S&P Global Ratings today assigned Banca Popolare dell’Alto Adige SpA (Volksbank) an environmental, social, and governance (ESG) Evaluation of 66. Our Volksbank ESG Evaluation is the result of an ESG profile of 66 combined with an adequate preparedness. Higher numbers indicate stronger sustainability in our evaluations.

The ESG Evaluation of 66 reflects Volksbank’s specificities as a regional bank. The bank’s defining local anchorage translates into a tailored governance structure with community leaders at the board, strong and long-lasting relationships with the communities in which it operates, and lower exposure to environmental and social risks relative to the wider banking industry. Volksbank has recently started factoring ESG into its lending and investment activities and across its supply chain, including several environmental factors, such as waste and water usage, as well as social and governance aspects like equal pay, safety management, and ESG reporting. Although the bank has clear plan and quantified objectives, it has yet to fully deploy and implement its ESG tools and policies.

Volksbank’s recent efforts to embed ESG deeper into everyday operations and strategy formulation demonstrate its leadership’s adequate preparedness to identify and adapt to the banking industry’s long-term risks and opportunities.

Volksbank is a commercial bank headquartered in Bolzano, Italy. The bank had 159 branches in the provinces of Bolzano, Belluno, Padua, Pordenone, Trento, Treviso, Venice, and Vicenza at year-end 2021, and generated revenue of €321 million. Like other regional banks focusing on retail customers and small and medium-sized enterprises, Volksbank derives a large portion of its recurring revenue from net interest income (close to 55% in 2021) and commissions from banking services (close to 20%), and to lesser extent from offering wealth management products.

What Is An ESG Evaluation? S&P Global Ratings’ ESG evaluation is a cross-sector, relative analysis of an entity’s capacity to continue to operate successfully. It is grounded in how ESG factors could affect stakeholders, potentially leading to a material direct or indirect financial impact on the entity.

Our definition of stakeholders for a particular entity goes beyond shareholders to include employees, the local community, government, regulators, customers, lenders, borrowers, policyholders, voters, members, and suppliers. A high ESG evaluation indicates an entity is relatively less prone to experiencing material ESG-related events, and is relatively better positioned to capitalize on ESG-related growth opportunities than entities with lower ESG evaluations.

First, we establish an ESG profile for a given entity, which assesses the exposure of the entity’s operations to observable ESG risks and opportunities, and how the entity is mitigating these risks and capitalizing on these opportunities.

Second, we assess the entity’s long-term preparedness, namely its capacity to anticipate and adapt to a variety of long-term plausible disruptions.

S&P Global Ratings currently evaluates more than 125 entities across the globe; they have an average score of 66. Since the first ESG evaluation, published in June 2019, we have finalized ESG Evaluations across 22 sectors globally. By region, the highest average score is 72, for companies headquartered in Europe, the Middle East, and Africa.

Visit spglobal.com/ratings for our latest sustainable finance research and all of our publicly available ESG Evaluations.

Source: S&P Global Ratings