This is a CTP of initiative: FEBEA/Banca Popolare Etica (Italy)
The critical turning point describes the process of constitution of the credit cooperative Banca Popolare Etica which becomes reality on the 8th of March 1999, when the initiative opened its first office in the city of Padova (placed in the North of Italy). According to the Banca Popolare Etica website, the initiative behind the creation of this bank emerged from a group of community-based initiatives –including associations, NGOs and cooperatives- which wanted “to create a bank that provided funding to projects with an exclusively social aim”.
In 1995, they created a cooperative to manage the establishment of the bank and started a nationwide campaign to raise the minimum social capital -required by the Bank of Italy- to obtain the legal authorisation to start its financial activity. In only 3 years, the pioneers of the Banca Popolare Etica model were able to gather thousands of associates -and more than seven million euros capital- who joined the cooperative “driven by the common desire for a more transparent and responsible management of financial resources”. Most of them were volunteers and activists from both social and solidarity economy institutions: cooperatives, social enterprises and, in general, people characterized by a strong social and solidarity orientation.
The respondent describes this turning point as "the step from the associative level to the corporate level”. These pioneering initiatives do not only shared a set of common values but also shared the awareness that one cannot be alternative to a certain system if the intended behaviors are not supported by means, instruments and services:
The idea was creating an “alternative bank”, a bank that could combine a social function with the requirement to facilitate access to credit for non-profit or social enterprises, realities rarely addressed by the traditional banking system
Besides, BPE aims to educate citizenship, enhancing customer’s awareness about their saving's destination, and facilitating borrowers “to develop their management and entrepreneurial abilities”.
The step ahead taken consisted in progressing from being an association to becoming a company. In the first place we would speak of people working for an association and later on, of having the responsibility of carrying on economic and financial activities. It was not very easy this ... to change from volunteering one day to being entrepreneurs the next
Banca Popolare Etica understands this event as a critical turning point due to the fact that:
This was the first time that a banking institution, with the purpose of operating exclusively in sustainable and alternative finance, has filed a request and obtained such an authorisation
Besides, the interviewee highlights a change in the dimension of traditional social-oriented projects. The constitution of Banca Popolare Etica involves a maturity process in which critical economy paradigms could be implemented and put into practice:
It was a very important critical moment because, for the first time, we saw the possibility of changing, of developing a different, alternative business culture. I do not know if ... before, in Italy, as you can say ... there was a cultural problem you would only talk of alternatives, without doing anything. Then we saw the possibility of developing an ethical banking tool to build an alternative economy model that needed a financial tool
An extended number of actors have listed by the interviewee when asked by the co-producers of this critical turning point. First, the initiative was created in 1999 by “a big coalition of the major Italian social organizations” who wanted to create a common place where conscious savers meet socio-economic initiatives “inspired by the values of sustainable social and human development” [1].
Among these social-oriented initiatives, the interviewee highlights the role of the MAGs cooperative societies, which represented the first experience of ethically oriented finance in Italy. MAGs were self-management mutual associations which traditionally raised savings among their members to support "socially oriented projects". These mutual associations were very committed to local investment and had been working, since 1978, financing social solidarity projects as well as environment and ecology initiatives or cultural activities.
However, in 1990s the MAGs were forced they the Bank of Italy to review their organization, as a consequence of new legal rules. These changes in the social context have been pointed out as one of the main reasons to constitute the credit cooperative. In order to create such a bank, these MAGs and voluntary organizations where involved:
“Pushed by some new legal rules in the 1990s, some of the organisations involved in ethically oriented finance initiated a fundraising campaign in December 1998, in order to obtain a banking license. This was the first time that a banking institution, with the purpose of operating exclusively in sustainable and alternative finance, filed a request and obtained such an authorization in Italy (BPE, 2012[2]).
The respondent defines this process as an unique experience which was succeeded in gathering thousands of activists in a social innovative project with national dimension. However, the decade of 90s was the perfect time to start a credit cooperative. There was an eagerness to transform the economy in Italian society, a culture of trying to change things or have a new economic model:
In Italy the 80’s and 90’s were very important. There was a very strong climate of social transformation. It was not like now. The classical places for social aggregation were somehow in crisis. The unions, the parties and the Church were in crisis, but there was movement of people who wanted to transform society. We used to speak of the third sector, the new societal actor, right?
An important sector of Italian society volunteered in different social initiatives, such as Fair Trade or ecological movements. This also connects to strong attention to democratic processes of decision and participation, including the financial system. Activists perceived that volunteering work was insufficient to reach the goals pursued by their organizations and new economic alternatives needed to be born:
It was the first time that people working in these voluntary organizations thought of transforming society using economic tools. Before it, the only thing done was cultural work, you understand? In those years it was decided to take action. There was also a financial problem. We could not develop a fair trade activity without financial tools. Thus, we decided to work on the development of a financial tool and we created SETEM-MAG. And MAG was constituted.
Note:
Founding member organizations of Banca Popolare Etica were: Acli, Agesci, Arci, Associazione Botteghe Terzo Mondo, Aiab - Associazione Italiana Agricoltura Biologica, Cgm - Consorzio Cooperative Sociali, Cooperative Oltremare, Ctm - Cooperazione Terzo Mondo, Consorzio Ctm-Mag, Emmaus Italia, Europe Conservation, Fiba-Cisl, Gruppo Abele, Janus, Mag 2 Finance Milano, Mag 4 Piemonte, Mag servizi Verona, Mag Venezia, Mani Tese, Overseas, Uisp, Ust-Cisl Brianza.
References:
[1] Source: Banca Popolare Etica (2000): La Finanza Etica in Italia. Come e perché promuoverla.(Pp 42-46).
[2] Source: http://www.gabv.org/members/banca-popolare-etica
The respondent describes a number of related events that occurred before the Critical Turning Point but which explain the persuasive process started by several initiatives of gathering partners and collecting funds to create the first valued-based credit cooperative in Italy. The first even happened in December 1994 “when the entire MAG movement and 21 non profit-making organisations founded "L'Associazione Verso la Banca Etica" (literally: The Association Towards Banca Etica). “
We are talking about 1995. 20 fair trade organisations joined first, people who worked in social initiatives, local economy, international cooperation, the environmental movement, right? There were 20 organizations that decided to found a bank. In 95 they founded the cooperative and from 95 to May 98 more than 10,000 people and organizations joined and we collected the necessary capital to constitute the bank. These were three years of intense work all over Italy ... The cooperative was called "Cooperative towards the ethical bank". In three years we reached the challenge but were three years of ... reflection and debate on the challenges of an Italian ethical bank
In June 1995, the “Association Towards Banca Etica” was reorganised into a co-operative company, with the purpose of gathering 6,5 million Euro, the necessary amount to incorporate a popular bank according to Italian law. Finaly, in December 1998, the Italian Central Bank authorised Banca Popolare Etica to start operating as a bank and thus to begin its financing activity.
A last related event that the interviewee mentions in this section is the creation of the asset management company “Etica Sgr” which, “since 2003 is developing, promoting and managing exclusively socially responsible investments" with the goal of “representing ethical values among the financial markets, making financial players aware of SRI and CSR values”, as states its institutional Website [1]. The interviewee speaks about the creation of this society as another critical point in the initiative´s timeline:
It was more than 3 years before this investment society project materialised. In this case it was preceded by a very tough debate because people did not understand it ... why to do so, why to invest the money…. We talked about giving credits anyway, not about making investments. But little by little this challenge was achieved because now we have a company that allows us to reach people and organizations that are a little far from the project
Etica Sgr is an investment society founded by BPE in 2000 and represents a step forward in the institutionalization of the initiative. The event was preceded by an intense process of internal discussion on the aims and goals of this new society:
We are talking about year 1999, 2000 ... in addition to the cultural challenges, it was important for us to support the development of the solidarity economy, social enterprises, and the local economy. This was the bank's top priority. And with ETICA SRC, the investment society, the challenge was to reach other people who are a little far from the solidarity economy, people who believed in the responsible management of money. But they were not involved in solidarity economy projects. People who are a little further away but through the ETICA SIRC project approached the ethical banking project. I believe this was the real challenge
References:
[1] Source: Website: https://www.eticasgr.it/en/chi-siamo/profilo-istituzionale
Being asked about contestation, the interviewee does not remember any struggle or discussion regarding the CTP. Banca Popolare Etica represents the first attempt to create a community-based credit cooperative and gathered twenty national organizations which represented the entire Italian third sector. He affirms that Italian society was very positive regarding this project.
I do not remember any particular conflict. No, I do not remember. I believe that society, a very important of the Italian society was ready. Many people reflected on the use of money and then when talked about launching one ethical bank, many people came to the bank. But I think it's important to say that rather than organizations, there were people, who joined the bank
Indeed, in only three years, they were able to collect more than 7 million euros in social capital. For this, pioneers had to deal with existing bias and preconceptions, among several entities that were invited to build the cooperative. The first obstacle was the comprehension of the concept of social capital, this was a cause of intense debate among the promoters:
Rather than an internal opposition there was a very long and very deep internal debate. Three years to understand the need to collect capital and having a real tool. Not an association doing some ethical banking activities but a real bank that could change things... this was the most difficult step.”
"When we started, we had a problem of capital. In those years, talking about social capital was considered neo-liberal in Italy. One could not talk about social capital in an association or an NGO because only the word, social capital was anathema ... but we had a need for social capital to develop this project, right? Well, that was the first problem. The one of passing from having a sociocultural responsibility to a corporate or economic responsibility
Internal discussions were overcome by the strong desire of creating an innovative project. As well as the third sector organizations, many committed people demanded an autonomous finance resource that guarantees the activity of the alternative and counter movements. As the interviewee remarks in the following quotation, people were confident (that) they would succeed and reliance on the goodness and ability of promoters:
I think there was a need; it could be said that the Italian society was ready for a project of this type. Many people reflected on the correct use of money. Many people thought that their savings, that their money, that the where their savings will be held, had to be consistent with their principles, with their values. It was not very difficult to gather enough people and collect the social capital. I believe that there was a part of the Italian society which was ready for this project. I believe that we could not do the same now.
In terms of anticipation, it is clear that this critical turning point was expected by all the pioneers and activist that contributed to the succeeded of the initiative, collecting savings and engaging new members to the social innovation. Besides, pioneers of Banca Popolare Etica have defined the credit cooperative as a “great social laboratory” in which to combine solidarity with the economy, ethics with finance, responsibility with political action, etc.
Pioneers were experimenting with new ways of doing, relating and framing challenging the financial system, but they were confident that the project would work well once they were authorised by the Bank of Italy to start the financial activity. They also counted on the long-term experience of MAGs mutual associations which have been operating in Italy since the 70s. The members of Banca Popolare Etica share the opinion that the cooperative represents “one of the first and most significant experiences of solidarity economy ever developed in Italy”. In fact, according to the interviewee:
“It is not a coincidence that the first organizations that gave life to the so-called cooperative "towards Ethical Banking" were those of fair trade and solidarity, social and international cooperation, alternative finance; in particular those who had worked to combine ecology and economic activities
Indeed, pioneers were able to anticipate the existing social demand on community-based financial institutions able to manage savings raised from private citizens, non-profit organisations and even market institutions and invest them in social and economic projects “operating in full respect of human dignity and the environment”.
The stage was set for it ... It’s not that one morning someone woke up and said:- well, I'll start the ethical bank. - It was all ready for the first person to raise his hand could say: -Well, let’s all make an ethical bank too. Yes, all people.- Because in three years we gathered more than 10,000 people ... more than 1.000 organizations which contributed with capital. I think there was a 7 million euros capital. It's amazing! ...You have to understand that there was no bank, there were no headquarters. There was an idea and people believed this idea and trusted us with their money
Being asked about lessons and learning from this CTP, the interviewees shared some personal insights regarding the experience of starting a social initiative from the very beginning. First lesson is that any innovative project is possible if it counts on the commitment of like-minded others:
“I would say, and I am talking on a personal level, that what it is proven is that if you have a dream, and this dream is based on a deep sense and you can share it with others, everything is possible. And I think it's important. For me it was important because there is no theory without practice. So when you talk, you have to do things too, right? I cannot spend my whole life talking about what is not fair. No, I have to think that what I am thinking can be implemented. This was our dream and then reality for us.
His long-term experience permitted him to be positive and optimistic about the future transformation of the society in a positive way:
30 years ago I would never have believed the possibility of starting an ethical bank. Now it is possible. That's why I say that if we are to think about how the new economy would be in 10 years’ time; in 15 years ... I think many things can be changed, right? But the collective level is very important. You have to share ideas with people, right? If I can share my dream with others, the bigger dream the more resources I will have to develop it. This is what I can say.
Thinking about changing the world can be a little presumptuous. The commitment to change the world, day after day is going to give meaning to my life. This is what moves people. I remember the slogan of MAG which says: Caravans, the ones that cross the desert do not move if they do not have a mirage. After almost 30 years this slogan, we can say it was true for us.”
However, the interviewee also reflects on the contextual conditions that might –or might not- facilitate social transformation. Hence, being asked about if current social context would be favorable as well to create Banca Popolare Etica, he is not very confident about this. Despite the economic crisis, what really matters is the cultural context. He highlights the lack of values which characterize our western societies:
“No, not right now. This is a very difficult time, with the crisis, which rather than a financial crisis is a social and ethical crisis as well. It is not an economic issue; it is a matter of values, of which model of society we want ... of which model of society we are living in right now, right? Then there is also the economic financial crisis in Spain, as in Italy. The situation is very hard.”
“In those days there was a very strong sense of changing society. So the bank constitution I think it was almost a natural thing. Because if you talk about economics there has to be a financial tool. And the development of fair trade was also possible through the development of an alternative financial instrument.”
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