Disclosing Sustaninability: Methodological Note

MATERIALITY, GRI STANDARDS AND REPORT SCOPE

In light of the evolution of the Group’s strategic, industrial and sustainability guidelines7, during the second half of 2019 Acea conducted a new round of materiality analysis.

The process, subject to a specific procedure, aims at identifying the main financial, governance, social and environmental issues (the so-called “material” issues) related to the company’s business and at defining their prioritisation on the basis of the assessments expressed by stakeholders and the company.

The activity is divided into phases, including:

• analysis of documentation, which was conducted on about 30 documents (scenario, representative of stakeholder, strategic and internal management requests, etc.) and led to the identification of a list of 19 potentially relevant topics, validated by the top management and submitted for the assessment of stakeholders and Group managers;
• the direct involvement of stakeholders (external and internal) identified with the support of the heads of Group Areas/Companies and Functions through a multistakeholder focus group, in the final phase of which the Company Chairman took part, and some one-to-one telephone interviews. Overall, the discussion involved 43 people, representing 11 categories of stakeholders, who assessed the relevance of the proposed topics also with respect to their impacts on stakeholders;
• the direct involvement of Group managers, through a meeting with 22 company managers. After illustrating the main results of the multi-stakeholder consultation, the managers assessed the relevance of the proposed topics also with respect to the risks associated with them.

Following the meetings, which were led by a qualified facilitator, the opinions expressed by the stakeholders and the Company were elaborated in the 2019 materiality matrix: a two-dimensional chart showing the distribution of the 19 economic, governance, social and environmental issues of low, medium and high importance (prioritisation). In particular, 16 topics are located in the high significance area (score 68-100) and 3 in the medium significance area (score 33-67) (see chart no. 1).

All “material” issues are consistent with the Group’s strategic sustainability planning.

In addition to being presented in a report to the stakeholders and managers involved, the materiality analysis process and its results were shared with the Group’s top management and explained to the members of the Ethics and Sustainability and Control and Risk Committees in joint session with the members of the Board of Statutory Auditors.

CHART NO. 1 – RELEVANT TOPICS FOR THE COMPANY AND ITS STAKEHOLDERS: ACEA “MATERIALITY MATRIX” – 2019

Besides being a strategic reference, the identification of the “Acea materiality matrix” through direct discussions with the stakeholders is necessary to identify the aspects to be included in the sustainability report in greater or lesser depth depending on the results of prioritisation, and to select the indicators required by the adopted standards.

To prepare the Sustainability Report in accordance with the GRI Standards (ed. 2016): Comprehensive option, indeed, it is necessary to illustrate the issue performance in light of:

• “Universal Standards”, which include the reporting principles (GRI 101: Reporting principles) and the 56 general standards (GRI 102: General information);
• the “Specific standards” referring to the economic, environmental and social dimension (GRI 200: Economic, GRI 300: Environmental, GRI 400: Social) considered to be material (“material topics”) and related indicators selected from among the 33 topics envisaged in the specific Standards;
• the management approach (GRI 103: Management approach) for each of the specific topics considered material.

In order to be able to select GRI Material Specific Standards, consideration was given⁸ to both their correlation with Acea’s “materiality matrix” and the meaning thereof conferred by international Standards, in some cases tracing them back to the corporate context and in others establishing their non-applicability⁹.

Following the assessments described above, 26 specific Standards¹⁰ were identified this year out of a total of 33, as consistent with Acea material topics of high significance (see table no. 1). Furthermore, among all the indicators envisaged in the specific Standards considered as “material”, only 2 were considered as not pertinent and excluded from the analysis¹¹.

Only one Acea material topic of high relevance is not correlated to the specific Standards, this being the Consolidation of elements of sustainability in corporate governance, which however, is fully consistent with the general standards dedicated to aspects of governance (GRI 102: General information).

Lastly, also regarding Acea material topics of medium significance present in the report on a less descriptive basis, consistencies were found, albeit not highlighted in the table, with both the material specific Standards and the standards of the General information.

TABLE NO. 1 – CONSISTENCY WITH GRI “MATERIAL SPECIFIC STANDARDS” AND ACEA “MATERIAL TOPICS” OF HIGH SIGNIFICANCE

The principle of materiality was also applied to the definition of the “report scope”, as envisaged both by the standards adopted for reporting and by Legislative Decree no. 254/2016. The latter, indeed, under art. 4, states: “To an extent necessary for ensuring an understanding of the group’s business, its performance, results and the impact it produces, the consolidated declaration includes data about the parent company, its fully consolidated subsidiary companies and covers the topics pursuant to article 3, paragraph 1”.

To define the reporting scope, the same approach was used as in previous editions, subject to a specific procedure. In particular, the adequacy of the criteria of strategic materiality/significance was verified in order to identify the Companies that ensure an understanding of the activities and impacts generated by the Group, taking into account the main business areas and the region where these activities are mainly carried out. As an indicator of commitment in the medium- and long-term, it was considered appropriate to add the value of the investments to quantitative criteria¹² (such as the weight of turnover on the consolidated revenue, value of energy consumption expressed in TOE, etc.), already identified and applied previously. Qualitative criteria (such as a relevant and current role in the qualifying companies, presence in the region in which almost all of the turnover is generated, the majority of the stakeholders are located and a large part of the managed assets are located) highlight the specific role and relevance of the Company in question¹³.

Both types of criteria¹⁴ were applied to the Companies included in the scope of consolidation¹⁵ of the Parent Company in 2019 (see table no. 2) resulting in a proposal of scope that, having heard the opinion of the Head of the Legal and Corporate Affairs Function and the CFO, was shared with Top Management, defined after further data verification and finally explained to the Ethics and Sustainability and Control and Risk Committees.

The companies that are representative for the purposes of reporting the 2019 non-financial information (in accordance with Legislative Decree no. 254/2016 and the GRI Standards), include, in addition to all those present in the previous edition of the document, Gori SpA (see table no. 3)¹⁶.

TABLE NO. 2 – COMPANIES INCLUDED IN THE PARENT COMPANY’S FULL CONSOLIDATION AREA (2019)

     

TABLE NO. 3 – SCOPE OF THE ACEA GROUP CONSOLIDATED NON-FINANCIAL STATEMENT FOR 2019 (PURSUANT TO LEGISLATIVE DECREE NO. 254/2016 AND GRI STANDARDS)

The scope of the Acea Group’s 2019 Sustainability Report is therefore consistent with what was defined the year before, guaranteeing continuity and comparability as well as coverage of the Companies that ensure full understanding of the Group’s activities and most significant sustainability performance. Furthermore, such Companies represent at least: 90% of the turnover, 84% of the average number of employees and 88% of the costs for materials and services of the full consolidation area of Acea Group (including the Parent Company and excluding the companies that had entered that area in the last quarter of the year).

Lastly, in compliance with the principle of completeness required under GRI Standards, the 2019 Sustainability Report includes qualitative and quantitative information regarding corporate and environmental matters of certain companies that are not included within the scope of the Non-Financial Statement. Specifically, this concerns foreign activities and the following companies operating in the water area: Acque, AdF, Publiacqua and Umbra Acque, which were included in some Group data and described in a dedicated chapter (Water Company Profile and abroad activities), giving clear evidence of their individual contribution.

DOCUMENT STRUCTURE AND DISSEMINATION

The 2019 Sustainability Report is divided into three sections: Corporate identity, Relations with the stakeholders and Relations with the environment, supplemented by the Environmental Budget. The latter comprises about 400 items and parameters monitored which quantify the physical flows generated by the activities: the products, factors used (resources), outbound outputs (rejects and emissions) and some performance indicators.

It is important to note that where the document recalls the main economic-financial data and describes corporate governance, data and information are consistent with those given in the Consolidated Report and the Corporate governance report and which may derive from the latter.

The published data and information are provided by the Industrial Areas, Companies and responsible Functions (data owner), they are processed – and possibly reclassified with application of the reference Standards – by the internal workgroup which draws up the document and then submitted it once again to the Areas/Companies/Functions responsible for final validation, formalized by the issuing of a specific certificate.

Downstream of the audit activities by the appointed indipendent auditor, the report distributed by means of publication on the institutional website – www.gruppo.acea.it – and the company intranet, as well as the other formats provided under Legislative Decree no. 254/2016 and the implementing Consob Regulation (implemented by Resolution no. 20267 of 19 January 2018). It is also distributed together with the consolidated financial statements in a kit: to the shareholders, during the annual Shareholders’ Meeting upon closure of the financial year, to directors and middle management of the Group and the public concerned during events.

For further information about the Sustainability Report and its contents, it is possible to write to the following email address: RSI@aceaspa.it.

Mr. Giuseppe Sgaramella
SUSTAINABILITY UNIT

Mr. Antonio Sanna
RISK & COMPLIANCE FUNCTION

¹ After also following other guidance, Acea opted for compliance with the guidelines issued by the Global Reporting Initiative (GRI), applying them starting with the 2002 Sustainability Report with the highest level of “compliance” possible and following its progressive development.
² Article 1, paragraph 1073 of the 2019 Budget Law introduced an amendment to Legislative Decree no. 254/2016, art. 3, paragraph 1, letter c, also prescribing the illustration of the methods for managing the main risks.
³ Legislative Decree no. 254/2016 as amended, in particular articles 2, 3, paragraphs 1, 4.
⁴ In 2016, when the previous version of the Guidelines (GRI-G4) were superseded and further developed, the Global Reporting Initiative (GRI) published the GRI Standards – Consolidated set of GRI Sustainability reporting standards 2016 – requiring their adoption with respect to the 2018 financial year. Acea has anticipated such application, with the Comprehensive option, since the 2017 Sustainability Report. In October 2019 GRI made the Italian translation of the GRI Standards available on the website www.globalreporting.org (Raccolta consolidata dei GRI Sustainability Reporting Standards 2018).
⁵ Legislative Decree no. 254/2016, art. 4 and art. 5, paragraph 3.b.
⁶ Legislative Decree no. 254/2016, under art. 3, paragraph 10, provides that: “The subject entitled to perform the statutory audit of the Sustainability Report (...) or another subject entitled to carry out the statutory audit as specifically designated” issues “a certification concerning the compliance of the provided information with the requirements under this legislative decree and the principles, methods and procedures provided under paragraph 3”. Namely principles and methodologies: “provided by the reporting standard used as reference (...)”.
⁷ In April 2019, the Acea SpA Board of Directors approved the 2019-2022 Business Plan, and in December 2019 the 2019-2022 Sustainability Plan.
⁸ It is important to consider that both the specific GRI Standards – each of which includes a description of the management method and a number of indicators – and Acea material topics both refer to contents that are far more complex and detailed than their brief name may suggest which, given their level of detail, cannot be presented at this time. See the GRI Standards – Consolidated set of GRI Sustainability reporting standards for 2016 – on the website www.globalreporting.org (now also in Italian translation: Raccolta consolidata dei GRI Sustainability Reporting Standards 2018).
⁹ This led, for example, to the exclusion of the Specific standards related to Presence on the Market and Human Rights which, according to the meaning given to them by the GRI, are more pertinent to multinational enterprises and not suited to the reality of the Group’s most significant operations.
¹⁰ One more than the last sustainability report. In particular, by virtue of the results of the materiality analysis that brought the topic of Company well-being, diversity and inclusion to the forefront, the specific GRI Standard No discrimination was also selected.
¹¹ Two more indicators have been included in the reporting compared to the last reporting cycle, relating to the specific GRI Material and Biodiversity Standards, see The GRI Table of contents.
¹² Thresholds of significance were defined for each of the quantitative elements considered.
¹³ “Inconsistent” elements were also identified for qualitative criteria, focusing on materiality (such as “vehicle” companies, companies under liquidation with non-determining positions for the purposes of operations, companies operating outside of the territory of reference, etc.).
¹⁴ The conditions of contemporary presence of quantitative and qualitative factors were also established, aimed at defining the strategic significance of a Company for the Group and its representative ability for the purposes of disclosing non-financial information.
¹⁵ As required by Legislative Decree no. 254/2016, art. 4, para. 1: “To an extent necessary for ensuring an understanding of the group’s activity, its performance, results and the impact it produces, the consolidated declaration includes data about the parent company, its fully consolidated subsidiary companies”.
¹⁶ In light of the applied criteria, the following Companies are outside of the scope of the consolidated non-financial Statement for 2019: AdF, Berg, Bioecologia, Iseco, Demap, Acque Industriali, Cesap Vendita Gas, Umbria Energy, Acea Energy Management, Parco della Mistica, Acea Dominicana, Aguas de San Pedro, Acea International, Acea Perù, Consorcio Acea-Acea Dominicana, Consorcio Servicios Sur, Acque Blu Arno Basso, Acque Blu Fiorentine, Crea Gestioni, Crea, Lunigiana, Ombrone, Pescara Distribuzione Gas, Sarnese Vesuviano, Umbriadue Servizi Idrici, Acea Liquidation and Litigation, KT4, Brindisi Solar, Solaria Real Estate, Compagnia Solare 2, Compagnia Solare 3, SPES, Acquaviva, Luna Energia, Sisine Energia, Acea Solar, Marche Solar, Urbe Solar, Urbe Cerig, Trinovolt, Acea Sun Capital, Technologies for Water Services and Acea Innovation.