In an environment of constant and rapid change, exposing the energy industry to new risks and offering new opportunities, Enel’s model of sustainable business leverages the synergies among the various business areas and the outside world 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. Understanding the context in which Enel operates and actively listening to everyone with whom we work enable us to create sustainable longterm value, blending economic and social growth. It is a strategic and operational approach founded on the “Open Power” concept of openness, where sustainability and innovation are an essential combination.

Framing this are the principles of ethics, transparency, anti-corruption, human rights and health 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.

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 decision-making processes. Enel’s CEO has been a member of the United Nations’ Global Compact Board since June 1, 2015.

A key aspect of this approach is the adoption of environmental, social and governance (ESG) sustainability indicators throughout the value chain, not only for assessments of results achieved, but above all to drive decisionmaking and develop a proactive stance, in line with the Sustainable Development Goals (SDG) 2030 of the United Nations.

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

On September 25, 2015, the United 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 adopted by all actors involved.

The sustainability of Enel’s strategy is also confirmed by the rapid progress achieved in contributing to attaining the 17 SDGs, with a focus on four in particular:

  • SDG 7 - ensuring access to affordable, reliable, sustainable and modern energy, including the promotion of energyefficiency services, the beneficiaries of which will include three million people primarily in Africa, Asia and South America by 2020. In the 2015-2017 period, 1.7 million beneficiaries had been reached.
  • SDG 4 - supporting projects to ensure inclusive and equitable quality education for 400,000 people by 2020. In the 2015-2017 period, about 600,000 beneficiaries had been reached, prompting us to double the goal to 800,000 beneficiaries by 2020.
  • SDG 8 - promoting sustained, inclusive and sustainable economic growth for 500,000 people by 2020. In the 2015- 2017 period, around 1.5 million beneficiaries had been reached, so the target was doubled again to 3 million beneficiaries by 2020.
  • SDG 13 - taking targeted action to achieve decarbonization by 2050. As of December 2017, specific CO2/sub> emissions totaled 411 g/kWheq and the target has been confirmed at <350gCO2/kWheq.

For the second time, Enel was included in the “Change the World” ranking produced by Fortune magazine, which classifies the world’s 50 leading companies whose operations create a positive social impact. The commitment to decarbonization, the construction of the first geothermal plant in South America (Cerro Pabellón) and the Vehicleto- Grid (V2G) hub in Denmark, which transfers unused power from electric vehicles to the grid, are just some of the activities taken into consideration. Enel is also ranked 19th in Forbes’ classification of the “500 best employers” in the world.

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 2017. Enel has 160 socially responsible investors (up from 150 in 2016), which hold about 8.6% of all Enel shares in circulation (compared with 8% in 2016), equal to 11.3% of the float (10.5% in 2016). In absolute value, shares held by SRI investors increased by 8%.

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 identify 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: new technologies, services and digitization, decarbonization of the energy mix, efficiency in operations, the creation of economic and financial value, 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 2018-2020 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 2018-2020 Sustainability Plan.

As part of its Strategic Plan, Enel has identified the most significant emerging risks:

  • cyber attacks (“cyber risk”): the era of digitization and technological innovation means that organizations are increasingly exposed to cybernetic attacks, which are becoming increasingly numerous and sophisticated, partly reflecting the changes in the context in which they occur. The organizational complexity of the Group and the numerous environments it encompasses (data, people and the industrial world) expose our assets to the risk of attacks. The Enel Group has adopted a model for managing these risks based on a “systemic” vision that integrates the traditional information technology sector, the operational technology field most closely linked to the industrial sector and the Internet of Things associated with the networking of smart “objects”;
  • 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 decrease the intermediation role of the traditional business model of utilities, especially through the combination of factors linked to digitization and decentralization and changes in customer needs. Enel’s strategy and “Open Power” vision represent the framework for responding to the challenges of the transition towards the utility of the future. The pillars of that strategy are the development of new businesses, industrial growth and agility in operations (operational efficiency, organizational simplification, short-term remuneration, active portfolio management), while the central focus on customers and the digital transformation represent the main enabling factors for the strategy.

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.

The Group, in implementation of the new EU (Directive 2014/97/EU) and national legislation (Legislative Decree 254/2016) that has introduced mandatory of non-financial information as from the 2017 financial year for large publicinterest entities, has drafted a “Consolidated non-financial statement” that covers the areas provided for in that decree, accompanying the Group’s Sustainability Report.

The reporting process involves collecting and calculating specific key performance indicators of economic, environmental and social sustainability in accordance with the GRI international standards and the Electric Utilities Sector Disclosures, as well as with the principles of accountability of the United Nations Global Compact. More specifically, as from 2017 the new GRI sustainability reporting standards apply.

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 Control and Risk Committee and by the Corporate Governance and Sustainability Committee. The documents are approved by the Board of Directors of Enel SpA and presented in the Shareholders’ Meeting.

Finally, the Group is included in the leading sustainability indexes, such as the Dow Jones Sustainability Index World, FTSE4Good, the Carbon Disclosure Project (CDP) Climate and the Carbon Disclosure Project (CDP) Water, the STOXX ESG Leaders, the Euronext Vigeo Eiris and the ECPI.