The financial institution in brief:

Bankinter is a Spanish commercial bank founded as an industrial bank in 1965 between Santander Bank and Bank of America.

In 1972, Bankinter first became a publicly quoted company, turning the bank into an independent commercial institution.

Bankinter is recognizes and is concerned about the material environmental risks that faces humanity at present . Its Governance Committee takes these challenges and risks very seriously and is leading the way to raise awareness within the institution in order to change its business model to one based on sustainable economic development.

In this regard, Bankinter is a recognised leader in key areas such as sustainability, corporate social responsibility, innovation and technology use.

An example of this is demonstrated in its corporate strategy 2016–2020, in which the bank commits itself to move towards sustainable development and better environmental management by upholding 10 principles. As part of this approach, the natural capital approach is helping to identify new targets and goals based on material risks and opportunities, and is therefore improving the impacts and rsults of this corporate strategy.

Why use natural capital thinking?

Bankinter places great emphasis on innovation. Thus, integrating natural capital approaches into their innovation progress is part of the DNA of the company. Moreover, according to the last Dow Jones Sustainability Index report, Bankinter succeeded in improving its rating, which is a remarkable achievement for the financial institution. In order to further improve their environmental performance, and their rating in this index, Bankinter is working to gather information about their relevant externalities.

The new DJSI natural capital questions cover the external environmental impacts of Bankinter’s financial activity. For the first time, not only Bankinter but also many other financial institutions were in this new situation. In the case of the Spanish entity and, according to its principles, the management team has shown an enthusiastic interest in implementing a natural capital assessment, based on the Finance Sector Supplement to the Natural Capital Protocol. This decision is due to the fact that they aim to perform a risk analysis on impacts and dependencies from natural capital, and assess the potential environmental risks on their investment portfolio.

Through this assessment, Bankinter wanted to understand the relationships between its investment portfolio and natural capital risks and opportunities, and applying this information to improving or adapting its corporate strategies to increase its score and impact in future index assessments.

What was the approach?

In the context of this natural capital assessment, we based our approach on implementing the Natural Capital Protocol Financial Sector Supplement guide.

The main objective of this assessment was to understand which investment sectors have the greatest impacts and dependencies on natural capital and determine what level of investment would need to be committed in order to reduce or manage the impacts and dependencies identified. Having this critical information about which sector receiving investment, has the greatest impacts and dependencies on natural capital, would allow Bankinter to take better decisions and focus future actions or strategies around avoiding and minimizing environmental risks within its investment portfolio.

Bankinter’s natural capital assessment engaged multiple bank departments (such as sustainability, communications, risk and investment), and collected information and perspectives from each. First, a focus group session was organized between these departments, and involved a networking assessment to understand their skills when identifying environmental risks, the degree of knowledge regarding natural capital, and ability to work collaboratively in the same projects among different areas.

The natural capital assessment was implemented following the Natural Capital Protocol Finance Sector Supplement guidelines. From a corporate approach focused on downstream and direct operations, we develop our own qualitative impacts and dependencies matrix, defining impacts on natural capital, based on peer reviewed research on environmental impacts for each investment portfolio sector.

The final results showed diagrams focusing the attention in the sectors with the greatest impacts and dependencies on natural capital, and the level of investment in each one. This analysis helps identify exposure to the material risks, and to develop future decision-making process with accurate information.

What were the outcomes of the assessment?

We divided our main findings from this assessment into two sections:

1. Focus group: Across departments, we found a high correlation among the leadership bank goals, sustainability, corporate social responsibility, innovation, and use of technology, with a pronounced need to communicate to external stakeholders about progress.

  • Secondly, we found high interactions between departments already determining dependencies and impacts in order to evaluate investment risks. Many departments were involved in these issues, with no centralized process, this often generating misunderstanding among them.
  • As a strength, Bankinter has a great advantage in comparison with other competing financial institutions since the main commitment on sustainability issues comes directly from the Management Committee of the bank, thus there is a great senior management commitment and buy-in to reduce their environmental impacts and risks.

2. Natural capital assessment: it is noteworthy that the sectors with the highest impact and dependency on natural capital are industry, agriculture, and extractive sectors. This specific assessment has shown wholesale trade, transport, and other activities related to construction, and real estate agencies as the sectors with the highest impacts and dependencies on natural capital. There are also the sectors in which Bankinter’s portfolio is investing the most.

  • For this kind of analysis, more detailed information and more time is necessary to develop a comprehensive assessment. For example, the location of investments is crucial in order to adequately assess the context of impacts. In the same way, incorporating the loan period return into the assessment could offer more information on the timescale of risks. This assessment was also done using qualitative valuation, if there was demand from Bankinter decision makers, it could be progressed up to qualitative or monetary forms of value. Definitely more information is needed for an in-depth finance project assessment.
  • Economic figures regarding investment sectors ́potential impacts and dependencies drew the greatest attention from the different departments and stakeholders involved. Potential risks the institution will soon have to address were the most relevant aspect for them.

The Natural Capital Protocol Finance Sector Supplement was very useful to determinate the reason, scope, risks, impacts, and dependencies assessed but there is still a big lack of awareness around the methods to implement this type of assessment and increase or engage the main stakeholders in it. It is necessary to show more clearly the main benefits that this kind of assessment can achieve for future natural capital assessments.

Next steps

We will use natural capital assessments again in the future, and continue to focus on quantitative methodologies.

Thanks to this approach, we can focus future actions on improving our sustainable policies. Assessment findings have qualified us to implement direct actions and decisions in the mentioned sectors with identified higher risks for Bankinter. At present, we have the information we need to develop informed decision-making processes and report to our main stakeholders and groups of interest.

Our future step consists in making a complete review of our corporate strategy implementing these findings and improving our actions consistently with our 2020 goals.

For more information see the Bankinter website.

Read through the other Finance Sector Supplement case studies here.

This case study support the Connecting Finance and Natural Capital project; brought together by the Natural Capital Coalition, the Natural Capital Finance Alliance and the VBDO.