Gruppo Montepaschi

Focus on a Member - May 2009

In this month's interview, Francesco Mereu, Head of Corporate Responsibility at Gruppo Montepaschi, discusses potential impacts of the current crisis on the banking sector in the longer term, and how his company engages with key stakeholder groups on some of today's key socio-economic trends and challenges.

Climate change is one of today’s most pressing issues. How is it perceived by Italian companies and what is your own company’s strategy to address it?

Francesco Mereu

A large majority of Italian companies sees at least one opportunity in climate change, while showing a growing awareness of the associated risks. This was one of the main findings of a survey which was carried out this year in collaboration with the Carbon Disclosure Project (CDP) among the 40 largest Italian stocks. The survey is part of the first CDP Italy Report.

The uncertainty on energy costs and even more severe restrictions to CO2 emissions make it harder for companies to assess their own risks. The approach of Montepaschi to the issue is to help businesses to better understand these risks and manage them proactively - with mutual advantage - providing loans and other banking services that are fully appropriate to their needs.

In your view, how will the current crisis impact CSR in the banking sector in the mid to long term?

The crisis and its impacts on banks and real economy are bringing up crucial points of concern.

At first sight it can seem like a paradox, but I think the current crisis will even bring new opportunities to the banking sector to enhance the social value of its role in the society. Certainly, this is true only for those banks that will be able to reaffirm their inclination to make profits over time, through solid assets, being efficient, optimising cost structure. In short: being a perfectly functioning machine.

CSR can help bring finance back to its main function, which is to serve people and the community. In particular, it can contribute to claiming for safer and more appropriate use of savings. Key points to be stressed are very simple products, investment traceability, direct link between financial tools and the real and social economy, and the involvement of clients in a territorial and branch rationale.

As a participant to CSR Europe’s Market Valuation Laboratory, what to you is the added value of the tool the Laboratory has developed, the European Framework for Valuing Financial and Non-financial Performance?

The results of CSR Laboratories are being integrated into our internal company programmes. For example, the Market Valuation Laboratory Framework has served as a basis for developing internal CSR related key performance indications for various of our departments, supporting the integration of CSR into strategic business planning and investor relations.

I believe this will contribute to ESG issues being perceived internally as more material and therefore more manageable. It will also facilitate communication with external stakeholders, particularly with regard to ESG analysts and investors, with hopefully positive reflections on our stock value.

To this aim, Montepaschi has also experimented on its CSR Report the new GRI - XBRL Taxonomy, as a potential additional tool to reach key potential users of ESG data.

On the issue of communication, could you explain to us how your CSR report helps you to engage with key stakeholder groups?

The report clarifies what the Bank stands for in the society. That, today, without a doubt, exposes it to public scrutiny and criticism, struggling to discourage skepticism on the banking sector in general.

But I still do prefer to consider the CSR report as a way to open up to genuine judgments of stakeholders, instigate constructive dialogue both inside and outside the company on items of mutual interest. For example, unions and consumer associations are coming up with many new ideas on how to apply CSR principles in strategic areas such as HR development and customer relationship. A successful practice so far that I hope to occur soon with respect to other influential stakeholder groups, such as institutional investors.

How has CSR Europe’s report feedback service supported you in further developing your CSR report?

We are generally very satisfied with the cooperation with CSR Europe. Among the many valuable services that CSR Europe has delivered to us - as a company member since 2002 - we have asked CSR Europe to undertake a first report review. The report feedback was a first point of reference for the development of the CSR report 2008 (English version to be launched in the end of May).

Accordingly, several innovations were made, that include:

Producing an easily digestible summary report, supplemented by a detailed, GRI compliant report available online, in order to reach a diversified audience more effectively.
Addressing CSR aspects that are most meaningful for the business strategy and for stakeholders.
Using more specific and forward looking KPIs.
Reducing the length of the text in favour of graphs, visuals, charts and case studies.

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