Climate change and long-term scenarios

In the following pages, Enel sets out its strategy founded on decarbonization, innovation and digitalization, with a sharp focus on the fight against climate change. We describe an integrated business model directed at   sustainable development. In order to promote transparency in our climate-change disclosures, we intend to give our stakeholders all the tools and information they need to appreciate how the Group is tackling climate change with diligence and determination. Enel has therefore publicly committed itself to adopting the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)(1) of the Financial Stability Board, which in June 2017 published specific recommendations for the voluntary reporting of the financial impact of climate risks. The Group is also taking on board the “Guidelines on reporting climate-related information” published by the European Commission in June 2019, which, together with the TCFD recommendations and the GRI standard(2), constituted the main benchmark framework for the Group’s reporting on climate change issues in 2019.

The Enel Group is committed to developing a business model that is consistent with the objectives of the Paris Agreement (COP21)(3) to contain the average increase in global temperature below 2 °C compared with pre-industrial levels and to continue to limit this rise to 1.5 °C. In 2019 Enel officially reaffirmed this commitment, responding to the call for action by the United Nations and being the only Italian company to signthe commitment to limit the increase in global temperatures to 1.5 °C and to achieve zero emissions by 2050.
The Group’s ambition for leadership in the energy transition and the fight against climate change was further strengthened in 2019: the target for the reduction of direct emissions from generation by 2020, which was set in 2015 at 350 g/kWheq of CO2 with a 25% reduction compared with 2007, wasachieved one year earlier. In fact, 2019 closed with a reduction of 37% compared with 2007, to 296 g/kWheq of CO2. This objective has been certified by the Science Based Targets initiative (SBTi)(4) as consistent with the 2DS(5) scenario of the International Energy Agency, which defines an energy system development path and an emission trajectory consistent with at least a 50% chance of limiting the average global temperature rise to 2 °C. As a result, the reduction target for 2020 has been updated in the new 2020-2022 Strategic Plan to 254 g/ kWheq of CO2.

In September 2019, Enel further enhanced its commitment by setting a new target for 2030, with which it undertook to reduce direct CO2 emissions per kWh by 70% by 2030 (Scope 1) compared with 2017. This target, for direct emissions from electricity generation, is nearly three times as ambitious as the previous objective for 2020 and is fully aligned with the Paris Agreement (COP21). In addition, the objective has been certified by the Science Based Targets initiative, which is currently the most ambitious certification criterion available for the utility sector and is consistent with the Well Below 2C pathway of the SBTi and the IEA B2DS scenario. This acceleration is also a response to the appeal of the Intergovernmental Panel on Climate Change (IPCC) as part of its effort to strengthen the global response to the climate change threat. Included in the special report, the appeal warns of the impacts of global warming of 1.5 °C above pre-industrial levels and the related global greenhouse gas emission pathways.

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In parallel with direct emissions, the Group has set a new target, also certified by the Science Based Targets initiative, to also reduce indirect emissions associated with the consumption of gas by the Group’s end users (indirect emissions from the use of products sold), which represent a significant source of indirect Scope 3 emissions, by 16% by 2030.

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The Group develops short-, medium- and long-term scenarios for the energy industry and for macroeconomic and financial conditions in order to support its strategic and industrial planning and the evaluation of   investments and extraordinary corporate transactions. The role of climate change in these scenarios is increasingly important in terms of:

  • acute phenomena (heat waves, flooding, hurricanes etc.) and their potential impact on industrial assets;
  • chronic phenomena related to structural changes in the climate, such as the rising trend in temperatures, rising sea levels etc., which bring about changes in the output of generation plants and in electricity consumption profiles in the residential and commercial sectors;
  • transition of the various industrial and business sectors towards a green economy characterized by ever lower emission levels.

The issues connected with future trends in climate variables (in terms of acute and chronic phenomena) define the socalled “physical scenario”, while the issues associated with the industrial and economic transition towards solutions to reduce atmospheric concentrations of CO2 are the characteristic elements of the “transition scenario”. The adoption of these scenarios and their integration into corporate processes takes account of the guidelines of the TCFD and enables the assessment of the risks and opportunities connected with climate change.

(1)The TCFD is the task force established by the Financial Stability Board in December 2015 to develop voluntary guidelines and recommendations for companiesin order to provide information to all stakeholders on the risks and opportunities associated with climate change.
(2) The Global Reporting Initiative is an independent international organization that develops global reporting standards for sustainability.
(3) The agreement reached in December 2015 at the 21st meeting of the Conference of the Parties (COP21) incorporates a commitment to limit the increase of global temperature to below 2 °C and if possible below 1.5 °C compared with pre-industrial levels.
(4) An initiative to provide companies with targets for reducing greenhouse gas emissions (GHG) consistent with what the current level of scientific knowledge deems necessary for limiting the rise in global temperature well below 2 °C.
(5) The 2DS scenario describes an energy system consistent with an emissions trajectory which, with an 80% probability, would make it possible to limit the increase in the average global temperature to no more than 2 °C.

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