The economic value of being sustainable

Published on Friday, 1 April 2016

In the past, everyone who was interested in purchasing a company’s shares, from individual investors to big funds, evaluated its assets and its economic and financial data. Today the world has changed, and so has the market. According to recent studies, more than 80% of a company’s market value consists of so-called intangible assets, namely, anything that is not included in their balance sheets and general financial results.

An increasing number of investors select companies based on good governance criteria and social sustainability and environmental practices. The assessment of ESG factors (Environmental, Social and Governance), along with economic and financial data, provides a comprehensive, long-term view of a company’s evolution.

Enel has placed the integration of sustainability at the heart of its operational strategies and business decisions, because we believe that the environment, social development and economic sustainability are the three crucial factors for a global player’s growth in the energy sector.

The world’s most advanced companies have been called upon to form an alliance in order to ensure the sustainability and social progress of the territories in which they operate. To this end, the UN launched Private Sector Forum, a platform that allows companies and investors to communicate their business strategies and to sign partnerships that are in line with the United Nations Development Agenda. Enel is the only Italian company and the only utility in the world to have been asked to serve on the board of the United Nations Global Compact, the body that coordinates and directs the alliance.

We are also committed to directly contributing to the achievement of four of the 17 Sustainable Development Goals set by the United Nations. Among the medium-term objectives (to be achieved by 2020), in addition to ensuring access to electricity to 3 million people who currently lack power, we will provide basic education on energy topics to 400,000 people, and we will contribute to the employment and economic growth of yet another 500,000 individuals. By 2050, we plan to reach the important milestone of carbon neutrality, by completely eliminating CO2 emissions from all of our activities.

For the twelfth year in a row, we have been listed in the Dow Jones Sustainability World Index (DJSI World), an important market benchmark which includes the best companies in the world that meet strict economic, social and environmental sustainability criteria. We are also listed in other prestigious indices that asses company behaviour based on such criteria as relations with stakeholders, respect for human rights, the quality of working conditions, anti-corruption instruments, transparency of greenhouse gas emissions data and the commitment to fight climate change.

Among these indices are FTSE4Good, STOXX Global ESG Leaders, ECPI and CDP Italy Climate Change Disclosure Leadership 2015, selective indices used by many sustainable investors (SRIs) to decide where to invest their capital. Not surprisingly, we have continued to record a significant positive trend in the presence of SRIs in our share capital.

We also acknowledge the importance of sustainability reporting. Together with the Global Reporting Initiative (GRI), an independent international organisation that helps businesses, governments and other organisations to understand and communicate the impact of sustainability on their business, we have designed and promoted – in collaboration with SAP and Boston College Center for Corporate Citizenship – Reporting 2025, a project that aims to define the key issues that companies must face in order to work their way towards a fully sustainable economy. Our Sustainability Report has been drafted in accordance with GRI guidelines, receiving the highest application level (A+) for the ninth year straight, highlighting our commitment to transparent and accurate sustainability reporting.