ESG-related KPIs
We have ensured that indicators related to environmental, social and governance objectives have been integrated into the incentivization schemes, both long-term and short-term.
As part of the performance evaluation process in relation to the Group Remuneration Policy, priority and increasing space is devoted to delivering on Environmental, Social and Governance (ESG) objectives. Performance in this area is measured through KPIs applied at the level of individual area of responsibility, having regard also to the reward systems applicable at both the individual and divisional level.
In the Long Term Incentive Plan 2023-26, two quantified and measurable ESG KPIs have been included in the scorecards, with a total weighting of 20% (10% each):
- Climate Change: percentage reduction in the portfolio’s carbon intensity (portfolio decarbonization);
- Diversity & Inclusion: percentage of women in management positions within the Group.
The same ESG indicators, on climate change and D&I issues, have also been included in the objectives of the Employee share ownership and co-investment plan for Group staff over the Strategic Plan 2023-26 time horizon, achievement of which will trigger payment of the premium or “matching” shares.
Financial ESG and sustainability criteria are also included in the annual scorecards (Short-Term Incentives) for the Mediobanca CEO and Group General Manager, the performance in which is to be evaluated over a one-year time horizon. These criteria have a weight of up to 10% of the quantitative evaluation, and refer to the annual ESG objectives set in the Strategic Plan for the Group’s main business lines, with financial KPIs related to, for example, growth in ESG lending volumes (new loans: CIB, Compass Banca and Mediobanca Premier), and deeper penetration rates for Article 8/9 funds in client portfolios, both affluent/premier and private.
The CEO’s and Group General Manager’s annual scorecards also include non-financial ESG and CSR objectives, with an overall weighting of 15% out of the total indicators. For FY 2024-25 the focus is on the following issues: “Our People”, “Our Community” and “Digital Journey”, also structured as projects, and using quantitative as well as qualitative evaluation methods. Evaluation is supported by quantitative indicators, and evidence is fully documented and provided in detail to the Board of Directors to ensure that performance is evaluated correctly.
The short-term incentive mechanism for other senior management (Key Function Holders and Material Risk Takers who head up the main business lines, including the CEOs and General Managers of the largest Group Legal Entities), both individually and as part of the scorecards used to define the divisional bonus pools, and where appropriate to the scope under consideration, the presence of quantitative, measurable ESG indicators with weightings of up to 10%. These ESG KPIs include, but are not limited to:
- Higher volumes of green products (new loans), and deeper penetration of Article 8/9 funds in client portfolios
- Number of green and sustainability bonds issued
- Monitoring and accounting for portfolio assets from an ESG standpoint
- Integrating ESG valuations into the fund investment process.
- Increasing green/ESG-linked bond issues and lending activities
- Screening of suppliers based on ESG criteria
- Electricity target levels from renewable sources.
Non-financial ESG objectives have also been set for these figures, with focus primarily on People Strategy issues (diversity, training, succession planning, work-life balance, staff conditions, etc.), also structured as projects.
The remaining staff are assigned a Group objective (with a weighting of between 5% and 10% of the total) to evaluate the performance delivered in terms of socially responsible behaviour, in line with the Group’s Corporate Social Responsibility policies, and with reference in particular to protection of the environment, to diversity, and to the protection of human and social rights.