Sustainability Report Terna Is a Leading Grid Operator for Electricity Transmission in Italy and Guarantees Its Safety, Quality and Cost-Effectiveness Over Time
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2011 Sustainability Report Terna is a leading grid operator for electricity transmission in Italy and guarantees its safety, quality and cost-effectiveness over time. It ensures equal access conditions to all grid users. It develops market activities and new business opportunities with the experience and technical competence acquired in the management of complex systems. It creates value for shareholders through a strong commitment to professional excellence and responsible attitude towards the community, while respecting the environment in which it operates. Translation from the Italian original, which remains the definitive version. 2011 Sustainability Report Contents Letter to our stakeholders 4 The Concise Report 7 The Concise Report 8 Terna 8 The most significant events 8 The numbers of 2011 9 The Sustainability Report: contents and novelties 9 The photographs 9 The main sustainability results 9 Responsibility for the electricity service 10 Economic responsibility 10 Environmental responsibility 11 Social responsibility 11 Methodological note 15 Methodological note 16 Materiality 16 Structure of the report 16 Boundary and indicators 17 Comparative analysis of sustainability performance 17 GRI Content Index 20 Connection with the Global Compact’s 10 Principles 25 Terna’s Profile 27 Presentation of the Company 28 The Terna Group 28 The Strategic Plan 30 Ownership Structure 31 Corporate Governance 31 Transmission activities and processes 33 Other activities 34 Development Abroad 36 Sustainability 39 Terna’s concerns 39 Sustainability Governance 39 Sustainability results and objectives 42 Controversies and litigation 45 Promotion of Corporate Social Responsibility 48 Sustainability Indexes 50 Awards 50 Medium-term prospects 51 Stakeholder engagement 52 Shareholders, financial analysts and providers of capital 54 Employees 54 Grid users and companies in the electricity industry 55 Society and Local Communities 56 Suppliers 58 Media, opinion groups and the scientific community 59 2011 Responsibility for the electricity service 65 Our approach 66 The security of the electricity system 67 Information security 70 Service continuity and quality 72 Grid Development 74 Sustainability Report Grid Development Activities in 2011 74 Connecting new plants 80 2 Plant maintenance 81 Engineering and innovation 84 Economic responsibility 89 Our approach 90 Revenues and risk management 90 Revenue structure and regulatory framework 90 Risk management 93 Terna’s economic impact 98 Value added 98 Other economic effects 99 Relations with shareholders 101 Share performance 101 Relations with suppliers 104 Relations with companies using the electricity service 108 Environmental responsibility 111 Our approach 112 Lines and local communities 113 Consultation 113 Reducing the environmental impact 116 Biodiversity 120 Lines in protected areas 120 Management of impacts on biodiversity 122 Lines and birdlife 126 Energy efficiency and climate change 128 Energy consumption 128 Direct and indirect emissions of CO2 129 Other indirect emissions of CO2 131 Other atmospheric emissions 134 Initiatives to reduce own emissions 134 The Development Plan and reduction of the electricity system’s CO2 emissions 138 Resource use and waste management 141 Resources 141 Waste 143 Costs for the environment 146 Social responsibility 149 OUR PEOPLE 150 Our approach 150 Changes in personnel composition 150 Search and selection 154 Training 156 Personnel development and management 162 Diversity and equal opportunity 164 Internal communication 167 Occupational health and safety 169 Main 2011 activities 170 Occupational injuries 172 Industrial relations 173 SOCIETY 176 Our approach 176 Human rights 176 The safeguard of legality and the prevention of corruption 177 Relations with institutions 178 Participation in Associations 178 Community initiatives 179 Indicator Tables 185 Acronyms 198 Glossary 200 Report 211 Independent report on the limited assurance engagement of the Sustainability report 2011 212 Contents 3 Letter to our stakeholders For Terna, 2011 was another year marked by good economic results, the seventh consecutive one at a time of economic turmoil both nationally and internationally. Particularly, in this last year, the difficult Italian situation has led to adopting extraordinary tax policy measures – such as the “Robin Hood Tax” – that have also significantly affected the Company’s accounts. We are therefore especially pleased to underline our capability of creating value that has allowed us, in 2011, to maintain the distribution of dividends at the same level of 2010. The shareholder return was only one of the positive results of our stable business approach based on solidity and versatility that aims at building lasting results also by focusing on sustainability and on all stakeholders: even in this area, our commitment has received growing recognition over time. In 2011, investments in developing the electricity transmission grid, that continues to represent the principal crossroad of economic, environmental and social aspects of our operational activity, reached 1,229 million euros, surpassing 67 million euros invested in 2010. This is how Terna most significantly expresses its role as a useful company for the country: investments in electricity infrastructures improve the service’s quality and safety, with important consequences also regarding the potential of the economic system. We are therefore pleased to underline how some of the principal projects we implemented and are currently implementing – as for example the SA.PE.I. submarine cable inaugurated in 2011, and the Sorgente-Rizziconi and Montecorvino-Benevento power lines – regard Southern Italy and the Islands. The positive effects of developing the transmission grid include creating employment – in 2011, nearly 3,500 full time employees worked for contractors and sub-contractors in Terna’s building sites – and contributing to reducing CO2 emissions from the electricity service, deriving from increased grid efficiency and eliminating restrictions to renewable energy production. Grid development also represents the main area of Terna’s interaction with external stakeholders that is particularly expressed in presenting and approving the Development Plan, in coordination activities with the local governments and in collaboration agreements with leading environmentalist associations. In 2011, voluntary coordination activity continued with Regional Authorities and Local Bodies for identifying shared solutions for new infrastructure locations. The agreement with the WWF for sustainably developing the electricity grid led to implementing mitigation and enhancement works in three WWF Oases in Tuscany and in Sicily, that were completed and inaugurated during the past year. In December, Terna signed a Memorandum of Understanding with Legambiente for promoting energy sustainability. For the first time in 2011, the grid’s Development Plan was presented also to associations representing production categories and to consumer associations: it is important to point out in this respect that, as of 2005 to the present, Terna’s activities generated savings of 4 billion euros for the Italian electricity system. 2011 Sustainability Report 4 In the new 2012-2016 Strategic Plan, investments for building new power lines will continue to play a central role for the Company’s growth and will increasingly focus on developing new activities. Among these, building storage systems is particularly important as they are functional to safely managing an electricity system that in the past few years has witnessed the rapid growth in number of electricity production plants from non-programmable renewable sources. Storage systems are an important element in building a smart grid where the transmission grid has a decisive role. In line with the guidelines of the Strategic Plan, in April of this year Terna adopted a new Group structure – illustrated within this Report – that intends to promote growth by fully enhancing people. The guidelines will also be applied to focusing on responsible management: our objective is that all the companies of the Group adopt the sustainability governance instruments implemented by the Parent Company, from the Code of Ethics to Model 231, starting in 2012. Developing business requires maintaining high standards of professional capacity. For this purpose, training investments continued to be high also in 2011: 97% of personnel was involved in training activities that overall reached 51 average hours per capita, 2 more compared to 2010. The attention towards our people, that was also expressed in a survey on people satisfaction, will continue to be an important foundation of Terna’s sustainability; this will be just as important as stakeholder relations – particularly for grid development investments – as improving environmental performance that in 2011 registered a reduction of CO2 emissions and of the amount of SF6 leakage, and as supporting cultural and solidarity activities. In presenting the Sustainability Report, we feel it is important to also underline our commitment towards complete and transparent information. This includes considering the new information requests of the G3.1 version of the GRI Reporting Guidelines, focusing on integrated reporting, confirmed by Terna’s participation in the Pilot Programme of the Integrated Reporting Council; this also implies online communication on sustainability issues enhanced by a dedicated section on electric and magnetic fields and last but not least,