Blog Post - ESG: the Perfect Synthesis Between Profit and Sustainability

Snam is committed to an ESG scorecard with concrete, measurable goals

ESG translates as a commitment to implementing environmental and social plans and corporate governance best practices. ESG (Environment, Social and Corporate Governance) issues have now become a key factor in increasing a company's long-term value and achieving better financial performance, recognising the importance of generating value not only for the business but also for its stakeholders.

For Snam, this commitment translates into integrating ESG issues into its business strategy, setting precise and quantitative targets and reporting on them periodically, sharing the progress made.


From environmental protection to the fight against inequality: public opinion is becoming more and more attentive


In general, the global increase in ESG investments in recent years has been driven by the growing importance of sustainability in public opinion, particularly among younger people. This has been further accelerated by the socio-economic effects of the pandemic. In his annual letter to the companies in which he invests, Blackrock CEO Larry Fink wrote that in the post-pandemic phase, which will be accompanied by hardship and increasing inequality, companies will have to increasingly recognise and serve the interests of all stakeholders, promoting a tectonic shift towards pursuing business activities in a sustainable manner.

Institutional and private investors have also realised that they want more from their investments than just financial return. They want to help support activities that do not destroy - indeed, aim to improve - the environment and reflect best social and good governance practice.

Cutting emissions, using energy from renewable sources, circular economy; the broad theme of diversity and inclusion ranging from gender equality to respect for ethnic and religious minorities; internal control activities to combat corruption; good relationships with suppliers, who are asked to operate in a similar manner; equal pay and fair working conditions: all this and much more goes into the composition of the complex puzzle of ESG factors. These virtuous behaviours also create economic value. According to Morningstar data, 89% of ESG funds outperformed their target market in the first quarter of 2020, at the height of the pandemic.


Snam's dashboard to publish its targets and monitor progress


For Snam, the concepts of economic, environmental and social sustainability have long been part of its business model, and ESG factors - increasingly integrated into the company's strategy and management - guide its choices to the benefit of all stakeholders.

The guiding thread of Snam's long-term strategy will be the Net Zero Carbon Strategy, i.e. achieving carbon neutrality by 2040 for scope 1 and 2 emissions, in line with the global warming containment target set by the Paris Agreement.

Snam has also decided to put its ESG commitments on paper by drawing up and publishing an ESG scorecard (https://www.snam.it/it/sostenibilita/strategia_per_futuro/esg_scorecard.html), a sort of dashboard with specific indicators for each of the  various areas, that serves to keep the parameters of this journey under control.

The scorecard parameters include 22 quantitative, measurable targets in 13 relevant areas, in order to provide stakeholders with an overview of Snam’s commitment and growing sensitivity in the ESG area, allowing them to monitor results. Some examples? On the environmental front, among other things, a major increase in the commitment to biomethane and the implementation of significant improvements in energy efficiency are planned, as is the protection of soil and biodiversity. In the social area, the focus is on employees, suppliers, occupational safety and support for local communities, with an increase in the presence of women in executive and middle management positions and of accredited social enterprises in the list of suppliers.

The company is also committed through various initiatives to encouraging the study of STEM disciplines amongst young girls, in order to contribute to the achievement of an effective gender balance in this sector. Finally, when it comes to governance, commitments range from customer satisfaction to verifying the reputation of counterparties. The objective is a 'sustainable success', also included by Snam in its bylaws together with its corporate purpose 'Energy to Inspire the World', which more specifically entails 'the company's commitment to encouraging the energy transition towards ways of using resources and energy sources that are compatible with environmental protection and progressive decarbonisation goals'. The purpose of an organisation is its reason for existing. As the British writer and essayist Simon Siniek pointed out, in comparing a company to a car: profit is not the destination but the fuel needed to reach the destination. A company's destination is its purpose.

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25 March 2021 - 18:00 CET