Climate Change

The nature of the illimity Group's business model with a 100% digital infrastructure that is entirely on the cloud, aims to minimise direct environmental impact and promote the responsible and efficient use of resources. Since the beginning illimity has been committed to monitoring and reporting energy consumption, greenhouse gas emissions and waste generation, also considering the constantly evolving regional, national, and supranational regulatory framework on environmental protection.

The Group has gradually increased the share of renewable electricity supply, primarily certified with Guarantees of Origin, to mitigate the environmental impact associated with its consumption and reduce its Scope 2 greenhouse gas emissions.

To guarantee a better management of transition risk and be able to identify the associated opportunities, the Group decided, from 2020 onwards, to adopt a process to gather data and information that led, in 2022, to the first quantification of indirect GHG emissions (Scope 3) attributable to its financing activities (“financed emissions”). To quantify financed emissions, illimity uses the methodologies provided by the PCAF in a combined manner, enhancing the exact data of the counterparties, where available, and sector data to cover the remaining part of the portfolio. With the aim of respecting its environmental commitment, illimity annually monitors its financed emissions and portfolio carbon footprint.

In November 2024, the Bank's Board of Directors also approved the Climate Strategy, which is based on three fundamental pillars:

1.minimising the Group's own emissions by achieving net zero Scope 2 Market-based emissions by 2030 and implementing feasible actions to contain Scope 1 emissions, while maintaining carbon neutrality (already achieved by 2020), by offsetting residual emissions from these areas, through the purchase of certified carbon credits;

2. the development of sustainable finance to actively support companies in their transition, an action started in 2023;

3. the decarbonisation of the carbon intensive sectors in the portfolio, starting in 2025, through science-based targets with a horizon to 2030 and 2050.

Own workforce

illimity’s People Value Proposition is the set of actions that create the illimiters’ ecosystem, with the purpose of favouring the engagement, development and well-being of the latter and their families. In illimity human capital management takes place at 360 degrees, throughout the entire path of professional development of illimiters, paying great attention to their engagement to foster a sense of belonging and to help carring out their work to the fullest.

The Bank is committed to breaking through physical, communication and cultural barriers, adopting an approach that values inclusion. Diversity, equity and inclusion are illimity’s core values. These promote a meritocratic work environment, consistent with a work-life balance, and empowers the individual characteristics of each person, their capacities, experience and aspirations. Employees’ background is diverse: they come from more than 350 firms from 20 different sectors, often operating in sectors other than finance, and have an average age of 38 years.

Clients and services

illimity is by the side of corporate clients, in particular SMEs with growth potential, that require specialist support to address their development, restructuring and relaunching plans. These objectives are pursued through the offer of tailor-made solutions, capable of fostering competitiveness, access to credit and generating positive social impact, helping to keep jobs and bolster local manufacturing.

Starting in 2023, illimity has broadened its offer of products and services adopting a specific Green, Social and Sustanability-linked Loan Framework, which is an integral part of the Credit Procedure, which describes in detail the types of projects deemed eligible by the Bank for financed operations (green loans and social loans) and the possible environmental, social and/or governance targets and performance indicators that may be linked to the transactions (Sustainability-Linked Loans). In the same setting, the Bank granularly detailed economic sectors excluded from its investments.

Affected communities

illimity is committed to generating a positive impact on the business ecosystem through the distribution of economic value to key stakeholders, including suppliers, communities and businesses across the country, which collectively represent affected communities of interest to the Bank. Through dialogue, collaboration, and analysis of the impact on these communities, illimity aims to understand and enhance the results of policies and the effectiveness of actions taken by fostering sustainable and inclusive growth based on the guiding principles of the United Nations, ILO Declarations, and OECD guidelines.

Governance

The Board of Directors constitutes the pivotal element of corporate governance and is largely composed of independent directors (11 out of 13) of high standing with significant and complementary skills and experience, also at an international level.

Since its foundation, illimity has adhered to the Corporate Governance Code of listed companies promoted by Borsa Italiana and, in December 2020, the Board of Directors resolved to adhere to the Corporate Governance Code approved by Borsa Italiana's Corporate Governance Committee in January 2020.

On 21 February 2022 the Extraordinary Shareholders‘ Meeting approved a new text of the illimity Bank By-laws, which introduced the “one-tier” system of administration and control (which became effective with the appointment of the Corporate Bodies by the Shareholders’ Meeting of 28 April 2022) - in which the functions of administration and control are exercised by the Board of Directors and the Audit and Internal Control Committee established within it - and provided that the Board of Directors shall guide the Company by pursuing sustainable success for the purpose of long-term value creation for the benefit of shareholders, taking into account the interests of relevant stakeholders.

Role of Corporate Bodies in Corporate Sustainability

The Board of Directors, endowed with the highest decision-making powers on sustainability issues, approves the Code of Ethics, the Strategic Plan and the Sustainability Plan, the Climate Strategy, corporate policies, including ESG policies, and the Sustainability Statements and the related double materiality assessment (impact materiality and financial materiality) of sustainability matters. It is periodically informed of the findings of the sustainability risk assessment and related internal controls.

The Audit and Internal Control Committee is periodically informed about the consolidated sustainability reporting process - functionally supervising and controlling it - and supervises compliance with the provisions set forth in Legislative Decree 125/2024, implementing the Corporate Sustainability Reporting Directive, and reports on it in its annual report to the Shareholders' Meeting.

The Chief Executive Officer is involved in the double materiality assessment, collectively in the Steering Committee, and reviews the information provided in the Sustainability Statements of which, together with the Financial Reporting Officer, he certifies compliance.

The Sustainability Committee assists the Board of Directors in evaluations and decisions that relate to sustainability issues and, among its tasks, oversees the overall sustainability reporting process and is responsible for monitoring the impacts of sustainability issues.

The Risks Committee is responsible for monitoring the risks and opportunities of sustainability issues. In general, it assesses, in coordination with the Sustainability Committee, the development of exposure to ESG risks, in particular climate and environmental risks, and their management and control.

Corporate culture

Integrity is a pillar of illimity's corporate culture and guides internal and external behaviour by ensuring transparency and accountability. The Organisational, Management and Control Model (231) defines the general principles of behaviour and identifies the controls designed to prevent the risk of wrongdoing. The illimity Way, the Group's Code of Ethics, promotes legality, sustainability and compliance with regulations. To ensure a safe and compliant working environment, the Whistleblowing system allows anonymous and traceable reports through a digital platform, ensuring confidentiality and timely handling.

Fighting corruption

illimity adopts an Anti-corruption Policy that defines principles, rules of conduct and measures to prevent the risk of corruption in all business processes. The policy is binding for the entire Group, including partners and suppliers, and provides clear roles and responsibilities for risk management. The Board of Directors monitors the implementation and effectiveness of the system, while the CEO ensures its implementation and promotes continuous improvement.

Supplier relationship management

illimity adopts a structured process for supplier management, ensuring the timely registration and payment of invoices, as well as monthly monitoring of deadlines. Suppliers are selected through a rigorous qualification and risk assessment process, which includes anti-money laundering, credit and reputational checks. The Group promotes respect for human rights, labour and environmental sustainability, requiring suppliers to adhere to the ‘illimity Way’ Code of Ethics and the Sustainable Supply Chain Policy. It also monitors environmental, social and governance performance through an ESG questionnaire, taking corrective action in the event of an unsatisfactory rating.