This article presents the innovative story of the “Social Evaluator” figure used by Banca Etica and is part of a series of research insights related to the “IMmPACT” research project led by Professor Paolo Taticchi, OMRI at UCL School of Management. IMmPACT is a 3-year research programme focused on measuring and managing social impact to support corporates and impact investors’ decision-making. This insight was prepared by Chiara Andreoli, a Visiting Research Fellow at UCL School of Management.
Over the years, engaging with stakeholders has increasingly become a key factor for an organisation’s success. Especially in ethical finance, financial institutions progressively understand the importance of inclusion in the decision-making of individuals or groups (e.g., employees, customers, shareholders, suppliers, government agencies, and community) with a stake in a particular project or investment. Stakeholder engagement has proven its powerful capability to increase collaboration and improve stakeholder relationships. If organisations succeed in building an effective stakeholder engagement strategy, they are better off understanding the stakeholders´ needs and gathering feedback from them. This mechanism strengthens trust, improves decision-making, and leads to shared benefits.
Beyond the standard methodologies to engage stakeholders (e.g., surveys, individual interviews, focus groups, social media, public events), Banca Etica launched an innovative strategy since its foundation in 1999, based on the idea of engaging with stakeholders through the figure of the “social evaluator”.
About Banca Etica
Banca Etica is a cooperative bank that operates in Italy and Spain. It was established thanks to the commitment of several individuals and organisations who joined forces to create a credit institution based on Ethical Finance principles: transparency, participation, sobriety, efficiency and attention to the non-economic consequences of economic actions.
Its democratic management and ethical approach are ensured by the fact that its members freely participate according to the “one head, one vote” principle: all shareholders have the same right to vote in the General Assembly, irrespective of the number of shares they own. Thanks to the savings accumulated, Banca Etica funds projects aimed at welfare, social economy, environmental protection, innovation, international cooperation and culture. This information is verifiable: Banca Etica is the only bank in Italy that publishes all its loans on its website.
Social evaluators at Banca Etica
“Everybody speaks about stakeholder engagement when dealing with ethical finance”, remarked Franco, one of the veterans in the social evaluators’ group, “but only a few organisations really walk the talk”.
As Tommaso Rondinella, Head of the Socio-environmental assessment team at Banca Etica, explains:
“At Banca Etica, we want to promote an ethical finance culture, and we established an active participation of ninety volunteer members in Italy and Spain, the so-called “social evaluators”. They ensure the proper development of local relations and help us to evaluate the socio-environmental impact of companies that request loans. In addition, we fund projects aimed at welfare, social economy, environmental protection, innovation, international cooperation, and culture.”
To gain a deeper understanding of this role and initiative, Andrea Abbate, a member of the Socio-environmental assessment team of Banca Etica, delved into the difference between the impact assessment carried out by Banca Etica and other banks. Andrea explained that the tool for assessing the impact of organisations applying for a loan from Banca Etica is the Socio-Environmental Assessment (VSA), based on a Socio-Environmental Questionnaire (QSA). The QSA is made up of four sections: areas of Internal Value, indicators, organisational impact, and loan impact. One of the unique characteristics of the socio-environmental assessment is the involvement of the social evaluators, who are tasked with verifying the quantitative data and, in parallel, validating the actions carried out by combining quantitative and qualitative data. However, quantitative data alone are not enough to grasp the complexity of the phenomena analysed, so the social evaluator’s qualitative contribution remains fundamental.
To help explain the concept, a social evaluator since 2010 offered the following metaphor:
“Think about DNA. One helix is Banca Etica, the other represents the clients. We are the bridge between them, we are at the heart of the bank.”
To become a Social Evaluator, it is necessary to be a member of Banca Etica for at least one year and be an active member in the territorial jurisdiction of the members. Moreover, to be successful in this role, relational and social skills are pivotal. Therefore, it plays a fundamental supplementary role to traditional financial valuation. Another social evaluator underscored this point with the following remark:
“The reasons are simple. First, the interview with the management board, combined with the visit to the reality to be financed, reveals information about organisational coherence and integrity that cannot be found in financial documents. It would be like choosing a person for a job based only on their CV. The second reason is indirect and can be found in a sort of natural self-selection of the reality to be financed. In other words, the request to complete a questionnaire and the complexity of the credit process that follows discourage the realities which are approaching Banca Etica solely to capitalise on its social reputation.”
Alongside Banca Etica employees, social evaluators can attract newcomers by stressing the other side of their role:
“I believe that being Banca Etica’s social evaluators means covering a crucial and specific role for this new approach to banking. Sheerly by being volunteers and being able to personally know the people that request a loan is a unique characteristic of our function.”
Going beyond the traditional way of banking, the involvement of the Social Evaluators represents a unique approach to stakeholder engagement by Banca Etica. By letting the voices of these stakeholders be heard in the bank’s decision-making process, the measurement and management of social and environmental impact become more democratic. Moreover, as has been emphasised, the approach has many benefits. Not least of all, compared to traditional banking, Banca Etica’s approach places a greater emphasis on the needs of clients and final beneficiaries of the loans (e.g., communities where the companies operate).
Some other banks, faced with such an overwhelming willingness to engage with more stakeholders, might replicate the Banca Etica model. Creating a critical mass that follows the same principles would undoubtedly contribute to making finance more ethical and more inclusive.