“Decarbonization is a multi-level strategy. You have to use different options according to local conditions and characteristics,” says Francesco Gattei, Chief Financial Officer of Italian company Eni. “This is about continuing to generate value in all the segments you are exposed to, in a way that is fully aligned with the Paris Agreement.”

A recent report by research group Carbon Tracker found that Eni—which has announced plans for cuts in emissions across all of its activities by 2030, and the full decarbonization of all its products and processes by 2050 through a transformation of its business—has the strongest net zero plan in the oil and gas sector [1].

As part of its energy transition plan, the company recently published the sector’s first sustainability-linked financing framework, which fully integrates sustainability into the company’s funding strategy and is verified by ESG consultancy Vigeo Eiris.

The framework mirrors the company’s actions to execute its decarbonization strategy. These include the merging of its retail business with its renewables arm—to broaden its green energy offering to customers—and increasing its bio-refinery* capacity. The company is also working to develop carbon capture and storage (CCS) technology, which could cut emissions from hard-to-abate industrial sectors such as steel and cement.

The framework, developed over past eight months, has four KPIs against which it is measured:
• Renewable energy installed capacity
• Net carbon footprint upstream (Scope 1 and 2 emissions)
• Net GHG lifecycle emissions (Scope 1, 2 and 3 emissions)
• Net carbon intensity (Scope 1, 2 and 3 emissions)

“The industrial decarbonization strategy you introduce and the financial strategy you use to deploy your plans should be fully aligned,” says Gattei. “You need to have a methodology that is recognized by the market, and you need key performance indicators that are relevant to your transformation.”

For each of these KPIs, Eni has defined intermediate and long-term sustainability performance targets that contribute to the achievement of the UN Sustainable Development Goals (SDGs), primarily SDG 7, Affordable and Sustainable Energy, and SDG 13, Climate Action, although Eni will also target access to health and education.

“We have adopted a strategy that is credible, sound, and that combines financial robustness with social and environmental sustainability, because improving social conditions is also the best way to protect the environment,” Gattei explains. “At the same time, through the framework, we have linked our financial tools to our industrial targets. We have chosen four KPI that are perfectly aligned with Eni’s strategy to reach the full carbon neutrality by 2050.”

Eni Ties Sustainable Commitment to Financial Performance