging the use of lifts, printers and paper (in any case always FSC certified), encouraging the exchange of digital documents. We employ water dispensers and have personal and re-usable aluminium flasks. For some months now, we have lowered emissions thanks to the supply of energy arriving 100% from “GO” (Guarantee of Origin) certified renewable sources.

After calculating and mitigating the inevitable emissions, even if low, arising from the Bank’s business activities (Scope 1 and Scope 2), we decided to offset these by using carbon credit certificates linked to environmental and social development projects in Mozambique, which we will follow over time, and circular urban reforestation initiatives in Biblioteca degli Alberi Milano.

A key item in contributing to the indirect positive impact in sustainability activities has lastly been the ESG Rating in the credit assessment business, as a means of supplementing the map of risks arising from the businesses to be financed with an evaluation of their positioning in terms of sustainability. Collecting this pool of information will enable illimity to have a database in order to adopt, from a strategic standpoint, the best investment decisions and define plans set up to accompany businesses along a sustainability path by encouraging them to develop policies that improve their sustainable approach to activities.

The achievements to date, starting from a native approach, are by no means a point of arrival, but only the first step of a long journey which we will make with the contribution of everyone aware of the responsibility we bear in being a new generation business. Rethinking the future also means starting out again from a “Next Generation Sustainability” embraced in an informed and decisive way by the public and private sectors after the first great global crisis of the new Millennium.

Editorial published on Formiche on June 15th, 2021