The global shift to sustainability has led to investments worth $30.7 trillion¹, but without sufficient data, it is difficult for investors and the public to measure the environmental and societal impact of companies that claim sustainable operations.

As enterprises transition to a zero-carbon future and compete for funding, clarity and disclosure is key to attract the green investment needed to innovate and sustain the global economy.

The latest annual report from Europe’s biggest utility is leading the way, offering increased transparency into its progress on achieving the U.N. Sustainable Development Goals (SDGs).

Enel’s Revolutionary Approach to Corporate Reporting

Enel Group, the world’s largest private renewable energy player and Italy’s biggest company by market cap ($65 billion), has integrated sustainability into its business model, its governance, its strategy and its financial reporting.

Now, to better inform its many stakeholders as it aims toward targets set by the SDGs, it has revolutionized its corporate reporting and restructured its annual report to provide the results of its sustainability strategy in unprecedented detail.

“We have changed our approach to constructing the report because the integration between business and sustainability is real: in our strategy, in our operations, in our performance and therefore in the way all of this is recounted to stakeholders,” says Alberto De Paoli, Enel’s CFO.

For Enel, clarity of impact is paramount. “Any reader of Enel’s future annual reports must see an increasingly clear correlation between economic and financial performance and meeting the sustainable development goals established by the U.N.,” says Angelo Scipioni, Enel’s Head of Administration.

A multinational energy innovator with around 70 million customers in more than 30 countries and $90 billion in 2019 revenue, Enel is focused on sustainable energy and infrastructure development, de-carbonization processes and digitalization.

Last fall, Enel partnered with the U.N. Global Compact’s CFO Taskforce for the SDGs, which engages CFOs to mobilize finance for sustainable growth, and it is a member of the Task Force on Climate-related Financial Disclosures (TCFD), which helps companies clearly communicate the financial impacts of climate risk in order to direct investments toward a long-term global growth strategy.

A Breakdown of Enel’s Annual Report

Enel’s 2019 Annual Report, released April 21 in a completely new format, lays out the company’s strategic vision based on the link between sustainability and value creation. The downloadable report, which also appears as a fully interactive digital version, offers stakeholders financial data and non-financial data connected in meaningful ways, and, notably, an integrated sustainability analysis using new KPIs that correlate Enel’s financial performance with the fulfilment of its SDGs targets.

The digital report also provides links to the company’s Sustainability Report and Corporate Governance Report, as well as links to the corporate website in order to provide in-depth details and a 360-degree information experience for all stakeholders.

Enel’s new segmented reporting, in compliance with International Financial Reporting Standards (IFRS), facilitates analysis. This information is integrated into a view of measurable sustainability using the new KPIs, which offer much-needed benchmarks to monitor impact and compliance.

Raising the Bar with Better Data and Analysis

An accurate representation of the risks and opportunities of climate change—and of the value of knowledgeable management—is only possible with quality data and numerical analysis. Enel, a global leader in the transition to a sustainable future, is setting the reporting and analysis bar significantly higher, and the company clearly wants this enhanced transparency and additional information to be appreciated by markets, investors and the public.

“We have changed our approach to constructing the report because the integration between business and sustainability is real.”

Alberto De Paoli, Enel’s CFO

The new structure of Enel’s annual report was prompted by the firm’s deep integration of business and sustainability, and it has evolved to become a storytelling tool to inform and guide users. “The new 2019 Consolidated Annual Report provides a complete overview of Enel Group and has the ambition to be the first concrete example of an ‘integrated report’ at the service of all our stakeholders,” explains De Paoli.

The annual report’s first chapter, Enel Group Report on Operations, has seen the greatest change, with the introduction of four new sections inspired by the four core TCFD pillars:

Governance, which illustrates the group’s governing bodies and its organizational model;
Strategy & Risk Management, which starts from the macroeconomic view and gives an overview of the group’s strategy and the main objectives of Enel’s 2020–2022 Strategic Plan, and illustrates the main risks to which the group is exposed, including all those related to climate change, and how they are being mitigated. This section also highlights opportunities offered by the current energy transition scenario;
Performance & Metrics, which focuses on Enel Group’s business segments and their financial and non-financial results for the year, and provides a fully integrated view in line with Enel’s business model;
The Outlook outlines significant developments related to the evolution of the management of the Enel Group, and gives a medium-term forecast.

A Sustainable Approach to Success

The company’s proactive efforts appear to be succeeding. Bloomberg Intelligence names Enel as “among the highest-ranked companies in terms of Bloomberg’s ESG disclosure score and RobecoSAM’s sustainability ranking,” noting that “sustainable-investing demand and corporate focus on sustainability go hand-in-hand, as underscored by European investors being the most likely to consider ESG issues, and European companies scoring best on average in sustainability data reporting and ranking.”

At a time when investors and customers are seeking clarity and standardization around the measurement and transparency of sustainability, Enel's enhanced reporting may push other large energy companies to better report their ESG and sustainability activities.

Written by Gabe Kirchheimer for Bloomberg Media Studios.

Source:

1. http://www.gsi-alliance.org/wp-content/uploads/2019/06/GSIR_Review2018F.pdf

How Enel’s Annual Report Sets a New Standard for Sustainability and Disclosure