BANCA POPOLARE ETICA

BANCA POPOLARE ETICA Financing policy and social impact evaluation Tallin 30.06.2016 Cesare Vitali Strategy Department

AGENDA 1. Banca Popolare Etica 2. Indirect impact evaluation: credit policy 3. Direct Impact evaluation: internal performance 4. Banca Etica network

BANCA POPOLARE ETICA BANCA POPOLARE ETICA

BANCA POPOLARE ETICA A DIFFERENT BANK A cooperative bank operating in Italy and in Spain Owned by a movement of citizens and social organizations It was founded in 1999 with the aim of creating a community where savers, driven by the will to manage money through ethical criteria, could finance organizations and projects inspired by social and environmental goals. Inspired by the principles of Ethical Finance: trasparency participation sobriety efficiency awareness of the non-economic consequences of economic actions

BANCA POPOLARE ETICA A DEMOCRATIC BANK Since it is a Popular bank, the principle one head, one vote rules the General Meeting which elects the main corporate bodies Banca Etica is free from the influence of politics and economic-financial power groups: the members are citizens and organizations 87 groups of active members in Italy and Spain guarantee: the development of local relationships the promotion of ethical finance's culture contribute to determine the strategic orientations of the Bank

BANCA POPOLARE ETICA MEMBERS' PARTICIPATION Members are organised on a territorial basis in: Local districts Territorial Initiatives Groups (GIT)

BANCA POPOLARE ETICA THE TERRITORIAL INITIATIVE GROUPS GITs are groups of voluntary members who act in their communities to: promote the culture of ethical finance participate in governance decisions link the Bank's activities with the needs of their territory create relationships with the social economy run the social evaluation of the loans through the Community of Action, collaborate with branches and Itinerant bankers to reach operational and cultural goals

BANCA POPOLARE ETICA TRANSPARENCY We ask to our customers to sign a declaration related to the Statute principles and of conformity of the origin of their money to these principles We are the one bank in Italy who publishes on the website all the loans granted to legal entities We draft up our accounting reports about our activities according to the economic, social and environmental performance in the Integrated Report and Online Sustainability Report

BANCA ETICA IN ITALY Banca Etica is accessible through: 17 Branches 30 Itinerant Bankers Internet BANCA POPOLARE ETICA

BANCA POPOLARE ETICA BANCA ETICA IN SPAIN In 2014 Banca Etica opened its first Spanish branch, in Bilbao. This result has been realized thanks to Fiare Foundation and the efforts of thousands of individuals and organizations 20 groups of Spanish active members

BANCA ETICA IN NUMBERS SHARE CAPITAL 54.354.000 NUMBER OF MEMBERS 38.209 SAVINGS COLLECTION 1.063.282.000 LOANS APPROVED 864.841.000 NUMBER OF LOANS 8.074 NUMBER OF WORKERS 269 BANCA POPOLARE ETICA Updated as of 31/12/2015

CREDIT POLICY INDIRECT IMPACT EVALUATION: CREDIT POLICY

CREDIT POLICY WHO WE FINANCE With the collected savings, we mainly finance: social cooperation international cooperation environment culture We provide loans to people for their needs compatible with our values: first home purchase and restructuring production of energy from renewable sources and energy efficiency measures personal loan

SOCIAL COOPERATION CREDIT POLICY Social services, education and health; fighting social exclusion and integration through employment of disadvantaged people. The Nuova Cucina Organizzata restaurant (San Cipriano D'Aversa - Caserta)

ENVIRONMENT CREDIT POLICY Development of renewable energy sources, promotion of organic and bio-dynamic farming; environmentally sustainable projects. The photovoltaic system of the Podere SS Annunziata (Livorno) farm

CREDIT POLICY INTERNATIONAL COOPERATION Support to NGOs, Fair trade, creation of micro-enterprises and development of partnerships. A project in India of the Fondazione Pangea Onlus (Rome)

CREDIT POLICY CULTURE AND CIVIL SOCIETY The promotion of a legality culture, of artistic and cultural heritages, support for non-profit associations and socio-cultural animation projects. The Scuola Popolare di Musica di Testaccio (Roma) music school

CREDIT POLICY The loans social-environmental analysis Banca Etica evaluates its loans by social and environmental point of view through two main tools: Lists of negative criteria (such as weapons production, gambling, ecc) and positive ones (such as social cooperation, fair trade, renewable energy, ecc) Internal social-environmental evaluation model

CREDIT POLICY The loans social-environmental analysis The loans social-environmental analysis is a strategic Banca Etica internal process aimed to evaluate clients by ethical point of view. It supports Banca Etica in: understanding if the clients social-environmental profiles are compliant with the Banca Etica values; evaluating the clients through an integrated model; not being involved in reputational risks linked to clients not responsible behaviours; strenghting the CSR culture into the clients structures; involving the active members. The results of the social-environmental analysis integrate the financial evaluation.

CREDIT POLICY The loans social-environmental analysis The process is structured into 3 main steps: A) Social-environmental questionnaire, run by the clients; B) Reporting Social analysis, run by the employees; C) Social-environmental evaluation, run by the Social Evaluators

CREDIT POLICY A - Social-environmental questionnaire The organizations clients have to fill a questionnaire aimed to: raise the main information about their mission and their CSR profile communicate the Banca Etica values Banca Etica has set 6 main questionnaire models specific for: Associations and NGOs Foundations Cooperatives Social Cooperatives For Profit organizations Personal companies Since January 2015 all data are inserted through an online platform

CREDIT POLICY A - Social-environmental questionnaire The questionnaires are composed by about 70 indicators which are weighted into a scoring model (range 0-100) and often updated; They are classified in specific sections, such as: Mission Governance Trasparency Fair opportunities Environment Health and Safety Legality Communities relations Suppliers relations Impact

B - Reporting Social analysis CREDIT POLICY The credit analysts of Banca Etica are trained in order to evalute the clients not just by economic point of view but also by social and environmental one; The credit analyst support, through documents sharing, the final social evaluation step which is run by the Social Evaluator.

C - Social-environmental evaluation CREDIT POLICY The last step is run by the Social Evaluators, who are voluntary members, trained by Banca Etica; The main activities of the Social Evaluator are: meeting the organization at its headquarter and setting up an interview about its mission and the information inserted in the questionnaire; analizing the information sent by the credit analyst; searching information about the clients from other sources; involving other active members of its GIT during the evaluation; drafting up a final report with the Social Evaluation final judgement, which has been shared with the other active members. As of 31.12.2015 the Social Evaluators of Banca Etica are 222; they have run 695 Social Evaluations.

C - Social-environmental evaluation CREDIT POLICY Banca Etica applies an Advanced Evaluation Model for peculiar kind of clients, depending by: Companies size; Complex governance structure; Operations in controversial countries; High environmental impact; The model is composed by 75 indicators through an ESG analysis;

C - Social-environmental evaluation CREDIT POLICY Focus on training for Social Evaluators; Impact on loans default rate; Particular cases: Microcredit projects; Migrants hosting organizations.

CREDIT POLICY Case study A - Cooperativa Sociale San Saturnino Onlus Mission: cooperative established in Rome in 1979 by a group of women specialized in the provision of social, health, educational and psychological services to people of all ages. The cooperative met Banca Etica at a time of financial difficulties due to the delays in the payments from Public Authorities. Banca Etica has helped the Cooperative in paying salaries. Governance: 116 members (115 members/employees) More than 50% of the members join the Annual Meeting Women presence in board: more than 30% Employees: High quality of the contracts No controversy with unions Strong health and safety policies Strong fair opportunities and involvement policies No certification Suppliers: Ethical selection Community: High involvement

CREDIT POLICY Case study A - Cooperativa Sociale San Saturnino Onlus Users: 1.000 users Users satisfaction monitoring Volunteers: 12 volunteers Insurance and training Environment: Clients: Medium level of attention but not a real policy Quality certification (ISO 9001) Clients satisfaction monitoring CSR Policies: No sustainability reporting No ethical code

Case study B - Cooperativa Sociale K-Pax Onlus CREDIT POLICY Mission: established in 2008 in the North of Italy by a group of operators who wanted to help refugees and asylum seekers. K-PAX developed an innovative project base on a decentralised shelters. Often, in fact, social tension between refugees and locals are caused by the very high concentration of refugees into one specific location. The most common model for managing refugees in Italy is in fact to build big refugees centers in specific cities. The project implemented by K-PAX took a totally different approach and tried a decentralised shelter system where refugees are integrated into local territories in small groups. This system has proved to be effective for both refugees (who are able to relate themselves without being constantly in emergence) and local people (who no longer see refugees as a risk for their identity). Banca Etica has supported K-PAX in this project and has helped to expand its activity. Governance: 12 members More than 50% of the members join the Annual Meeting Women presence in board: less than 30% Employees: 19 employees High quality of the contracts No controversy with unions Strong health and safety policies Strong fair opportunities and involvement policies Women presence in managerial level: 25% Suppliers Ethical selection (certification and environmental respect)

Case study B - Cooperativa Sociale K-Pax Onlus CREDIT POLICY Users: 100 users Users satisfaction monitoring Volunteers: 50 volunteers Insurance and training Environment: Clients: Strong environmental policy (ISO 14001 certification) No quality certification Clients satisfaction monitoring CSR Policies: Detailed sustainability reporting Ethical code

CREDIT POLICY MICROFINANCE Banca Etica is involved in microcredit field: social security (in support of people) entrepreneurship (for the creation or consolidation of social enterprises) Since 2001 we have approved 3.199 operations for 20,6 millions social security 1.258 loans for 7 millions entrepreneurship 1.941 loans for 13,6 millions The activities of microfinance are carried out in collaboration with local networks in order to ensure a real relationship between bank and borrowers. Updated on 31/12/2015

CREDIT POLICY Future challenges of social evaluation Creating an unique questionnaire for all categories of clients; Increasing the integration between social evalution and financial one, thanks to an unique IT tool; Working on correlation between social evaluation and loans default rate; Linking the data about impact with the Banca Etica website («Con i miei soldi» section); Analyzing impact data for strategic decisions, depending by territories needs; Correlation between impact and pricing.

INTERNAL PERFORMANCE DIRECT IMPACT EVALUATION: INTERNAL PERFORMANCE

INTERNAL PERFORMANCE ETHICAL GUARANTEE The ethical guarantee and the respect of the principles outlined in art.5 of the Statute are monitored through appropriate tools and supervisory bodies: the Ethical committee the Ethical code the Supervisory body the Social Value certification

Valore Sociale certification INTERNAL PERFORMANCE Since 2011 Banca Etica CSR internal model is certified Valore Sociale; Italian certification model which monitors social, environmental and economic aspects about companies relations with: Communities Employees; Clients; Environment; Suppliers. All stakeholders could underlines bad practice to the certificator; Valore Sociale VS SA8000

Banca Etica integrated reporting INTERNAL PERFORMANCE Banca Etica approaches reporting in order to: Communicate the good practices; Share performance with stakeholders; Develops improvements; The integrated reporting is built on 2 main tools: Annual Integrated Report (GRI 4 Model Core level) 2.0 Sustainability Report (http://bilanciosociale.bancaetica.it/) Both tools focus on: Materiality; Trasparency; Quantitative indicators for 7 categories of stakeholders; Dialogue with stakeholders

Banca Etica integrated reporting INTERNAL PERFORMANCE The Integrated Reporting model is developed on 60 indicators for 7 categories of stakeholders, such as: Members: socio-cultural events: 1.014 (+21%) Clients: microcredit loans: 3.897.781 euro (+6%) Employees: salary range: 4,68 (5,28) Suppliers: num. suppliers certified: 51%; 7 suppliers evaluated; Environment: renawable energy consumption: 98% (+5%) Communities: participants of courses about financial education: 15.000 Financial system: working groups on ethical finance/csr: 10

BANCA ETICA NETWORK BANCA ETICA NETWORK

BANCA ETICA NETWORK FCRE Fondazione Culturale Responsabilità Etica (Cultural Foundation for Ethical Responsability) works with promotion, research, experimentation and training activities related to the relationship between ethics, economics and finance. Main projects Non con i miei soldi (Not with my money) campaign Novo Modo, event in Florence dedicated to sustainable change, born from the experience of the conference-fair Terra Futura Zoes.it, online social network on sustainable life-styles Active Shareholder initiatives Finance and Legality Observatory

BANCA ETICA NETWORK ETICA SGR Etica SGR is the asset management company of Banca Popolare Etica Group. It's the one Italian company that offers only ethical investment funds, which invest exclusively in securities of States and companies characterized by a high profile of social and environmental responsibility. Moreover, Etica SGR: has established the Fund for microcredit projects in Italy, whose subscribers can donate 1 euro for every 1,000 they invested conducts active shareholder activities to raise awareness on social and environmental issues in the companies in which it invests offers consultancy for institutional investors

BANCA ETICA NETWORK FEBEA It is the European Federation of Ethical and Alternative Banks, a nonprofit organization founded in 2001 by Banca Etica with Crédit Coopératif and Caisse Solidaire du Nord Pas-de-Calais (France), Crédal and Hefboom (Belgium) and TISE (Poland) for the development of ethical and solidarity-based finance in Europe. Today it includes banks, financial cooperatives, investment companies and foundations which cooperate for the exchange of good practices and the realization of financial tools.

BANCA ETICA NETWORK SEFEA European Society for Ethical and Alternative Finance; it supports the participating members of FEBEA. SEFEA offers: Consultancy services Financial services for the development of medium-long term projects Participation in international projects for the promotion of ethical finance and social economy

BANCA ETICA NETWORK GABV The Global Alliance for Banking on Values is an independent network composed by the main banks around the world who operate on the basis of the principles of ethical finance. It was founded in 2009 and today has 27 member banks who operate in 24 countries. The member banks share research, training and lobbying activities.

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