A mere five years ago the phrase “sustainability equals value” would have looked more like a slogan for an NGO: it would have been unthinkable for such a concept to be adopted as a strategic cornerstone of a large corporation or the mantra of the financial community. And yet five years have flown by and what might then have seemed to be within the realm of fantasy has now become reality: sustainability is now a solid value that is measurable in tangible, and economic, terms.
“The Value of a Sustainable Strategy” is, in fact, the theme of the first edition of #MeetEnel, the new format of meetings our Group has created in order to discuss strategic themes for Enel, with the sector’s experts and opinion leaders. The aim is to share the Group’s strategic choices and the results which they generated – and which they will continue to generate. This is in order to stimulate debate about the global macro trends that will lead to a deep transformation in the areas in which we operate. The venue for the event was the Milan office of LinkedIn, where on 20 January a group of influencers and opinion leaders from the worlds of finance, academia and sustainability came together to hear an exceptional keynote speaker, Enel CFO Alberto De Paoli.
Changing the company: a cultural challenge
“Right from the outset, we have believed that sustainability equals value,” began De Paoli, “and for this reason we committed very early on to embark on a pathway to combat climate change and contribute to the achievement of the United Nations Sustainable Development Goals (SDGs). However, choosing sustainability is no small matter: it involves totally overhauling the way a company works and devising new strategies for the future. We made this choice in 2015, after having closely observed the megatrends reshaping the world: even though at that time they were not as evident as they are today, we realised that they were ushering in a sea change that would soon be upon us. Consequently, we chose to completely reshape our strategy, imagining how the world would be following that change.”
Sustainability means value: the results
The challenge has brought its own rewards. “Today, when we say sustainability equals value, we have the figures to prove it. Back then our Group had a market capitalisation of around 35 billion euros: five years later we are approaching 78 billion and we are in second place among the world’s utilities in this respect. Meanwhile the cost of energy from renewables has fallen to just under half that of energy from fossil fuels.”
On the subject of figures, or measurable values, over the last five years the Group’s investment in infrastructure and networks has not only laid the foundations for a new, completely decarbonised energy world, but also resulted in a significant reduction in costs and a notable increase in the number of final users (passing from 61 million to 73 million in 2019). Consequently profits have increased too; EBITDA per client has risen by over 13%. These results speak for themselves, and the same can be said of the fact that (as was illustrated by the financial analysts of the most recent edition of Capital Markets Day) all of the targets set five years ago for 2019 have been achieved and exceeded. For example, EBITDA reached 17.8 billion euros compared with the goal of 17 billion; cost reductions of 1.5 billion were achieved, well above the target of 1.1 billion. The Industrial Plan has ensured predictability, enabling a doubling of the share dividend (from 16 cents in 2015 to 33 cents in 2019) and resulting in a total shareholder return of over 130%.
Prioritising the fight against climate change
“Currently, all our Group’s efforts are focused on sustainability strategy,” continued De Paoli, “to the extent that we are one of few companies in the world in which almost 100% of our investments are in line with the goals of the UN’s 2030 Agenda.” To be precise, of 28.7 billion euros of investments planned for the next three-year cycle, around 14 billion relate to SDG 7 (“Affordable and Clean Energy”), around 12 billion concern SDG 9 (“Industry Innovation and Infrastructure”), around one billion for SDG 11 (“Sustainable Cities and Communities”) and overall these contribute to the achievement of SDG 13 (“Climate Action”).