Sustainable vs. not sustainable cooperative banks business model: The case of GBCI and the authority view

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Abstract

Sustainable finance has become a common lexicon of both supervisors and financial institutions in the last years also due to the COVID-19 crisis. Undoubtedly, the application of ESG (environmental, social, and governance) factors is currently designing a new strategic perspective, a new approach to business usually named “sustainable”. The paper’s research problem is related to the reengineering of the bank’s business model on sustainability. Integrate ESG factors within the decision-making process will not be enough for the European financial sector; it will be strategic that European authorities and regulators also ensure incentives in this direction. In this perspective, the paper has the purpose to answer the following questions: “How sustainable the business model of cooperative credit banks is and how they are ESG oriented?”, “What are the possible ways, in the prudential framework, to foster a higher attention to the ESG paradigm, in the bank’s business model?”. The research methodology used analyses of a) the main features of cooperative bank systems and the sustainability of their business model and the conceptual benchmark framework used by EBA in the 2020 survey; b) the case of Iccrea Sustainability Framework. The contribution of our paper is manifold and likely to raise the interest of policymakers. Our argumentations and conclusions are likely to contribute in terms of recognition of the sustainable business model also in the prudential framework in the current COVID-19 economy.

Keywords: Sustainability, ESG Risk, Cooperative Banks, Consolidated Cooperative Network Group

Authors’ individual contribution: Conceptualization – P.P.; Methodology – P.P.; Writing – P.P. and A.B.; Investigation – P.P. and A.B.; Funding – P.P.; Resources – P.P. and A.B.; Supervision – P.P. and A.B.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

Acknowledgements: The authors offer their acknowledgments to GBCI Sustainability Team for their suggestions: Elsa Arras, Elisa Bottoni, Claudia Gonnella, Giuseppe Ingrao, Matteo Pasolini. The paper is approved by the Scientific Committee on Sustainability of Iccrea Banking Group that is composed by Mario Calderini, Professor of Social Innovation, at School of Management, Milan Polytechnic; Paola Ferrara, Sustainability Manager of Confcooperative; Teresa Fiordelisi, Chairwoman of BCC Basilicata and Board member of Iccrea Banca SpA; Giuseppe Gambi (Chairman), Vice Chairman of Banca Ravennate, Imolese, Forlivese and Board member of Iccrea Banca SpA responsible for sustainability; Carmelo Giuffré, CEO of Irritec SpA; Marina Migliorato, Head of Sustainability Stakeholders Engagement, ENEL; Paola Pizzetti, Board Member of Emil Banca; Serena Porcari, CEO of Dynamo Foundation; Pasqualina Porretta, Associate Professor, Faculty of Economics, Sapienza University; Alessandra Smerilli, Professor of Political Economy, Auxilium University; Edoardo Zanchini, Vice Chairman of Legambiente.

JEL Classification: G2, G3, K2

Received: 30.11.2020
Accepted: 22.02.2021
Published online: 24.02.2021

How to cite this paper: Porretta, P., & Benassi, A. (2021). Sustainable vs. not sustainable cooperative banks business model: The case of GBCI and the authority view. Risk Governance and Control: Financial Markets & Institutions, 11(1), 33-48. https://doi.org/10.22495/rgcv11i1p3