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Materiality analysis process and results for 2022

The sustainability context

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In order to evaluate the economic, social and environmental challenges, identify the risks, limit their impacts and take full advantage of the relative opportunities as part of the broader materiality analysis process, an analysis of the main current and future ESG megatrends was carried out.
Within today’s complex scenario, new generation and consumption models are emerging, dictated by ongoing technological and demographic changes, as well as by new economic and geopolitical balances.
Based on the main publications within the scope of the Electric Utilities sector and the current public policies, the analysis of the sustainability context identified 14 main ESG megatrends, which include the digital revolution, definition of new governance models, climate and demographic change, preservation of resources. These phenomena influence both today and in the future the economic, social and environmental dimensions of sustainable development and often are mutually conditioned and act in combination, reinforcing their individual impact. The technological revolution and digitalization have in several cases accentuated income disparity and the consequent increase in inequalities.
Climate change is contributing to displacement from rural to urban areas, and therefore to demographic changes in countries. Safeguarding resources entails the need to use and adopt technologies with a lower environmental impact. The impacts of the 14 ESG megatrends identified in the social, economic and environmental context were analyzed and evaluated using a specific questionnaire completed by external, national and international stakeholders and experts. The results confirm climate change, the digital revolution and the preservation of resources as the main ESG megatrends, and highlight the increase in inequalities as a further area of focus in the current and future scenarios.
Furthermore, due to the nature of its business and its geographical distribution, the Enel Group is exposed to various types of ESG risk, identified within the reference framework relating to the risk categories adopted by Enel, of which there are six: strategic, financial, operational, governance and culture, digital technology, and compliance. For further details and a description of the actions intended to mitigate their effects and ensure their correct management, refer to the chapter “Sound governance” in this document.

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Through the materiality analysis, which involves various categories of internal and external stakeholders, the material topics, namely the topics that represent the organization’s most significant impacts on the economy, environment, people and human rights, are defined. The results of this analysis are used to help define the objectives to be included in the Strategic Plan and the Sustainability Plan, the achievement of which is contributed to by the various Group Functions and Business Lines, as well as the topics covered by the Sustainability Report and other Corporate Reporting documents.

As a result of the continuous monitoring of stakeholder expectations (“dynamic materiality”(1), the traditional way of looking at the priorities of ESG topics (“Priorities’ Materiality”) has been enriched by incorporating a view of the significance of the impacts generated and suffered (impact materiality and financial materiality) by the Company in the reference context (“Double Materiality”). 

The impact analysis model is of fundamental importance as it enables the Company to identify the material topics and focus on the best way to manage them, both in terms of risk management as well as in terms of strengthening opportunities. In addition, the Company must recognize its strategic priorities, taking into account also the view of its stakeholders. Identifying the priority ESG topics with which the Company wants to engage therefore strengthens the profile of impact management.

The materiality analysis process and results 2022 - plant growing among the rocks

(1) The concept of dynamic materiality – announced in 2020 by the World Economic Forum in the document “Embracing the new age of materiality” – represents materiality as a dynamic process according to which what may be financially irrelevant today can become material tomorrow.

Materiality analysis

The materiality analysis process and results 2022 - Materiality Analysis

* The identified impacts are linked to the main ESG megatrends and the 1st, 2nd and 3rd level priority topics.

Materiality analysis
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From a “double materiality” perspective, according to which the Company can influence and be influenced by ESG topics, the topics are material to one or both of the following dimensions:

  • impact materiality: in line with the GRI 2021 standard, which identifies and analyzes material topics in terms of the impacts generated by the Company, namely the effects that the organization has or could have on the economy, the environment, people, and human rights, which in turn can indicate their contribution (negative or positive) to sustainable development; 
  • financial materiality: in line with the main publications currently available (SASB, ISSB), which identifies and analyzes the material topics from a financial point of view, namely those that affect or could affect the Company’s financial condition or operating results, and are therefore most relevant to investors

Reference standards and governance of the materiality analysis process


The materiality analysis was developed in line with the GRI 2021 and the AccountAbility AA1000 Stakeholder Engagement Standard (AA1000SES), taking into account the draft of the ESRS 1 standard – General Requirements prepared by EFRAG (European Financial Reporting Advisory Group), the Value Reporting Foundation – SASB standard and the SDG Compass, which supports companies in adapting their strategies to comply with the UN SDGs.
The Holding’s Sustainability Planning, Performance Management and Human Rights unit, as part of the Innovability Function, is responsible for analyzing materiality at Group level and plays a guidance and coordination role, providing guidelines and methodological support for the country, Company and site level analysis conducted by local managers, with the involvement of stakeholders and the key figures at Company level.
The materiality analysis and the relative results, such as the material topics identified, are subject to specific examination by the Corporate Governance and Sustainability Committee, set up within the Board of Directors, when examining the Sustainability Plan guidelines. Furthermore, the Corporate Governance and Sustainability Committee and the Control and Risks Committee issue prior opinions on the Sustainability Report, which includes the materiality analysis, and submit them to the Board of Directors’ meeting called to approve the Report.
The collection, aggregation and processing of data relating to the engagement and analysis initiatives of the stakeholders and experts involved are managed through a dedicated computer system (“e-mia®: Engagement – materiality & impact analysis”), which also allows the best stakeholder engagement and monitoring practices to be shared within the Group in line with the Company’s organizational model. The results, which are updated annually, are presented to the Group, the individual companies, the Business Lines/Corporate Functions and sites (potential or actual operating sites), as well as to the different categories of stakeholders. Every two years, an analysis is carried out with a view to possibly reviewing the topics and categories of stakeholders so as to take into account any significant changes in the internal and external context of the Company. In 2022, the scope of the materiality analysis included 21 countries, covering all continents where the Group is present. In particular, in 2022, new sites were added in Chile, Greece and Peru, with increasing integration of the results due to the application of the Creating Shared Value (CSV) tools to the Group’s assets.

Identification of the topics

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The topics subject to the 2022 analysis cover the entire sustainable business model and are classified into three categories: business and governance topics, social topics and environmental topics, divided into three levels to cover all the different cases. 
In defining the ESG topics, multiple sources were considered and various stakeholder categories were directly and indirectly involved. The instruments used include: 

  • the main ESG megatrends revealed in the sustainability context analysis (please refer to the section on “The sustainability context”). A specific questionnaire, addressed to external stakeholders and experts, was used to identify the main ESG megatrends. The latter were correlated with the materiality analysis topics, thus serving as a guide in defining the relative impacts;
  • the topics of greatest interest to sustainability rating agencies;
  • sector benchmarking studies; 
  • Sustainability Reporting standards;
  • the strategic guidance of the Company as well as input from experts inside and outside the organization.

We define and update the list of ESG topics every two years, with the support of the various units involved each year in the analysis process.

Identification of the stakeholders

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The stakeholders involved in the 2022 materiality analysis represent the individuals or interest groups that are affected or could be affected by the organization’s activities, with a view to successfully implementing its strategies and achieving its goals. We regularly involve our stakeholders through numerous listening initiatives in order to capture their expectations and identify potential and future impacts (please refer to the section on the “Priorities’ Matrix”). The stakeholders are grouped into categories, classified on three levels, in line with the structure of the topics analyzed.

The first level stakeholder categories are the following:

  • Businesses and trade associations 
  • Customers 
  • Financial community 
  • Institutions
  • Civil society and local and global communities
  • Media
  • Enel people
  • Suppliers and contractors

Please refer to the table in section “Assignment of priority to the topics by external stakeholders”, which shows the stakeholder categories with their respective degree of relevance).

With the support of the various units responsible for stakeholder relations, which are involved in the analysis process every year, we identify and update the list of relevant stakeholder categories every two years, in order to define a complete list of actual and potential stakeholders and to ensure continuous alignment with the sustainability context in which Enel operates. 

Assignment of relevance to stakeholders

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The process of assigning stakeholder relevance is conducted in accordance with the applicable standards and entails the involvement of the business units responsible for stakeholder relations and an assessment of each stakeholder according to their respective relevance. 
In 2022, a specific questionnaire was put to the Top Management at the Business Line and country level, who were asked to assess the relevance of the categories based on the following parameters:

DependenceImportance of the relationship for the stakeholder, indicating groups or individuals who directly or indirectly depend on the activities, products or services and associated services, or on which the organization depends in order to operate
InfluenceImportance of the relationship for the Company, indicating groups or individuals that may have an impact on the organization or on a stakeholder for strategic or operational decision-making
TensionTemporal dimension of the relationship, indicating groups or individuals who require the immediate attention of the organization on broader financial, economic, social or environmental topics

(See table in the section “Assignment of priority to the topics by external stakeholders”, which shows the stakeholder categories with their respective degree of relevance).

In particular, the analysis carried out at Group level shows that the relevance of “Suppliers and Contractors” stakeholder has grown over the last year, particularly given the awareness of their key role in managing the energy transition process. On the other hand, the relevance of the stakeholder “Enel people”, as a strategic player in the pursuit of sustainable business and continuous improvement of the Company, remains constant. 

Assignment of priority to the topicsby external stakeholders

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Having identified the topics and stakeholder categories and weighted them according to their respective relevance, the materiality analysis process then proceeds with an assessment of the priorities assigned to the topics by the external stakeholders, taking into account the related impacts generated on the economy, the environment, people, and human rights (horizontal axis of the priorities and expectations matrix) (please refer to the “2022 Priorities’ Matrix”). An analysis of the priorities assigned by the Group’s relevant stakeholders results in the definition of the priority topics for stakeholders, based on which the potential and actual impacts of the Company are defined.

In 2022, the priorities assigned to the topics were identified thanks to the implementation of approximately 460 engagement initiatives (surveys, focus groups, interviews, document analysis, etc.) with relevant stakeholders for the Group. Less than 1% of the assessments were carried out indirectly, through interviews with the business units responsible for the relationship with the reference stakeholder (“self-assessment”), demonstrating the objectivity of the analyses carried out. The engagement initiatives used in the materiality analysis are part of the various engagement initiatives carried out during the year by the Group’s various units. These initiatives include: customer satisfaction surveys; the “Wellbeing Global Survey”, aimed at collecting expectations and the degree of satisfaction regarding the numerous initiatives promoted by the Company concerning the physical and psychological well-being of Enel people; questionnaires from sustainability rating agencies; customer complaints; relations with analysts and investors, representative and trade associations; institutional relations at national and local levels, as well as with trade unions; media monitoring and opinion polls. In some cases, where necessary, ad hoc materiality analysis initiatives were implemented, including an online questionnaire for suppliers or focus groups aimed at specific categories of stakeholders.

The following table shows, for each internal and external stakeholder category identified at 1st Level and involved in the materiality analysis process, the respective degree of relevance, the engagement initiatives used, the priority topics and the Company’s response methods.

Stakeholder categories, degree of relevance, type and engagement initiatives

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Since 2016, in order to more precisely define the topics on which the Company needs to focus, Enel has been combining the stakeholders’ assessment of priorities with an analysis of their satisfaction with the topics identified. The 2022 results of the expectations analysis show a substantial alignment between the priorities assigned by stakeholders and their level of satisfaction. It should be noted that the topic related to the “Sustainable supply chain” experienced an increase in satisfaction in terms of positioning compared to 2021, denoting appreciation for Enel’s strong commitment to managing the environmental and social impacts associated with the supply chain.

Assessment of priority to the topics in Company strategies

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For the purposes of drawing up the 2022 Priorities’ Matrix, Enel assessed the priority of the topics in its strategies (vertical axis of the Priorities’ Matrix), taking into account the guidelines set by the Strategic Plan, the objectives of the Functions/Business Lines and the commitments made by the Group through its own policies and conduct criteria. This analysis involved the Company’s various Functions and Top Management (Chief Executive Officer and Chairman) through ad hoc interviews and specific questionnaires.

Priorities’ Matrix

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The aspects covered in the previous paragraphs, namely the priority of topics for stakeholders and in corporate strategies, contribute to the development of the Priorities’ Matrix. The process makes it possible to identify the priorities for stakeholders and the Company at both Group and country level, down to each Business Line/Corporate Function and individual asset (understood as a potential or effective operating site). In 2022, the analysis covered 21 countries, 64 companies and 36 sites and considered 463 engagement initiatives involving stakeholders relevant to the Group.
Shown below are: 

  • the 2022 Priorities’ Matrix of the Enel Group, which considers the contributions of the main companies involved in the process, weighted according to their relevance in relation to the type of business in which they operate;
  • the main 2022 priorities – in consolidated view – of some of the main companies participating in the materiality analysis process.

The following are some of the main priority topics and how they should be handled.

  • Occupational health and safety – Enel considers the health, safety, mental and physical integrity of people to be among the Group’s main priorities. Optimal management of this topic helps to generate trust and boost the commitment of people in relation to the work they perform, also helping to improve performance and raise productivity and efficiency. As a confirmation of Enel’s constant commitment to safety in 2022, the Lost Time Injury Frequency Rate (LTIFR) for Enel and contractor companies combined was down by 22% compared to 2021. 
  • Decarbonization of the energy mix – The fight against climate change has become one of the key challenges facing companies. In the utilities sector in particular, this has led to the development of regulations and public policies aimed at promoting a global zero emissions economy, in which electrification of the energy demand plays a key role. Institutional investors are devoting ever-greater attention to the management and results of companies in relation to climate change. In this context, Enel has set specific objectives for the reduction of greenhouse gas (GHG) emissions, focusing on the growth of renewable capacity and the gradual closure of coal plants (please refer to the “Sustainability Plan 2023- 2025” and the “Zero emissions ambition” sections of this document).
  • People management, development and motivation – In line with our Open Power approach, we work every day to create an open, inclusive and dynamic working environment that seeks to incorporate diversity, attract new talent and empower our people. In particular, Enel’s commitment to closing the gender gap and ensuring equal pay continues with tangible results, the result of actions that affect all stages of women’s career paths in the organization. The Long-Term-Incentive Plan 2022 actually supports these trends, confirming the target “percentage of women in Top Management succession plans” of 45% by the end of 2025, with a view to continuing a policy of preparing a suitable pool for managerial appointments in the near future.

The priority topics for stakeholders and the Company thus defined are subject to analysis according to the double materiality approach, which aims to identify the material topics (please refer to the section “Material topics”).

Priorities‘ materiality and main 2022 priorities for the Countries (1)

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Definition, analysis and prioritization of the most significant impacts

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The materiality analysis process has evolved and the traditional view is now complemented with that of double materiality, in which financial materiality and impact materiality each represent an equally important perspective. Through the involvement of the Group’s key stakeholders and internal and external experts, the process seeks to analyze the most significant impacts in order to identify material topics, taking into account – especially for negative impacts – the due diligence process and the relative results. 

Enel has therefore identified the impacts based on the following activities: 

  • analysis of the main ESG megatrends: a survey of external (national and international) stakeholders and experts, with the aim of assessing the impacts of the main ESG megatrends through an analysis of the context in which we operate. (please refer to the section “The sustainability context”);
  • assignment of priority to the topics by external stakeholders: more than 460 engagement initiatives involving the Group’s main external stakeholders (for example, through surveys, focus groups, desk analysis, etc.), in order to assess the priority, satisfaction and impact of ESG topics (please refer to the section “Assessing priorities and satisfaction of topics assigned by stakeholders”);
  • definition of the impacts list: direct involvement of internal stakeholders and experts in defining and weighting the list of impacts generated and suffered on the basis of their feedback, also taking into account the views of external stakeholders. The impacts list has therefore been subject to thorough analysis and review by experts who internally oversee business activities, giving rise to positive and negative impacts that affect or may affect the relationship with the Group’s relevant stakeholders.

Once the impacts have been identified, Enel proceeds with their analysis, that is with the assessment of the respective significance, both on a material level of the impact as well as financial materiality level, through the involvement of the Group’s internal stakeholders and experts who, in performing their business activities, have a greater relationship with the main stakeholders and so have a complete view of the actual and/or potential impacts in the external context in which Enel operates. 

As regards the impact materiality, in 2022, Enel strengthened the methodology for analyzing the impacts generated by the Company to bring it into line with the provisions of GRI 2021. Following the pilot project launched in 2019 and its completion in 2020 and 2021, with the involvement of all the countries participating in the process, in 2022 the Group conducted an impact materiality analysis which, through the involvement of the relevant stakeholders and experts and based on the best practices dictated by the due diligence process, identified the impacts generated by the Company on the economy, the environment and people, considering any violations of human rights as among the negative impacts and the contribution to sustainable development among the positive impacts. The impact analysis was carried out by each local Sustainability and Holding unit in order to assess the significance of the impacts, a process involving the Group’s internal experts and stakeholders who, in performing their business activities, have a close relationship with the main stakeholders and so have a complete view of the actual and/or potential impacts in the external context in which Enel operates. This analysis took into account the internal company context, including upstream and downstream activities in its value chain, the main stakeholders, and the best practices dictated by the due diligence process, and assessed the (actual and potential) positive and negative impacts generated by the Company. Negative impacts were analyzed according to their significance based on the degree of severity(2) and likelihood, in the case of potential impacts. Positive impacts were analyzed according to their significance(3) and based on their scope and direct and indirect contribution to the SDGs, in line with the commitment made by the Group, and with respect to the management instruments put in place to monitor the objectives set. On the basis of the impact materiality assessment, for reporting purposes the most significant positive and negative impacts generated (actual and/or potential) were selected according to their highest degree of significance for each material topic (1st Level). The table below shows:

  • the most significant impacts – associated with ESG megatrends, the material topic (1st, 2nd, 3rd Level) and related GRI  – both positive and negative in suffered directly and indirectly by the Company from the external context;
  • type: whether actual or potential;
  • the time horizon for their occurrence (short-, mediumor long-term);  
  • impact management: the Company strategies and performance, in line with the management of the main types of risk faced by the Enel Group;
  • additional information: whether the reported impact is or could be a human rights concern; the reference SDGs; the phase of the value chain affected by the impact; the stakeholders that can or could be positively or negatively affected by the impact; whether the topic related to the reported impact is a priority for the stakeholders involved in the materiality analysis process; reference to the Sustainability Plan and to the chapter of the Report that describes in detail the management methods and results related to the impact.

(2) The severity of an actual or potential negative impact is determined by the following parameters: • scale: how severe the impact is; • scope: how widespread the impact is; • irremediable character: how difficult it is to counteract or repair the resulting damage. (3) The significance of a positive impact is determined by the scale and scope of the impact, as well as by the probability of the impact in the event it is potentially positive.

The materiality analysis process and results 2022 - solar panels

Table of the most significant impacts - Positive and negative impacts

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The impacts and associated material topics that have been determined through this process are used to identify the financial risks and opportunities related to the organization’s impacts and for financial assessment purposes. 

As regards financial materiality, in 2022 the Group conducted an assessment, analyzing and identifying the material topics from a financial perspective, namely those that affect or could affect the Company’s financial condition or operating results, and are therefore most relevant to investors. The financial materiality analysis was performed by each Local Sustainability and Holding unit, in order to assess the significance of impacts arising from the external context. This entailed the involvement of relevant stakeholders and experts within the organization who have a close relationship with the main stakeholders, and thus a comprehensive view on sustainability aspects related to risks and opportunities that influence or may influence substantially the Company’s cash flows, development, performance, positioning, cost of capital or access to borrowings in the short, medium or long term. In conducting the financial materiality analysis, Enel also considered the relevance of ESG topics according to the SASB Standard for the prevailing Electric Utilities sector and the Gas Utilities, Solar Technology and Wind Technology sectors. 
On the basis of the financial materiality assessment, for reporting purposes the most significant potential(4) positive and negative impacts were selected according to their highest degree of significance for each topic of the materiality analysis. The table below shows: 

  • the most significant impacts – associated with ESG megatrends, the material topic (1st, 2nd, 3rd Level) and related GRI – both positive and negative generated directly and indirectly by the Company vis-à-vis the external context;
  • the time horizon for their occurrence (short-, mediumor long-term);
  • limpact management: the Company strategies and performance, in line with the management of the main types of risk faced by the Enel Group;
  • alignment with the SASB Standard for the prevailing Electric Utilities sector and the Gas Utilities, Solar Technology and Wind Technology sectors, and the material topic (1st Level) related to the impact;
  • additional information: whether the reported impact is or could be a human rights concern; the reference SDGs; the phase of the value chain affected by the impact; the stakeholders that can or could be positively or negatively affected by the impact; whether the topic related to the reported impact is a priority for the stakeholders involved in the materiality analysis process; reference to the Sustainability Plan and to the chapter of the Report that describes in detail the management methods and results related to the impact.

(4) For financial reporting input purposes, the financial materiality analysis looked at the actual and potential impacts suffered by the Company from a financial point of view. However, in order to select the most significant impacts for reporting, it focused on potential ones with a view to assessing the potential economic effects on the Company.

The materiality analysis process and results 2022 - men at work on solar panels

Table of the most significant impacts - Positive and negative impacts

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The material topics

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The impact analysis model is of fundamental importance as it enables the Company to identify the material topics and focus on the best way to manage them, both in terms of risk management as well as in terms of strengthening opportunities. In addition, the Company must recognize its strategic priorities, taking into account also the view of its stakeholders. Identifying the priority ESG topics with which the Company wants to engage therefore strengthens the profile of impact management. The assessment of the impacts generated and suffered and their relative significance guides the identification of the material topics: identify, within each 1st Level material topic, which 2nd-3rd level topics are material. The result of this analysis are used to help identify and define the objectives to be included in the Strategic Plan and the Sustainability Plan, the achievement of which is contributed to by the various Group Functions and Business Lines, as well as the topics covered by the Sustainability Report and other Corporate Reporting documents. The list of 1st, 2nd and 3rd Level material topics is provided below together with the respective reference GRI as a monitoring and management indicator and the reference to the Sustainability Plan and Sustainability Report 2022.

Material topics

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Glossary

ACT

Word
ACT
Definition
Actual – when associated with one or more items of data, the term describe results that have been achieved, as opposed to estimated or forecast results. In a full reporting system, “actual” data are generally compared with “budget” data (see “BDG”).

AIFIRM

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AIFIRM
Definition
Associazione Italiana Financial Industry Risk Managers - an association representing Italian-based risk managers from the financial, banking and insurance sectors.

AM

Word
AM
Definition
Adjustment Market - a trading venue where producers, wholesalers and end-customers can change the input/withdrawal programs established on the Day-Ahead Market (DAM): it was superseded by the Intra-Day Market (IDM) on November 1 2009.

APA

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APA
Definition
Advanced Pricing Agreement - a type of agreement widely used in OECD countries, under which one or more tax-paying entities and one or more tax authorities establish, in advance, the criteria and technical procedures for applying the principle of free competition to intercompany transactions (Transfer Pricing), so as to prevent disputes over transfer pricing. An APA can be unilateral, bilateral or multilateral, depending on how many financial administrations are involved in the agreement.

API indices

Word
API indices
Definition
All Publications Index - a price index for hard coal. API 2: A price index for hard coal with a calorific value of approximately 6,000 kcal/kg imported into North-West Europe (Amsterdam-Rotterdam-Antwerp). The financial quotation is shown including CIF (Cost, Insurance and Freight) and NAR (Net As Received) in US$ per tonne. API4 - An FOB (Free On-Board) price index for hard coal deliveries to the Richards Bay hub (South Africa) API6 - An FOB price index for Australian hard coal.

ARA

Word
ARA
Definition
Amsterdam-Rotterdam-Antwerp – refers to the ports of Amsterdam, Rotterdam and Antwerp, where transactions for refined products are used as indicators for the North-West Europe market.

ARS

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ARS
Definition
Argentine peso.

B2B

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B2B
Definition
Business to Business - commercial transactions between companies, as opposed to commercial transactions between companies and other categories of customer. It represents the relationships that a company has with its suppliers for the purposes of procurement, production planning and monitoring, or product development, or the relationships that the company has with professional customers, i.e. other companies at different points in the production chain.

B2C

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B2C
Definition
Business to Consumer - describes the relationships that a commercial company has with its customers for the purposes of sales and/or support.

B2G

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B2G
Definition
Business to Government - describes commercial transactions between businesses and government bodies. Also known as Business to Administration (B2A).

BDG

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BDG
Definition
Budget - a management and accounting tool for planning and controlling operational, economic and financial activities in a company's first year of planning.

BESS

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BESS
Definition
Battery Energy Storage System - a battery-based system for storing energy. BESS systems are used to store energy and release it at times of peak energy demand or when renewable energy sources are unavailable. BESS systems can also provide frequency and voltage regulation services in the power grid.

BEV

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BEV
Definition
Battery Electric Vehicle. A type of vehicle powered by a battery-operated electric motor. Unlike internal combustion vehicles, which burn fuel to produce energy, BEVs do not emit pollutants into the environment.

BRL

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BRL
Definition
Brazilian real.

BSO

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BSO
Definition
Build, Sell and Operate. In the renewable energy industry, this means selling assets in order to generate revenue, while remaining responsible for their operation and operational management.

Brent

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Brent
Definition
“Brent” is the term used to describe crude oil extracted from the North Sea. The name derives from the Brent oil field, off the coast of Scotland, which was one of the first oil fields discovered in the region. Brent crude has become a major benchmark for global oil prices and is seen as a high-quality oil with a low sulfur content and a relatively high density.

Business Line

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Business Line
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An umbrella term referring to a more specific area in which a company performs its services.

Business model

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Business model
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A business model defines the logic of how companies create, convey and acquire value in economic, social, cultural or other contexts. Each company has its own specific business model that, in the course of work organization, can undergo major transformations due to both innovation and change.

CAGR

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CAGR
Definition
“CAGR” stands for “Compound Annual Growth Rate” and indicates the growth in value of an investment or business asset over a specific period of time.

CBAM

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CBAM
Definition
Carbon Border Adjustment Mechanism – forming part of the framework of the European Green deal, the Carbon Border Adjustment Mechanism is a European Union Regulation, proposed by the European Commission in 2021 and provisionally agreed by European legislators in December 2022, concerning environmental customs duties on the importation of products with high greenhouse gas emissions into the European Union. EU importers will purchase carbon certificates corresponding to the carbon price that would have been paid if the goods had been produced under EU carbon pricing rules. Conversely, where a non-EU producer can show that they have already paid a price for the carbon used in the production of the imported goods in a third country, that cost can be fully deducted for the EU importer. The CBAM will help reduce the risk of carbon leakage (i.e. the transfer of production to countries with laxer emissions constraints) by encouraging producers in non-EU countries to green their production processes.

CCGT

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CCGT
Definition
Combined Cycle Gas Turbine – a gas-fired combined cycle power plant, in which two thermodynamic cycles (a gas cycle and steam cycle) take place in series, thus increasing thermodynamic efficiency compared to a scenario where both cycles take place independently, and making more effective use of the fuel.

CCIRS

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CCIRS
Definition
Cross Currency Interest Rate Swap - a swap contract in which the parties exchange payments at two different rates and in two different currencies.

CCS

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CCS
Definition
Carbon Capture and Storage – a technology used to prevent the release of large amounts of carbon dioxide into the atmosphere, by separating the carbon dioxide from the emissions and injecting it into geological formations.

CDM

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CDM
Definition
Clean Development Mechanism – defined in article 12 of the Protocol, the CDM allows a country with an emission-reduction or emission-limitation commitment under the Kyoto Protocol (Annex B Party) to implement an emission-reduction project in developing countries. Such projects can earn saleable certified emission reduction (CER) credits, each equivalent to one tonne of CO2, which can be counted towards meeting Kyoto targets.

CDP Climate

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CDP Climate
Definition
Carbon Disclosure Project - the CDP is an international non-profit organization that provides companies, local authorities, governments and investors with a global system of environmental measurement and reporting. The CDP provides a system for measuring, recording, managing and sharing global climate-change information.

CDS

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CDS
Definition
Clean Dark Spread - the CDS is the difference between the wholesale price of electricity and the cost of the coal and carbon needed to produce 1 MWh of electricity. It refers to the power (earnings side) and coal/CO2 (cost side) exposure arising from generating energy with a coal-fired power plant.

CER

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CER
Definition
Certified Emission Reduction - A tradable emissions unit issued under the UN’s Clean Development mechanism (see CDM).

CF@R

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CF@R
Definition
Cash Flow at Risk - a risk metric for measuring the maximum potential decrease in expected cash flows resulting from market volatility and correlation, with a given confidence level, over a given period of time (holding period).

CFC

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CFC
Definition
Controlled Foreign Companies - a concept used by EU tax systems to prevent tax avoidance. It is part of a tax regime designed to counter the fictitious allocation of significant earnings to controlled foreign companies registered in low-tax countries, especially for companies that do not systematically distribute dividends.

CFD

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CFD
Definition
Contract For Difference - CFDs are a financial instrument whose price derives from the value of other types of investment instruments. Instead of involving the physical trading or exchange of a financial asset, a CFD is a transaction in which two parties – a seller and a buyer – agree to exchange money based on the change in the value of the underlying asset between the time the transaction is opened and the time it is closed. If the value of the underlying asset increases, the buyer makes a profit and the seller makes a loss. Conversely if its value decreases, the seller makes a profit and the buyer makes a loss.

CGE

Word
CGE
Definition
Computable General Equilibrium - a macroeconomic theory that attempts to explain how demand, supply and prices for different products are interrelated and simultaneously determined by market forces according to a mechanism known as "general equilibrium".

CLP

Word
CLP
Definition
Chilean peso.

CME

Word
CME
Definition
Chicago Mercantile Exchange - a global derivatives market based in Chicago. The CME is currently the largest open-interest options and futures exchange in the world (by number of contracts in place). The CME trades various types of financial instruments, including interest rates, shares, currencies and commodities. In 2008, its shareholders approved a merger with the New York Mercantile Exchange (NYMEX).

CO2

Word
CO2
Definition
Carbon dioxide - a colorless, odorless gas, produced naturally by animals during respiration and through the decay of biomass, and used by plants during photosynthesis. Although it accounts for only 0.04% of the atmosphere, it is one of the most important greenhouse gases. The burning of fossil fuels is increasing the concentrations of carbon dioxide in the atmosphere, which is believed to contribute to global warming.

CO2 equivalent

Word
CO2 equivalent
Definition
A standardized unit of measurement of greenhouse gases other than CO2, determined by converting amounts of these other gases to the equivalent amount of carbon dioxide with the same global warming potential, where CO2 equals 1. Under the Kyoto Protocol, the following greenhouse gases must be taken into consideration: carbon dioxide (CO2, hence the term “carbon footprint”), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulfur hexafluoride (SF6). This parameter can be used to determine the environmental impacts of emissions on anthropogenic climate change.

COP

Word
COP
Definition
Colombian peso.

CPI

Word
CPI
Definition
Consumer Price Index - a statistical measurement calculated by averaging the weighted prices of a specific basket of goods and services. This basket is based on the purchasing patterns of an average consumer. The most widely used consumer price index is the index number that measures the change over time in the weighted average of prices paid in transactions relating to consumer goods and services traded between economic operators and private end-consumers (free-of-charge transactions, intermediate transactions and transactions involving public bodies are not taken into account when determining the index). This type of index therefore measures the increase in the general level of prices, i.e. consumer inflation for the period concerned (measurement of the cost of living for the specific period).

CSR

Word
CSR
Definition
Corporate Social Responsibility - corporate policies and practices designed to harmonize economic goals with the social and environmental goals of the geographical area concerned, with a view to promoting sustainability. It is a voluntary form of responsibility that companies tend to assume in relation to their main stakeholders.

CSS

Word
CSS
Definition
Clean Spark Spread – the CSS is the difference between the wholesale price of electricity and the cost of the coal and carbon needed to produce 1 MWh of electricity. It refers to the power (earnings side) and gas/CO2 (cost side) exposure arising from generating energy with a gas-fired power plant.

CSV

Word
CSV
Definition
Creating Shared Value - the CSV approach involves reconciling the company perspective with the social, economic and environmental needs of the community in which a company operates, with a view to identifying choices that generate value for both parties.

CapEx

Word
CapEx
Definition
CAPital EXpenditure. In business economics, “CapEx” denotes capital outlays on investments in non-current assets for operational purposes. In practice, this means funds used by a company to acquire, maintain and implement physical assets such as buildings, land, plants or equipment.

Carbon Footprint

Word
Carbon Footprint
Definition
“Carbon Footprint” is a parameter used to estimate greenhouse gas emissions from a product, service, organization, event or individual, generally expressed in CO2 equivalent (i.e. by converting amounts of other gases to the equivalent amount of carbon dioxide with the same global warming potential, where CO2 equals 1).

Carbon Neutral

Word
Carbon Neutral
Definition
The term “carbon neutral” describes a situation where an entity’s CO2 emissions are fully offset by its carbon removal processes.

Circular economy

Word
Circular economy
Definition
A concept linked to the definition of business models aimed at decoupling economic and industrial activities from resource consumption (although, in public opinion, it has been mainly and improperly associated with the issue of waste recycling). Leveraging a major institutional recognition, which occurred with the EU’s 2015 Circular Economy Package, it subsequently became one of the cornerstones of the European strategy in 2020 with the Green New Deal (Circular Economy Action Plan).

Climate Neutral

Word
Climate Neutral
Definition
The term “climate neutral” describes a state of equilibrium between greenhouse gas emissions and the absorption of greenhouse gases from the atmosphere.

Consolidated income statement

Word
Consolidated income statement
Definition
A document that is part of the Consolidated Financial Statements and consists of a classification of costs according to their nature, with a separate presentation of the net profit (loss) from continuing operations and discontinued operations attributable to shareholders of the Parent Company and to third parties.

D&A

Word
D&A
Definition
Depreciation & Amortization – a component part of the cash flow calculation intended to exclude from EBITDA the share of costs incurred in a given year but attributable to subsequent years, and the share of future charges attributable to a given year but which have not yet been paid.

DAM

Word
DAM
Definition
Day-Ahead Market - the venue where electricity sales and purchases are negotiated on the Italian free market. It enables eligible producers, wholesalers and end-customers to sell or buy electricity for the next day.

DPS

Word
DPS
Definition
Dividend Per Share - the sum of the declared dividends issued by a company for each ordinary share in circulation.

DSM

Word
DSM
Definition
Dispatching Services Market - the market on which Terna S.p.A. (Italy’s TSO) procures the necessary resources for managing and controlling the system (resolving intra-zone congestion, creating an energy reserve and real-time balancing). On the DSM, Terna acts as a central counterparty and pays for accepted offers at the price quoted by the bidder (pay-as-bid).

DSR

Word
DSR
Definition
Demand-Side Response - in the energy market, the term “DSR” describes active participation in the market by demand-side entities, i.e. major industrial consumers and aggregated – and duly regulated – groupings of consumers (industrial, commercial). These consumers can modulate their energy consumption, upwards or downwards, in response to market signals, in exchange for an economic benefit. This service helps modulate peaks in supply or demand, thus enhancing the flexibility and stability of the grid.

Direct Emissions

Word
Direct Emissions
Definition
Direct greenhouse gas emissions are emissions from sources owned or controlled by the reporting entity. These emissions can also be referred to as scope 1 emissions.

E2E

Word
E2E
Definition
End-to-End - under the end-to-end principle, where two applications communicate over a network, all the specific functions and operations required by those applications, such as error checking, must be fully implemented and executed at the end nodes (or end points) and not at the intermediate nodes of the network.

EA

Word
EA
Definition
Equivalent Asset – a functional unit, specific to a Business Line, assumed to represent organizational complexity from an environmental point of view and the related business volumes: For GPG: 500 MW of installed capacity. For GIN and ENEL X: million hours worked.

EBIT

Word
EBIT
Definition
Earnings Before Interest and Taxes - represents operating income before the deduction of financial expense and taxes. Also known as Operating Income Before Taxes.

EBITDA

Word
EBITDA
Definition
Earnings Before Interest, Taxes, Depreciation and Amortization - represents gross operating margin and is an indicator of operational performance. It is the sum of “operating income” and “depreciation, amortization and impairment losses”.

EBT

Word
EBT
Definition
Earnings Before Taxes - represents income before the deduction of taxes.

ECB

Word
ECB
Definition
European Central Bank - The European Central Bank (ECB) is the central bank of the European Union and is responsible for Euro Zone monetary policy.

ECB

Word
ECB
Definition
European Central Bank - The European Central Bank (ECB) is the central bank of the European Union and is responsible for Euro Zone monetary policy.

EDF

Word
EDF
Definition
Électricité de France.

EDP

Word
EDP
Definition
Energia de Portugal.

EGM

Word
EGM
Definition
Extraordinary General Meeting - a general meeting of all company members, held to discuss important matters that cannot be deferred until the next annual general meeting.

EIA

Word
EIA
Definition
Energy Information Administration - the statistical and analytical agency of the United States Department of Energy. The EIA collects, analyzes and disseminates independent, impartial energy information to promote rational policy-making, efficient markets and public understanding of energy and its interaction with the economy and the environment. EIA programs cover data on coal, oil, natural gas, electricity, renewable energy and nuclear energy.

EM

Word
EM
Definition
Emerging Markets - an emerging market (or an emerging country or an emerging economy) is a market that has some of the characteristics of a developed market, but does not fully meet its standards. This includes markets that may become developed markets in the future or have been developed markets in the past. The term "frontier market" is used to describe developing countries whose capital markets are smaller, riskier or less liquid than those of "emerging" countries. Since 2006, the Chinese and Indian economies have been considered the largest emerging markets. The nine largest emerging and developing economies by nominal GDP or PPP-adjusted GDP are the BRICS countries (Brazil, Russia, India, China and South Africa), along with Indonesia, South Korea, Mexico, Saudi Arabia and Turkey.

EMIR

Word
EMIR
Definition
European Market Infrastructure Regulation - EU Regulation no. 648/2012 concerning OTC derivatives, central counterparties and trade repositories.

EPS

Word
EPS
Definition
Earnings Per Share - the earnings a company has generated, divided by the number of shares it has issued.

ERU

Word
ERU
Definition
Emission Reduction Unit - a tradable emissions unit issued under the UN’s Joint Implementation (JI) process.

ESG

Word
ESG
Definition
Environmental, Social, Governance - denotes the three key criteria for measuring the environmental, social and governance impact of companies with a view to maintaining sustainable business practices. In economics and finance, these criteria are used to denote all activities relating to responsible investment that pursue the typical goals of financial management, while taking account of environmental, social and governance aspects.

ESMA

Word
ESMA
Definition
European Securities and Markets Authority - the aim of the ESMA is to improve investor protection and promote stable and orderly financial markets.

ETR

Word
ETR
Definition
Effective Tax Rate - the total tax burden on pre-tax profit in percentage terms (taxes/pre-tax profit). For calculation purposes, account is only taken of the income taxes that apply to the total amount allocated to the income statement (current taxes, deferred taxes, withholding taxes, etc.).

EU