UniCredit has become the latest
leading retail bank to aver its commitment to
environmentally-friendly banking and is extending its product
portfolio accordingly. Dan
spoke to Roberto Nicastro, deputy CEO and head of the
retail business area at UniCredit, about the bank’s ‘green’ plans
over the coming decade.

UniCredit, Italy’s largest bank by assets, has signed an
international partnership with the World Wildlife Fund (WWF)
through which it will implement a company-wide sustainable banking
programme. The ‘Green Deal’ stands as the latest large-scale effort
in an increasingly long lineage of environmentally-friendly banking
initiatives – initiatives that unsurprisingly centre around a
growing public desire to act on climate change. Roberto Nicastro, UniCredit

Accordingly, a glance at the history of these
programmes shows that it is typically retail banking powerhouses
such as Bank of America (BofA), HSBC, Westpac and now UniCredit
that have committed themselves to such projects.

US banks were among the first to present
themselves at the forefront of the green movement – in March 2007,
for instance, BofA announced the launch of a $20 billion, ten-year
corporate social responsibility (CSR) programme designed to
“support the growth of environmentally sustainable business
activity and to address global climate change”, which has since led
to the launch of eco-friendly retail products such as the
Eco-Deduct rewards scheme and the Brighter Planet credit card.

BofA’s domestic competitors such as PNC have
taken different routes: the bank has trademarked the phrase “green
branch” and says that, with 53 such outlets, it has more certified
green buildings than any other company in the world. In Australia,
Westpac stood out as an earlier pioneer of eco initiatives, with a
range of products that initially included a deposits programme
designed to support environmentally-friendly initiatives.

UniCredit’s own Green Deal centres around a
commitment to reduce its CO2 emissions by 30 percent by 2020, in
line with the European Union’s energy goal as defined in its
climate action and renewable energy package.

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A wide range of sustainable initiatives will
include a collaboration with the WWF to develop a banking model
that will see lending decisions steered according to environmental
criteria. A range of consumer-centric programmes are also now being
rolled out.

Greener housing

As part of a drive to strengthen the
“environmental identity” of all group employees, UniCredit has
rolled out a Housing Efficiency Loan to its employees in Italy,
aimed at prompting them to more closely consider the environmental
impact of their places of residence.

“We finance the purchase of equipment designed
to make use of alternate energy sources. We also facilitate the
financing of materials that might generate a saving on home energy
consumption,” explained Roberto Nicastro, UniCredit deputy CEO and
head of the retail business area.

Nicastro acknowledges that UniCredit’s green
lending policies are in an early phase, but believes that the
domestic nature of the initial programme has its advantages.

“No one is as dependent on external energy
suppliers as Italy. People are aware of the issue, and there is
obviously a lot of attention on these matters,” he said.

Central to UniCredit’s thinking is the recent
introduction of tax breaks in Italy for those making improvements
to their homes before the end of 2009, a policy which has also been
created with one eye on reinvigorating some industry sectors more
severely affected by the global recession. Similar policies
currently under consideration across Europe have also caught the
bank’s attention.

A forthcoming extension of the Housing
Efficiency Loan will again be focused on employees, this time in
some of UniCredit’s other key markets. Existing incentives will be
taken into account, said Nicastro.

“We are looking at the existence of tax
breaks,” he acknowledged, suggesting that both Austria (where
UniCredit has a presence under the Bank Austria brand) and Germany
(where the bank goes by the name of its HVB subsidiary) were
candidates for a forthcoming rollout.

For now, the project is designed to “test the
level of interest” among employees, but a full-scale rollout to all
customers is planned should the pilot scheme prove successful. “We
often test and roll out the first products in Italy and then extend
them further through the group based on the interest of each
country,” Nicastro outlined.

That strategy is already been applied to
existing green offerings within the bank’s product portfolio: in
April, for instance, UniCredit launched a credit card in
collaboration with WWF which automatically donates 0.3 percent of
every transaction to WWF Italy for environmental protection

Nicastro said that the card will be extended
to other countries in early 2010, without specifying exact

The housing efficiency loan has an adjunct in
another environmentally-friendly product, said Nicastro: “We’ve
also introduced a credit express energy loan for customers who want
to renovate their houses in order to increase energy

Leveraging customer

Using its domestic market as a
testing ground also means UniCredit is able to leverage its
considerable customer feedback matrix before progressing further
with retail banking projects. The bank seeks feedback from 100
customers at every one of its domestic outlets per year in order to
gauge customer satisfaction levels. UniCredit retail banking metrics

According to Nicastro, in 2010 the bank’s
questionnaires will quiz customers about their interest in green
products for the first time, but the banker is already confident
that the appetite for eco-friendly banking is on the rise.

“What we have seen is our customers are
clearly showing an increased interest towards anything that goes in
the direction of protecting the environment. This is clearly a
strong trend that we expect to continue. What is less tested at the
moment is the relationship between this and banking,” he

“What we are doing is launching a whole set of
products aiming at fulfilling such interests, and to take advantage
of their banking relationship to fulfil their own desire [for such
products],” Nicastro added.

Though the housing efficiency loan is
supported by energy consulting services, Nicastro does not expect
such advice to necessarily require an emphasis on branch-based
banking, instead believing that any future distribution of green
products to consumers would predominately take place through online
channels, in keeping with current trends.

Questioned about the future of the
branch-centric business model, Nicastro said that the continuation
of expansionist monetary policies could accelerate the decline of
the branch.

“We’ve seen a secular trend of a progressive
movement from branch based banking to online channels. The actual
closing of branches has been gradual, but could accelerate if we
stay for in a low interest rate environment for the next three
years. That would force major restructuring because it would kill
the existing cross-subsidy whereby the interest margins on
deposit-taking subsidises services to customers.”

If the bank’s multi-channel strategy is
something of a waiting game, so too is its positioning of its green
products and services.

“We will have to wait and see if [these new
offerings] will constitute a big leap forward. It will take one or
two years to see if it will provide a major boost to our product
line or simply a nice sideline,” said Nicastro.

What is apparent, however, is that such
products are not suffering from any slump in interest from
consumers who now more concerned about price points rather than
ethical expenditure.

“These products have immediate opportunities
for their annual consumption so interest from customers has
increased. Making savings on energy is possibly more of a priority
here than anywhere else in the world,” Nicastro said.


Interims – better than expected