The sustainability context

The global context in which the Group operates has been characterized over the past 12 months by interlocking events that have caused turmoil at all levels. In addition to the post-pandemic geopolitical events, there was a significant rise in interest rates and inflation with a corresponding downward revision of GDP growth in many countries. Moreover, the prolonged military conflict between Russia and Ukraine, the more recent conflict in the Middle East, the unstable relationship between the US and China, and the resulting uncertainty on a global scale continued to exacerbate energy, raw materials and food markets, slowing the process of normalizing inflationary pressures on a global scale. At the same time, the state of the art of the Paris Agreement targets calls for an acceleration of the energy transition to limit the increase in average global warming to within 1.5 °C compared to pre-industrial levels. At the recent COP 28 on climate change held in Dubai, a target was set to transition away gradually from fossil fuels by 2050 and to triple renewable capacity by 2030 (11 TW vs 3.6 TW in 2022). 

The path towards achieving the UN Sustainable Development Goals is significantly behind, with only 15% currently on track, due to various interconnected crises and tensions. In response, the UN Global Compact launched the “Forward Faster” campaign in September 2023, urging companies to accelerate their efforts, particularly in Climate action, Finance and investment, Water resilience, Gender equality and Living wage.

Governments and regulators have well understood the need to pursue ever greater energy independence through energy generated from renewable sources. This is a context in which the role of distribution networks will be crucial in meeting demand and accommodating new capacity from renewables, along with that of energy storage systems, which in turn will be crucial in ensuring not only the penetration of renewables, but also a stable and reliable supply.

Climate, human rights and just transition are global priorities for action. Tackling the climate crisis has significant social impacts, and the imperatives of a just transition and respect for human rights must be taken into account in business practices, as reaffirmed by the Paris Agreement and COP 28, putting people at the center to ensure support and engagement.

There is also a growing focus on issues related to nature and in particular biodiversity. The recently announced commitment at the World Economic Forum to start making nature-related disclosures, building on the Recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD) published in September 2023, underlines the crucial turning point on this topic for the private sector and reiterates the importance of considering the synergies between people, nature and climate. In line with this trend, even leading ESG ratings demand commitments from companies on biodiversity conservation.

Digitalization driven by artificial intelligence offers opportunities and challenges, eliciting responses from regulators, but also raises concerns about the ethics of artificial intelligence and its implications for the workforce. Considering the growing need to ensure that artificial intelligence is used responsibly and safely, the European Union has approved a draft law on the subject that would regulate the use of large language models and generative artificial intelligence.

Finally, mandatory sustainability reporting, spearheaded by the European CSRD (Corporate Social Responsibility Directive) and the International Sustainability Standard Board, is progressively imposing itself globally, requiring increasing cooperation and collaboration between the various institutions and regulators in different countries. The various regulations and mandatory requirements are, however, faced with the growing risk of anti-ESG sentiment, which may delay their adoption in some regional contexts.

The sustainability landscape is constantly evolving and, in order to meet challenges and seize opportunities, constant monitoring of trends is required along with joint action by the different stakeholders to weigh up needs while aiming at sustainable progress. Companies can play a crucial role by promoting a fair and sustainable transition through concrete and credible commitments in line with the context.