For the first time, for fiscal year 2020, Italgas presented its Annual Financial Report in the form of an Integrated Annual Report. Large companies, which have a leading role in their business, are now required not only to offer an annual report on their financial performance, but also to inform their stakeholders of the impact they have made in the operating context. What are the goals that the Company has set itself and the advantages of the new form of reporting? What were the challenges that Italgas encountered in preparing its first Integrated Annual Report?
The decision to present the Integrated Annual Report, as our CEO Paolo Gallo has indicated in his Letter to Shareholders, was guided by the “aim to paint an effective and transparent picture of the Company’s ability to create value over time, as well as of the underlying link between the strategic priorities, governance decisions, risks management and financial performance, and the social, environmental and economic context in which the company operates.” We are aware that we work in a constantly changing environment and we ask ourselves how we can contribute to its further improvement.
The focus has shifted from specific shareholders, to whom traditional financial statement communication was mainly addressed by ensuring a correct and effective representation of financial information, to all stakeholders of the Italgas Group, which indeed include our suppliers, customers and sales companies, the communities in which we operate, our employees, authorities and associations, and of course our shareholders.
The increasing attention to sustainability issues, the will to maintain an open communication with all the Group’s stakeholders and the search for continuous improvement were among the drivers of this change. It was not just an exercise aimed at satisfying increasing compliance requirements imposed by the legislation.
It was a “important integration process”, as reminded by our CEO in the Letter to Shareholders. A “process that has involved the entire corporate structure with the aim of permeating “sustainability” into the all corporate operating processes to achieve the so called embedded sustainability”.
The Company was asked to make an important shift in its way of thinking, with a major effort from the entire organization, while asking all functions to get involved. First of all, “basic” choices were made on how to build the new report so that it would optimally reflect characteristics of the sector in which we operate, the peculiarities of Italgas, and the features of our strategy and business model. Moreover, both the Board Committees and the management were involved in this process. At the same time, the reporting and internal control systems were reviewed and improved in order to continue to guarantee the accuracy that has always characterized the Group’s reporting, also in view of the significant increase in the granularity and abundance of the data presented and the need to ensure consistency with the data reported by the subsidiaries.
In this context, there are three main areas on which we invite readers, usually focused on financial data, to concentrate their attention:
1. Italgas Values, Mission and Purpose are the starting point.
Our group has over 180 years of history. The principles underlying Italgas’ purpose are fourfold. We reaffirm our unwavering commitment to integrity of behavior and responsibility toward the communities served. We promote the fundamental role of gas networks in the process of energy transition toward a decarbonized and circular economy. We contribute, through digitized networks, to the development of renewable gases such as biomethane and hydrogen. We aim to guarantee and improve service quality, contribute to the creation of sustainable and smart cities, and generate long-term value for customers, the market, the territory and all its stakeholders, while respecting the environment.
2. The materiality analysis
already included in the 2019 Non-Financial Statements, has been deeply expanded and revised. We directly involved our stakeholders and collected their opinions. These were internal and external stakeholders. The highest relevance, from both an internal and external perspective, is attributed to three issues: environmental sustainability and the fight against climate change, asset quality and safety, and innovation.
3. The representation of business risks.
Now in the table form, has been integrated and expanded, involving all the main risk owners of the Group and incorporating some of the features of the risk section of the 2019 NFS. The tabular representation made it possible to group risks with similar characteristics by macro-categories, illustrating the main management methods and highlighting the link with the material issues mentioned above. At the same time, the section dedicated to sustainability issues has been enlarged with a special focus on climate change issues, clearly highlighting the main emerging risks that characterize the Group’s activities, in line with the requests of shareholders and sustainability indices. These are medium- to long-term risks that, although they do not have a significant impact today and may not materialize in the future, have the potential to impact the Company’s strategy.
All this, together with the satisfaction for the results that the Group achieved at operational level and in terms of sustainability performance, proves Italgas ability to adapt to change through proactive behavior.