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The sustainable business model

Enel’s model of sustainable business sees sustainability and innovation as inextricably linked, a union that creates value for the company and for all our stakeholders and which enables us to seize new opportunities.

Enel integrates sustainability into all aspects of its business in order to develop innovative solutions to reducing our environmental impact, to meeting the needs of local communities and to improving safety for both employees and suppliers. By actively engaging and listening to everyone with whom we work and making a rational use of resources, we promote a synergistic blend of social and economic progress.

Enel’s ability to anticipate industry change as a part of our Strategic Plan and our leadership in innovation and sustainability have been recognized at the 2016 Platts Global Energy Awards, where Enel won the Industry Leader Award - Power.

Framing this entire process are the principles of ethics, transparency, anti-corruption, human rights and safety that have always been a distinctive feature of Enel’s operations and which are a part of policies and standards of conduct that are applicable throughout the Group.

A key aspect of this approach is the implementation of environmental, social and governance (ESG) sustainability indicators throughout the value chain, not only for ex-post assessments, but above all to anticipate decision-making and promote a proactive, not reactive, stance. Enel wants to drive change and anticipate new market opportunities and is aware that it must begin by understanding the context in which it operates.

From business development to plant engineering, construction and day-to-day operation, we have redesigned the way in which we operate in order to create and continue adding shared, inclusive value over the long term. The efficiency and effectiveness of business processes, during both development and operations, depend significantly on the creation of stable, constructive relationships with our various stakeholders as well as on our ability to become a synergistic part of the community, preventing and managing any socioenvironmental impact. In order to react promptly to changes in society, in the needs of our customers and in the energy market, it is becoming increasingly necessary to be open to contributions from the outside. For this reason, Enel has promoted the Open Innovability model, forging a growing number of partnerships throughout the world with local organizations, businesses, universities, international associations and non-governmental organizations.

In 2016, we developed around 900 sustainability projects, with an estimated six million people benefitting from access to electricity, the socio-economic development and support of local communities and internal initiatives to promote sustainable methods of operating.

It is a model that promotes sustainable development and is fully in line with the indications of the United Nations Global Compact, of which Enel has been an active member since 2004, reiterating the importance of increasing the integration of sustainability within the company’s strategic decisionmaking processes. Enel’s CEO has been a member of the United Nations’ Global Compact Board since June 1, 2015.

Enel’s commitment to the United Nations’ Sustainable Development Goals

On September 25, 2015, the Unitde Nations formally adopted the new Sustainable Development Goals (SDGs) 2030 that were officially launched the next day at the Private Sector Forum held in New York City. Through the SDGs, the United Nations called on companies to be creative and innovative in addressing the challenges of sustainable development, such as poverty, gender equality, clean water, clean energy and climate change. The success in achieving the new goals will rely heavily on the policies that will be implemented by all actors involved.

On this occasion, Enel committed to contributing to four of the 17 goals: access to energy, climate change, work and economic growth and education.

More specifically, Enel is committed to the following:

  • SDG 7 - ensuring access to affordable, sustainable and modern energy, including the promotion of energy-efficiency services, the beneficiaries of which will include three million people primarily in Africa, Asia and Latin America by 2020. As of December 2016, 1.2 million beneficiaries had been reached;
  • SDG 4 - supporting education projects for 400,000 people by 2020. As of December 2016, about 300,000 beneficiaries had been reached;
  • SDG 8 - promoting sustained, inclusive and sustainable economic growth and employment for 500,000 people by 2020. As of December 2016, around 1.1 million beneficiaries had been reached, so the target has since been tripled to 1.5 million beneficiaries by 2020;
  • SDG 13 - taking targeted action to achieve decarbonization by 2050. As of December 2016, specific CO2 emissions totaled 395 g/kWheq, with the target of less than 350 gCO2/kWheq by 2020 unchanged.

Non-financial information is coming under increasing scrutiny by investors and the financial markets, who are now focusing on the ability of a company to make sustainable long-term business plans that translate into concrete, measurable actions and better financial performance.

Socially responsible investment funds continued growing in 2016. Enel has 150 socially responsible investors - SRI (up from 132 in 2015), which hold about 8% of all Enel shares in circulation (compared with 7.7% in 2015). This increase is even more evident when considering the increase in the number of Enel shares (following the merger with Enel Green Power) compared with 2015 (up from 9,403 million shares in 2015 to 10,167 million in 2016). In absolute value, shares held by SRI investors increased by 13%.

Priority analysis and definition of sustainability goals

For several years now, Enel has conducted materiality analyses – based on the guidelines of the most widely adopted standards such as the Global Reporting Initiative (GRI) – in order to identify the Group’s intervention priorities, the issues to consider for disclosure and which stakeholder-engagement activities to strengthen. The aim is to map and assess the priority of the issues of interest to stakeholders, integrating them into the Group’s business strategy and priorities for action.

Through this analysis, the main stakeholders of the Group are identified and assessed according to their importance to the Company and to their priorities on the various issues approached in the numerous engagement activities. This information is then crosschecked with the assessments of the issues on which Enel intends to focus its efforts, with the respective priority value.

By observing the two perspectives together, it is possible to identify the issues, which, due to their relevance and priority, are essential to Enel and our stakeholders. Consequently, it is possible to verify the degree of alignment or misalignment between external expectations and internal priorities.

The materiality analysis, which is conducted with increasingly greater detail in terms both of issues and geographical scope, makes it possible to obtain the company and stakeholder priorities for the entire Group and for each country of operations. It is also possible to obtain results with a specific focus such as the matrix for the sole stakeholder category of “financial community”, which is useful for identifying issues to be discussed in the Annual Report in order to provide integrated reporting on performance. In particular, this analysis has pointed to the following priorities: renewable energy, innovation and efficiency in operations, the creation of economic and financial value, climate strategy and health and safety in the workplace.

Based on the material analysis results, the issues to be included in the reports are defined and the specific targets and objectives of the 2017-2019 Strategic Plan are set. Operations and projects regarding various functions and business lines of the Group contribute towards achieving these targets and objectives as detailed in the 2017-2019 Sustainability Plan.
As regards its strategic plan, Enel has identified the following as among the most significant emerging risks:

  • cybersecurity represents one of the levers of our digital transformation plan and we have a strategy to protect our information, our assets and emerging technologies (e.g. Internet of Things - IoT). In this area, a dedicated unit has been created, a new operating framework has been defined to manage the issue on a unified basis with a riskbased strategy and the propagation of security-by-design practices, and training projects have been launched;
  • paradigm change in the world of energy and the transformation of the business model of utilities – new macroeconomic and energy trends, technologies and actors can potentially support and disintermediate the traditional business model of utilities, especially the combination of factors linked to digitization and decentralization and changes in customer needs. Enel’s strategy and “Open Power” vision represents the framework for responding to the challenges of the transition towards the utility of the future.

Management and reporting of non-financial information

Enel undertakes to constantly manage and measure sustainability performance by using and developing mechanisms that allow for an integrated, standardized system of activities and information that are kept constantly up to date based on developments in the scope of operations and relevant standards, while promoting the sharing of best practices and experience.
With a view towards increasing transparency towards our stakeholders, the Group monitors and actively participates in the development of new frontiers in reporting towards integrated communication of performance, both financially and in other areas.

The reporting process involves collecting and calculating specific key performance indicators of economic, environmental and social sustainability in accordance with the ”G4 Sustainability Reporting Guidelines” of the Global Reporting Initiative (GRI) and the supplement dedicated to the Electric Utilities sector (“Electric Utility Sector Disclosures”), as well as with the principles of accountability of the United Nations Global Compact.

Projects, activities, performance and the other main results, including progress made towards the SDGs in line with the SDG Compass, are presented in Enel's Sustainability Report, the completeness and reliability of which are verified
by an accredited external auditing firm, by the Group Control & Risk Committee and by the Corporate Governance & Sustainability Committee. The document is then approved by the Enel SpA Board of Directors before being presented to the shareholders.

In the fourth edition of its report, “Reporting Matters”, the World Business Council for Sustainable Development (WBCSD) dedicated a specific section to methods of SDG reporting in Enel’s Sustainability Report.

Finally, the Group is included in the leading sustainability indexes:

  • Dow Jones Sustainability Index World;
  • FTSE4Good;
  • Carbon Disclosure Project (CDP) - Performance A List;
  • STOXX ESG Leaders;
  • Euronext Vigeo-Eiris;
  • ECPI.