Fiona Melrose started her career at the Bank of England in Banking Supervision in 1992.
She moved into European bank equity research at NatWest Markets (became Bankers Trust and then Deutsche Bank) where she worked from 1994-1999. She moved to Morgan Stanley in 2000 and then Lehman for three years until 2003 where she covered German, Nordic and Swiss banks.She then joined Execution Noble, where she built the European banks research product, and was also co-head of equity research until 2011. Fiona then led the development of a new bank equity research team and covered Global Investment and Private Banks at RBC Capital Markets from 2011-2017. Fiona joined UBS in 2017 as Global Head of Strategy for the Investment Bank.In 2019 she moved to Grupo Santander in Strategy & Corporate Development. More recently she has worked at Bankers without Boundaries, a social enterprise that mobilises private capital to invest in projects that benefit the environment, nature and social good.
In May 2021, Fiona is appointed Head of Group Strategy & Optimisation. In February 2022, Fiona is appointed Head of Strategy and ESG.
EUROPEAN BUSINESS: Fiona, please tell us how UniCredit develops a successful ESG Strategy? How do you partner with your management teams to build ESG into daily operations?
Fiona Melrose: ESG is a key pillar of our strategic plan, UniCredit Unlocked, which was presented to the market in December 2021. Our goal is to be the bank for Europe’s future and leading by example with ESG embedded throughout our business as a collective mindset that we all take responsibility for, is core to helping us reach that ambition.
Our purpose of empowering communities to progress, and our commitment to supporting our clients through a fair and just transition embed ESG in all that we do. To do this successfully, our ESG strategy must be robust and like all business strategies, it comes with KPIs and targets, subject to ongoing review and measurement.
As an example, we are targeting €150 billion in new cumulative ESG volumes across 2022-2024. This covers environmental lending, ESG investment products, sustainable bonds and social lending. With regards to the social element, we have significantly increased our ambition, setting a growth target of €10 billion in volume over three years, up from a previous €1 billion target.
Lastly, as you rightly point out, ensuring the full involvement of the business in the implementation of our ESG strategy is extremely important for it to be meaningful and impactful. UniCredit is one of few banks where the ESG function reports directly to the CEO. We’re also one of a few to have a dedicated ESG Board Committee. All of this goes to concretely show the strategic importance of ESG to our Group and how we’re ensuring effective and consistent Group level steering of the ESG strategy across the whole organisation.
EUROPEAN BUSINESS: In terms of ESG education, what are you doing to upskill your teams and how, why that’s important given how fast-evolving ESG is as a discipline?
Fiona Melrose: Education and training are fundamental to the culture of our Group. These are key levers for unlocking future opportunities for our bank, our clients and our communities.
On ESG education specifically, we are constantly working to increase the general awareness and knowledge of ESG across the Group with dedicated learning resources and training programmes for all colleagues. This includes targeted courses for specific roles, which should reach c. 600 people between 2022 and the first half of 2023, in addition to the c. 40 000 colleagues already trained on ESG fundamentals in 2021-22.
The more targeted programmes for specific roles that are increasingly engaged on ESG topics in their daily work have been developed together with experts from the POLIMI Graduate School of Management and SDA Bocconi. Furthermore, we’re also providing dedicated ESG programmes for our middle management, including in-person workshops, webinars and online resources. These activities are mirrored locally as well, in all our countries, adapted to their specific market conditions and relevant regulation.
ESG education and training will continue to be a priority for us both, internally and externally, as we keep playing our part in driving the transition towards a fairer and more sustainable future. In addition to training our staff on these topics, in 2022 we reached a total of 165k beneficiaries externally (by end of 3Q) through our financial education, and financial and ESG awareness initiatives.
Furthermore, UniCredit announced a foundational pan-European partnership with Teach For All across seven of our markets, going beyond financial support, and also sharing our ESG expertise to help train teachers that, through the Teach For All network, teach in schools in disadvantaged areas, ensuring equal access to quality education for all children.
EUROPEAN BUSINESS: Can you share your stories of engagement with the communities; why is climate education important also to our communities and specifically the youth?
Fiona Melrose: There is a fantastic example called the RenewAcad project, where our local bank in Romania supported one of the largest professional retraining programmes for miners and former miners in the Jiu Valley and adjacent areas, helping to turn them into professionals of wind energy and electricity distribution.
The aim was to increase participation in continuing education programmes for 700 employees from less developed regions, particularly those with lower qualifications and people over the age of 40. These projects now ensure not only the maintenance of 3000 MW wind power installations in Romania, but also abroad, developing a new concept and term – “wind navigators”.
On climate education specifically – it is increasingly important because we must help prepare our youth to pioneer the necessary solutions to the global climate crisis, to be resilient and to lead the transformation to a more sustainable world. Climate education will be key to achieving this, ensuring we equip the next generation of European leaders with everything they need to collectively address the growing challenges from climate change.
As already mentioned, this is a key area where we will collaborate with Teach For All to support their teachers. Furthermore, the UniCredit Foundation was relaunched in 2022 with a clear purpose to unlock the potential of Europe’s next generation by providing them with equal education opportunities. The Foundation is another lever allowing us to build better futures for our youth and their communities across Europe.
EUROPEAN BUSINESS: What are some of the latest ESG trends of the financial industry that you’ve been observing across markets that you’d like to highlight? How ESG can unlock the business potential?
Fiona Melrose: I would mention three key themes for 2023: Net Zero, biodiversity and the growing importance of the social element of ESG.
Net Zero is an important commitment, which UniCredit undertook in 2021 to accelerate our transition, that of our clients and of Europe as a whole in a fair and responsible way. Net Zero is also a key topic for the financial industry overall, requiring a consistent and pragmatic approach given the complex macroeconomic and geopolitical environment faced by all stakeholders involved in the sector.
In addition to Net Zero, there is increasing attention on biodiversity as part of the wider debate on how to ensure a sustainable future for the next generations. At the end of 2022, at COP15, UniCredit became the first Italian member to join the Finance for Biodiversity Pledge. The signatories of this Pledge are calling for and committing to take ambitious action on biodiversity to reverse nature loss in this decade through collaboration, engagement with counterparts and assessment of own biodiversity impact, setting relevant targets and reporting on this by the end of 2024.
Lastly, in the post-pandemic context and considering the war in Ukraine that is resulting in a humanitarian crisis across Europe, the social part of ESG is more important than ever. Banks have an important social function which goes far beyond lending. We have a huge responsibility in supporting clients in their own business transformation and guiding financing in the right direction, and this needs to be done in a way that is concrete, measurable and impactful.
Our role is to assist our clients and communities in making meaningful progress towards a more sustainable, inclusive and equitable society in the long term. And there is tangible business value to be unlocked across all these aspects, ensuring our bank evolves with the rapidly changing operating environment and fully in line with the needs of all our stakeholders.
EUROPEAN BUSINESS: In Europe, we are facing challenges (energy crises, inflation, or the war in Ukraine), what’s the potential impact of the challenges on ESG? How can we make a balance between the short-term business needs and long-term ESG goals?
Fiona Melrose: The unfolding war in Europe, the cost-of living crisis, the after-effects of the pandemic and the continuing climate emergency are impacting individuals across the world and will continue to do so. But in challenge there is possibility.
The war has shown us the urgency of resolving the question of energy security. It should give us greater motivation and focus in our work towards a greener future. We recognise that the longer-term global threat of climate change remains unchanged and ever more pressing, and we remain committed to supporting our clients through challenges they face in this transition.
It is equally more important than ever that we see the possibilities in this transition. And it will be imperative that we continue to refine our ability to understand our clients’ financed emissions and work closely with them on an orderly and gradual path of decarbonisation.
Our ESG Strategy is designed with the purpose to help us see past the immediate bottom line and short-term financial goals. In addition, UniCredit’s unparalleled positioning across Europe will enable us to play a critical role in our whole continent’s transition to a more sustainable future.
EUROPEAN BUSINESS: Fiona, you are a very senior financial leader with decades of experience, please tell us more about yourself, your current role in UniCredit, your personal experience and the lessons you learnt. And what’s the best piece of advice you can give to the young financial practitioners that you wish someone had told you earlier in your career?
Fiona Melrose: I started my career at the Bank of England in banking supervision, then spent a large part of my career in equity research where I covered the banking sector both in Europe and also the US. I then moved into strategy roles at banks joining UBS in 2017 as Global Head of Strategy for the Investment Bank. Prior to joining UniCredit, I worked at Bankers without Boundaries with a focus on ESG.
I’ve been in my current role at UniCredit since May 2021. As mentioned, combining Strategy and ESG is one way to ensure that ESG is indeed fully embedded in our corporate strategy and day to day business.
In terms of advice to my younger self it would be to relish change more and realise that change brings significant opportunities with it in terms of forging new relationships and networks. We are working in an industry that is undergoing significant change and transformation and embracing that is key.