We have structured an analysis of the impacts that climate change may have on our business, developed following the guidelines of the TCFD (Task Force on Climate-related Financial Disclosure). The analysis started in 2019 - resulting in disclosures from the 2019 NFS on - and has been updated over time to take into account perimeter changes that have occurred, it also covered four lines: Governance, Strategy, Risk Management, Metrics & Targets.

The main phases in the process were:​

  1. Identification of the reference scenarios;
  2. Identification of the variables present in the scenarios that could impact ERG’s business;
  3. Identification of the risks and opportunities related to climate change in relation to ERG’s business;
  4. Identification of the corporate functions responsible for the governance, monitoring and management of climate change issues;
  5. Identification of the strategies for managing the risks or achieving the opportunities.

The scenarios chosen in 2019 were confirmed from among those most widely accredited in literature, more specifically the one developed by the Intergovernmental Panel of Climate Change (IPCC) that shows the response of the Earth’s climate to changes in atmospheric concentrations of greenhouse gas (GHG) in the absence of mitigation measures (physical scenario).

We also considered two transition scenarios that focus on assumptions of the development of policies and technologies to reduce GHG emissions:

  • the Below 2 Degree Scenario (B2DS) of the International Energy Agency (IEA), used by the Science Based Target Initiative (SBT) to set the greenhouse gas emission reduction targets;
  • the Sustainable Development Scenario (SDS) of the International Energy Agency (IEA) which uses the UN's Sustainable Development Goals (SDGs) as targets.

The variables that may impact ERG’s business were subsequently identified and classified into Physical (acute and chronic) and Temporary (Regulatory, Market, Reputational, Technology) events.

At the same time, the analysis aimed to identify all the opportunities generated by climate change that could work in the Group’s favour in developing its business. The assessment confirmed that ERG, having already achieved ante litteram the “energy transition” towards a decarbonised economy, has already implemented actions and processes that allow it to be resilient and ready to face a predominantly green generation model.

The governance of climate change issues is divided between the Board of Directors and  Management:

  • The Board of Directors is responsible for strategic guidance;
  • Management is responsible for managing the assets, with an increased focus on issues such as managing maintenance to optimise production, technological development and increasing the efficiency of plants in order to extract the greatest possible value, the integrity of assets and the environmental and safety management needed to ensure business continuity. 

In the new 100% Renewable structure, we expect a further improvement in risk management related to climate change, as strategies will be 100% focused on technological (through the development and operation of Wind & Solar plants) and geographical diversification (9-10 target countries in the new Plan). This will allow us to further offset any negative impacts of climate change.

In conclusion, in order to counteract the risks arising from climate change and seize any opportunities, we continue to make our choices in a conscious and responsible manner, implementing a climate strategy (understood as the reduction of industrial impacts) integrated into the business strategy, based on the following actions:

  • maintaining and developing, both at Board and Management level, a positive, change-oriented and resilient culture and approach, and developing the Group's ability to evolve and reposition itself in a timely manner within the energy transition, taking advantage of its challenges and opportunities;
  • implementation of a plan for the development and production of renewable energies (wind and sun) in Italy and abroad, which has already made it possible to limit CO2 emissions into the atmosphere;
  • pursuit of a strategy of geographic and technological diversification, in order to compensate for the negative impacts of climate change;
  • continuous monitoring of regulatory developments in the countries in which we operate, and the establishment and maintenance of effective and long-lasting relations with all stakeholders;
  • introduction into the portfolio strategy of bilateral contracts and Power Purchase Agreements/PPAs for sales of electricity with medium/long-term maturity to counteract the greater volatility and any downward pressure on prices, linked to climate change (many of which with opposing impact on prices during the energy transition period);
  • specific communication activities to maintain the Group’s high level of reputation, which include, among other things, a structured Corporate Social Responsibility process (sustainability reporting, monitoring of sustainability objectives, ESG rating).