Corporate governance at illimity places great emphasis on the tangible adoption of diversity, expertise and transparency, with the Board of Directors having adopted the new code of conduct approved by the Corporate Governance Committee.

The Board of Directors is the cornerstone of corporate governance and is composed to a large extent of independent directors (11 out of 13) of high standing that have key and complementary expertise and experience.

In December 2020, the Board of Directors resolved to adopt the new Corporate Governance Code approved by the Corporate Governance Committee of Borsa Italiana. During 2021, illimity aligned with the recommendations of the new Code, publishing the Annual Report on Corporate Governance and Ownership Structure of 2021 and the Guidance Document on the Optimal Quali-Quantitative Composition of the Corporate Bodies, approved by the Board at the meeting of 25 February 2022, prior to the notice of call of the Annual Ordinary Shareholders’ Meeting.

On 21 February 2022, the Extraordinary Shareholders’ Meeting approved the new text of the By-laws for the adoption by the Bank of the “one-tier” system of administration and control, which assigns strategic management to the Board of Directors, while the control functions are delegated to the Audit and Internal Control Committee established within the Board. The amendments to the By-laws also provided for the explicit inclusion of "sustainable success" for the purpose of creating long-term value for shareholders, taking into account the interests of illimity’s significant stakeholders.

Governance of Sustainability

The issues of sustainability and the management of ESG impacts are overseen, in accordance with international best practice and each according to its responsibility by a Sustainability Board Committee specifically established in January 2020, and by a Risks Committee, both composed of four Directors.

illimity's Sustainability Committee is tasked with supporting the Board of Directors and it has the power to advise and formulate proposals in relation to assessments and decisions on sustainability issues. The Committee, assisted by the IR & Sustainability Department, promotes a responsible and sustainable culture in the Group and makes proposals to the Board for the definition of medium and long-term sustainability goals. The Committee receives periodic (quarterly) reporting on the progress of sustainability projects involving the Bank and the Group.

The Risks Committee, through a process involving, inter alia, the identification of ESG risk by the CRO is also responsible for assessing and analysing the risks and opportunities linked to the climate and a correct system of internal control so that the Board may correctly and effectively determine the Risk Appetite Framework and the ESG risk governance policies. The Sustainability Committee and the Risks Committee, coordinating with each other, express an opinion on the integration of climate and environmental risks and their assessment and management, into the company culture, strategy and processes, as well as the risk appetite and limits, as well as the Supervisory and Market Information on exposure to climate and environmental risks, which signal to all stakeholders the Group’s positioning in the process of transition to a more sustainable economy. They also assess the trend in exposure to climate and environmental risks, and their management.

The Board of Directors plays a key role in the management and control of climate risks, in defining the strategic guidelines, objectives and limits of risk, in assessing the degree of efficiency and adequacy of the Internal Control System and in approving the policies related to those activities. The Board of Directors has, moreover, the responsibility for approving the materiality matrix resulting from Stakeholder Engagement activities, as well as the annual Consolidated Non-Financial Statement, which represents and conveys the Bank’s commitment, results and goals for improvement in terms of sustainability issues.

The CFO, through the IR & Sustainability Department and the ESG Governance operating area, monitors the Group’s sustainability activities, coordinates the implementation of the Sustainability Plan and the process of monitoring and reporting on these issues, working at all times with the Group’s various Departments and Divisions. The CFO reports to the Sustainability Committee at least every two months, and to the Board of Directors at least annually.

Then there are the ESG Ambassadors, staff identified in the various Divisions and Departments who are in charge of developing specific ESG initiatives and fostering a sustainability culture within their teams.

We place great value on talent, expertise and diversity for people both within and outside the company, adopting initiatives designed to unlock people’s potential.

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. The illimity journey starts from the recruitment phase, which aims to identify the people who have the skills, the mindset and the motivation to add and, at the same time, gain value, in the Group. In illimity, great attention is paid to the illimiters' engagement to foster a sense of belonging that plays an important role for well-being and helps to carry out their work to the fullest. Process digitalisation helps simplify certain aspects of the work lives of employees.

illimity is committed to breaking through physical, communication and cultural barriers, adopting an approach that values inclusion. The Bank considers diversity and respect its core values. Diversity, equity and inclusion are in fact anchored to illimity’s identity and therefore the basis for looking after human capital, promoting a meritocratic work environment, consistent with a work-life balance, that empowers the individual characteristics of each person, their capacities, experience and aspirations.

The Group’s more than 850 employees, as of December 31, 2022, come from more than 20 different sectors and 300 different companies, more than half operating in sectors other than finance. The average age of employees is 36 years and the most represented generation is that of junior millennials, ranging from 26 to 33 years. In illimity 22 nationalities are represented.

The company's welfare policy is also cutting edge: a distinctive and flexible benefits policy in the choice of services with best-in-class solutions, offering illimiters an evolved and customizable Flexible Benefits plan according to their individual and family needs.

Achieving business targets must produce, directly and indirectly, positive externalities that can foster sustained and sustainable growth of the business and entrepreneurial fabric in which illimity operates.

Supporting SMEs

Our purpose is to provide SMEs with growth potential with loans when such companies require specialist support or have had problems. We guide SMEs through a process of development, restructuring and relaunching, which brings a positive social impact and knock-on effect, helping to keep jobs and bolster local manufacturing.

Total investments made in 2022 with the specific objective of turning around companies in financial difficulty amounted to 351 million euros. Financing with effects and benefits in the environmental sphere totalled 40.4 million euros in operations impacting the circular economy and renewable energy sectors.

Distressed credit servicing

The Distressed Credit Division is one of the leading Italian operators specialised in corporate distressed loans. It is focused on the acquisition of distressed credits, on financing to third party investors purchasing non-performing loans and, through the ARECneprix (formerly neprix) servicing platform, on the management and valorisation of distressed credits up to the sale of real estate and movable assets, also on behalf of third parties.

The Division is committed to support the entrepreneur in difficulty by initiating a constructive dialogue with him in order to restore his position and eventually return to the market. The division adopts a very professional approach to such relations, identifying focused actions designed to find mutually agreeable out-of-court settlements that speed up the resolution of such matters.

Responsibility in illimity SGR’s investments

In line with the Group’s sustainability strategy, illimity SGR directs the investment decisions it takes for its Funds by respecting environmental, social and governance (ESG) matters, with the aim on the one hand of generating sustainable value over time, which also takes into consideration the economic, social and environmental impact that individual businesses can produce at a local level, and on the other hand of satisfying investors’ interests, mitigating any financial, operating and reputational risks. In compliance with the reference legal framework, illimity SGR has adopted an ESG Investment Policy aimed at defining strategic guidelines for the integration of sustainability risk within investment decisions as part of the management of Alternative Investment Funds.

Over the last two years, illimity, taking into account the UN principles on the approach to business and Human Rights and in line with the Bank's strategic guidelines and the guidelines expressed in its credit strategies, has granularly detailed the economic sectors excluded from its investments. For more details, see the Consolidated Credit Procedure.

Responsible supply chain management

We regard ESG issues as key elements to be considered in the selection and management of our suppliers. As part of the supplier qualification process, suppliers are asked to complete an ESG questionnaire with the dual objective of identifying, according to the principles of proportionality and materiality, their commitment to ESG factors (ESG score) and the indirect environmental impact generated by the supply chain (Scope 3 - Cat. 1).

Our business sustainability combined with our focus on the environmental, social and economic impact of our activities drives our contribution to social well-being and the environment.

The business model adopted by the illimity Group, with a 100% digital infrastructure that is entirely on the cloud, is designed to reduce our direct environmental impact and use resources more efficiently. Right from our creation, we have been committed to monitoring and reporting our energy consumption, our greenhouse gas emissions and waste generation, partly in response to the rules on environmental protection set out by constantly developing EU regulations and Italian and regional laws.

illimity's business model, with no branch offices and a digital, cloud-based infrastructure, intrinsically aims at combating climate change. Starting in 2020, we have defined a carbon neutrality strategy through the calculation of the company's carbon footprint, the identification of efficiency and consumption reduction activities and the selection of certified carbon credits to offset non-avoidable emissions related to its carbon footprint (Scope 1 and Scope 2).

The Group has purchased gradually an increasing percentage of renewable electricity supply, mainly certified with Guarantees of Origin, in order to mitigate the environmental impact associated with its consumption, which, to date, accounts for 76% of the energy purchased by the Group. illimity has set itself the goal of extending the supply of electricity from renewable sources to Abilio and ARECneprix (formerly neprix) for the Rome office as well, thus reaching 100% coverage from renewable sources in the Group's offices.

Financed emissions

In order to ensure a better management of transition risk and enable the identification of associated opportunities, we decided to embark on a data collection process starting in 2020, which led to the first quantification of indirect emissions (Scope 3) attributable to its financing activities (so-called financed emissions) in 2022. For the quantification of financed emissions, illimity used the methodologies provided by the PCAF in a combined manner, inputting the exact datausing point data of thefrom counterparties where available, and sector data to cover the reminder of the portfolio.

The measurement of financed emissions has involved the use of punctual (Scope 1 and 2) emissions data (verified and unverified) from counterparties or, if not available, sectoral emissive intensities. With the aim of meeting our environmental commitment, we are committed to keeping our financed emissions and portfolio carbon footprint up-to-date and monitored, in line with available calculation methodologies.