ESG, banks and social issues: data analysis is also crucial for BSI calculation

It is well-know that in the acronym ESG, the letter ‘S’ stands for ‘Social’. Instead, it is less known that social responsibility is gaining more and more importance in the current period. Nowadays, in a credit and financial environment, it is common for banks also to bear social responsibilities, both in Italy and in the rest of Europe. Savers and investors look more and more to the social impact exercised by a bank, through its business activities and the choice of its customers. Moreover, considering the increasing level of information available and education, they are more involved in evaluating the level of social concern of credit institutions.

Many customers wonder: how does a bank ‘spend’ savers’ money? Are its actions in line with the investors’ values? These questions arise because customers are trying to improve their social responsibility regarding their personal finances.

This is why savers and investors look for responsible and ethical banks. For example? They should reduce harmful emissions, promote social welfare, and support a sustainable development. These good practices are increasingly important for customers.

The Banking Social Index (BSI)

Against this background, the FABI (an independent federation of Italian bank workers) introduced the Banking Social Index (BSI) to measure the quality and the quantity of banking initiatives related to social issues, especially to combat poverty: in Italy, people at risk of poverty are almost 11 million. In Italy, it is the first tool of this nature, its analysis and the relevant classification is certified by a consultative Committee.

FABI

FABI, an independent federation of Italian bank workers, counts more than 108 thousand members and has 98 branches. It is the most representative trade union for Italian banks, established in Milan in 1948, during an historical period characterised by strong ideological oppositions, including within trade unions, and since its origin claimed to be non-religious and non-partisan.

It has an ancient and notable tradition: it was the only trade union to sign, together with Assicredito, the first collective agreement for bank workers, in 1949.

Since its establishment, and given its presence in the vast majority of credit institutions, FABI has taken part to every negotiation and stipulation of collective agreements, affiliation, and settlement within the credit sector at a national level. It also promoted many cultural and editorial initiatives.

Justice, autonomy, freedom, democracy, solidarity, work ethics, and centrality of man: these are the founding values inspiring the independent federation of Italian bank workers, from its origin to the present day.

Introduction of BSI

Which is the rationale underlying the introduction of the Banking Social Index (BSI)? Here is the answer of the General Secretary of FABI, Mr. Lando Maria Sileoni: ‘Banks have to re-affirm their social role, performing a crucial function within the society. With this initiative we assume a great responsibility: we are aware that trade unions must be proud and go beyond business relationship, for the sake of public interest. To the trinomial of revenues, gains and profits, a fourth element should be added: solidarity. Poverty is the actual pandemic of the future. People should know the names of banks committed to fight against poverty’.

Functioning of BSI

The Banking Social Index (BSI) of FABI has been designed analysing the initiatives promoted by Italian banks regarding social issues. More in detail: consideration is given to economic initiatives, projects, subsidised loans and donations to entities, research institutes, non-profit organisations, hospitals, charitable associations, volunteering and assistance structures, and foundations.

The interventions of the banks are analysed and classified both on a geographical (breakdown by region and province) and sectorial basis (for example: assistance, donations for those in need, support to health research, funding to hospital and humanitarian organisations). Also in this case, data gathering and analysis are essential for the calculation of BSI, as for the measurement of turnover and profits. Following such an analysis, it is possible to transform raw data into useful information to evaluate to level of solidarity of a bank.

To perform a consistent comparison among different-sized groups, a ratio has been introduced to weight the amount disbursed against their size and, as a consequence, their effective ability to donate money.

For the sake of transparency, the final assessment is subject to the opinion of a consultative Committee, composed by academic experts, representative of the volunteer and third sector, members of civil society and foundations.

B Corp certificate

In Europe and in the rest of the world there are other certificates that can be used by banks to demonstrate they are investing in a responsible way.

A B Corp Certificate means that a bank – or another kind of firm – is making efforts to find a balance between gains and objectives to be pursued.

B Corporation (or B Corp) is a certificate, present in 78 countries and 155 different sectors, issued by B Lab, a non-profit US institution. The objective of the B Corp is to measure environmental and social performance with a methodology which is as robust as the one used to measure economic results.

To obtain this certificate, and maintain it, firms have to reach a minimum score on a questionnaire analysing their environmental and social performance and to include their commitment toward stakeholders in their statutory documents, for example assuming the legal status of ‘Benefit Corporation’.

In our specific case, B Corp certifies that banks sustain social economy, reducing inequalities and poverty, and supporting sustainability and a healthier environment.

Global Alliance for Banking on Values (GABV)

‘We put finance at the service of people and the planet’. This slogan contains the mission of Global Alliance for Banking on Values (GABV), a network of independent banks using finance for a sustainable economic, social and environmental (ESG) development. Its philosophy can be summarised as follows: ‘Finance plays a pivotal role in shaping our society. Each loan and each investment impact on our communities, on the environment and on the economic future, for the better or for worse”.

The GABV comprises more than 60 banks, from 44 different countries and its head office is located in Amsterdam (The Netherlands).

Banking and financial sectors have great responsibilities, since banks are not mere intermediaries, but through their activities can play a fundamental role in the change. This is the reason why an increasing number of banks across all over the world has adopted a ‘value-based’ approach, joined forces for a common mission to put finance at the service of communities and the planet.

As the above-mentioned networks and associations, we in Save Consulting Group do care about social and environmental issues; for this reason, with our consulting services we help intermediaries to draft plans for the management of environmental and climate risks.