Hedging solutions
By supporting corporates and institutional clients through a wide range of solutions to manage financial risks, we also offer hedging products and strategies which include Environmental Social Governance features.
Our commitment to support a more sustainable economy and continue expanding our offering in this regard allows us to be a partner not only in providing financing but also in managing the market risks to which our clients' businesses are exposed.
Intesa Sanpaolo’s expertise in risk management provides the opportunity to achieve a range of bespoke hedging solutions underlying several asset classes, even connected with ESG goals.
The structure
As an ever-developing market, hedging solutions linked to sustainability performance are now considered valuable instruments: in recent years, we have structured hedging strategies that incorporate certain performance indicators and predefined sustainability targets into conventional and standardized instruments.
We have been among the first financial partners in Europe to offer ESG-asymmetric derivatives for interest rate risk management, consisting of a rewarding mechanism lowering the cost for the client in case some pre-agreed sustainability performance targets are achieved by the client at certain checkpoints.
As a result of an increased commitment to ESG topics, hedging strategies further stimulate the client's ESG performance through penalty mechanisms if targets are not met: the client thus should send a stronger and more meaningful signal of its commitment to sustainability.
The ESG impact
Any reward mechanisms linked to ESG improvement targets generate a cost/benefit trade-off for the client. The primary goal is not the economic convenience, but the incentive of positive ESG performance: the demand from market players for such instruments is continuously increasing, as they allow to keep sustainable development at the core of their activity and to incentivize their ESG performance, incorporating sustainability targets also in derivative financial instruments and thus demonstrating the variety of innovative functions adopted as an integrative part of their sustainability strategy. Among the most relevant targets, those towards markets and investors: the client applies the concept of sustainable development to finance, with the aim of placing ESG commitments at the core of its business and investment decisions, thus being attractive to investors interested in its debt or equity.
Securitisation
As we are recognized as one of the main players in Italy in the structuring, financing and placing of securitisation and asset-based financing transactions, we have further expanded our ESG offering to this asset class, thus offering greater support and incentive to the sustainable business model of client companies.
Securitisations with ESG characteristics, with particular reference to deals that optimize working capital through disinvestment of trade receivables, envisage mechanisms of reduction/increase of pricing (intended as spread) considering certain targets on ESG parameters. These solutions make it possible, among other things, to link the sources of financing of working capital to indicators relating to the sustainable development of the originator company.
