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Letter to stakeholders

Enel’s business model considers sustainability and innovation as an inseparable pairing, which creates value for the Company and for all its stakeholders and enables new opportunities to be taken. Sustainability is an integral part of our way of doing business, and drives us to constantly seek out new solutions to reduce the environmental impact of our activities, to grow together with the communities of which we are part, to increase the safety of our colleagues and our suppliers. Listening to and actively involving all stakeholders, together with rational use of resources, enable the promotion of synergy between economic and social progress. The way we operate is based on principles of ethics, transparency, inclusiveness, respect of human rights and utmost attention to safety.

We are currently living through significant and sudden changes to the global outlook, characterized by the technological and digital revolution, by growth in the population and in its expectations, by climate change and by pressure on the use of natural resources. This rapidly evolving scenario offers the energy sector new challenges and opportunities. In a world whose energy needs are growing, we are witnessing ever greater penetration of electric vehicles and the gradual replacement of fossil fuel based energy usage. Global energy consumption is increasing, not only in percentage terms, but also in absolute terms, while over 1 billion people still have no access to energy, or have it to only a limited extent. Renewables are the energy source seeing the greatest growth, while the other sources remain constant or are falling slightly. Given this significant penetration by renewables, electricity grids and their digitalization, in both transmission and distribution, are becoming increasingly important, attracting various industrial sectors and creating new opportunities and competitive challenges.
So it is increasingly important not only to be aware of and 6 Sustainability Report 2016 G4-1 G4-2 anticipate technological developments, but also what society around us wants, thus ensuring that communities understand and share the strategy and investments which a large group such as Enel can provide. This is one of the reasons why, in our organization, sustainability and innovation go hand in hand in integrated fashion, leading the ongoing energy transition. Enel’s ability to anticipate changes in the sector in its Strategic Plan and its leadership in innovation and sustainability were recognized with the Platts 2016 prize in the “Industry Leadership Award - Power” category.
An essential contribution to defining a new economic, social and environmental model is connected to the approval by the United Nations of the Global Agenda for sustainable development and the related goals (17 goals and 169 targets), to be achieved by 2030. Enel has made a formal commitment in regard to 4 of the 17 goals: (i) ensure access to clean and affordable energy (SDG 7), (ii) support educational projects (SDG 4), (iii) promote employment and inclusive economic growth (SDG 8), (iv) take action for carbon free energy by 2050 (SDG 13). Enel was one of the first companies in the world to integrate the United Nations Sustainable Development Goals (SDGs) into the processes of defining strategies and reporting.
This is because we are aware that the contribution of our business is not only connected to economic results, but also, and increasingly, to our ability to generate solutions and positive impacts on long-term economic and social growth in the communities with which we interact. And our investors are convinced of this too. In 2016, 68% of institutional investors were long-term investors, confirming Enel’s commitment to adopting a business model which is sustainable over time. In particular, Enel’s share capital includes 150 Socially Responsible Investors (SRIs), who hold around 8% of total shares outstanding. In absolute terms, the shares held by SRIs increased by 13% compared to the previous year. This increase is even more significant if we consider the greater number of shares making up Enel’s share capital compared to 2015, following the completion of the merger of Enel Green Power into Enel.

2016 was a year characterized by several important strategic decisions and by the achievement of significant goals. In 2016 the first stage of corporate reorganization in Latin America was completed, while the process of simplification at the level of each individual country in the region continues. The integration of the renewables activities within the Group was also completed, with the convergence of the whole hydroelectric sector into the “Renewable Energies” Global Business Line. The project was also started to build the ultra-broad band network infrastructure, in order to take up the new opportunities to create value which are available to those who can offer competitive, modern infrastructure for interconnectivity.
In 2016 the project continued to reconvert 23 thermoelectric power plants in Italy, “Futur-e”, with the launch of 5 new design competitions for their redevelopment. This is a “circular economy” project which shows in concrete terms our ability to look forward with vision and a proactive approach to the future of our Company, and which, with its call for ideas, once again confirms the importance and the need for an “Open Power” approach to address complex, modern-day issues.
In order to facilitate new uses of energy, new ways of managing it and making it accessible to an increasing number of people in a sustainable way, the commitment to innovation has been strengthened. Within the Group there are around 300 active innovative projects which cover the whole value chain in the various regions and which also 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 leaders in their own sectors, or the contribution of start-ups that can develop solutions which are still not available on the market. Three innovation hubs have also been set up in the regions with the highest degree of innovation, to enable their inclusion in the most avant-garde eco-systems in the world.
As for occupational health and safety, Enel continues in its commitment to increasingly efficient standards and to 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, as is the overall number of injuries recorded during the year.
The “Open Power” model, which links the strategy to concrete values and conduct for all the people who work in the Enel Group, has been further broken down into operational aspects, in order to increase involvement and the ability to communicate the innovations linked to the new strategy. This approach permeates all the process for the management, development and motivation of people. 2016 was also the year of the climate survey, which envisaged the Letter to stakeholders 7 Chief Executive Officer and General Manager Francesco Starace Chairman of the Board of Directors Patrizia Grieco G4-1 G4-2 involvement of all colleagues right from the preliminary stages, in order to identify the priorities together, and an “open” question approach, so that everyone could put forward ideas for improvement. In addition, Enel’s commitment to the increasing dissemination of the principles of diversity and inclusion continued.
These are all concrete facts and data which reflect Enel’s daily commitment to protecting the environment, relationships with local communities, the motivation of people, customer relations, investments in innovation, technologies for information and communication and the development of clean energy.
Energy is a door to the future, and the Strategic Plan 2017- 2019 represents the instrument to reach that future. In November 2016, we presented the new Strategic Plan, which updated the contents of the Group strategy, taking account of the fact that we achieved the goals identified in the previous Plan one year ahead of schedule. This new Plan, alongside the existing fundamental pillars of the strategy (operating efficiency, industrial growth, simplification of the Group’s structure and active management of the portfolio), envisages digitalization and a customer focus as levers to promote further growth and efficiency. These pillars are broken down from both the industrial and Environmental, Social and Governance (ESG) viewpoints, also through the inclusion in the Plan itself of the Agenda 2030 goals.
The overall Investment Plan for 2017-2019 is 20.9 billion euro, of which 60% is investment for growth, split between emerging and mature economies.
The overall Investment Plan for 2017-2019 is 20.9 billion euro, of which 60% is investment for growth, split between emerging and mature economies. In mature markets, which are characterized by the increasing presence of renewable sources and distributed generation, a key element will be the development of a modern distribution network open to multiple uses and services. In emerging markets, the challenge is to satisfy electricity demand in economies where economic growth, an increasing population and urbanization are driving their development. Our presence in over 30 countries enables us to offer technologically more advanced solutions, promoting social development and guaranteeing high safety standards. In addition, our commitment will continue to achieve the United Nations Sustainable Development Goals to which we adhere, and in relation to which we had already achieved significant results at the end of 2016. In particular:

  • as for SDG 4 (quality of education), we have already reached 300 thousand beneficiaries, against the goal of 400 thousand beneficiaries by 2020;
  • in relation to SDG 7 (clean and affordable energy), we have involved 1.2 million beneficiaries, compared to the goal of 3 million beneficiaries by 2020 (mainly in Africa, Asia and Latin America); 
  • as for SDG 8 (dignity of labor and economic growth), the beneficiaries currently number 1.1 million, given the new target (compared to the initial 500 thousand) of 1.5 million by 2020; 
  • in reference to SDG 13 (combating climate change), the grams of CO2/kWheq have fallen to around 395, compared to the goal of achieving a level below 350 grams by 2020.

Enel is a company which pursues growth based on sharing, internally and externally, ideas, innovation, concepts and areas for improvement, of which sustainability is an integral part, since it is an important driver for innovation. Given rapidly changing scenarios, and with everyone’s collaboration, Enel wants to write the future of the world of energy: a world in which old power plants acquire a new life, connections travel faster, smart homes are a reality, meters facilitate the dialogue between homes and people, and electric transport travels ever further.

 
 

Chairman of the Board
of Directors
Patrizia Grieco

Patrizia Grieco Signature

Chief Executive Officer
and General Manager
Francesco Starace

Francesco Starace Signature