Rivoluzione verde? Investing in Italy’s decarbonisation

01 October 2021

Dr Arthur KrebbersHead of Sustainable Finance, Corporates

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Pietro StimamiglioCorporate Financing & Risk Solutions, Sustainable Finance

James CloseHead of Climate Change, NatWest Group

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“We have to accelerate all decarbonisation opportunities through serious investments,” was one key message from a panel of ESG experts during our virtual webinar about the financial and investment implications of the Italian decarbonisation agenda.

Ahead of the Pre-COP26, which will take place in Milan from 30th September to 2nd October, the panel members agreed that the COP26 in Glasgow in November this year is an ‘extraordinary opportunity’ for countries to deliver on the $100 billion Climate Finance commitment as well as achieve ‘a step change’ in international collaboration to ensure money is going from developed countries to developing countries.

With James Close, Head of Climate Change at NatWest Group pointing to the need for additional capital to urgently strengthen climate adaptation measures in the light of the severe flooding and wildfires across Europe this year, Catriona Graham, British Consul General in Milan and Director of the Department for International Trade in Italy, concluded that “the climate challenge is not a challenge solely for politicians but requires the entire civil society in Italy and around the globe to be involved in.”

Key learnings from the panel included:

  • Climate agenda to boost Italy’s GDP: According to S&P’s projections Italy could overcome its elevated dependency on energy imports between now and 2050, leading to a GDP that is roughly 4.2 percentage points higher than it would be if Italy does not reduce its energy intensity (presentation by Frank Gill, Sector Lead Sovereign Ratings EMEA at S&P Global Ratings).
  • A 360-degree approach to sustainability: While sustainability is often associated mainly with environmental concerns, Ilaria Bertizzolo, Head of Coverage Large Corporates at Cassa Depositi e Prestiti, emphasised the need for companies to consider a 360-degree approach to sustainability in order to not only tackle environmental issues but to also discuss social challenges, and the implications of the sustainability transition on their financial performance.
  • Data collection and team work is key to creating a credible sustainable finance framework: Looking at Italy’s efforts to raise capital for its decarbonisation, Rebecca Smith, Sustainable Finance Analyst at Vigeo Eiris (part of Moody’s ESG Solutions Group), who had acted as project manager for the Second Party Opinion (SPO) Vigeo Eiris provided for Italy’s first green sovereign bond earlier in the year, highlighted the need to outline environmental objectives and benefits for each green expenditure in the framework and to define eligibility criteria that determine the selection or exclusion of expenditures (following recognised international standards). To master the challenge of collecting and organising expenditure information robust inter-ministerial governance and organisational structures are key, Smith stressed, pointing to inter-ministerial green bonds committees which green sovereign issuers have come to form.
  • Best-in-class approach improves long-term risk return of investments: Luca Soria, Credit and ESG Portfolio Manager at Intesa Sanpaolo, pointed to negative screening and impact investing as the most popular strategies amongst Italian ESG investors, however, he argued that his bank’s team strongly believed that the best-in-class approach, whereby the most environmentally proactive companies per sector are selected, is more effective in improving the risk return of investments in the long term. This approach also ensures that companies aren’t excluded simply based on the fact they are carbon intensive, but that instead those firms can receive capital if they have a strong commitment and credible plan to reduce their emissions.

Food for thought: framework dilemma, GDP flaws, and nuclear energy

The panel also brought up thought-provoking observations:

  • Ambitious, dark green & narrow versus light green & broad: Smith pointed to the dilemma of opting for very stringent sustainable finance frameworks with inflexible criteria – for example only choosing best-in-class technologies – which nearly inevitably results in selecting fewer projects for the framework; or whether to rather opt for a framework that allocates capital to a wider range of activities that maybe “not the greenest of the green” but still help improve the status quo by kicking-off the green transformation.
  • GDP under-prices climate costs: Gill made the case, that there’s a real problem with modelling GDP for any economy, especially advanced economies, as traditionally national GDP data does not cover the negative externalities, in other words, the cost of emissions, and equally doesn’t reflect the depreciation and degradation of both man-made and natural physical assets. Therefore, the GDP under-prices the costs of global warming of natural degradation. Gill proposed a shift away from GDP to Net National Product, which does price the cost of depreciation into the GDP estimate.
  • Revival of nuclear power? Relating to plans of the Italian government to evaluate new technologies in the nuclear energy sector, the panel members agreed that in light of the climate crisis no technology that could support sustainable energy production should be dismissed straight out.

Webinar poll: Investment priorities and net zero financial instruments

Kicking off the discussion about Italy’s investment and finance needs to achieve its decarbonisation targets, a short poll amongst the webinar participants delivered the following results:

Question 1: Which areas of investment should Italy prioritise? 

  1. Clean energy (42% of respondents)
  2. Public transportation (24%)
  3. Building retrofits (18%)
  4. Research & development (15%)

Question 2: Which financial instruments do you consider to be most effective in helping to meet Italy’s zero carbon challenge?

  1. Bonds (50% of respondents)
  2. Loans (21%)
  3. Equity/equity-like instruments (14%)
  4. Secured/structured debt (14%)

The panel for this webinar:

Ilaria Bertizzolo

Head of Coverage Large Corporates

Cassa Depositi e Prestiti

James Close

Head of Climate Change


Frank Gill

EMEA Sovereign Specialist

Standard & Poor´s Global Ratings

Catriona Graham

UK Consul General in Milan and
Director, Department for International Trade, Italy

Department for International Trade

Dr Arthur Krebbers

Head of Sustainable Finance, Corporates


Roland Plan

Head of Corporate Coverage and of Debt and Financing Solutions, Western Europe

NatWest Markets NV

Rebecca Smith

Sustainable Finance Analyst

Vigeo Eiris (part of Moody's ESG Solutions)

Luca Soria

Credit & ESG Portfolio Manager

Intesa Sanpaolo


To hear the panel's views on these topics, please watch the video below: 


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