Letter from Head of Group Strategy & ESG

One of the key takeaways from our first ESG Day, an event fostering stakeholder dialogue you can read more about on here, was the need for cathedral thinking: the concept of laying the foundations of our future world, with an acknowledgement that it may be the generations to come, and not us, who are there to enjoy it. This is the real definition of sustainability that we want to foster and support.

Our world faces many challenges and organisations like ours need to step up and help shape a fairer, greener future. We believe that leading by example is the right thing to do. 

All banks have an important role to play when it comes to ESG – and it is one that goes far beyond lending. But we believe UniCredit is uniquely placed to be a true pioneer in creating behavioural change, helping clients in higher-emitting sectors to transition while exploring how we can integrate ESG into our own day-to-day operations to create a new benchmark in our industry.

Our unique footprint across Europe, with expertise, resources and an on-the-ground presence in 13 countries, means we can make a tangible difference in ways other banks simply cannot match. We are bigger, with a greater presence, and we have a bigger opportunity to drive change. 

Our 15 million clients are at the centre of our Bank and our decision-making, and we are directly influenced by their needs. But we also have a responsibility to hold them to the same high standards we set ourselves. It is our responsibility to bring them with us and support them in their own transition as we progress towards our ESG targets.

One of the most powerful ways we can do this is through the financing of environmental initiatives. We are empowering clients and communities alike to progress by supporting renewable energy projects and energy efficiency efforts.

We also want to have a positive social impact in line with our responsibilities as a social actor – assisting our clients and communities in making meaningful progress towards a more sustainable, inclusive, and equitable society in the long term.

Our swift progress against our ambitions is testament to the strength of our commitment – and to the whole Group pulling together in the same direction. We are striving to reduce our direct and indirect environmental impacts while supporting Europe’s green transition.

When we joined the Net Zero Banking Alliance in 2021, we set Net Zero targets of 2030 for our own emissions and 2050 for our financed emissions portfolio. Since then, alongside our actions to reduce our own emissions, we have also set additional interim 2030 targets to reduce our financed emissions in three of the most carbon-intensive sectors in our loan portfolio: Oil & Gas, Power Generation, and Automotive.

In January 2024, we added targets for the Steel sector, in alignment with the Sustainable Steel Principles, of which UniCredit is a founder. In the coming months we will establish interim targets for other carbon-intensive sectors, including Real Estate.

In addition, we have now published our inaugural transition plan – as outlined here. This plan illustrates how we are turning our commitments into actions, making our targets operational, and ensuring all relevant functions of the bank can contribute.

In the past two years we have achieved €82bn of ESG volumes and we will keep supporting our clients in their transition towards more sustainable business models, committing to specific ESG penetration targets on Lending, Investment Products and Sustainable Bonds – which you can read more about here.

While financing is traditionally where banks can have the greatest impact, we are also educating our clients and stakeholders on ESG topics and the important role they can play in protecting the planet and its communities.

As the traditional scope of ESG broadens, we are also expanding our focus to embrace nascent topics including biodiversity and the circular economy. We were the first Italian bank to sign up to the Finance for Biodiversity Pledge and we are member of the Ellen MacArthur Foundation’s international charity network to support our approach to accelerating the circular economy transition across our countries.

In 2023, we contributed to the publication of UNEP FI’s PRB “Nature Guidance for Banks” and the Finance for Biodiversity Foundation’s first paper, entitled “Unlocking the biodiversity- climate nexus”. Collaborations like these, especially with other financial institutions, promote the open dialogue needed to truly tackle the challenges the planet is facing.

Our commitment is also in favour of the communities and vulnerable people for whom we provide a wide range of financial education programmes, to increase awareness on economic topics and reduce social gaps. In 2023 we continued to support communities through our Social Strategy focusing on social finance, our own social contribution to our communities, and the support we give our people.

Internally, we continue to work hard to embed ESG in everything we do. This year, UniCredit was the first pan-European bank to win a Global EDGE Certification for gender equity and inclusion. Furthermore, in 2023 we provided ESG training for colleagues at all levels – giving them the knowledge and insights they need to make a meaningful impact and drive positive change with clients and customers.

We have also taken steps to prevent green and social washing – a serious issue that threatens to undermine ESG initiatives across industries. To safeguard our reputation and mitigate the associated risks, we have extended the scope of our activity to include prevention initiatives and the issuance of ESG product guidelines.

While we are certainly heading in the right direction, challenges remain that we must rise to meet. We recognise, for example, that not all the communities we operate in are at the same stage of their journey – and, in some cases, we will need to evaluate the trade-off between environmental impacts and social repercussions. Both factors are equally important, but we are realistic about their interaction and where we can add the most value.

While we remain steadfastly committed to the transition, it is vital that we also consider the real people who will be impacted by our policies and help businesses to transition in a sustainable manner.

Also on the horizon are new regulations that will call for greater transparency and disclosure of ESG-related data. The EU’s Corporate Sustainability Reporting Directive, for example, will apply from next year, and it will take considerable effort for all impacted companies – UniCredit included – to comply. We have already set up a working group to analyse all applicable requirements and define an adaptation plan to be implemented during 2024.

The future of our planet depends on all of us – clients, colleagues, competitors, governments and many other influential bodies and organisations. We must stand together, be prepared to be counted, and make a concerted effort to change our behaviour. UniCredit will continue to lead by example.

Fiona Melrose 
Head of Group Strategy & ESG