SAS Climate Risk Stress Testing on SAS Viya helps Intesa Sanpaolo plan, optimize and achieve net-zero targets by integrating governance and business strategies

Intesa Sanpaolo understands that addressing climate change requires a proactive, targeted approach. While other financial institutions are strategizing and taking steady, measured steps toward sustainability, Intesa Sanpaolo has been boldly advancing its sustainability journey since joining the Carbon Disclosure Project in 2004. The international banking group not only monitors its own emissions, but it’s also actively transforming its business model to improve sustainable practices across the sectors it serves.

From developing stress tests that anticipate climate effects to offering loans that empower clients to achieve net-zero goals, Intesa Sanpaolo is embedding climate consciousness into every corner of its operations.

A significant change has been the implementation of SAS Climate Risk Stress Testing on SAS Viya. Stress testing and simulations have been an internal banking assessment for decades. According to the Global Association of Risk Professionals (GARP), though, many financial institutions are now rethinking their risk management and financial strategies in light of climate change. In this context, simulations have become essential for crafting effective climate change mitigation strategies and reaching the net-zero targets that financial institutions have committed to. They serve as a strategic tool to develop governance frameworks, empowering businesses to implement these strategies efficiently.

With SAS, Intesa Sanpaolo has the tools it needs to plan, optimize and achieve net-zero targets by integrating governance and business strategies. SAS Climate Risk Stress Testing allows Intesa Sanpaolo to identify potential risks and uncertainties in the journey toward net-zero emissions, and optimize investments and commercial strategies toward that goal. With a simulation approach, the bank not only can monitor the progress of its transition plan from a multiyear perspective, but it also can identify corrective actions to align with its environmental objectives. With SAS technology supporting its mission, Intesa Sanpaolo is setting a benchmark in the banking industry, showing how data-driven insights can help build a more sustainable future and combat the effects of climate change.

In our chat with Luca Tomasetto, Head of Environmental, Social and Governance (ESG) Metrics and Targets at Intesa Sanpaolo, we asked about the bank’s net-zero strategy, its new ESG management reference database, the role of simulations in the target setting process, and how SAS technology supports Intesa Sanpaolo in this journey.

Q: What is Intesa Sanpaolo’s strategy to achieve its net-zero emissions goal?

Luca Tomasetto: Intesa Sanpaolo was among the first banks to join the Net-Zero Banking Alliance and Science Based Targets initiative (SBTi) associations. We are committed to communicating emission targets for our portfolios that are consistent with the required methodology and organizing an internal process for sharing and monitoring.

Despite progress, global greenhouse gas emissions are not in line with the Paris Agreement that was confirmed in December 2023 by the UN Climate Change Conference (COP28), attended by Intesa Sanpaolo. The goal of net-zero emissions by 2050 means “financial institutions must further scale up investments in climate action and increase customers’ availability, effectiveness and access to climate finance.”

Intesa Sanpaolo provides more than €400 billion in medium- and long-term lending to support Italy’s National Recovery and Resilience Plan, with €88 billion dedicated to green initiatives, circular economy and ecological transition.

As an ESG steering committee, we are continually exploring new innovations in sustainability to help us achieve our targets.

Q: How does SAS help Intesa Sanpaolo create a more sustainable approach and reduce emissions in its portfolio? What role do stress tests and simulations play?

Tomasetto: We built the first ESG management reference database with dedicated views that cross-reference bank data with external information (e.g., information provider, product flags, etc.). The climate stress testing solution is the fastest way to make the new information available. It allows us to monitor and investigate the cause of changes at a granular level and then assess alternative scenarios and quickly evaluate their feasibility in the market.

We use SAS to investigate steering committee corrective actions, simulate new customer entries and evaluate changes in the exposure of our referral base, so we can balance actions with the correct mix of risks and benefits.

Q: How can interdepartmental collaboration help design a more effective strategy?

Tomasetto: The target-setting methodologies consider exposures and our clients’ emission intensities and create projections on predefined scenarios and curves. In the end though, the business dynamically manages its portfolio moves commercially. So we need to be able to identify the impact of these business moves ex-post, or better yet, ex-ante, so we can forecast and assess target achievements, including their broader economic and revenue impacts.

By sharing this information with the business, we create a synergy where governance is more aware of potential operational constraints and the business has a clearer understanding of governance guidelines. This alignment enables a collaborative assessment of risks and opportunities.

Q: How will the integration of risk and climate strategies evolve in the coming years, and how can technology support this evolution?

Tomasetto: Technology, particularly artificial intelligence, will be critical to support the integration of risk and climate strategy. AI tools will improve information retrieval, which historically is very onerous. AI will also improve risk modeling, allowing banks to refocus on strategies and targeted initiatives to make sustainable finance more effective.

Conclusion

By aligning its operations with climate goals and pushing the boundaries of what’s possible in sustainable banking, Intesa Sanpaolo is setting a standard the industry can’t afford to ignore. With SAS’ data and AI guiding each step, Intesa Sanpaolo is not just adapting to climate challenges – it is anticipating them, equipping its teams and supporting clients in ways that reinforce both economic and environmental resilience.