“We think that our most significant challenge today is to tackle the problem of climate change. To do that, given that the global demand for energy is destined to increase enormously, it is fundamental to electrify consumption as much as possible, modernise the distribution infrastructure, transform it into platforms, and, above all, completely decarbonise energy production”
Indeed, for the next three-year cycle our Industrial Plan has set out 28.7 billion euros of investment, of which 14.4 billion are earmarked for decarbonisation, almost all of which for the development of the portfolio of clean energies. This will bring the percentage of renewables in the Group’s total installed capacity from the current 50% to over 60%. By 2030, moreover, the goal is to reduce the CO2 emissions produced by the Group’s activities by 70% compared with 2017 levels, in line with the objectives of the Paris Agreement.
Finance and EU for sustainable development
For De Paoli another key step towards sustainable development was the issuing of the first corporate bonds linked to the SDGs, an initiative that took place last year: “Such an innovative tool can become credible and function only on the condition that sustainability is completely integrated throughout the company’s business model, which, as is now universally accepted, contributes to lowering the company’s risk profile.” Without finance, according to De Paoli, “we wouldn’t be able to put our plans into practice and the financial world has now understood very well that sustainability is not philanthropy: it’s good business. This has been clearly demonstrated by the success of almost 4 billion euros of SDG bonds issued between September and October last year, for which demand was almost four times the supply. These bonds have already ensured our Group a saving of 15 base points compared with the debt costs of traditional bonds. In this vein Enel plans an increase in its financial instruments linked to sustainability from the current 22% of total gross debt to 43% in 2022, and to 77% in 2030.
In actual fact, as was underlined by Francesco Pascuzzi, Co-head of Investment Banking Italy at Goldman Sachs and one of the opinion leaders attending the event, the financial world is looking with growing interest at the companies that have decided to prioritise sustainability, to the extent that for the next 10 years Goldman Sachs has allocated 750 billion dollars for finance linked to sustainable development.
This approach has been echoed by the European Union, which has recently launched the investment fund Sustainable Europe. “An instrument designed to support companies that, like Enel, have integrated sustainability throughout their business strategy, contributing, therefore, to the goal of decarbonisation of the Union by 2050. In short, the greater and the more complete a company’s commitment to sustainability, the more substantial and the more agile the finance that it will be able to access,” explained Sara Lovisolo, member of the EU’s Technical Expert Group on Sustainable Finance. “Nevertheless,” added Pascuzzi, “it is important that companies are ready to revolutionise business culture, in order to be able to achieve sustainability with innovative tools such as bonds linked to the SDGs.”
A fair energy transition
Speaking about this cultural change was also Stefano Pogutz, Head of Sustainability at Milan’s Bocconi University, according to whom “sustainability has become a fully-fledged science, and the academic world must invent a new language to describe it in order to be able to develop transversal skills and change the way people and institutions reason. Take finance, for example: for a long time it acted with a single goal – to increase value for the shareholders. Today however, there is no hiding from the issues of decarbonisation and social equality.”
On this latter point, De Paoli concluded by emphasising that “the energy transition is on the cusp of an exponential acceleration. Everything is likely to happen very rapidly and we must learn to keep up. But at the same time we must be aware of the necessity for the transition to be fair and egalitarian: for this reason we have invested significantly also to ensure that our evolution has no negative social impact.” The journey undertaken by our Group, De Paoli stated, positions us on the right side: with the hope that we can be an example that encourages more and more companies, in every sector, to do the same. After all, “it’s about working towards an ideal: if you are convinced that the purpose of your business is not only to create profit, but to contribute to something higher and more noble, then you do so with a completely different attitude.” And profit will follow automatically.