Italian Unlisted Banks Lag on ESG Sustainability

Standard Ethics’ new benchmark for unlisted Italian banks shows that only 36% of institutions achieve a fully sustainable level, while the majority remain below the threshold for compliance with international ESG standards.

Only a little over a third of Italy’s largest unlisted banks currently achieve a fully sustainable level according to international ESG standards. This is what emerges from the new SE Unlisted Italian Banks Benchmark published by Standard Ethics, which analyzes 25 of the largest Italian institutions not listed on the stock exchange. The survey shows that 36% of banks achieve a Sustainable Grade, while 60% remain below the fully sustainable threshold, and one institution still has a rating in the process of being finalized.

In the detailed rating table, the highest band of the benchmark is occupied by a group of banks that reach the EE- threshold, a level that according to the Standard Ethics methodology indicates good compliance with international standards. This category includes institutions such as Banca Popolare Etica, Banca Sella Holding, Cassa Centrale Banca, Cassa di Bolzano, Cassa di Ravenna, Cassa di Risparmio di Asti, Iccrea Banca, Mediocredito Centrale, and the Institute for Sports and Cultural Credit.

The 9 Levels of Standard Ethics’ ESG Rating

Immediately below this is a larger group of banks with an E+ rating, indicating a low level of compliance that is not fully sustainable, but is evolving. This range includes, among others, Banca Agricola Popolare di Sicilia, Banca Cambiano 1884, Banca del Fucino, Banca del Piemonte, Banca Finnat, Banca Popolare Alto Adige, Banca Popolare Puglia e Basilicata, Banca Popolare Pugliese, Banca Popolare Valsabbina, and IBL Banca. For these institutions, according to the analysis, the process of aligning with ESG standards is underway but not yet fully consolidated.

At the bottom of Standard Ethics’ ranking are banks with an E rating, such as Banca di Piacenza, Banca Ersel, Banca Investis, Banca Passadore, and Banca Popolare del Lazio, which still show significant room for improvement in their sustainability policies and governance systems. Banca Progetto completes the picture , currently maintaining a Pending rating, pending the conclusion of its evaluation.

The sector’s picture highlights a significant gap compared to listed banks. While the share of sustainable entities is significantly higher among publicly traded institutions, the process of integrating ESG policies among unlisted entities appears to still be in the process of consolidation.

According to Standard Ethics, one of the factors explaining this gap is primarily the level of transparency

Unlisted banks, the Standard Ethics’ analysis highlights, show higher rates of shortcomings in communicating sustainability policies , particularly on emerging issues such as human rights, environmental impact, and the management of artificial intelligence.

Another critical area concerns governance, where gender parity on boards of directors and executive teams is only adequately addressed by a limited number of institutions. This is compounded by the lower prevalence of independent ESG assessments , which are required less frequently among private banks than among publicly traded institutions.

Overall, the Standard Ethics benchmark therefore paints a picture of an unlisted banking sector characterised by uneven progress on the sustainability front.

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(Featured image by Akil Mazumder via Pexels)

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