The rising influence of «Made in Italy» on sustainable finance

Although the first SRI fund was marketed in the country more than twenty years ago, in 1997, and it was home to the first European SRI Index (Ethical Index Euro), launched in 1999 a handful of months ahead of the launch of the Dow Jones Sustainability Index, Italy for a long time has been largely left apart from the expansion of the sustainable finance industry that has taken place in numerous European countries as well as in North America and other Anglo-Saxon countries throughout the world. But in the past few years things changed substantially. And now you can expect Italy to be part of the group of countries, not only in Europe but at world level, that will arguably drive the next expansion of sustainable finance. To some extent it’s already happening, as you may see if you line a number of facts and figures up in a row.

Take the role of the Stock Exchange. Well, in 2017 Borsa Italiana organized the first edition of the Sustainability Day: it was a day fully dedicated to engagement between listed companies and SRI investors. At the time, and as far as I know, the Italian Stock Exchange was the second one at world level to do such a thing. Next July 2nd, it will be time for the 3rd edition in a row of the Sustainability Day and it seems to me no other Stock Exchange in the world has a similar, you know, “track record”. Italy also came in first at European level last year when Ivass, the Italian Insurance Authority, passed an innovative regulation where insurance companies are forced to consider ESG aspects, especially when it comes to risk management activities.

Take the role of the Sustainable Investment Forum (SIF). First of all it’s nice to notice that Forum per la Finanza Sostenibile (FFS), the Italian SIF, is coming of age this year, since it was launched in 2001, one of the first SIFs to be launched in Europe and in the world and co-founder of Eurosif, the European SIF. More importantly, next November FFS is going to organize the 8th edition in a row of Settimana SRI, the Italian SRI Week (the first one took place in 2012), another remarkable “track record” given that in Europe only the Uk (where the first SRI Week dates back to 2008) and France (first SRI Week in 2010) can claim SRI Weeks of comparable duration. Moreover, consider that FFS membership more than doubled in just two years and a half and is now close to 100. That means FFS is actually and more than ever “the voice” of sustainable finance in the country, since it represents de facto the whole SRI industry. As a consequence, it can play a unique pro-active role at institutional level, also with the aim of improving the policy and regulatory framework for sustainable finance. That’s what it’s already doing, since in the current Italian legislature that started one year ago, as well as in the previous one, FFS has promoted the establishment of an Interparliamentary Group on sustainable finance.

Take the presence at the international tables and in the world’s major networks and fora on sustainable finance, to be honest something Italy has never excelled in. Among the “fabulous 35” of the Technical Expert Group (TEG) on Sustainable Finance established in 2018 by the European Commission to work on the implementation of the European Action Plan on Sustainable Finance, three experts come from Italy (a percentage close to 10%). And in the TEG sub-group dedicated to Taxonomy, the big issue laying at the core of the entire Action Plan, two experts out of twelve are Italian.
Another example comes from the Un Environment hosted Financial Centres for Sustainability (FC4S) global network, whose launch event took place last year in Milan at Salone del Risparmio, the largest gathering for Italy’s asset management industry. Moreover, consider that FC4S is a project that was strongly stimulated and supported ab orgine by the Italian Ministry of the Environment. And also consider, with regard to big financial events increasingly opening their doors to sustainable finance, that Salone del Risparmio 2019 deeply addressed the issues of sustainable finance, as you may notice by looking at the event title itself (“Sustainable, Responsible, Inclusive. The Frontier of  Asset Management”).
Just to mention a couple of further examples coming specifically from the skyrocketing space of impact investment, an Italian guy, Roberto Randazzo, has just taken office as President of ESELA, the “global network with a European focus” – as efficaciously claimed on its webiste – of lawyers active in and above all passionate about the impact economy field. And an Italian lady, Giovanna Melandri (in the past she held twice the position of Minister of State in Italy), last year was elected in the Board of Trustees of the Global Steering Group (GSG) for Impact Investment. By the way, you should not forget that the term “impact investing” was coined right here in Italy, at the Rockefeller Foundation’s Bellagio Center, on the shores of Lake Como, in 2007.

Take, finally, the figures. According to the European SRI Study Report 2018 by Eurosif, with regard to sustainability themed investments Italy now leads with almost 53 billion euro AUM in 2017 (out of about 149 billion euro all over Europe), up from 2 billion euro two years before. Italy also leads with regard to impact investments, passed from about 3 billion euro in 2015 to almost 52 billion euro AUM in 2017. Strong increases have been likewise registered in Italy’s SRI market with regard to best-in-class strategies (from 4 to 58 billion euro AUM), engagement and voting (from 43 to more than 135 billion euro AUM) and ESG integration (from 45 billion to 70 billion euro AUM).
You can also find out some other illustrative numbers by searching the Un PRI’s signatory directory. In fact, the Italian signatories are still an extremely tiny fraction of the total (38 of almost 2,400). But nearly half of them (16) signed the Un Principles in the past twelve months. And 11 of them did it in 2019, that means in the latest four months alone.

History says that Italy, once started, has proved many times to be capable of running very fast, in some cases fast as no one else. I think that’s the case, once more. In other words, it looks like time has come for the “Made in Italy” to enter and mostly help design the sustainable finance space of the future.

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