Like human beings, capitalism is a concept in evolution.
And from the traditional way to look,
and also the new way, to look at it,
like… so the sustainable way
to drive business and new concepts
like the stakeholder capitalism
in which companies are now working around.
Let's now look at how Enel, our company,
made its progress around this path
and how also all the steps we endorsed create value for us,
create value for our stakeholders
and how also our language has changed around this path.
The first is when we started in deciding
to have a full sustainable model, business model,
not only to do some acts on projects around sustainability,
but to put ourselves fully in a sustainable way to do business.
And how this drove the value of our company
in the normal world, in the traditional world.
To maximize the value,
you need to have these three things,
so the better you can, so you have to seek free cash flows
so that the growth will be very predictable, low volatile.
You need to have a very low cost of debt
and you have to have a perception of the risk of your company very low.
Sustainability for us
created the conditions to have these three things together,
to have this high level of free cash flow,
to reduce the cost of debt and to reduce our risk,
also to avoid the social conflicts
that are also one of the aspects of the risk that companies may face.
These three things, maximizing and minimizing these three things,
creates value in the traditional way to say how the value is.
These are the free cash flows of our company since the inception.
You see the transition here,
that is the year in which we decided to change
our business model and our purpose.
And you see the trend that we are following after this choice.
We invented new sustainable financial instruments
that now are mainstream in the world.
We invented these instruments because we didn't find
a financial instrument that was in line with our purpose.
So, we invented it
and we created a financial instrument that is giving us,
and all the other companies that are following us,
a big discount on the cost of debt
because we are now clearly saying
that if we pursue sustainability,
we will find less risk and a higher free cash flow.
And in this case, in the traditional language,
lenders are keen to offer money to you at a lower cost.
And this, as I said, became a very, very big thing
in the sustainable finance world.
And last, the risk of our company notwithstanding today,
so risk is high,
so the level of risk of our company,
and this is expressed by the traditional way to express the risk,
that is the level of beta.
You see how it has been reduced
since the inception of our new decision.
What is the final end of all this stuff?
Only one:
the integration of sustainability
in the business model of companies leads to higher value.
And this is our history since the inception,
100 per cent of increase in value
because of all the things I said.
And this is by far more on what markets did in the same time.
Now, a new dimension is needed.
The dimension of companies that have endorsed
this path from the traditional view to a sustainable concept.
A new dimension has to be added
in the way the company presents themselves
and the way they think and they act,
that is to create a value and to pursue value
that creates value for all the stakeholders involved
in the action of the companies:
quality at the center, clear quality,
clearly expressed to everyone, to every stakeholder.
And then a new concept that is the value
a company creates for all.
And then a concept on how this value is distributed
and then how a part of this value is used
to follow a development strategy
that is sustainable and in line with the expectations
and the needs of communities and all the stakeholders,
and then how a company communicates all the stuff.
This is our representation in this new dimension
of Enel in the next chart,
first on value creation.
This is the value creation that we got in 2021.
You will not see in any other part this 23.1.
It’s not traditional language, it’s the new one,
it’s a measure that expresses
the value that we have created for all stakeholders.
What do we have to do with this value?
The purpose of the company is to increase it.
This is us: how can we can increase this?
We can increase revenues
selling more electricity produced by renewable sources.
Why is this good?
Because electrifying everything,
we will use no gas,
no oil, we will not pollute,
and for people, this will be a less cost
versus the overall spending
that we are having for using so different sources of energy
that are destroying the world.
So, the electrification of consumption
and electricity produced by renewables is the word,
and it’s going to increase the revenues of my company,
creating value for the planet and for everyone.
Then I can reduce the fuel purchase
because I have to buy gas and oil
to produce my energy, but at the time in which
I will have 100% of my energy produced by renewable sources,
this will be ten to zero,
and I'm going to increase the value created, saving the world.
And everything that you see here
may be connected between a growth
that will create value for someone,
and a reduction that will create value for others.
This is the prospect. This is the growth trend
that a sustainable company working
in this new concept, will pursue.
And this is the difference between a traditional language,
the net income one, with the value created,
that income is related to a traditional way to look
at the value created for a company.
The new dimension is putting another number
by far higher than what we are accustomed to look at.
Quality: quality is relevant
because quality means exactly what is
the soul and the purpose of a company.
And every stakeholder has to understand clearly
what the company is doing for that specific class of stakeholder,
and the company has to clearly express,
in terms of the main things
and the main objectives expressed in targets,
KPIs, in numbers, very clear how they are built, how…
so what is the trend that the company wants to follow
and what are the targets the company wants to reach?
Quality is at the center and this is our quality expressed.
Then there is distribution.
This is a new concept and this is the way
our company distributes the value the company,
Enel, is creating. This is 2021.
So, we have distributed 23% of the value created to our employees,
22% to our shareholders,
and we have retained €7 billion of this value created
to fuel our future development and growth.
That's new. This is a new dimension
because in this dimension,
the value the company creates is distributed to stakeholders.
And here you see how we want to have and,
like I was saying before,
on the business concept around,
how we want to grow the value creation and,
for this way, the value that we can distribute to our stakeholders.
The development strategy of a company
is of paramount importance.
Without a clear development strategy,
nothing that I'm saying is possible.
It’s at the beginning, it’s the concept
on what the company wants to operate and to develop itself.
Here, what we have decided
in these tough times
in which we need to have a huge and rapid transition,
energy transition,
we decided to have, for the next years,
an investment plan that is almost double the value
that we are retaining from the value we create.
And the numbers say that this value plan,
this capex plan,
is related with some ratios of sustainability,
like you see in the chart here.
The company has more than 90%
of SDG-aligned investments,
so that our investments are useful
for the world to reach the SDG targets.
And, on the other side, on the taxonomy, the European taxonomy,
that are in line with what Europe is seeking in order
to have a proper energy transition.
And so, this is the way in which we will invest,
so we will spend our money,
increasing hugely our renewable capacity
because we have to reach what I said:
at a certain time in the future,
100 per cent of the energy we produce
will have to be produced by renewable sources,
not polluting, and so using to fight
the climate war that we are fighting.
And, on the other side, nothing is possible (it’s not fancy, but)
if you don't have the infrastructure ready to support a revolution,
you may speak about revolution but it will never happen.
So, you have to hugely invest in not fancy things
like the distribution infrastructure
becoming a new digitized world to host
the new concept of energy that is coming:
electric vehicles, storage, renewable energy,
everything will change the way in which we will use and produce energy:
infrastructures are at the center of this.
And then customers:
(where) offering electricity instead of other sources
that we know are volatile and they are also sources we have to exit
and also offering the best technologies
connected with the new way to use energy
is the purpose that will create value for them
and increasing the value created of the company.
And everything pertaining to the investment plan
has to be defined around how the investment plan will create value,
how the GDP will be increased,
how many jobs the plan will create.
These are languages very relevant to link,
so the purpose of the company as a value for all.
And, last, we will ask stakeholders to support us
in this big effort to have this huge amount of investments
not covered by our value created,
and the overall effort of the stakeholders
that are on both sides of our actions
will be of the utmost importance
to have us and them in entering and winning the energy transition.
That’s the new concept to have circular cooperation
around the targets a company has.
And, finally, communication.
We already started from
the beginning of our new communication in which
we had to communicate different things
around old concepts and new concepts.
So, at the very beginning, when sustainability appears
and another report was added and another and another and another
because every time at the very beginning you add new information for new things,
then you have to think that it’s not a communication,
it’s only a sum up of documents.
And you have to try to offer
a way to read within and to look at how to combine
and to communicate that the new purpose is not in adding things,
but is a new thing.
And we did it in creating for the first time in 2019
the integrated reporting that says exactly what I'm saying:
we are doing the two things together and not separated.
It has been a big, big, big success.
We had, so you see here
plus ten times or 30 times the number of visits
on the concept we were expressing
and this gave us the fuel to say we are on the right path.
Now, stay in tune with us because the new report
will try to endorse exactly the new dimension
that we were talking about before,
trying to create a communication,
integrated communication,
that expresses the new way of creating value
and also the new languages and also a communication
that may offer to each stakeholder its own communication,
its own direct channel with the company,
expressing the way the company is creating value for them,
and what is the purpose and the target the company will follow.
I think that adding a dimension to this concept,
adding a different purpose or a new purpose,
I think that capitalism would be the way
in which we may really create value for all,
for our planet, for everyone, and prosper on this planet.