In 2016 significant progress was made in realizing the strategy, in both industrial terms and in ESG (Environmental, Social and Governance) performance, and in particular compared to the commitments entered into as part of the Sustainable Development Goals defined by the United Nations at the end of 2015. These concrete facts and data reflect Enel’s daily commitment to protecting the environment, relationships with local communities, the motivation of people, and customer relations.
The economic-financial results show EBITDA from ordinary operations for 2016 of 15.2 billion euro, up for the first time since 2013. The net profit from ordinary operations, on which the dividend is calculated, rose by 12%, reaching 3.2 billion euro compared to 2.9 billion euro in the previous year. The ratio of FFO to Net Debt, which indicates the level of financial solidity, reached 26%, surpassing the objective which the Group had set and up compared to 25% in the previous year. Net debt remained largely stable at 37.6 billion euro, despite the significant increase in investments for growth, which rose by 1.5 billion euro compared to the previous year.
2016 recorded significant progress compared to the commitments entered into as part of the United Nations Sustainable Development Goals (SDGs), which are an integral part of the Strategic Plan:
- SDG 4 (quality of education): 300 thousand beneficiaries, compared to the target for 2020 of 400 thousand beneficiaries;
- SDG 7 (clean and affordable energy): 1.2 million beneficiaries, compared to the target for 2020 of 3 million beneficiaries mainly in Africa, Asia and Latin America;
- SDG 8 (dignity of labor and economic growth): 1.1 million beneficiaries, compared to the new target for 2020 of 1.5 million beneficiaries (initial goal of 500 thousand beneficiaries);
- SDG 13 (combating climate change): ~395 gCO2/kWheq compared to the target for 2020 of <350 gCO2/kWheq and being carbon free in 2050.
Total installed capacity from renewable sources is around 36 GW, of which new installed capacity in 2016 was around 2 GW. The energy produced was 262 TWh, down by 22 TWh compared to 2015, of which around 40% was due to the removal from the business scope at the end of July of Slovenské elektrárne. 46% of production comes from zero- emission sources. In 2016 there was a general lowering of the value of CO2 emissions to stand at 395 g/kWheq and of specific atmospheric emissions: those relating to sulfur dioxide fell by around 23%, specific emissions relating to nitric oxides by around 4% and particulates by around 15% compared to 2015. These values are in line with the objectives set by the Group for 2020.
To facilitate new uses of energy, new ways of managing it and making it increasingly accessible to a growing number of people in a sustainable way, the commitment to innovation was intensified. Within the Group there are around 300 active innovative projects which cover the whole value chain in the various regions and which look to the future in terms of electric transport, the e-home, industry 4.0, microgrids, and storage. In many cases these projects have required the activation of partnerships with other leading players in their own sectors, or the contribution of startups to develop solutions which are still not available on the market. In 2016 an innovation hub was launched in Tel Aviv, one of the cutting edge innovation eco-systems worldwide, followed in March 2017 by another in the Silicon Valley.
As for occupational health and safety, Enel continues with its commitment to increasingly efficient standards and the development of new instruments and means of operating.
The combined indices of the injury frequency rate and the lost day rate for injuries involving employees of Enel and of contractors are falling (LTIFR 0.22 and LDR 8.90), as is the overall number of injuries recorded during the year.
62,080 people work at Enel, of whom 80% are men and 20% women. 2016 was also the year of the climate survey, which envisaged the involvement of all colleagues right from the preliminary stages, in order to identify together the priorities and an “open” question approach so that everyone could propose improvements. In addition, Enel’s commitment continued to increasing dissemination of the principles of diversity and inclusion.
The good results are reflected in the trend in the Enel share price which, in 2016, recorded an increase of around 8% (+12% if the dividends distributed in the year are also considered).
68% of the institutional investors are long-term investors, confirming the appreciation of a business model which is sustainable over time. In particular, the Enel share capital includes 150 Socially Responsible Investors who hold around 8% of the total shares in circulation.
Enel launches its first green bond on the European market
On January 9, 2017 Enel Finance International successfully placed its first green bond for institutional investors on the European market backed by a guarantee issued by Enel SpA. The issue totaled 1,250 million euro and envisages repayment in a single payment falling due on September 16, 2024 and the payment of a fixed-rate coupon of 1%, payable each year in arrears in September, starting from September 2017. The issue price was set at 99.001% and the effective yield on expiry is 1.137%. The green bond has been listed on the market regulated by the Irish stock exchange and on the regulated market of the stock exchange of Luxembourg, and, subsequent to the issue, also on the unregulated market of the Italian stock exchange.
The operation saw take-up for around 3 billion euro, with significant participation by Socially Responsible Investors (“SRIs”) which enabled the Enel Group to further diversify its investor base. The net income from the issue – which was undertaken as part of Enel and Enel Finance International’s Euro Medium Term Notes program (EMTN) – will be used to finance the Enel Group’s eligible green projects which have been identified and/or are to be identified in conformity with the “Green Bond Principles 2016” published by the International Capital Market Association (ICMA).
In particular, by way of example, eligible green projects include:
- development, construction and repowering of power generation plants using renewable sources;
- development of transmission and distribution networks, as well as the activation of smart grids and smart meters in the geographical areas where Enel operates.
The operation is in line with the financial strategy of the Enel Group set out in the Strategic Plan 2017-2019, which envisages refinancing of 12.4 billion euro also through the issue of green bonds as instruments dedicated to the financing of projects that can help achieve the decarbonization of the production mix.
In this regard, the Enel Group prepared and published a “Green Bond Framework” in order to assist the transparency and quality of the green bonds issued. An external advisor, Vigeo Eiris, issued the “second party opinion” which confirmed the adherence of the Enel green bonds to the key principles and evaluated as “reasonable”3 the level of assurance on sustainability.
In particular Enel’s ESG (Environmental, Social and Governance) performance was considered “advanced”4, the framework used for the issue of the green bonds as “robust” and the related means of reporting the commitments defined in the framework as “robust”.
The key documents are available on the Enel website (https://www.enel.com/en/investors/Main-programs/green-bond.html).
The operation was led by a group of banks, involving Banca IMI, BofA Merrill Lynch, Crédit Agricole CIB, Citi, Deutsche Bank, HSBC, J.P. Morgan, Mizuho Securities, Natixis, SMBC Nikko, and UniCredit Bank.
In addition, Enel is among the first companies in the world which committed to setting up a “Green Bond Committee” with the aim of selecting projects that can be financed with the funds collected through the issue of bonds and monitoring the progress of the projects themselves.
3 Vigeo Eiris evaluation scale – Level of Assurance: Reasonable, Moderate, Weak.
4 Vigeo Eiris evaluation scale – Performance: Advanced, Robust, Moderate, Weak.