Italian banks failing to defund fossil fuels - Bank On Our Future

Italian banks failing to defund fossil fuels

Intesa Sanpaolo branch

Like banks in other countries, Italy’s biggest banks are dragging their feet on bringing fossil fuel financing to an end. One bank, Unicredit, has made progress but recently breached its own coal policies. Another, Intesa Sanpaolo, hasn’t even tried.

Fortunately, groups like ReCommon are holding these banks to account and pushing them to do better.

Unicredit

Unicredit is the second largest bank in Italy which, in 2020, adopted an impressive coal policy. This would end financing of new coal projects and bring Unicredit close to zero coal financing by 2028. It was the result of a campaign run by ShareAction, Italian group ReCommon and others, and campaigners at Reclaim Finance described the policy as “high quality”.

But less than a year later, it has been revealed that Unicredit is involved in arranging a €1 billion loan to the Czech energy group EPH. EPH is expanding its coal operations and, while Unicredit claims the loan doesn’t breach its new policy, providing financial services to a company that is creating even more coal power capacity isn’t compatible with a zero coal policy.

As a result, Unicredit’s status as a climate finance leader has been significantly downgraded. And ReCommon has highlighted other problematic aspects of the bank’s portfolio, with €5.8 billion in loans and underwriting to oil and gas companies. One of Unicredit’s customers is French oil giant Total, which has projects in the Arctic.

To regain its status of having one of the world’s leading climate finance policies, Unicredit needs to make sure its coal policy really does mean ‘no more coal’, and bring in similarly ambitious policies on oil and gas.

Intesa Sanpaolo

Another Italian bank currently in the spotlight is Intesa Sanpaolo (Intesa for short), the largest banking group in the country. It also has one of the weakest coal policies of any bank in Europe – Intesa is perfectly happy to provide services to companies building new coal power plants. Its policies also place no limitations on financing the oil and gas sector, and has been greenwashing to hide its contributions to the climate crisis.

Update, 29/7/21 – Since this story was published, Intesa Sanpaolo has released a new set of environmental and climate commitments but they are still weak and insubstantial.

Good news, such as phasing out coal mining by 2025 and ending finance for companies expanding their coal operations, are offset by huge gaps elsewhere. For instance, the new policies only apply to loans and not the other financial services Intesa is providing to fossil fuel companies.

The policies also say nothing about coal power plants, and they suggest a move towards using gas instead of coal when Intesa should be prioritising clean energy like wind or solar. And even though Intesa has said it will no longer back extreme projects like tar sands oil, fracking, and oil drilling in the Arctic and the Amazon, there’s no detail on how this will happen, leaving loopholes you could sail a tanker through.

It’s a wasted opportunity for Intesa when it could have taken a global lead on climate policies, and a wasted chance to end its contribution to the climate crisis.

 
In total, Intesa provided €5.4 billion of finance to the fossil fuel industry in 2020. It’s supporting companies such as Total and ConocoPhillips which are pushing into the Arctic. In North America, Intesa has backed ExxonMobil and Chevron, as well as companies involved in Line 3, the pipeline being built across Indigenous lands in Minnesota.

According to ReCommon, Intesa’s fossil fuel policies are minimal in the extreme, so it has a lot of catching up to do. Ending support for new projects, setting timelines to remove existing coal, oil and gas from its books – those are the basic steps needed to meet EU climate targets and align with the goals of the Paris Agreement.


Banks can fund our future and aid the global green recovery. Together, we can push the worst fossil banks to change.