Sustainable investment

As a long-term investor aware of its social and environmental responsibilities, Banca d'Italia takes account of sustainability profiles in its investment decisions, with the aim of making progress in managing the associated financial and reputational risks.

This page sets out the:

• objectives;
• activities;
• results.

Objectives

With its 2023-25 Strategic Plan, Banca d'Italia has reiterated the commitments made in 2021 with its Responsible Investment Charter, which sets out three objectives:

• promote sustainability through initiatives to encourage the disclosure of information by issuers, financial intermediaries and other financial system operators;
• integrate environmental, social and governance (ESG) criteria into the investment and financial risk management of the Bank's financial portfolio and foreign exchange reserves;
• publish information on and analyses of sustainable finance in order to promote good practices within the financial system; regularly publish its sustainability achievements; and help spread a sustainable finance culture within the financial system and among the general public.

For more information:

Responsible Investment Charter of the Bank of Italy

Presentation of the Bank of Italy's Responsible Investment Charter - Speech by Paolo Angelini

Presentation of the Bank of Italy's Responsible Investment Charter - Slides (only in Italian)

Banca d'Italia regularly reviews its investment strategies to ensure that they are in line with the objectives of the UN 2030 Agenda, the Paris Agreement and the European Union's 2050 climate neutrality targets.

For more information:

UN 2030 Agenda

The Paris Agreement

Common stance for climate change-related sustainable investments in non-monetary policy portfolios

Activities

Banca d'Italia has incorporated sustainability assessments into its investment management since 2019, both at the initial stage of allocating resources between different asset classes (government and supranational bonds, equities, corporate bonds) and at the subsequent stage of constructing its portfolio through its selection of issuers and securities.

The Bank prioritizes investments with the best ESG profiles and excludes others based on fundamental labour standards and international treaties relating to controversial weapons, as well as tobacco producers. The objective is to improve, or at least maintain, the ESG score and reduce the carbon intensity of private issuer investments year by year. In constructing its portfolio, the Bank has chosen to favour companies within each sector that are most committed to the green transition.

In addition, it has taken further steps since 2022: i) it established a thematic portfolio focusing on companies whose productive activities can make a significant contribution to the transition to a low-carbon economy; and ii) it engaged in constructive dialogue with the companies responsible for most of the greenhouse gas emissions associated with the Bank's equity portfolio to review their transition plans and explain the Bank's sustainable investment strategy.

With regard to bonds issued by governments, supranational bodies and public agencies, the sustainability strategy considered most appropriate is thematic investment through the gradual expansion of the green bond portfolio.

Results

The measures taken so far have improved the ESG profile of Banca d'Italia's investment portfolios, reduced their carbon footprint and increased the amount of investment in green bonds. The overall ESG scores of the equity and corporate bond portfolios are higher than those of their benchmarks. Some data, such as those on gender diversity in management bodies, are better than the benchmark for all the portfolios analysed.

In terms of the climate profile, the weighted average carbon intensities of the portfolios are lower than the conventional market benchmarks and will likely improve further over the next few years.  

The Supplementary Pension Fund metrics also show an improvement in the climate profiles of corporate equities and bonds.

For more information:

Annual report on sustainable investments and climate-related risks for 2023