Sustainable Development 2014 Progress Mission

Eni for Sustainable development 2014 progress Mission

We are a major integrated energy company, committed to growth in the activities of finding, producing, transporting, transforming and marketing oil and gas. Eni men and women have a passion for challenges, continuous improvement, excellence and particularly value people, the environment and integrity. Eni for Sustainable development 2014 progress

Eni confirms its inclusion in the main sustainability indices Message to our stakeholders

The last year has been one of significant change for our company. We began a profound process of transformation in order to strengthen the company and make it able to create long term value. The first step in this process was the company’s reorganization from a divisional to a completely integrated model, which is simpler and more compact, in order to improve flexibility and efficiency. This reorganization brought immediate benefits in terms of processes speed and costs reductions. During this transformation, sustainability has played an even more central role in the Strategic Plan. The important internal debate and the institution of the Sustainability and Scenarios Committee at Board of Directors level is the evidence to this commitment. The Sustainability and Scenarios Committee is the first of its kind in the Oil & Gas industry and has a particular role to play: it supports the Board of Directors in the implementation and continuous improvement of strategies, focusing on integrated sustainability scenarios. In addition to focusing on continuous energy efficiency improvement, which is already in line with the best global standards, Eni is working on a long-term strategy to redefine the production mix and to promote access to energy, in compliance with the environmental safety requirements related to combatting climate change in the long term. Following the approach that Eni has always adopted, we continue to promote cooperation and dialogue with local communities, respect for the environment and workers’ rights, and the development of sustainable resources. In the Countries where we operate, we promote a dialogue based on transparency and integrity employing concrete actions for the transfer of know-how, support for the development of local content, investments in social projects and above all a contribution to the development of local infrastructure projects to enable access to energy. Our strategies are not focused solely on short-term goals, Eni’s approach is symbolized by the “dual flag”: our flag but rather look towards a more profound business alongside the local flag, not only at operational plants transformation that is in line with the European 2030-2050 and fields, but also in the towns and villages where the objectives, promoting the use of gas and the development development projects, which will eventually belong to the of renewable resources. host Country, are implemented. The outlook is long term The promotion of the use of natural gas is a key factor to meet and is aimed at directly involving the Countries and local the demand for energy in the developed Countries and the communities in the projects by sharing technological growing ones in developing Countries. The use of gas, along know-how and investing in infrastructure projects, such with improved energy efficiency and the continuous reduction as those providing access to energy. of emissions, is our response to climate change which will Eni was the first among the IOCs to invest in electricity lead us towards a low carbon future. generation capacity in Africa, making it possible for the Furthermore, we are using technological innovation to support natural gas produced to be used locally. a green strategy that, in the field of green chemistry and The access to energy programmes are part of a wider bio-refining, promotes new entrepreneurship locally. programme of initiatives aimed at benefitting local Our projects and initiatives demonstrate that it is possible communities that also cover primary health care and support to implement innovative solutions that convert traditional policies that facilitate the population’s access to health production cycles into a form of production that is sustainable services and infrastructure. We also support education and and has greater value added, even in sectors that are training and help with the introduction of new management currently experiencing difficulties. practices of local cultivation to promote economic Our history, our achievements, the energy of our people, development. together with our technical, technological and operational A fundamental aspect of sustainability is the protection of know-how, demonstrate that Eni can make a great the environment throughout the initial planning and design contribution to find solutions to the new sustainable stages. This approach is a distinct hallmark of our modus development challenges. operandi. We conduct our operations in compliance with international standards and agreements, as well as with national laws, regulations and policies. Environmental management is based on prevention, protection, information and participation criteria and its aim is to adopt the best technologies, mitigate the environmental impacts and protect Claudio Descalzi biodiversity. Chief Executive Officer

Within Eni, we are committed to the growth of our human resources, developing skills, expertise and a strong sense of belonging, which are at the root of our company’s success.

1 2 3 Overview Projects and activities Results 8 Eni in the world 28 Governance 98 Performances and Business Ethics 10 Sustainability objectives 28 Governance model 122 Reporting principles and results 30 Human rights and criteria 13 Scenario 33 Integrity and transparency 126 Independent 13 Scenario and competitive 36 Fighting corruption Auditors’ Report context 38 People 15 Agenda for sustainable 39 Safety development 43 Internal sharing 17 Stakeholder engagement of corporate strategy 21 Materiality 45 Professional development 22 Materiality definition process 48 Internal mobility 24 Material issues 54 Environment 54 Environmental Management System 55 Biodiversity and water conservation 58 Oil spills management 61 Local development 61 Relationship with local stakeholders 64 Local content and value creation 68 Community investment and expenditure for the territory 76 Access to energy 84 Energy and climate 85 Greenhouse gas emissions reduction 89 Energy efficiency 90 Renewables 92 Climate risk in business evaluations 93 International partnerships

Case studies 50 Operational excellence and innovation at the root of exploration success 79 Innovation for industrial restructuring and the creation of new opportunities 94 Natural gas: a key role in the future energy mix

Eni for 2014 and the related GRI Content Index are available on eni.com “Eni strives to be a leader in innovating corporate communication and promoting awareness of future energy issues, in order to share this knowledge with our stakeholders and with the public opinion.”

CEO Claudio Descalzi Eni in the world > 8 Sustainability objectives and results > 10 Scenario > 13 Materiality > 21 8 overview | projects and activities | results

Eni 1.1 in the world

Eni is an integrated energy company employing more than 83,000 people in 83 Countries around the world. It is a major player in the exploration and production of oil and natural gas, the refining and sale of oil products, the generation and marketing of electricity, chemicals and engineering and construction.

Activities worldwide Main indicators

Austria • • • • • Australia • • • • • BelgioBelgium • • • • • Azerbaijan • • • • • Bulgaria • • • • • CinaChina • • • • • CiproCyprus • • • • • TEastimor T imorEst Europe • • • • • CroaziaCroatia • • • • • India • • • • • RepubblicaCzech Republic Ceca • • • • • Indonesia • • • • • People*,le* ooff whwhich:hich: DanimarcaDenmark • • • • • Iraq • • • • • FranciaFrance • • • • • GiapponeJapan • • • • • GermaniaGermany • • • • • Kazakhstan • • • • • GreciaGreece • • • • • Kuwait GroenlandiaGreenland MalesiaMalaysia • • • • •

• • • • • Asia & Oceania • • • • • UngheriaHungary • • • • • Myanmar • • • • • IrlandaIreland • • • • • Oman • • • • • Women Local employees abroad ItaliaItaly • • • • • Pakistan • • • • • LussemburgoLuxembourg • • • • • Papua NuovaNew Guinea Guinea • • • • • Malta • • • • • FilippinePhilippines • • • • • NorvegiaNorway • • • • • Qatar • • • • • PaesiNetherlands Bassi • • • • • Russia • • • • • Workforce injury PoloniaPoland • • • • • ArabiaSaudi Arabia Saudita • • • • • Shareholdinging PortogalloPortugal • • • • • Singapore • • • • • frequency rate (held directly and indirectly Romania • • • • • CoreaSouth delKorea Sud • • • • • (injuries/million of worked hours) by the Italian State) RepubblicaSlovak Republic Slovacca • • • • • ThailandiaThailand • • • • • Slovenia • • • • • Turkmenistan • • • • • SpagnaSpain • • • • • EmiratiUnited ArabArabi Emirates Uniti • • • • • SveziaSweden • • • • • Vietnam • • • • • SvizzeraSwitzerland • • • • • Net cash provided by Turchiarkey • • • • • Argentina • • • • • Adjusted net profit operating activities UcrainaUkraine • • • • • Bolivia • • • • • (million euro) (million euro) RegnoUnited UnitoKingdom • • • • • BrasileBrazil • • • • • Canada • • • • • Algeria • • • • • CileChile Angola Colombia • • • • •

• • • • • Americas • • • • • Congo • • • • • Ecuador EgittoEgypt MessicoMexico • • • • • Africa • • • • • • • • • • TotalT procurement R&D expenditures Gabon • • • • • PerùPeru • • • • • (billion euro) (million euro) Ghana • • • • • Suriname • • • • • Kenya • • • • • Trinidad & Tobago • • • • • Liberia • • • • • VeUnitednezuela States LibiaLibya StatiVenezuela Uniti • • • • • MaroccoMorocco • • • • • • • • • • Mauritania • • • • • MozambicoMozambique • • • • • P P s C Net value added Total direct GHG emissions • • • • • E& G& R&M E& Nigeria (million euro) (million tonnes CO2eq) SudafricaSouth Africa • • • • • Chemical TTuunisianisia • • • • • Uganda • • • • • * The figure doesn't include the employees • • • • • of consolidated companies by proportional method P P s C as mentioned in Integrated Annual Report 2014 E& G& R&M E& Chemical eni in the world | sustainability objectives and results | scenario | materiality 9

Geographic presence*

ASIA & OCEANIA S AMERICA EUROPE

E&P AFRICA G&P R&M Chemicals E&C * Operations distributed by geographical area based on the number of Countries the company operates in The production cycle

Oil & gas Offshore Explorationp Onshore productionpro u tion xplorationp & development productionction field development & development

GAS Gas OIL liquefactionaction Tradingg LNG & shipping regasification Upstream Mid-downstream

International markets Downstream ElectricityE it plantsp ( (chemica( als geenerationne and refining) Gas

Fuelsuels andand Basic y & Gas forf Gas for Electricity sales an Polymers business customenrs consumers lubricantsc chemicals bioproducts 10 overview | projects and activities | results

Sustainability objectives 1. 2 and results

The company is able to build long-term success by integrating sustainability objectives with economic and financial ones. Each year, Eni defines its sustainability goals and strategies and monitors their progress.

COMMITMENTS PROGRESS AS AT 2014 OBJECTIVES FOR 2018

Online and classroom-based 1,430 people have received Anti- Implementation of the Anti-Corruption Governance Anti-Corruption training Corruption training through e-learning training programme (e-learning, and Business and 2,480 people (employees and workshops, job-specific training and contractors) have been trained in the other classroom-based training). Ethics classroom in Italy and abroad.

Dissemination of the integrity Since November 2013, 11 “1st level” Introduction of references to integrity culture workshops have been delivered to senior issues in all the training initiatives managers with significant corporate directed at senior and middle responsibilities (involving 186 people) management as well as new recruits. and 41 “2nd level” workshops have been Extension of web-based training to all delivered to the other managers (600 levels, worldwide. participants). 167 senior managers received web-based training along with 121 procurement staff members (pilot initiative in view of the extension of the initiative to middle management).

Increase the number of women Guidance and monitoring activities Taking as the minimum threshold in the Boards of Directors (BoD) were implemented resulting in 34.4% for female representation at least 1/3 and the Boards of Statutory of the positions on Boards of Directors of the total, the aim is to gradually Auditors in Italy and abroad in Italy being occupied by women rising increase this to 40% for the to 39.1% in the case of positions on appointments pertaining solely to Eni. Boards of Statutory Auditors (only Eni With regard to governing bodies in appointments). foreign subsidiaries, the aim is to With regard to foreign subsidiaries, arrive at 1/4 of the board positions the reshuffle of the Boards of Directors being occupied by women, provided reflected the achieved target of 1/5 there are no regulatory constraints or of the Board positions being occupied other local impediments. by women.

Alignment of internal processes Preliminary assessment of the potential Consolidation of a management with the United Nations Guiding impacts on human rights in Mozambique. system for the respect of human Principles on Business and Initiation of planning for a training rights. Human Rights programme on human rights.

Formalization of the land Development of an operating instruction Formalization of the procedure in acquisition procedure for managing land acquisition and line with international standards and resettlement cases in Mozambique, in application in all the Countries in line with international standards. which Eni operates. eni in the world | sustainability objectives and results | scenario | materiality 11

COMMITMENTS PROGRESS AS AT 2014 OBJECTIVES FOR 2018

Training on human rights Training session in Mozambique Continued delivery of training courses and security delivered to around 120 participants abroad and implementation of a including private security firms, comprehensive information and institutions and civil society. training plan.

Suppliers audits SA8000 audit carried out on Definition and implementation of a 8 suppliers / sub-suppliers in supply chain audit plan based on risk Mozambique, Indonesia, Pakistan and criteria relating to human rights. Angola and 12 follow-ups on SA8000 audits carried out in 2013 in Congo, Ecuador, East Timor and Pakistan.

COMMITMENTS PROGRESS AS AT 2014 OBJECTIVES FOR 2018 People Reduction in the number of employee Reduction in the number of injuries Continuation of the projects and contractor injuries as a result for the 10th consecutive year “zero fatalities”, “Eni in safety”, of initiatives to tackle incorrect (LTIF: 0.31 and TRIR: 0.89). HSE feedback on suppliers, behaviour and “Innovative systems for the prevention of road accidents” (Italian abbreviation: SIPIS). Adoption of methods and corrective actions to guarantee the highest standards of safety and asset integrity.

Monitoring the application of the Completion of the “Maternity Renewal with Industrial Global Union ILO labour standards with regard to Protection” survey (ILO 183) on local of the international Agreement on fundamental rights at work in the regulations and preparation of the Industrial Relations and Corporate main Countries in which the company proposed implementation procedures. Social Responsibility. operates and issuing of operating Distribution of a webinar on non- Preparation and implementation of instructions on maternity discrimination for HR and managerial a plan for the application of the ILO roles. Identification of the ILO 140 and 140 and 142 standards on vocational 142 standards on vocational training training and paid leave for training. and paid leave for training in order to Extension of the specialist course initiate monitoring activities. on non-discrimination to middle- Renewal of the agreement on the management level. European Works Council, improving its efficiency and effectiveness.

COMMITMENTS PROGRESS AS AT 2014 OBJECTIVES FOR 2018

Environment Increase in the reinjection of produced Amount reinjected: 56%. Increase the amount reinjected to waters as an alternative to treatment 70% by 2018 and assess alternatives to reinjection.

ISO 14001 and OHSAS 18001 Upstream 86%, Midstream 100%, Achieve 100% certification of the activities with Downstream oil 92%, Subsidiaries by 2015. a significant HSE risk profile 100%.

Mapping of the areas of potential Completion of mapping and Definition by 2017 of integrated impact on biodiversity and ecosystems conclusion of phase 2 of the action plans for biodiversity and and implementation of action plans Biodiversity project in Ecuador. ecosystemic services in 20% of the Continuation of projects in the Arctic, Assessment Units (AU) exposed to Kazakhstan, Congo and Alaska. biodiversity risk in 2012. 12 overview | projects and activities | results

COMMITMENTS PROGRESS AS AT 2014 OBJECTIVES FOR 2018 Local Monitoring and evaluation system Development of management tools Systematization of the management for community investments in line with international standards tools, including the system development and trials in 5 pilot Countries. for monitoring and evaluating Initiation of collaboration with the community investments, and roll out Earth Institute (Columbia University) of the system to all the geographical in order to monitor and evaluate the units. interventions in relation to the Hinda Conclusion of the project to monitor Project in Congo (PIH). and evaluate the interventions in relation to the Hinda Project (PIH) in Congo.

Development of the Integrated 80% achieved. 100% of the planned actions. Hinda Project (PIH) in Congo which envisages various intervention sectors (access to drinking water, health, education, agriculture)

Continuous commitment on access Studies on proposed off-grid Development of new access to to energy in Sub-Saharan Africa systems in rural areas of the Cabo energy projects in Sub-Saharan Delgado province in Mozambique. Africa through innovative solutions. Agreement for the supply of gas to electricity power plants in Ghana. Study on possible solutions regarding access to energy and management of drinking water in Angola. Electrification of villages on the outskirts of operational areas in Nigeria.

COMMITMENTS PROGRESS AS AT 2014 OBJECTIVES FOR 2018

Elimination of routine 75% reduction in the volume of 22% reduction of the volume Energy flaring activities gas flared compared with 2007 of hydrocarbons flared and climate (due to investments of more than in 2014-2018 period. 2 billion €).

Reduction in energy consumption Savings in the 2008-2014 period Implementation by 2017 of through continuous efficiency of around 400 ktoe / year (of energy efficiency initiatives that improvements which 240 in R&M and 110 in are able to achieve savings of 400 Petrochemicals) amounting to ktoe / year compared with those a reduction of approximately 1 of 2010.

million tonnes of CO2.

Use of renewable energy sources Launch of the first biorefinery Construction of Green Diesel for fuels plant in Italy for green diesel production plants able to satisfy production (Ecofining™ owned Eni’s demand for Green Diesel technology for high performance (1Mton/year) in accordance with product): 90 kton produced with European regulations and taking a maximum capacity production into account the 2nd generation of 330 kton/year. feedstock requirements (drain oil, manufacturing scrap, etc). eni in the world | sustainability objectives and results | scenario | materiality 13 1. 3 Scenario

The political, economic and social scenario, stakeholders’ main requirements and the evolution of the institutional and regulatory framework identify which emerging elements attention should be focused on. These aspects guide Sustainability directions on which Eni defines its strategies.

Scenario and competitive context

Over the last year the energy sector witnessed a series of important changes that In order to address these have highlighted the need to develop the capacity to react quickly to address the complex dynamics, in dynamics in play. 2014 Eni decided to focus Outside of Eni the enormous development of unconventional resources in the United on simplifying its projects States, together with the slowdown in the growth of demand for hydrocarbons, has and maximizing the value had an impact on the global oil market, creating a surplus, drastically reducing of its portfolio. prices in the second half of the year and leading to more structural changes in the market flow of crude oil.

At the same time, rising tensions in North Africa and the Middle East, where geopolitical risk increased, as well as international sanctions on important oil-producing Countries such as Iran and Russia, mean that there continues to be a high level of market instability.

To address these issues, Eni has decided to focus on simplifying its projects in order to reduce the executive risk and exposure, and to maximize the value of the portfolio by promptly implementing projects and ensuring the early monetization of discoveries. This is all made possible due to the availability of an ample supply of conventional resources, the high level of technical expertise associated with a new model for managing development projects with integrated control throughout all the 14 overview | projects and activities | results

We are creating a stronger and more flexible company, able to achieve continued growth and create value in spite of the deterioration of the market scenario.

CEO Claudio Descalzi

phases (from engineering to execution Added to this is the growth of Technological innovation to commissioning), and a strong renewables in the energy mix, and environmental technological leadership that makes stimulated by European energy sustainability are some use of the professional resources policies providing privileged access of the levers used by Eni located within Eni. to substantial subsidies, and the to relaunch its industrial To address structural changes in expansion of coal due to the supply activities in Italy. the refinery market, in 2014 Eni of large quantities at low cost, accelerated the process of resizing its particularly in the United States. All of refining capacity, particularly in Europe, these dynamics have fundamentally by rationalizing and restructuring transformed the mid and downstream its business. By taking advantage business in Europe. of technological and industrial developments, Eni has been able to Eni, one of the leading operators at presence in Africa, where important oil launch projects to convert traditional European level, still believes that and gas projects are pending. Capacity refineries into bio-refineries in certain gas is the ideal solution to offset the building, local content, and projects important locations in Italy such as inconsistency of supply that is typical that benefit local communities are key Porto Marghera and Gela. of solar and wind power and is in line to sustaining local development, which The gas market, which in Europe with an energy policy that combines is often a decisive factor in critical is characterized by a continuous development, environmental protection situations for producing Countries. contraction of demand, has seen the and energy security. The success model implemented in

volumes exchanged on the spot market Africa is now being replicated in Asia increase and has required continued Yet another strategic action in progress where Eni is seeking to widen renegotiations of take or pay contracts. is the consolidation of the company’s its presence. eni in the world | sustainability objectives and results | scenario | materiality 15

Agenda for sustainable development

2015 is an important year for the on Climate Change (UNFCCC), it is international organizations, and which is definition of the international agenda for hoped that there will be a new climate engaged in the definition of a proposal sustainable development. The United agreement for the post-2020 era, the of indicators and targets to measure Nations General Assembly proposes year in which the second period of the progress with respect to the Sustainable to approve the new Sustainable Kyoto protocol is due to expire. Eni plays Development Goals. Development Goals (SDGs), which an active role in the preparation for In the various contexts in which the will provide Countries, international these events, since it considers that the company operates, Eni promotes the organizations, companies and private sector can and must contribute development of targets and indicators associations with an indication of the to a shared assumption of responsibility. for measuring the contribution made priorities for implementing a more In particular, Eni has contributed to the by companies, as well as Countries, equitable and inclusive development drafting of the Synthesis Report of the to the achievement of the Sustainable strategy that respects the limitations of Secretary-General of the United Nations Development Goals. In this context, the planet’s resources. In addition, the through its role as co-chair of the working Eni has contributed right from the start to United Nations International Conference group on the Post-2015 Development the joint efforts undertaken by the Global on Financing for Development to be Agenda, which is part of the Global Compact, the World Business Council held in Addis Abeba aims to define an Compact LEAD programme of the UN. for Sustainable Development (WBCSD) agreement on the instruments to be used Eni participates in this dialogue also and the Global Reporting Initiative (GRI), to finance the achievement of the above through the UN Sustainable Development in order to equip the private sector with development goals. Finally, with the 21st Solutions Network (SDSN), which is an organic set of management, planning Conference of the Parties (COP21) of the directed by Professor J.D. Sachs and and measuring tools suited to the new United Nations Framework Convention involves academia, civil society and development agenda.

Eni’s partnerships Combining equitable growth with Sustainable Energy for All. Eni works in partnership respect for the environment is a complex At the international conference with the academic world, challenge that requires the cooperation “Regional Use of East Africa’s Natural civil society, of various players to achieve a common Gas” held in Ethiopia in 2014, a paper international organizations goal at both the local and global was presented on the use of gas for the and other companies to levels. On access to energy, in 2014 internal African market. achieve equitable local Eni worked with The Earth Institute at In conjunction with The Earth Institute and global development. Columbia University on research into at Columbia University, work began on new solutions to address the issue of setting up systems for evaluating and energy poverty in Sub-Saharan Africa, monitoring the projects aimed at helping in line with Eni’s commitment to support communities. 16 overview | projects and activities | results

Furthermore, on access to energy, Eni discussions on sustainability issues Council’s business network since 2010. is the Official Partner for Sustainability (biodiversity, local content, community With regard to climate change, during Initiatives in African Countries at Expo development, reporting, human 2014 Eni joined the Climate and Milano 2015 and is one of the founders rights). Eni is still in the Steering Clean Air Coalition Oil & Gas Methane of “World Access to Modern Energy & Committee of the Global Compact Partnership, which is aimed at reducing Expo 2015”, an association created LEAD programme and participates in methane emissions, and also endorsed through the alliance between eight the various workstreams, including the the “Zero Routine Flaring by 2030” large Italian and European energy UN Post-2015 Development Agenda initiative, which seeks to eliminate companies and Expo 2015 SpA with and the Realizing Long Term Value for routine flaring by 2030. the common goal of promoting the Companies and Investors project. Furthermore, Eni has contributed to theme of access to energy at the Expo Eni also participates in the Sustainable the creation of the Oil & Gas Climate 2015 event. In relation to the theme Stock Exchange initiative, which is Initiative, which is a voluntary initiative of human rights, Eni is cooperating aimed at introducing sustainability of the Oil & Gas industry aimed at with the Danish Institute for Human and transparency criteria to the identifying common standards for Rights and has carried out a project requirements for accessing stock the implementation of and reporting aimed at identifying the impact on markets. Furthermore, Eni was one on activities that have an impact on human rights of business activities of only six companies in the world to climate change. This initiative, which in Mozambique. With regard to the take part in the pilot phase of the LEAD was launched at the United Nations efficient management of natural Board Programme, aimed at reinforcing Climate Summit in New York in resources for a more inclusive awareness on sustainability issues to September 2014 in the presence of development, Eni is involved in the the Boards of Directors (more details heads of state and international leaders, OECD Policy Dialogue on Natural are given in the Governance chapter). was enthusiastically received and is Resource-based Development, which With regard to transparency in the evidence of Eni’s continuous efforts to promotes the sharing of best practices extractive sector, the company has find effective means of collaboration in and the definition of policies including confirmed its support to the Extractive order to achieve the goal of sustainable the producing member Countries of the Industries Transparency Initiative (EITI) development. OECD and partner Countries. and has actively sought to increase Research represents for Eni one of the Within the context of IPIECA (global awareness in the Countries in which levers used to tackle climate change. Over oil and gas industry association for it operates. The publication of the recent years Eni has been collaborating environmental and social issues) and Integrated Annual Report is evidence with the MIT in order to carry out scientific the WBCSD (World Business Council of the company’s transparency on research in the solar energy field thus for Sustainable Development), which communication. In this regard, the enabling the current limitations on counts among its members companies company has been a member of the renewable sources to be overcome and in various sectors, Eni participates in International Integrated Reporting the achievement of optimal results. eni in the world | sustainability objectives and results | scenario | materiality 17

Stakeholder engagement

Eni Financial Local people community communities

METHOD OF ENGAGEMENT METHOD OF ENGAGEMENT METHOD OF ENGAGEMENT - MyEni Portal and MyEni International - Dialogue through the Investor Relations - Workshops/seminars - Cascade Programme function and eni.com - Public meetings/consultations with - Moka (company’s social network) - Conference call on the quarterly results communities - Cascade e-mailing for relevant business - Collective live presentations - Channels of communication projects - One-to-one meetings with financial - Formal instruments for managing - Workshops (e.g. “idea-generation” analysts and portfolio managers complaints (grievance mechanism) projects) - Participation in thematic conferences - Partnership agreements for the implementation of social projects TOPICS OF INTEREST TOPICS OF INTEREST - Formal instruments for participatory management of social projects - Health and safety at work - Quarterly and annual results - Integrity - compliance - Further development of strategies and TOPICS OF INTEREST - Sustainability projects - Professional development and sharing of - Sustainability performance and strategy - Transparency of and information on know-how - Corporate Governance/shareholders’ business activities meeting agenda - Assessment, mitigation and ACTIONS IN 2014 - Risk management management of the environmental, social, health and human rights impacts - HR ambassador project ACTIONS IN 2014 - Local content - “Well done” web campaign - Grievance management (e.g. - Launch of the new version of MyEni - Quarterly presentations and strategy compensation, land use, potential - Sustainability communication plan 2014-2017 impact on the local economy) - Brand activation initiatives - Meetings with the SRI on the risk - Long-term strategy and participatory - “Idea generation” projects focusing on management model and on compliance, management of social projects business and efficiency Country and operational risks - Road-show on corporate governance in ACTIONS IN 2014 London and Paris - Meetings with institutional investors - Publication of the 2nd edition of “Eni in and the main proxy advisors Basilicata” and updating of the website; workshop to present the Basilicata Local Report to stakeholders - Starting the project of mapping of key stakeholders in six pilot Countries: Angola, Congo, Kazakhstan, Mozambique, Nigeria, Pakistan - Public consultation forums on business activities in Nigeria, Kenya, Mozambique, Norway, Italy and Russia - Updating and continuation of the mechanisms for collecting and managing grievance in six pilot Countries - Multi-stakeholder committees for the planning, management and Eni believes that the participation and involvement implementation of social projects - Drafting of Memorandums of of its stakeholders in business decisions are fundamental Understanding (MOU) with local communities and other local partners for elements for the Countries’ development. the implementation of social projects - Updating of the dedicated websites (Naoc, Norway, KPO) 18 overview | projects and activities | results

Suppliers National and local Business organizations and associations and regulatory bodies Confindustria

METHOD OF ENGAGEMENT METHOD OF ENGAGEMENT METHOD OF ENGAGEMENT - Meetings about and involvement in - Institutional meetings, technical talks Meetings, workshops, and participation in specific projects and hearings technical committees/commissions and - Local content development plans - Responses to consultations, position associated roles papers, one-to-one meetings TOPICS OF INTEREST TOPICS OF INTEREST TOPICS OF INTEREST - Supplier qualification and auditing - Regional workshops to illustrate - Feedback on contract performance - Development and enhancement projects to Confindustria companies the - Audit SA8000 linked to the different activities qualification process for Eni supplier - Increasing awareness of the issues - Regional development - Discussion with Confindustria regarding related to climate change/emissions - Support for renewable sources the application of the aggregate - Involvement of local businesses in Eni’s - Regulation of tariffs for selling to “Business Network” model to Major supply chain protected markets Customers - Exploration activities in Italy - Meetings and discussions with the local ACTIONS IN 2014 - Regulation of G&P business activities branches of Confindustria in order to - Development of supplier with regard - Supply chain security exchange information that is useful for to organizational and technical skills, - Green economy Eni and the local area quality, HSE and respect for human - Environment (e.g. environmental - Issues relating to energy, sustainability rights remediation) and safety - International cooperation - Support in making improvements ACTIONS IN 2014 following the negative outcome of an ACTIONS IN 2014 audit - Periodic meetings with the heads of - Human rights audit - Information and awareness initiatives, Confindustria and the businesses - Invitation sent to specific suppliers to further study of technical and associated with the system participate in the Carbon Disclosure procedural aspects - Delivery of workshops Supply Chain - Site visits and surveys - Issuing of the procedure for the - Participation in the work of the management of local content in the National ANCI (National Association of procurement process Italian Municipalities) and in Cinsedo - Energy efficiency project: qualification (Interregional Studies and Documents of suppliers for technical assessment Centre) activities services at plants in Italy/outside Italy - Production site visits and surveys - Development plans for Local Content - Active participation in energy efficiency in Norway, Italy, Angola, Mozambique, matters and in discussions on energy Nigeria, Ghana, Kazakhstan, Congo sustainability in the future in Italy and Europe - Participation in the work of the inter- institutional forum on Cooperation and Development - Collaboration with the ministry for Foreign Affairs and International Cooperation on the “Italy-Africa” and “Arctic, climate change and eco-system” initiatives eni in the world | sustainability objectives and results | scenario | materiality 19

European institutions United Nations Other organizations and international System in the field of organizations Sustainability

METHOD OF ENGAGEMENT METHOD OF ENGAGEMENT METHOD OF ENGAGEMENT - One-to-one meetings, technical talks, - Inclusion in the Global Compact LEAD - Adhesion to and participation roundtables, answers to consultations, programme and presence on the relative in WBCSD, Business for Social Corporate Advisory Panel Steering Committee Responsibility, World Economic Forum, - Participation in industry associations, - Active participation in the activities GGFR (Global Gas Flaring Reduction institutional working groups and public promoted by Global Compact and its Initiative), Oil & Gas Climate Initiative events and/or hearings at the European LEAD programme (OGCI) and Climate and Clean Air Parliament - Presence on the Leadership Council Coalition Gas Methane Partnership, - Collaboration with the OECD National of the United Nations Sustainable EITI (Extractive Industries Transparency Contact Points and participation in Development Solutions Network Initiative), PACI (Partnering Against specific initiatives Corruption Initiative), B20 and IPIECA TOPICS OF INTEREST - Adhesion to GRI (Global Reporting TOPICS OF INTEREST Initiative) and IIRC (International - Sustainable development goals Integrated Reporting Council) - European energy policy - Human rights and business - Eni is an EXPO partner and a founding - Environment and fiscal policy - Decent work member of WAME - Regulation of the financial markets for - Anti-Corruption raw materials - Transparency TOPICS OF INTEREST - Regulation of the internal gas market - Environment - Transparency of payments in the - Access to Energy - Access to energy extractive industry - Training of the Board on sustainability - Environmental and social impact - Access to energy projects matters assessment - Issues related to the refinery industry - Investors and sustainability - Transparency and reporting - Dissemination and application of - Integrated reporting and value creation the OECD Guidelines directed at ACTIONS IN 2014 - Human rights multinational companies - Climate change and reduction of - Participation in the debate between emissions ACTIONS IN 2014 the United Nations and business (Private Sector Focal Points Meeting; ACTIONS IN 2014 - Presence on the related coordinating Private Sector Forum, Annual Forum on body in order to support Italian Business and Human Rights) - Participation in the working groups of participation in the work of the Arctic - Participation in the UN Climate Summit the WBCSD Council and the 1st Sustainable Energy For All - Participation in IPIECA working groups - Contribution to realization and Forum (on human rights, Reporting, Climate presentation of the publication “Africa - Management of the initiative “Energy Change, etc.) Energy Outlook” by the International for All in Sub-Saharan Africa” and - Participation in EITI’s O&G constituency Energy Agency participation in the “Regional Use of - Participation in the PACI working group - Contribution to the consultations of the East Africa’s Natural Gas” conference set up in order to update the core European Commission - Contribution to the work of the Thematic principles of the initiative - Participation in the Policy Dialogue on Group on Good Governance of Extractive - Active role in the Anti-Corruption Natural Resource-based Development and Land Resources working group of the B20 organized by the OECD - Participation in the pilot LEAD Board - Participation in the GRI G4 Pioneer Programme for training the Board of Programme Directors on sustainability issues - Participation in the IIRC pilot programme - Participation in the Global Compact - Participation in the O&G Climate Anti-Corruption working groups at the Initiative working groups national and international levels - Contribution to the work of the WAME - Adhesion to the UN Global Compact group Call to Action: Anti-Corruption and - Participation in the OECD Policy the Global Development Agenda and Dialogue on Natural Resource-based participation in the 10st anniversary of Development the 10st Principle of the Global Compact fight against corruption 20 overview | projects and activities | results

International and Universities and Eni customers national NGOs research centres and Consumer Associations

METHOD OF ENGAGEMENT METHOD OF ENGAGEMENT METHOD OF ENGAGEMENT - Collaboration and organization of joint - Strategic partnership and collaborative - Telephone survey and periodic events agreements qualitative research - Specific topics conferences promoted - Corporate advisory panels - Interviews conducted by phone or in bilaterally - Official bilateral meetings person at the point of sale - Participation in business networks - Communication exchange, sharing of - Focus groups on the degree of usability (Sodalitas, Anima per il Sociale) information and one-to-one meetings of the online services - Involvement in training and awareness- - Thematic workshops and meetings with - Online forums raising initiatives partners in order to verify the progress - Consultation aimed at assessing impacts of activities and circulate the results TOPICS OF INTEREST TOPICS OF INTEREST TOPICS OF INTEREST - Customer satisfaction and trials of new services - Climate change - Business support activities (exploration - Analysis of the level of satisfaction in - Security of plants in sensitive and production, innovative refinery and relation to the services supplied (gas, environments (offshore, the Arctic, etc.) petrochemicals technologies, distributed electricity, fuel) - Human rights generation and electricity storage) - Analysis of product and brand - Impact assessment - Renewable energy (photovoltaic solar awareness - Anti-Corruption power and concentrated solar power, - Consultancy and technical support - Sustainability of operations in Nigeria biomass used as an energy resource) - Analysis of energy consumption habits (prevention and management of - Environmental protection technologies spills, reduction of flaring, remediation ACTIONS IN 2014 ACTIONS IN 2014 activities and compensating local - Consolidation of the framework for communities) - Creation of “virtual laboratories” interacting with Consumer Associations - Transparency in corporate reporting - Renewal of Framework Agreements with regard to saving energy, preventing ACTIONS IN 2014 with the Milan and Turin Polytechnics, waste and the sustainable value of and with the Italian National Research products and services (green chemistry, - Dialogue with the main NGOs (eg. in Council and the Massachusetts Institute biofuels, smart mobility, energy efficient Italy, WWF and Legambiente and abroad of Technology (Boston, USA) and products and culture) the dialogue with Amnesty International Stanford University on the core - Planning of corrective measures to on the activities in Nigeria is particularly Oil & Gas technologies and address customer expectations and the relevant) environmental remediation requests of the Consumer Associations - Involvement of NGOs in the “Security - Signing of an agreement with The Earth - Creation of a specifically dedicated and Human Rights” Workshop in Institute of Columbia University aimed at telephone line for the identification, Mozambique strengthening the systems for planning, assessment and implementation of - Consultation with NGOs with regard to monitoring and evaluating Eni’s solutions to criticalities related to the the preliminary assessment on Eni’s investments in local development supply of gas and electricity potential impact on human rights in - Planning of corrective measures Mozambique to address the areas identified for - Response to the requests of Global improvement Witness and the Business and Human - Fine-tuning of sales and marketing Rights Resource Centre initiatives and pricing strategies - Definition of new supply models - Launch of initiatives focusing on specific targets - Development of a framework for interacting with Consumer Associations, aimed at joining together culture, consumerism and energy eni in the world | sustainability objectives and results | scenario | materiality 21 1. 4 Materiality

For Eni the identification of the most distinctive and relevant issues to the business is the main element to define strategies for value creation over time, to ensure the implementation of activities, to establish the contents of communication and dialogue with stakeholders.

Materiality is the result of a process of capacity to create value in the short, has been approved at the highest identifying, evaluating and prioritizing medium and long term. level and entails the involvement those sustainability issues that Eni has designed a process to of these senior decision-makers significantly impact on the company’s identify the material themes which in all company processes, from integrated risk management to strategy planning, from stakeholder IALITY engagement to internal and external F THE MATER RATION O communication and reporting, and INTEG CESS PRO to the implementation of operational MATER IAL decisions. SU ST AIN AB IL IT Y STRATEGY REPORTING IS Eni has designed a process PLANNING S AND INTERNAL U E to determine the material & EXTERNAL S COMMUNICATION sustainability issues integrated with all the STAKEHOLDER company processes. ENGAGEMENT INTEGRATED RISK MANAGEMENT 22 overview | projects and activities | results

Materiality definition process

The process for determining the business. These issues are related to issue contribute to pursue economic material issues begins by identifying social, environmental and governance objectives and results by guaranteeing issues which are most important for the aspects. The activities related to each sustainable value creation over time.

Phases of FtheAS Iprocess DEL P forRO CdeterminingESSO DI DmaterialETERMI NissuesAZIONE DEI TEMI MATERIALI

Identification of Assessment of the significant issues based importance of significant Prioritization of material on their capacity to issues with regard to the issues based on their influence long term related known or potential importance for the purposes value creation effects on value creation of value creation

Using a specific method of analysis, of Directors during the first module of the external context in which it operates Eni considers three perspectives. the sustainability training of the LEAD and it represents an important input for

The strategic vision of top management. Board Programme. different corporate processes: it guides In order to grasp the vision of top Risk assessment results. Since acting strategic planning and provides further management, in 2014 Eni carried out sustainably also means identifying insight on risks identification. two distinct activities: and planning initiatives to contain, Since 2013 stakeholders’ expectations • a cycle of interviews with 12 mitigate and, where possible, eliminate have been gathered using a specific top managers were carried business-related risks, the results of the system that records and analyses out focusing on the role and risk assessments periodically performed complaints and their capacity to significance of sustainability for in the company are an important influence company activities. The Eni; source for identifying the sustainability application, which is known as the • an internal survey was sent to priorities based on which improvement Stakeholder Management System 140 managers with the aim of actions can be planned. In particular, (SMS), is based on the evaluation of identifying the most significant the materiality process considers all stakeholders in line with parameters issues for the creation of value, the issues related to the company’s top established by the applicable evaluating the extent to which risks with a significant impact on health international regulations and it is sustainability is integrated into and safety, social, environment, image designed to analyse and weigh all company processes and defining and reputation aspects. contact elements with the various

the most important stakeholders. The stakeholders’ perspective. The stakeholders. This makes it possible The results of these two initiatives were stakeholders’ perspective enables the to assess the significance of the brought to the attention of the Board company to understand and relate to issues for each stakeholder and eni in the world | sustainability objectives and results | scenario | materiality 23

the weight attributed by the latter evaluated the importance of each issue perspective highlighted the importance to Eni’s performance in relation to for the purpose of creating value for of each issue as perceived by those sustainability issues considered the company in the short, medium and the different types of company’s important. long term. stakeholders. At the same time, the materiality Risk assessment was used to The combined results of the three analysis is an important tool in the determine the impact and probability perspectives outlined above allow systematization of the stakeholder of occurrence of potential risks related the material issues to be identified engagement process because it provides to each issue, while the stakeholders (prioritization). a clear methodological framework for mapping and evaluating stakeholders and issues, and therefore makes it MaterialT EissuesMI MATERIALI possible to select, guide, and rationalize STAKEHOLDERS the listening and communication INTERVIEWS WITH PERSPECTIVE activities with regard to the contents and TOP MANAGEMENT & SURVEY recipients of priority interest. The model is based on two TOP RISK ESG internationally recognized standards. On the one hand, it abides by the Accountability Principle Standard (AA1000), ensuring that the TOPICS fundamental requirements of inclusion (coverage of all the engagement Anti-Corruption initiatives), materiality (analysis of the Transparency of payments issues as perceived by stakeholders), Integrity and compliance (analysis of real/ Human rights perceived company performance) are Engagement of local communities met. On the other, it follows the G4 GRI Safety Sustainability Reporting Guidelines with Asset integrity Development of expertise and skills regard to the process of continuous GHG reduction internal review of material issues. Water resource protection Impacts on environment and biodiversit y Once the significant issues were Energy efficiency identified, they were assessed to Local developmen t determine their relative importance Local content using specific quantification metrics Access to energy for each area considered. More Technological innovation specifically, interviews and surveys 24 overview | projects and activities | results

Material issues

Reduction of environmental impacts (water resource protection, biodiversity, oil spills) and combating climate change (GHG reduction, energy efficiency). Eni is aware that environmental protection is a priority for the energy sector. Business integrity (Anti-Corruption, transparency, human rights, local For this purpose Eni is able to pursue levels of excellence maintaining a communities engagement) is an importantn issue for both management andnd constant dialogue with the peers, local communities and NGOs to discuss, stakeholders. Eni adopts the best techniques and methods for defining understand and respond to these stakeholders' expectations.ns. practices to combat corruption and, more generally, to support Biodiversity protection, oil spills management, environmentalntal risksrisks management,managem transparency. Integrity is a perceived value that increases Eni's soil protection are key elements of the operational excellenceexcellence acceptability and recognition as a reliable partner. and of great relevance to the top management. Furthermore,Furthermore, combatingcombati Eni demands the same principles of integrity to its suppliers climate change is a key factor for Eni's strategygy whichwhich considersconsiders thet starting from the qualification staage and involving all the useuse of gas,gas energy efficiency and emissions reductionreduction asas a responseresp S different stakeholders with whom it interacts. T toto climateclima change within the transition periodod towardstowards a lowlow TY IO RI N carboncarbo future.

AC T S

SafetySafety is a priority for Eni. In addition, process safety Local development, local content and promotion of access to energy have emerged from the analysis as distinctive and andand assetasset integrityinte are fundamental aspects in activities O F riskrisk prevention.preven These issues are also a yardstick of Y essential parts of Eni's business model in the relationship with T goodgood businessbusiness organization for stakeholders, particularly the territories in which it operates. The company is committed financialfinancial stakeholders.stak A true safety culture; one that to understanding local needs and using its skills and O

isis deeplydee embedded throughout the organization, M capabilities to contribute to economic and social development

E E E E E

N N N

N and the creation of a sustainable energy system in

T T

envisagingenvisaging thethe involvementin of suppliers and contractors in T

developing Countries. This ensures long-term value creation

A A full compliance with the main international standards and A the result of the ongoing commitment over time of all Eni for governments and development for the local communities people, from top management to operational activities. with which Eni works in order to forge a bond of mutual trust and respect.

M AT TechnologicalTechno innovation is considered a tool for improving Development of expertise and skills, identified as TE thethe efficiencyefficie of operations, developing new businesses, improving a key tool for competing in the O&G sector, KI safety at workw and reducing environmental impacts. Business expresses the attention that Eni pays to its people LLS innovation, from green chemistry to biorefining, is important also and how this issue is central to its business perspective. in its broader connotation of reconversion and reindustrialization. In addition to investing in training and development of each The new technological frontiers and R&D activities appear, as technology, person's potential, Eni has also identified the the more structured and codified areas for tackling market challenges and internationalization of local people as a priority in order to seizing the operational and strategic opportunities. ensure effective integration at Country level. eni in the world | sustainability objectives and results | scenario | materiality 25

Reduction of environmental impacts (water resource protection, biodiversity, oil spills) and combating climate change (GHG reduction, energy efficiency). Eni is aware that environmental protection is a priority for the energy sector. Business integrity (Anti-Corruption, transparency, human rights, local For this purpose Eni is able to pursue levels of excellence maintaining a communities engagement) is an importantn issue for both management andnd constant dialogue with the peers, local communities and NGOs to discuss, stakeholders. Eni adopts the best techniques and methods for defining understand and respond to these stakeholders' expectations.ns. practices to combat corruption and, more generally, to support Biodiversity protection, oil spills management, environmentalntal ririskssks mmanagement,anagem transparency. Integrity is a perceived value that increases Eni's soil protection are key elements of the operational eexcellencexcellence acceptability and recognition as a reliable partner. and of great relevance to the top management. FFurthermore,urthermore, ccombatingombati Eni demands the same principles of integrity to its suppliers climate change is a key factor for Eni's strategygy wwhichhich cconsidersonsiders tthe starting from the qualification staage and involving all the uusese of gasgas, energy efficiency and emissions rereductionduction aass a reresponsesp S different stakeholders with whom it interacts. T toto climateclima change within the transition periodod towtowardsards a llowow TY IO RI N carboncarbo future.

AC T S

isis deeplydee embedded throughout the organization, M capabilities to contribute to economic and social development

E E E E E

N N N

N and the creation of a sustainable energy system in

T T

envisagingenvisaging thethe involvementin of suppliers and contractors in T

developing Countries. This ensures long-term value creation

M AT TechnologicalTechno innovation is considered a tool for improving Development of expertise and skills, identified as TE thethe efficiencyefficie of operations, developing new businesses, improving a key tool for competing in the O&G sector, KI safety at workw and reducing environmental impacts. Business expresses the attention that Eni pays to its people LLS innovation, from green chemistry to biorefining, is important also and how this issue is central to its business perspective. in its broader connotation of reconversion and reindustrialization. In addition to investing in training and development of each The new technological frontiers and R&D activities appear, as technology, person's potential, Eni has also identified the the more structured and codified areas for tackling market challenges and internationalization of local people as a priority in order to seizing the operational and strategic opportunities. ensure effective integration at Country level. “Our successes arise mainly from our exploration efficiency, resulting from advanced technologies and the distinctive skills of our people. Our model of relationship with the Countries allows us to create value over time.”

CEO Claudio Descalzi Governance and Business Ethics > 28 People > 38 Environment > 54 Local development > 61 Energy and climate > 84 28 overview | projects and activities | results

Governance 2.1 and Business Ethics

The principles of integrity and transparency guide Eni in defining an administration and control system suited to its size, complexity and operational structure, in the adoption of an effective internal control and risk management system and in the continuous updating of communication with shareholders and stakeholders.

Based on the principles of integrity and transparency, and in line with the Eni adopts the highest strategic business objectives, the corporate governance system helps to support standards and the relationship of trust between Eni and its stakeholders and to achieve international guidelines business results, creating sustainable value in the long term. to manage its activities Eni’s corporate governance system is structured according to the applicable in all the contexts in general and special regulations, the company By-Laws, the Code of Ethics, which it operates. the recommendations established by the Corporate Governance Code for Listed Companies to which Eni subscribes, and relevant best practices.

Governance model

Eni manages its business and sustainable development strategies, To ensure that sustainability is at interaction with stakeholders, identifying the Board of Directors (BoD) the core of the company’s strategy, particularly with regard to the as the body responsible for defining Eni’s governance structure is based environment and communities, through sustainability policies and strategies on the integration of processes such

its corporate governance system. In this and approving the related results, as risk management, planning, context, Eni has set up a governance which are regularly presented to the implementation and monitoring, structure that is able to support Shareholders’ Meeting. reporting, internal and external governance and business ethics | people | environment | local development | energy and climate 29

CorporateStruttura Governance Corporate StructureGovernance

Shareholders' meeting

Board of Directors Board of Statutory Audit firm C SEVP hairman Chairman Internal Chief Executive Officer (CEO) Statutory Auditors Magistrateg of th e Audit Board Secretary Court of the Auditors and Corporate Directors Alternate Auditors Governance Counsel

Officerf in charge off ppreparinp p g g Eni Watch Structure Control Nomination Compensation Sustainability financial reports and Guarantor and Risk Committee Committee and Scenarios of the Code Committee Committee of Ethics

communication and remuneration. various forms of capital used by the of whom meet the independence Risk events are assessed using impact company. requirements. parameters that are concerned not In 2014, with the installation of the The Committee’s regulations only with financial and operational new BoD, the company’s commitment stipulate that its purpose is to deal factors, but also with social, to sustainability issues has been with the processes, initiatives and environmental and reputational further strengthened by the greater activities aimed at supporting the aspects. Upstream of this system there diversification in terms of the company’s commitment to sustainable is an integrated planning process, in expertise, managerial experience development throughout the value which sustainable strategies are part of and internationalism of the Directors chain, particularly with regard to: the the four-year business plan and guide Board members, and by the creation health, well-being and safety of people the definition of managers’ MBOs of the Sustainability and Scenarios and communities; the protection of (management by objectives) to ensure Committee. rights; local development; access their implementation. The purpose The Committee, having advisory and to energy; energy sustainability and of reporting and communication is consulting functions, reports directly climate change; environment and the to provide an integrated overview of to the BoD and is comprised of four efficient use of resources; integrity and the existing connections between the non-executive Directors, the majority transparency; innovation. 30 overview | projects and activities | results

In 2014 the Sustainability and Scenarios Committee dealt mainly with issues relating The Sustainability and to Eni’s sustainability strategies, gas advocacy, sustainability indices, international Scenarios Committee was energy and climate policies and market scenarios. In 2015 the Committee intends established in 2014 to address other fundamental issues for Eni such as local content, climate change in line with the new strategies, remediation and planning activities. strategic approach and Furthermore, within the wider context of the Board Induction programme, in order to further integrate sustainability into the Board’s agenda and reinforce awareness organizational structure. of the importance of sustainability for the company’s business and strategy, Eni is taking part in the pilot phase of the “UN Global Compact LEAD Board Programme”, which is dedicated to training Directors on sustainability issues, having already actively contributed to the development of the programme at the UN. The second session of the programme titled “The role of the Board” will be delivered in 2015 and will enable Directors to understand and better define their crucial role in developing sustainable strategies.

Human rights

Eni is committed to ensuring respect entails targeted interventions for the for human rights in line with the United geographical areas and operations in Nations Guiding Principles on Business which the role of Eni and its impact can and Human Rights. This commitment is be particularly relevant. demonstrated through: In 2014 the “human rights” project was • the continuous improvement of the launched in Mozambique, a Country suppliers subjected to qualification procedures methods and processes aimed at of particular interest to Eni given the including screenings on preventing and mitigating potential recent exploration discoveries. The human rights and actual impacts; company is mindful of the importance • integrating the results of the of considering human rights at the analyses conducted; outset of planning activities and so • monitoring and reporting on in 2014 Eni, with the support of the SA8000 audits performance; Danish Institute for Human Rights, carried out of which • dialogue with stakeholders, experts conducted a preliminary assessment of and peers, particularly within the the most significant potential impacts

IPIECA Human Rights Task Force. of its activities on human rights in the This approach is applied across all Country. The analysis involved Eni follow-ups functional and business areas and people at all the operating sites of the governance and business ethics | people | environment | local development | energy and climate 31

local subsidiary as well as external is part of the company-wide training People trained stakeholders, and was conducted programme that began in 2008, through a series of interviews with local, which to date has delivered training national and international institutions to more than 2000 operators. In 2014 and associations. Eni also oversaw the organization of security forces operators on Human Rights & Security The results of the analysis were verified an additional training course which since 2008 and discussed during a workshop was held in Kenya in early 2015, involving the various functional with the participation of national and areas concerned at group level and international NGOs. In the same year the management of the subsidiary. the specific conduct clauses of the At subsidiary level an evaluation is contracts with the security forces were security contracts containing clauses on human rights currently being made about adopting updated. The clauses provide for the a procedure aimed at ensuring human right to early termination from the rights are respected in managing land contract in the event of any acquisition and resettlement cases non-fulfillment. The new provisions also in Mozambique, in line with local introduced more stringent requirements regulations and international standards. regarding the protection of workers and In keeping with the objective of laying members of the community. To date the the foundation for the development of clauses have been added to around 90% operations in Mozambique that takes of the contracts concluded with suppliers into account human rights, in 2014 the of Security Services in Italy and abroad. following events took place: • a training course for the managers With regard to suppliers, Eni of the most relevant departments considers respect for human rights in the subsidiary, conducted by the as a requirement during the selection Danish Institute for Human Rights; process and conducts specific human • a specific workshop on human rights audits of the suppliers based rights and security, which on the SA8000 standard. In 2014, was attended by around 120 in addition to the ordinary checks participants not only from the carried out during the qualification private security firms that work for process, SA8000 audits were carried Eni but also from the institutions out on 8 suppliers and sub-suppliers in and civil society. Mozambique, Indonesia, Pakistan and Angola and 12 SA8000 audit follow-ups

The workshop on “Human Rights & were carried out in 2013 in Congo, East Security”, which was aimed at both Timor and Pakistan. In order to support public and private security forces, these activities, in 2014 a further 5 32 overview | projects and activities | results

people from Congo, Angola, Indonesia approaches based on the exposure to preventing violations. and Mozambique were trained as to risk. Due to the complexity of the In 2014 Eni adopted a new version of the SA8000 procurement auditors. In total task, Eni is investing significantly in Whistleblowing Procedure which further 31 people received training, including programme planning and also making strengthened the measures aimed at two Lead Auditors. use of the support of the Danish ensuring awareness of the procedure by Institute for Human Rights. Eni people and third parties. At the same 2014 also marks the launch of plans time, Eni is participating in the IPIECA to roll out a comprehensive company Eni is also working to strengthen the project to trial the grievance mechanisms training programme on human rights channels through which whistleblowing in local communities (see the chapter on which will aim to identify differentiated reports can be made, also with a view Local development). governance and business ethics | people | environment | local development | energy and climate 33

Integrity and transparency

Eni bases its corporate culture on the (see chapter on People, with special In 2014 Eni was first concept of integrity which translates refer to page 44); in the research on into transparency, the fight against • Internal communication, to make transparency in corporate corruption, respect for human rights, all the initiatives in progress more reporting conducted work, health and safety of people. visible and to incorporate ethics into by Transparency In 2014 the Integrity Culture project the everyday reality of the business. International. continued, aimed at reinforcing the ethical competence of management Transparency is an important tool and employees as it is a fundamental in the prevention of corruption and aspect of responsible leadership. This in encouraging the proper use of project is aimed at ensuring that the resources from the extractive sector. integrity culture is in line with company Therefore Eni intends to make its regulations and processes and it own contribution by acknowledging envisaged the implementation over the the legitimate transparency concerns year of a programme based on three raised and taking part in discussions pillars: with governments, civil society and • The definition of a regulatory international organizations with a system that makes the regulations’ view to defining a global standard of content more accessible and transparency on payments common understandable by all. Following to all operators in the industry. the drafting and issue of the Management System Guidelines, In 2014 Eni was ranked first in operating instruments were drawn the research on “Transparency in up to support the use and rapid corporate reporting” conducted by comprehension of the guidelines Transparency International, which and procedures. involved one hundred and twenty-four At the beginning of 2014 a of the listed multinational companies Competence Centre was set up in the world. The research analysed with a dedicated task force to offer companies’ corporate reporting and support and assistance mainly assessed the level of transparency through the Help Desk and onsite in three areas: Anti-Corruption interventions; programmes, company holdings

• Training, in order to promote the and the disclosure of key financial issue of integrity to all Eni people information on a country-by-country and to share the key messages. basis. 34 overview | projects and activities | results

This result is due to the progressive In particular, Eni believes that the governmental counterparties have extension of the information provided active involvement of governments given their permission for publication. by Eni, which was also aimed at is necessary to ensure a good use of The data have been extracted from responding to the requirements extractive resources. For this reason, Eni’s accounting records and relate to of Transparency International. the company has made contact with the parent company and consolidated For instance, information on Countries all of its upstream counterparties subsidiaries. 100% of payments related in which the various subsidiaries and in order to share with them its to Eni’s oil initiatives, also if carried out associated companies operate has commitment to transparency and to on behalf of partners, are reported. been integrated and improvements ask for their permission to publish Payments made by operators on Eni’s have been made to the description of taxes, royalties and other payments behalf in oil initiatives where Eni is not local community projects implemented envisaged by the EITI Standard and an operator are not shown. in various Countries. European Directives. The payment categories are in line Concerning transparency on As a result of this activity, the following with those provided for by the EITI payments, Eni has taken steps table shows the payments made (“cash Standard. The Countries subject to to increase transparency prior to basis”) during 2014 to Governments disclosure contributed to around the entry into force of the related (including local authorities and 38% of Eni’s production in 2014 legislation, in addition to its continued other governmental agencies) for (50% including the three further support to the Extractive Industries those Countries in which the relative Countries implementing the EITI Transparency Initiative (EITI). governments/local authorities/ shown in the table). governance and business ethics | people | environment | local development | energy and climate 35

Transparency of payments

Other Revenues Host National Oil significant from sales government’s Companies Profit payments Capital of equity (euro thousands) Year entitlement entitlement taxes Royalties Bonuses Fees and benefits Expenditure(*) hydrocarbons(*)

Australia 2014 6,337 568 33,654 112,435 Cyprus 2014 313 600 94,634 Ecuador 2014 16,183 32,120 112,606 Gabon 2014 15 1,129 72,379 Ghana 2014 158 903 30,443 Indonesia 2014 49,374 625,521 226,943 Iraq 2014 10,109 14,285 360,074 510,413 Italy 2014 327,187 1,928 13,028 923,121 3,028,401 Nigeria 2014 5,749 256,346 242,182 48 25,565 834,474 2,133,497 Norway 2014 314,619 13,498 1,366,403 2,070,686 Pakistan 2014 48,667 33,501 423 3,381 107,935 304,479 United Kingdom 2014 188,852 1,364 273,731 1,149,012 East Timor 2014 84,510 47,593 2,135 610 92,096 254,001 Vietnam 2014 1,505 424 12,449 EITI DATA (**) Kazakhstan(a) 2013 405,743 (4,467) Mozambique 2012 33,069 156 Republic of the Congo(b) 2013 35,600 17,810 1,196 19,325 (*) Accrual basis. (**) The reported data refer to the last EITI disclosure issued in relation to EITI Countries where Eni did not receive consent from relevant Government/Authorities to publish 2014 data on voluntary basis (a) The 2013 EITI report is showing payments for a total amount of 10,296,119 thousand of Tenge (KZ) for “Social Development and Local Infrastructures” that are not reported in the above table since they were made by the operator NCOC BV of the North Caspian Sea PSA. (b) In addition to the amount showed in the table some transfers “in kind” were made amounting to 10,864 kboe.

Royalties paid in Italy in the 2012-2014 period 2012 2013 2014 Royalties paid (a) (euro thousands) 237,517 298,383 327,187 - of which to the State 96,948 138,302 149,454 - of which to the Regions 109,949 125,596 130,610 - of which to Basilicata 77,255 91,862 94,925 - of which to the Municipalities 30,620 34,485 47,123

(a) The data include Eni SpA (Exploration & Production), Enimed, Società Adriatica Idrocarburi and Società Ionica Gas.

At the local level, in the Countries that In 2014 the subsidiary in Mozambique Ukraine. In Kazakhstan and Nigeria joined the EITI, Eni supports has joined the local Multi Stakeholder Eni is represented in the Multi the implementation of the initiative Group, while Eni is already active for Stakeholder Groups through trade by contributing to the preparation of years in the Multi Stakeholder Group associations of which Eni is part. the Reports and, in some cases, by in the Republic of the Congo and in For more information on the participating in the work of the local East Timor. Eni is following closely also implementation process in the Countries Multi Stakeholder Groups. the start up of EITI’s implementation in of operation, please see eni.com. 36 overview | projects and activities | results

We act correctly and ethically. All the colleagues who work in different departments act in accordance with our business processes, following strict procedures, working as a team, each one sharing its expertise.

CEO Claudio Descalzi Fighting corruption

Corruption represents an unacceptable On 29 October 2014, Eni SpA’s BoD Anti-Corruption: obstacle to business efficiency and approved an update to the fair competition. In line with the Anti-Corruption MSG (Management principle of “zero tolerance” set out System Guideline), which provides a in the Code of Ethics, Eni has sought systematic framework of Anti-Corruption people trained in the classroom to tackle the risk of corruption using a regulatory instruments that have been system of rules and controls aimed at planned and implemented by Eni over preventing corruption offences – known time, and which aims to provide Eni as the Anti-Corruption Compliance people, and all those who work with Programme – and a specifically Eni in Italy and abroad, with all the people trained through dedicated unit able to provide specialist principles and rules to be followed e-learning Anti-Corruption support to the Eni in order to ensure compliance with departments and unlisted subsidiaries Anti-Corruption legislation. This MSG is in Italy and abroad (Eni Anti-Corruption mandatory for Eni and its subsidiaries. Legal Support Unit). Eni provides mandatory Anti-Corruption Eni’s Anti-Corruption Compliance training through online course Programme was developed in line with (e-learning) and classroom-based current applicable Anti-Corruption training (workshops) delivered by the provisions as well as with international Anti-Corruption Legal Support Unit conventions such as the UNCAC in Italy and abroad. In 2014 around Convention, the OECD Convention on 1,430 Eni employees received Anti- Combating Bribery of Foreign Public Corruption training through e-learning

Officials in international economic while around 2,480 employees operations, the GCPA, Italian Legislative and contractors were trained in the Decree 231/01 and the UK Bribery Act. classroom. governance and business ethics | people | environment | local development | energy and climate 37

Eni plays an active role at national and extractives” (multi-stakeholder in working groups set up to work international level allowing it to discuss working group set up in order on the 10th principle dealing with the fight against corruption with key to identify scenarios with a high the fight against corruption. In players and also to contribute to the risk of corruption in the extractive this context, in October 2014 Eni development of best practice on this industry). joined the “UN Global Compact issue. In this context: • Eni also joined the PACI Call to Action: Anti-Corruption • Eni contributes to the B20 work (Partnering Against Corruption and the Global Development on the fight against corruption. In Initiative), an Anti-Corruption Agenda”, a petition aimed at 2014, as part of the Australia B20, initiative under the umbrella of getting governments to strengthen Eni played an active role in the the World Economic Forum, of their Anti-Corruption measures Anti-Corruption Working Group which Eni’s Chairman is a Board and implement strong governance in which Eni’s Chief of Legal & Member (Vanguard Steering) and policies. On 10 December, 2014, Regulatory Affairs was appointed the Chief of Legal & Regulatory Eni also took part, through ACLSU, as a member of the Expert Group Affairs is a Board Delegate. in an event held in New York (group of experts that identify the Eni participated in a restricted on the tenth anniversary of the priorities for fighting corruption). working group, set up in order 10th principle of the UN Global • On 17 November, 2014 Eni took to update the core Anti-Corruption Compact on Anti-Corruption. part, through ALCSU, in the principles of PACI, which were

OECD’s Policy Dialogue on Natural then presented at the meeting Eni also participated in a working group Resource-based Development in Davos in January 2014. that looked at the different approaches which was held in Paris and also • Furthermore, Eni is an established companies can adopt when liaising subscribed to the Work Stream 4 partner of the United Nations with investors on questions related to on “Detecting corruption risks in Global Compact and participates Anti-Corruption matters. 38 overview | projects and activities | results 2.2 People

Eni is aware of the fact that its own people play a strategic role in the company’s success. The centrality of their role is enshrined in the “Our People” Policy, which highlights the connection between expertise and dedication and the achievement of the company’s goals.

Eni considers the features and skills, experience and potential of its In 2014 Eni’s people ambitions of its people as a valuable employees. Its operational excellence have increased resource and is committed to is built on all the actions implemented by 1.8% compared creating a working environment by Eni to ensure the safety of its to 2013. that guarantees equal opportunities people, local communities and the and values the results, professional company’s partners in all contexts.

Eni’s people Geographical distribution of Eni’s people in 2014 83,599 82,093 % 77,636 14.1% 13.7 Africa Rest of Europe 13,65 0 13,58 8 12,84 7 30.9% Italy 18.8% Americas Women Men 22.1% Total workforce 0.4% Asia 64,789 68,505 69,949 Australia and Oceania 2012 2013 2014 governance and business ethics | people | environment | local development | energy and climate 39

Safety

Safety is one of the more complex though it has achieved significant initiatives to raise awareness and aspects of a company’s sustainability. results, Eni continues to work to further specific training courses delivered to Even though the results are easily improve its performance by remaining the entire workforce with no exceptions, observed through indicator trends, highly focused on the health and are fundamental aspects of the whole there are many underlying factors: safety of Eni people and contractors. company’s commitment to maintaining work organization, risk assessment and Since 2006 the number of injuries good safety results. mitigation, training, the state of the has decreased each year achieving an Over the course of 2014 the LTIF and equipment, management of production almost 80% drop by 2014 (in terms of TRIR went down by 26% compared processes, corporate culture and the Lost Time Injury Frequency - LTIF), with 2013 (respectively by 14% and the management’s leadership on the while the TRIR (Total Recordable Injury 16% if we include the performance subject. This is why safety performance rate) has gone down by 60%. of the engineering and construction is also an indicator of good company These objectives were achieved subsidiary Saipem). The fatality index management overall. through the application of a health and has been steadily decreasing over the Since 2007 Eni has included safety safety management system; by 2015 last 4 years (0.72 in 2014). Regrettably, among the targets linked to top all plants with a significant risk will be however, in 2014 there were 4 fatal management remuneration and over OHSAS 18001 certified. The exchange accidents at the premises of Eni the years it has defined related goals of information and the dissemination contractors in various geographical that are ever more challenging. Even of a corporate culture, also through locations (two in Italy in downstream

Injury frequency rate (LTIF) Fatality index ((injuries / hours worked) x 1,000,000) ((fatal injuries / hours worked) x 100,000,000) 1.74 2.00 1.80 1.60 1.22 1.40 1.23 1.10 1.20 0.98

1.00 0.87 0.80

0.60 0.53 0.72 Employees 0.40 0.20 Contractors 0.00 Total workforce

2006 2007 2008 2009 2010 2011 2012 2013 2014 0

Employees Contractors Total workforce 2012 2013 2014 40 overview | projects and activities | results

sites and two abroad in I&C and sub-contractors, which entailed also at maintaining the highest possible level upstream operations). These fatalities carrying out operational checks in of attention and ensuring compliance were caused by impact/crushing in the field, and HSE audits. Given the with procedures (through the three cases and by asphyxiation in predominance of impact/crushing as production of a film on handling loads, a confined space in one case. The a cause of the fatalities, further actions the publication of company calendars corrective measures put in place were undertaken to raise awareness bearing messages to raise awareness consisted of updating the work permit and provide information which included of the issue, and the preparation of procedures, checking the conduct of launching dedicated campaigns aimed technical material for briefing activities).

There have been In the context of occupational safety, the entire fuel pipeline network. This no blowouts in the following the initiatives to raise safety will make it possible to monitor the upstream sector awareness when working at height and more sensitive areas, ensure prompt for the eleventh protecting against being knocked or intervention if similar events re-occur crushed, the “zero fatalities” project and give a precise report to the police consecutive year. addresses road safety with the SIPIS of every incidence of attempted theft. campaign (innovative systems for the In 2014 a total of 4,301 emergency prevention of road accidents), which drills were carried out in Eni (excluding is currently under development. Saipem), which is 9.1% more than 2014 marked the eleventh consecutive the number planned. The upstream year during which there were no operational sites involved in the drills blowouts or significant emergencies included Liverpool Bay Operating in the upstream sector. Meanwhile, Company Ltd, with a virtual oil spill following an increase in pipeline fuel of 11,000 tonnes and which entailed thefts (both in Italy and abroad), considerable involvement of the English there were some oil spills that caused authorities and communication with the contamination of the land and water media. In 2014 three complex drills, emergency drills carried out in 2014 in protected areas. In order to manage which entailed the activation of the Eni this emergency, actions have been Crisis Unit and the involvement of the put in place in conjunction with media, were carried out at Eni level stakeholders in order to restore the in collaboration with or guided by the flora and fauna while work continues Italian and international authorities.

complex drills involving on the installation of a new e-vmps® One drill carried out on the Island the Authorities (Eni Vibroacoustic Pipeline Monitoring of Elba dealt with a naval accident and the media System, see more on page 59) on involving an oil spill, a second drill in governance and business ethics | people | environment | local development | energy and climate 41

Ravenna involved an accident at a operational area. Work continued on with two coordination units for the petrochemical plant with a toxic gas the process safety audit programme at upstream and downstream activities. leak (ammonia) and a third, in the east the upstream and petrochemical sites. It will also manage a Safety Training of Sicily was related to a seismic event In order to ensure continuous safety Centre which will deliver training to Eni and the consequent tsunami. improvements in contract work, in employees on fire fighting, first aid, January 2015 Eni inaugurated the working at height and working In the context of process safety at the Safety Competence Centre (SCC), in confined spaces. central level, in 2014 the company a centre of excellence which will be Over the year, work continued on the focused on developing an internal responsible for the training, guidance, awareness project “Eni in safety”, system to regulate process safety and management, coordination and which involved 1,147 people in Italy on the development of an ICT system monitoring of new professionals and abroad and was delivered through to manage work permits and define in charge of safety controls and 77 workshops attended by managing the related requirements. With regard improvements in work outsourced to directors and plant managers. to refining, a pilot system was put in third parties at all sites in Italy. The SCC This activity is evidence of the strong place to manage asset integrity, which will absorb around 180 resources from commitment of Eni’s top management will gradually be rolled out to all the the operational and maintenance areas to safety. 2014 also saw the third other production sites in the same of the Gela site and will be equipped edition of the company’s “safety day”, 42 overview | projects and activities | results

an annual event attended also by subsidiary in Tazerka (Tunisia), the The Eni in safety project has Eni’s Chief Executive Officer which petrochemical plant in Mantua and in resulted in 17,000 people represents an opportunity to take stock the Ravenna District. In addition to this, now playing a leading role of safety in the company, identify any internal skills and know-how were used on safety matters. criticalities and reward excellence. The to adapt the messages to the particular 2014 event also gave due consideration nature of the various businesses in to contractors, whose involvement is Italy and abroad. The campaign was fundamentally important in ensuring reinforced through training, monitoring the safety of operations performed at the results, and the accounts given by the worksites and the plants. the operators in the field. Among the various projects routinely signed with contractors, Moreover, a new campaign on implemented, the requalification defines the specific undertakings hand safety referred to as HaWoSa project at the ex-production sites of these contractors, establishes the (abbreviated from Hand Working and in Porto Marghera, in particular fundamental rules to be followed Safety) was promoted. This campaign the decommissioning of plants and and the tools to be used to achieve seeks to raise awareness among production facilities. On 5 September, the expected results. It is based on employees of hand injuries, which 2014, an important agreement – the the principle of zero tolerance for represent a significant percentage Safety Pact – was signed between dangerous behaviour and the positive of the overall injuries. The content Syndial and the contractors to solidify reinforcement of good behaviour and communication methods of the the increased focus on and importance through evaluation indices and tools campaign, as well as the technical of the issue. This initiative follows such as the “safety-meter”, a permit support tools, were checked using successful trials conducted at two to which points may be allocated various Focus Groups set up in important sites in the refining sector. or docked depending the type of the Livorno refinery, the upstream The Safety Pact, which in Eni is behaviour adopted.

Number of injuries and injury frequency rate (LTIF) of Eni’s workforce 759

1.51 732 661 1.31

1.14 535 million euro in safety 486 expenditures and investments 0.92 404 0.75 312 0.60 0.49 213

170 Contractor injuries 0.35 0.31 Employees injuries Workforce LTIF ((injuries/worked hours)x1,000,000) hours of training on safety 2006 2007 2008 2009 2010 2011 2012 2013 2014 governance and business ethics | people | environment | local development | energy and climate 43

Internal sharing of corporate strategy

In conjunction with the top management reshuffle, in 2014 Eni confirmed its commitment to effective internal communication. The aim is to inform people of and involve them in the new strategy, encourage them to take on a more active role and reinforce a sense of belonging to the company. More specifically, an internal communication plan was implemented to support the organizational and cultural change. This plan is aimed at ensuring the goals and values to which Eni’s people should aspire are effectively disseminated throughout the company.

La condivisione Engagement of Eni’s peopledella strategia

Objective Enhance communication on business issues to ensure people’s involvement in strategies and goals.

Projects Launch of a new version of the intranet portal MyEni, with the aim of improving its user-friendliness and efficiency.

Editorial plan on MyEni dedicated to business initiatives aimed at informing people using news and internal testimonies.

“HR Ambassador” Project: widespread communication by specific people within the corporate structure who promptly transfer key information on new strategic projects.

“Cascade” Programme: presentation of company goals through special meetings between top management and staff, with the possibility of following these meetings live via streaming.

Facilitating guidance in Eni, particularly with regard to regulations, by simplifying content Objective and providing tools that give the information needed to perform day-to-day working activities in a prompt and clear manner.

“Ben fatto” Project: campaign launched on the internal portal that illustrates the main concepts Projects of the Code of Ethics and policies through concrete messages and applicable in daily life.

Communication Plan for Sustainability issues: designed to spread simplified knowledge of the main sustainability issues Eni is committed to and the related activities. 44 overview | projects and activities | results

2014 was marked by two high-profile Eni to continue consolidating and interventions concerning the company strengthening its decision-making management and the new Board of and strategic capacity in line with the users with access Directors. ethical principles of the company. It to the MyEni portal The first intervention – the focused in particular on reinforcing and “Responsible Leadership” programme, disseminating the values of integrity which was developed with the support and responsibility, achieved through of management and ethics specialists leading by example and fostering a Countries involved (SDA Bocconi, Politeia) – enabled climate of trust. in the Cascade Programme

ResponsibleProgramma Leadership Responsible ProgrammeLeadership

from November 2013 to December 2014 The second initiative dedicated to the members of the Board of Directors – implemented through adhesion to the UN Global Compact LEAD Board Programme (see chapter on 11 41 600 Governance and Business Ethics, page 28) – concerned the creation workshops dedicated editions dedicated peoplep to managersg to senior managersg involved of sustainable value, which for Eni with significang t for a total of managerialg is realized by adopting a long-term responsibilities perspective and by continually paying heed to any requests or grievances of its stakeholders. Web training reached 167 121 senioreni managersg peoplep f from the in Italy and abroad Procurement department governance and business ethics | people | environment | local development | energy and climate 45

We have to explain people the elements of change, why we are changing and above all that all colleagues are involved in this change. Each of us is participating in this transformation, and we definitely don’t want to leave anyone behind.

CEO Claudio Descalzi

Professional development

Eni is aware of the fact that its people where necessary. Structure of the professional system are an important lever in the creation In 2014 the structure of the of long-term value and a driving professional system was reviewed, force for innovation in their own in line with company processes and fields which, by their very nature, are regulations, in order to update the professional models characterized by a great intensity of Professional Categories and related knowledge as well as of capital. roles, identifying the so-called primary The development of key professional roles, crucial in the achievement of skills and expertise in the O&G strategic goals, on which to focus industry requires time and a professional development activities. mapped roles professional career path that

includes diversified experience in the In 2014 Eni invested overall 60.9 Expenditures on training most relevant sectors and strategic million euro in training its own (million euro) areas. For Eni, internal growth is employees, delivering 3.2 million 75.91 an important lever in maintaining hours of training. 60.93

and developing intellectual capital. Training covers a range of areas 55.67 This is why it promotes professional including the technical aspects development among the various related to drilling, project different business areas through management and oil reservoir balancing and mobility initiatives, engineering, and also international supported by training plans that negotiation, leadership, ethics,

allow for professional requalification compliance and operational safety. 2012 2013 2014 46 overview | projects and activities | results

Training hours by tipe Ore totali di formazione professionale

36% 42% HSEQ professionalp f technical/commercial 9% languages and ICT 7% cross-sectoral 6% conduct,, communication, institutional

2014 saw the launch of the “Eni-campus” project which envisages the creation of The Scuola Mattei a technological platform in order to integrate and reinforce the training delivered The Scuola Mattei is an integral directly and remotely, both synchronously and asynchronously. This platform will part of Eni Corporate University. greatly facilitate interaction between participants and make it possible to access It was founded in 1957 by Enrico multiple sources of information and learning both internally (e.g. webinars) and Mattei himself and now offers a externally through, for example, the Massive Open On-line Courses (MOOC) made Master’s Degree in Energy and freely available to all by many foreign universities. The nature of the initiative makes Environmental Management and it easier to reach and involve our people, even those abroad, allowing at the same Economics (MEDEA), which is now time improved flexibility in the access to training. in its fifty-eighth year. It is a clear reflection of Eni’s interest in high Another initiative of note is the Coaching Academy project. In the first half of 2014, level and interdisciplinary training 19 Eni Corporate University professionals with consolidated experience in company with an international outlook. To date recruitment and training were trained and qualified as Corporate Coaches. Currently the school has trained over 2,800 there are 27 coaching courses in progress for managers and directors of various students from 110 different Countries businesses, and this number is set to rise significantly. (57% from outside of Italy). governance and business ethics | people | environment | local development | energy and climate 47

In Eni, the knowledge management system is based on the development of Knowledge management Communities of Practice (CoP), the aim of which is to capitalize on the experience gained to avoid repeating previous mistakes, more rapidly identify possible solutions and improve practices already in use. Current development, which is increasingly based on “social” methods, encourages more people to exchange ideas and become Communities of Practice actively involved, which ultimately benefits the exchange of knowledge. The knowledge management initiatives in 2014 confirmed the growing trend already recorded over the last few years.

As of 31 December 2014 Eni’s knowledge management system was composed people involved of a total of 66 active communities involving a total of 6,883 members, up by 21% compared to the previous year.

The acquisition of new professional Permanent New hires in 2014 new hires by age group resources from the market is conducted through recruitment procedures closely 6,663 26% 6,372 integrated with the academic world that 6,160 Employees 40-54 envisage the conclusion of collaborative agreements aimed at delivering the 6% Employees 18-24 master’s and specialization courses in order to develop the core skills 6% Employees over 55 needed in the Oil & Gas industry. Eni has invested around 3.5 million euro 62%

2012 2013 2014 Employees 25-39 in these initiatives, which contribute to the development of a pool of potential candidates that can be recruited into the company. At the same time, these university courses make a contribution (in conjunction with the Politecnico the Politecnico di Milano); Master in to the Italian training system. In 2014 di Torino); II Level Master in Planning Applied Exploration Geophysics (in these initiatives involved around 140 and Design of Oil & Gas Plants, II Level conjunction with the University of Pisa). students and recipients of scholarships Master in Safety and Environmental Several doctoral research (PhD) grants and will continue in 2015. Management in the Oil & Gas Industry are also made available for research (in conjunction with the University of on topics of interest to the company, The training initiatives in question Bologna); Master in Petroleum Geology in collaboration with some of the main are the following: II Level Master in (in conjunction with the University of higher education institutions in Italy (e.g. Petroleum Engineering and Operations, Perugia); Master in Energy Engineering the Politecnico di Milano, University of Master in Petroleum Engineering – Oil & Gas Track (in conjunction with Bari, University of Pavia, etc.). 48 overview | projects and activities | results

Internal mobility

In the current competitive and dynamic Local employees context, balancing requirements by professional category against the professional resources

available internally enables the 45,864 43,121

company to promptly respond to 39,668 business needs and to draw up medium and long-term professional Eni encourages development plans. internal mobility In 2014 there were 413 internal in order to respond transfers, a significant increase to the people’s needs compared to previous years. Senior managers Managers and those This result was achieved also through Employees the launch of a new job posting portal Workers of the business. in March 2014. 2013 2014 2012 The advantage of internal mobility, at both the national and international level, is that, through adequate retraining, it allows skills and expertise skills were of value. or international contexts, and to Syndial in declining sectors to be transferred An example of the strategic use of to support environmental remediation to those that are in expansion. This is mobility is the RaGe project which activities. particularly true for the upstream sector was aimed at converting the Refinery where more than 200 qualified workers in Gela into a Green Refinery. This The company’s strategy for managing from other areas of the company were entailed a substantial reorganization of its business at international level is transferred in 2014. the activities and therefore required the based on structured international In this way it has been possible involvement of many people who are career paths, along with the to manage important industrial today employed in the territory recruitment and development of local restructuring operations – also in cases (see chapter on Local development). people, with the aim of sustaining of closure or significant reorganization In fact, 350 people will be transferred the internal growth of professional of the production sites in Italy and between 2014 and 2015 to the development. abroad – without the threat of job upstream sector to support the new The main initiatives developed in this losses. Many people were redirected exploration and production operations context in 2014 were: to new activities or areas in which their in the Ionian Sea, or in other national • The launch of the new HR governance and business ethics | people | environment | local development | energy and climate 49

Evolution system; • The continuation of monitoring • The updating and monitoring of and support to ensure the correct international mobility policies, with application of the provisions on reference to the introduction of a recruitment and selection in the There has been a significant increase new model of transfers abroad; foreign subsidiaries. in the number of Eni employees in East Africa

Internazionalizzazione Internationalization

Objectives Projects

Spread and use of instruments for resource Local content development project: a plan of visits by managerss and development and knowledge at the level of all specialists from the central HR function in foreign subsidiariess was the operating units in the world. performed during 2014, in order to promote the use of tools foror pepeople'sopplle's development and knowledge of locals, internationals and expatriates with a high international profile.

Development of professional skills Managing Director Empowerment project: aimed at defining for international positions. an empowerment plan, from training to career paths, for Managing Directors.

Extension of professional skills and expertise Green 2014 Exploration & Development project: designed to provide and awareness of issues that don’t specifically a select sample of young talents with a broader vision of the whole chain belong to one’s area. of Upstream activities.

Mapping of skills and definition High Potential Manager (HPM) and STAR Enhancement project: of talent development plans. aimed at defining specific individual professional development plans for high potential or premium staff (particularly young graduates and senior staff/managers). 50 case studies

Operational excellence and innovation at the root of exploration success. In recent years Eni’s exploration activities have achieved top results in the oil industry, demonstrating that this area is a driver of internal growth and a source of long-term value.

The results achieved are the outcome replacing the reserves, at the same of a strategy pursued by the company time reducing its exposure with regard 2008 - 2014 new findings by applying the so-called Dual to investments in the main projects. Exploration Model. On the one hand this model’s primary goal is to replace The distinctive exploration strategy is 10.4 the reserves produced, and therefore based upon: billions of barrels sustain organic production growth in • medium to long-term vision of oil equivalent the future through exploration, while • focus on time to market on the other it makes it possible • governance of exploration to immediately exploit certain processes 10 discoveries and to generate cash flow • skills of Eni’s people times the annual consumption in Italy through the sale of minority interests • ability to protect, disseminate and in some assets. As a result of the renew know-how significant discoveries made in recent • constant focus on the years, the company is in a position opportunities provided by 2.5 to generate free cash flow without technological innovation times the barrels produced in the same period of time compromising the goal of organically • rigorous attention to HSE aspects Operational excellence and innovation at the root of exploration success 51

Medium to long-term vision

The exploration strategy – new Countries such as South Africa, Nigeria, Norway and Ecuador are characterized by low exposure to Myanmar, and Portugal, and it worthy of note. The results for gas non-conventional projects – is based acquired new exploration areas in were also good in Mozambique and on an exploration portfolio comprising China and Vietnam. Indonesia. of essentially conventional securities. The renewal of the portfolio spreads In the years up to 2014, Eni’s The exploration success of the the risk across various exploration investments in exploration have conventional activities and the low unit contexts and increases the overall been divided between frontier costs of discovery make it possible to likelihood of discover. areas (40%), areas in which the have a project development portfolio After the “supergiant” discovery in company traditionally operates that is less exposed to the volatility the Rovuma basin off the shores of (40%) and “incremental” and “near of the crude oil market. Mozambique, Eni achieved good field” exploration projects (20%). In recent years shares have been results also in 2014. Significant Starting from 2015, the company acquired with significant stakes pre-sale discoveries of oil, gas and will adopt a more prudent medium- in exploration permits with the condensate were made in West Africa term strategy that is more focused greatest potential that, if successful, (Congo and Gabon). The discovered on value rather than volume, thus allow the adoption of the Dual resources are situated in conventional increasing incremental and near field Exploration model. waters and are close to existing exploration activities in tested basins Eni seeks to continually broaden infrastructure which means that and reducing exposure in relation and diversify its exploration portfolio. production can begin promptly. to deepwater and ultra deepwater 2014 saw the company move into The oil discoveries in Angola, Egypt, exploration in frontier areas.

Focus on time to market

In order to maximize the value of can be set up in a short space commercially viable using a suitable its exploration discoveries, in recent of time. Exploration is focused delineation campaign. years Eni has been committed to on the delineation phase of the Development begins with a pilot reducing time to market, the time discoveries (appraisal, evaluation), project and then proceeds to the taken from the declared discovery which is aimed at quantifying the next phases until the field is fully to the start of production in the commercial reserves to allow project developed. In this way it is possible field. This goal is pursued right from development. to anticipate positive cash flows the start when selecting exploration It is possible to determine whether and spread out the investments assets, preferring those where, there is a sufficient quantity of as the discovery is evaluated on if successful, production activities reserves to render the project a step-by-step basis. 52 case studies

Management of exploration processes

The selection of the exploration adopted centralized procedures Advisors, the proposals put forward projects (Assets and Prospects) for selecting assets and making by the subsidiaries are ranked in proposed by Eni’s subsidiaries is a decisions on launching prospect order of preference. Every year, fundamentally important process. drilling operations. around 60-70 prospects out of 300 To ensure uniform criteria for After a rigorous technical validation proposals are selected on which to evaluating the proposals, Eni has process carried out by internal Senior conduct drilling operations.

Professional development of Eni’s people

In addition to the clear formalization In 2014, as in every other year, trainees with a broad vision of all of work processes, exploration around 20 people with great aspects of the business from the requires highly specialized potential were selected by the start of the exploration phase to the professionals, who, in managing exploration and technical units (at final production phase; to develop the activities, are able to develop a both Eni and subsidiary level) to familiarity with the processes, strategic vision and transform it into take part in an annual on-the-job systems and technologies used; to excellent exploration performance. training programme which gives help build the company’s knowledge In addition to specialized training, them work experience in the key network. All of this serves to prepare professional development in the professional areas of the core the next generation of managers exploration sector is guaranteed business. in the areas of Exploration and through the “Green Project”. The objectives are: to provide the Geophysics and Geological Services.

Ability to protect, disseminate and renew know-how

In ensuring that technical skills are and lessons learned. They are involved that are in line with the business valued, an important role is played right from the start of the project in strategy, and they also support the by the Knowledge Owners and Global order to ensure the most appropriate assurance review process of the Advisors in the diffusion of know-how methods and technologies are applied exploration projects.

Activities of the Communities of Practice in relation to exploration

webinars for Eni’s people Communities at central, foreign and 5 of Practice 5,000 interventions 50 subsidiary locations Operational excellence and innovation at the root of exploration success 53

Constant focus on the opportunities provided by technological innovation

The sustainability of Eni’s strategy project to install a new super computer This new supercomputer, which in the and model is based on a high degree in the Green Data Centre which is future will support dynamic reservoir of geological and geophysical expertise capable of performing 3 quadrillion simulation, gives Eni the capacity and on robust procedures that draw operations a second (3 PetaFlops) to recreate highly accurate on excellent proprietary technologies. and is equipped with 7.5 Petabytes of three-dimensional images of the These include seismic imaging, system memory. The new system was ranked subsoil in a significantly quicker modelling and cutting-edge drilling 12th in December 2014 by TOP500, timeframe (reduced from months to technologies. which lists the biggest computers in weeks), thus reducing the overall time The application of these proprietary the world. Furthermore, it received required for exploration activities. technologies enable a more refined an award in 2014 from the HPCwire and detailed exploration for the magazine for the fastest computer in targeted research of new deep the Oil & Gas industry. Its “hybrid” 23 plays even in mature basins and in nature guarantees extraordinary million euro already explored assets. In Congo performance in terms of energy of overall investments and Egypt the professional skills efficiency and with 2.8 GigaFlops/Watt and technological know-how of the it is ranked 9th in the Green500 list th company produced positive results in of the most efficient computers. Eni’s 9 the exploration of pre-sale deep plays. Green Data Centre’s innovative cooling place in the Green500 2014 saw the conclusion of Eni’s system contributes to the overall classification of the most efficient supercomputers “enhanced subsurface imaging” efficiency and reduces CO2 emissions.

Rigorous health and safety and environmental protection

The commitment to safety during worked (33% up in 2014 compared to the guidelines of the most significant operations and minimizing 2013), the accident indices continue international standards, studies were environmental impacts is a fundamental to fall. carried out on the environmental, social requirement of exploration activities. In accordance with local and and health impact of operations in the Despite the increased number of hours environmental legislation and following new exploration contexts.

Exploration results

drop in the Biodiversity studies assessments performed to TRIR1 compared (in relation evaluate the impact of operations2 -9% to 2013 7 to 7 Countries) 11 (in relation to 9 Countries) 1) TRIR - Total recordable injury rate, including contractors 2) ESHIA - Environmental, Social, Health Impact Assessment HIA - Health Impact Assessment Other Environmental Studies 54 overview | projects and activities | results 2.3 Environment Eni considers environmental protection an essential part of sustainable development in the realization of its industrial projects and it undertakes to integrate this goal into its operations throughout the lifecycle of its plants and in all the contexts in which it operates.

Environmental Management System

Managing environmental aspects is (available on eni.com). HSE issues are improvement measures for Eni’s one of the pillars of the sustainability coordinated by an HSE Coordination operations. strategy. It is based on the adoption, at Committee, chaired by Eni’s Health, Outstanding operational management: all the company’s operational sites, of a Safety and Environment Manager and is • contributes to reducing costs as it single management system model that composed of HSE functions Managers increases efficiency; encompasses the following activities: of the business units. In addition to • is an instrument for product and • identification of the significant putting the HSE sustainability objectives process innovation; environmental aspects; into effect, the committee also analyses • is a requirement for the company’s • management and mitigation performance and the overall audit licence to operate; of environmental impacts; results and proposes corrective and • reduces business risks. • adoption of the best technologies; Environmental expenditures • prevention of adverse environmental and investments (euro thousand) events; 770,182

• adoption of evaluations and 743,075 733,576 In 2014 over 90% action plans for the protection of of Eni’s industrial sites 600,488 biodiversity throughout the entire 467,939 490,238 with significant HSE project operational cycle. risks were ISO 14001 and The management system is integrated OHSAS 18001 certified. with the management of health and

safety and adopts the principles of Current spending The goal is to reach Investments excellence, sustainability and integrity 100% in 2015. Total

defined in the respective policies 275,136 243,338 169,694 2012 2013 2014 governance and business ethics | people | environment | local development | energy and climate 55

Biodiversity and water conservation

Over the last decade, the O&G sector of the use of natural resources and any In line with its own has grown significantly, not only in impacts. These assessments are then policies, the conservation the area of production but also in the used to define action plans aimed on of biodiversity, ecosystems area of exploration and the discovery the one hand at mitigating the impacts and natural resources is of new oilfields and new business as much as possible through a specific one of Eni’s main action opportunities (such as shale gas and hierarchy of actions, and on the other at principles. biofuel production). This growth was maximizing opportunities for enhancing accompanied by the industry’s move local biodiversity. into scarcely populated areas that have Eni implements these initiatives Villano Biodiversity Project: a high biodiversity value. in conjunction with internationally Eni has mapped its sites using the renowned scientific NGOs and local Integrated Biodiversity Assessment universities, applying the best industry Tool (IBAT) developed by the Proteus practices developed by the IPIECA- million euro Partnership, promoted by UNEP- IOGP Biodiversity Working Group. The in investments WCMC of which Eni is a member. end goal is to show that the company’s This mapping activity has assessed operations do not result in any net the proximity to protected areas and loss of biodiversity in the operational endangered species and has identified sites, adopting a systematic approach the priority sites where Eni has that avoids, reduces, restores and, local stakeholders involved undertaken to define Action Plans to if necessary, compensates for any protect biodiversity, thus increasing by operational impact. 20% by 2017 the sites already involved in this activity. In fact Eni has already 2014 saw the completion of the carried out biodiversity assessments phase 2 of the “Villano Biodiversity” and implemented the related Action project, developed in the production Plans in Italy (since 2003), Norway field in Villano (Ecuador). The project the potential impact of Agip Oil (the Arctic, since 2007), Alaska entailed an overall investment of 2.1 Ecuador (AOE) operations and to (Nikaitchuq, since 2008), Ecuador million euro and the involvement of draw up an adequate biodiversity (Villano, since 2006) Kazakhstan and 16 local stakeholders: indigenous action plan (BAP) outlining the Congo (since 2011) and has recently organizations, government bodies, actions to be taken to mitigate the begun work on similar initiatives in associations of farmers and impact and restore the habitats Mozambique and Indonesia. government consultancy companies. concerned;

The biodiversity assessments examine The project’s objectives were: • in the following phase, to the interaction of operational sites with • in the initial phase, to evaluate implement the BAP and monitor the surrounding environment in terms the state of biodiversity in Villano, its effectiveness. 56 overview | projects and activities | results

The project demonstrated that despite In 2014, less than 20% of the plants to reduce water consumption at the sensitivity of the ecological context, (out of a total of 207 operational the Versalis site in Mantua (due AOE’s activities did not alter the stability exploration and production sites), equal to be completed in 2016), the of the ecosystems. The impact of the to 31.4% of production, were located in implementation of “water reuse” activities was localized and reversible, such areas. These plants were located projects at the refineries in Gela unlike the impact resulting from human in the following Countries: Libya, and Sannazzaro (with a saving of colonization, which is more extensive Algeria, Tunisia, Egypt and Pakistan. 5 million m3 water withdrawals as and persistent. The remediation of the Currently at these sites initiatives of 2017) and an increase in the primary impact of AOE’s operations are underway to optimize water amount of groundwater treated in turned out to be feasible, effective, consumption and in 2014 initiatives Syndial’s TAF plants plants (plants relatively quick and could potentially continued at the BRN, MLE and Abu for groundwater treatment) and be extended to other similar operations. Rudeis sites. reused in the production cycle are The project served to verify the expected to further reduce the use of feasibility and effectiveness of the best As regards to water withdrawals due to fresh water by around 20% by 2016. practices used to protect biodiversity operations, Eni has been using mainly At many Italian sites (Gela, Priolo, and ecosystemic services in a sensitive sea water (more than 90%) for the Robassomero, Sannazzaro, Taranto) area such as the Ecuadorian Amazon. last 10 years and mainly for cooling contaminated groundwater that has activities. been purified by specific treatment With regard to new initiatives, The use of fresh water (approximately plants in the context of the remediation since 2010 Eni has been using the 160 million m3) is mainly due to in progress is already reused for Environmental, Social & Health Impact Petrochemical operations, and its various industrial purposes. This reuse Assessment, which is often preceded use is down by 12% compared to makes it possible to save around by a preliminary assessment 2013. The implementation of projects 4 million m3 of water a year. (pre-ESHIA). In 2014, 3 preliminary assessments were carried out in Congo and

Mozambique (1 of which was a Sea water withdrawals Fresh water withdrawals baseline ESH) and 22 ESHIA in Algeria, (Mm3) (Mm3) Cyprus, Ghana, Iraq, Italy, Kenya, 81.7% 80% 73.4%

Mozambique, Congo and Nigeria. 2,142.82 2,002.22 Particular attention is paid by Eni to 1,704.97 operations in areas facing water stress. 188.70 183.93

Each year Eni maps out its production 162.48 sites in relation to the areas that located

or may potentially be located in the Fresh water future (due also to climate change) in reused areas with inadequate water resources. 2012 2013 2014 2012 2013 2014 governance and business ethics | people | environment | local development | energy and climate 57

A special issue for exploration and 2015 thus creating a total treatment Production water reinjected: production operations is related to capacity of more than 9,500 m3 per fossil water. Reinjection of this water day (3.5 Mm3 per year). Eni’s total into the wells, through the use of share of investment in this project pumps and specific injector wells, is amounts to $106 million, of which in 2014 often the best solution. Eni’s goal is to 83% had already been committed achieve 70% of the production water by the end of 2014. being reinjected by 2018. In 2014 the Work continues on the “Water & Energy” percentage reinjected was 56%. project with analyses being carried out At the end of 2014, the testing to identify improvement areas in order to target to 2018 phase began for the Ebocha project reduce energy consumption related to in Nigeria, which was first launched the management of water resources at in 2011. Ebocha is the first of three the various operational sites. production water treatment hubs The areas identified so far will be planned in the Country (the other two further investigated in order to are Tebidaba and Brass). This first propose improvement measures step has already made it possible to based on specific case studies, reinject up to 915 m3 of water per day which may then serve as example of and the aim is to complete the project optimization that can be implemented and to connect all the facilities by on other operational sites.

Underwater In response to the increased focus It entails the use of Autonomous on the state of the seas and marine Underwater Vehicles (AUV) able robotic biodiversity, Eni has recently to move silently without any fixed technology developed new underwater robotic attachment to the surface and only technology known as Clean Sea, minimal logistical support. which in 2014 won the Eni Award Clean Sea is able to check the and the National Award for Innovation conditions of the offshore installations in the “Large Industrial Groups” in order to prevent breakages and to section. This technology enables identify any possible leaks. It can environmental monitoring and the also be used to map and characterize inspection of offshore Oil & Gas the habitat on the sea bed in real

facilities. It was used in 2014 to time thus making it possible to check conduct environmental monitoring in that the extractive operations are not Kashagan and in the Strait of Sicily. impacting on the marine life. 58 overview | projects and activities | results

Oil spills management

Eni is continuing its work on prevention the equipment for use in extreme the risk of any impact associated with (gradual replacement of the tanks and environmental conditions and studying oil spills, with which Eni is involved as pipelines that have been in service the behaviour of oil spilled close to the an external partner. the longest or that are in “hostile coastline. In 2014, 83 drills were carried out in conditions”: approximately 30 million The results obtained have been used to the upstream sector of which 10% euro in 2014) and also on emergency implement the “Oil Spill Preparedness management by participating in Plan” in the Goliat oil field. Other various joint initiatives to tackle initiatives worthy of note are the potential oil spills, also in extreme international IPIECA project known Upstream environments. For example the “Coastal as Oil Spill Response Joint Industry Oil Spill Preparedness Improvement (based on nineteen recommendations Programme” (COSPIP) is aimed at in relation to containing and dealing drills carried out improving Eni’s oil spill emergency plan with oil spills at sea put forward by the on managing oil spills and adapting it to the more challenging working group GRIG - Global Industry of which: environment of the Barents Sea by Response Group) and the European developing/improving techniques to project “Mediterranean Decision protect and clean up the coastlines Support System for Marine Safety” and to detect and monitor the oil (MEDESS-4MS), which is dedicated to spilled. It is also aimed at adapting reinforcing maritime safety by mitigating related to offshore events

Volume of oil spills events > 1 barrel (E&P) on potential offshore oil spills. Among (barrels) these, the drill carried out at Liverpool

8,43 6 Bay stands out as it involved a virtual oil spill of around 11,000 tonnes of oil 6,61 0 and also entailed the involvement of 5,49 3 the English authorities and the media.

3,015 In addition a drill was carried out on the Island of Elba (Italy) in relation to a 1,728

Oil spills from sabotage (including theft) 936 naval accident involving a crude oil spill Oil spills due to operations and an international-level response. 2012 2013 2014 governance and business ethics | people | environment | local development | energy and climate 59

Vibro-acoustic The Vibroacoustic Pipeline to eliminate background noise thus technologies to Monitoring System (e-vpms ®) is producing clearer sound quality that a technology based on different helps in locating the spill; increased tackle oil spills sensors (hydrophones, geophones and sensitivity both in terms of false alarms (e-vpms ®) accelerometers) and on a proprietary (far fewer compared with competing code that processes in real time and technologies such as those based on in a unique way the vibro-acoustic fibre-optic technology) and in terms of wave signals spread with different the amount of detected spills compared speeds both in fluids and on the to the pipeline’s flow capacity. surface of the pipelines. This makes it possible to remotely detect fluid The technology has been successfully leakages caused by structural faults, trialled in the field since 2011 sabotage or theft with a margin of and has been used industrially in error of only 25 metres. Nigeria and Italy since the end of The strengths of this technology 2013. Its extensive use will make it include: the possibility to install long- possible to respond more promptly range sensors (in some cases they and more effectively to oil spills, simply need to be installed at either with significant environmental and end of the pipeline); the capacity economic benefits.

Oil spills due to operations / hydrocarbon production (E&P) (barrels/Mbarrels) In 2014, Eni further reduced the volume of operational oil spills by 13. 7 13. 4 38% compared to 2013 reaching a total of 1,179 barrels of oil spilled and 9. 8 going below the 1000 barrels mark

if considering only E&P. In Nigeria 6. 7 there continue to be sabotages and 3. 9 3. 5 thefts which in the last 4 years have 3. 3 resulted in around 7 thousand barrels 2. 0 1. 1 spilled per year (in 2014 more than 2006 2007 2008 2009 2010 2011 2012 2013 2014 60 overview | projects and activities | results

6 thousand barrels of oil) and an Eni’s prompt response (providing reintroducing indigenous species average of 300 incidents per year (284 equipment and resources with an of flora and fauna. In order to contain in 2014). In line with international outlay of around 1 million euro) made and prevent these phenomena, standards, all the values above refer to it possible to contain the damage the upstream sector is working events involving more than 1 barrel. and to recover most of the fuel on the research and development Many acts of sabotage also took place in spilled. Together with NGOs and local of technologies for the real-time Italy (a phenomenon that has increased bodies, Eni plans to fully restore the monitoring and surveillance of onshore since 2012). In particular, towards the area paying particular attention to pipelines, and of technologies that end of 2014 in Maccarese (near Rome’s the local biodiversity. In cooperation will make it possible to interrupt illegal international airport), there was an with environmental associations and bunkering operations (see the box on attempted theft that led to the spillage universities, a repopulation study will Vibro-acoustic technologies to of around 40 m3 of kerosene. be carried out on the possibility of tackle oil spills, page 59). governance and business ethics | people | environment | local development | energy and climate 61 2.4 Local development In pursuing its corporate goals, Eni is committed to contributing to the development of territories in which it operates. This commitment is realized through long-term agreements with governments and local stakeholders, local content promotion, projects for local communities and with the preventive and inclusive stakeholders engagement.

Relationship with local stakeholders

Trust with partner Countries is built many Italian areas and has consistently Strategies and policies to involve local communities applied to using a model based on reciprocal built long-term relationships based on cooperation and responsibility. agreements with local partners aimed Eni adopts a multi-stakeholder also at sustainable development. approach in its relationship with the Based also in the experiences territory, which places the company gained in the Ravenna district and of subsidiaries operating worldwide side-by-side not only with governments, in Basilicata (see enibasilicata.it), in but also with local stakeholders such 2014 an important step was taken as social partners, associations and with a memorandum of understanding communities. The creation of common for a new Gela development plan goals and building stable relationships agreed at the Ministry of Economic Environmental, Social, are Eni’s essential levers for creating Development between Eni, trade Health Impact Assessments (ESHIA) “shared values” in the territories where unions, institutions and Confindustria. it operates and ensuring development Eni undertakes to implement a in the long term. programme of development that will entail an investment of 2.2 billion euro The territorial relationship and includes: the conversion of the preliminary ESHIAs model in Italy refinery into a biorefinery in accordance carried out Eni has a consolidated presence in with the “Green Refinery” model, 62 overview | projects and activities | results

development of upstream activities in guarantee growth and substantial Soprintendenza ai Beni architettonici Sicily, and the creation of a Competence economic prospects, protecting jobs e paesaggistici dell’Abruzzo. The Centre focused on safety issues which and placing environmental sustainability technical scientific activities are will support Eni’s production units at the heart of the industrial project. overseen by a group of universities and the environmental reclamation (Politecnico di Milano, the Sapienza activities. On 12 January 2015 the Another collaborative initiative University of Rome and the University Eni Safety Competence Centre (SCC) concerned the city of Aquila, of Aquila) that include also Eni was opened at the Gela site, which will where Eni launched a project geologists and engineers. In 2014, work in conjunction with Eni Corporate to give the Basilica of Santa the executive design phase developed University in order to deliver highly Maria di Collemaggio back to the by the Soprintendenza de L’Aquila specialized training courses on safety community by fully restoring it to was completed with the support of the issues. The review of the industrial its former glory. The project design, design working group, and the model at the Gela site represents construction management and safety vendor qualification process was an opportunity for the area, able to coordination has been assigned to the also completed.

Today’s agreements confirm that the synergies and constructive approach among all the stakeholders can lead to innovative and positive initiatives able to combine the needs of the company with those of local communities.

CEO Claudio Descalzi

Listening to and engaging with local stakeholders Eni ensures that information is management of social projects. IPIECA working group which, for Eni, freely and promptly available to Eni has adopted a system for receiving resulted in the implementation of a local communities. It supports and managing complaints (grievance pilot project in Ghana. Based on this their involvement by organizing mechanism) to facilitate the prompt experience and in accordance with the informative meetings, participation identification of solutions and in this most recent international guidelines, in community meetings, the creation way contribute to the business risk Eni developed updated operational of communication channels and the management. The mechanism is guidelines which are currently being adoption of formal procedures for sensitive to local customs and, in line applied in six pilot subsidiaries managing complaints, stakeholders with Eni’s Code of Ethics. 2014 saw in Mozambique, Congo, Angola, mapping and for the participatory the conclusion of the trial phase of the Pakistan, Kazakhstan and Nigeria. governance and business ethics | people | environment | local development | energy and climate 63

The information and engagement Liquefied Natural Gas) projects and Eni promotes the creation of activities are promoted right from the of the Muepane – Mocimboa Da growth opportunities as well start of operations. This is evident Praia coastal highway, Eni initiated as the enhancement of people in Countries such as Kenya in the a series of stakeholder engagement capabilities and firms in areas context of the 3D seismic prospecting and consultation activities, including where it operates, contributing activities around the Lamu basin, interviews with government authorities to knowledge transfer and where Eni has adopted an integrated and local community representatives, local development. approach to dialogue and dealing and focus groups conducted with local with local grievances. Through the communities in order to assess their Environnementalistes Sans Frontieres opinion on certain priority aspects (ESF), Eni has engaged with the such as health and the socio-economic maritime authorities and the local conditions of the area. Meetings communities affected by the activities, were held with the authorities of the it has distributed Grievance Forms Quirimbas National Park in order to and information leaflets, and has set share the information gained from up a dedicated hotline for managing research conducted in relation to and transmitting information to the biodiversity and ecosystemic services. manager in charge of relationships with Where it has a consolidated presence, local communities. Furthermore, visits such as in Basilicata, Eni has have been arranged to the offshore continued with its strategy of engaging facilities in order to inform institutional stakeholders and strengthening its stakeholders of the routine operations communication and information involved in 3D seismic prospecting and activities. In 2014 the enibasilicata.it to increase awareness of Eni’s activities website, the online platform dedicated in the area. A helpdesk has also been to Eni’s activities in the region, was set up to facilitate dialogue with local given a makeover and the second coastal communities. edition of the Local Report was In Mozambique, as part of the research published online and presented into the environmental, social and officially to the stakeholders last July health impacts of the FLNG (Floating during a consultation workshop. 64 overview | projects and activities | results

Local content and value creation

Eni considers Local Content the value specific know-how transfer technology of an integrated approach when added brought to the socioeconomic development, social projects and defining programmes in synergy with system of a host Country through the partnerships. At international level, stakeholders engagement activities, the participation of local people and firms Eni participates in working groups management of social impacts and the in industrial activities, the promotion committed to defining policies and good development of local communities. of their development, the transfer of practices related to Local Content and skills and know-how, the empowerment measuring the social impact. These Development of of local resources and community initiatives include: the OECD’s initiative local suppliers and capacities. “Policy Dialogue on Natural Resource- sustainability based Development”, the IPIECA’s in the supply chain It can be realized through various “Local Content Task Force” with regard In 2014, 31,555 suppliers worked means according to the local to updating the related guidelines with Eni worldwide with a total trade context and needs, such as: job and the WBCSD’s “Social Capital value of 42.8 billion euro. The overall creation, support to the growth of Measurement and Valuation in Decision share of goods and services procured local firms’ competitiveness, training Making” initiative. Eni has drawn up from local markets amounted to 58%, and development of local people, operational guidelines for the promotion equal to around 25 billion euro. The supply chain, socioeconomic and of Local Content that offer guidance to percentage locally procured exceeded infrastructural systems development, geographical units on the application 50% in various areas including Nigeria governance and business ethics | people | environment | local development | energy and climate 65

(93%), Republic of the Congo (70%), achieve the required standards. In suppliers qualification questionnaire Ghana (50%), Kazakhstan (62%), effect Eni uses a qualification and in line with the 10 principles of the Indonesia (98%), and Ecuador (96%), quality control system that includes Global Compact, which is the result due to the local content strategies suppliers evaluation using criteria of collaboration with the Italian Global in place. These results are based on defined by the SA8000 standard in Compact Network. In 2014, 20 SA8000 in-depth market analyses that also relation to respect for human rights audits were performed (of which 12 assess the availability and capacity and workers, the protection of minors follow-up of audits carried out in 2013) of local companies to respond to the against exploitation and guaranteeing involving 7 subsidiaries worldwide sector needs, also for the purposes health and safety at work. Furthermore, bringing the total number of SA8000 of identifying and implementing 2014 saw the completion of the audits performed since 2008 at 9 improvement actions in order to process to review and update the different foreign sites to 107.

Procurement Procurement by geographical area in 2014 (million euro) 1%

42,800 Oceania 14% Africa 32,814 31,811 22% Italy 12% Americas

19% 32% Rest of Europe Asia 2012 2013 2014

The sites in question are located in: China, Congo, Angola, Nigeria, Pakistan, In recent years East Timor, Ecuador, Mozambique and Indonesia. These activities are an integral the percentage of part of the Vendor Management System (VMS), which qualifies suppliers through local procurement has the evaluation, verification and monitoring of the respective technical and reached 58% due to the management capabilities and their ethical, economic and financial reliability. local content strategies In 2014, Eni continued its commitment to share the VMS to its subsidiaries. In particular the VMS (systems and training) was launched and consolidated in implemented by Eni. four foreign subsidiaries with training completed at Eni sites in Ghana, China,

Mozambique and the UK (with a coverage of 45% of the foreign upstream subsidiaries between 2011 and 2014). Eni’s participation in the Carbon Disclosure Project Supply Chain continued with the involvement of more than 66 overview | projects and activities | results

50 suppliers, selected based on In Nigeria, for example, a Country implementation of development shared criteria such as: commodity with one of the legislation among projects for the potential of local classes that are significant from a the most modern and developed, businesses and for their greater

CO2 emissions perspective, suppliers Eni has in place effective actions to capacity production, also through among the top 20, suppliers included stimulate local potential and increase the supply of energy. in 80% of spending, suppliers that the ability of suppliers to achieve the In Nigeria, Eni received a Local are important for Eni’s business. Eni highest standards required in the Content Operator award in 2014 is committed to promote the local Oil & Gas. Solutions include training presented by the local companies content by offering different solutions, programs and gap closure, awareness association Petroleum Engineering depending on the requirements and campaigns on environmental and Technology Association of characteristics of the host context. protection and safety, job creation Nigeria - PETAN (see also Maximizing the positive effects on the within the Country, support to www.naocsustainability.com). economy and local development is Nigerian products, industrial capacity Solutions for the development of the main goal. building, technology transfer, local content include using innovative governance and business ethics | people | environment | local development | energy and climate 67

methods to promote the participation market are comprised of local potential in the development of of local companies from the beginning companies. For more complex industrial activities. Details of 19 of the industrial operations, as in contracts requiring a high level of tenders were published in local Ghana and Mozambique. In Ghana specialization and in the absence of newspapers and a website was set the development of local content is any availability on the local market, up and updated in order to provide promoted through on-the-job training Eni applies a scoring model that information and documented support, and, with regard to the supply chain, includes the criteria of commitment thus enabling the evaluation of more through accompaniment in the to the maximization of local content. than 200 suppliers. All participants in qualification phase and continuous In the last three years the percentage the tenders must provide a detailed feedback in the contract execution of goods and services procured locally local content plan that is used for the phase, all aimed at a process of has risen from 29% in 2012 to 50% commercial evaluation. continuous improvement. in 2014. The percentage of goods and services The vendor lists for goods and In Mozambique, market analyses procured in the Country rose from services available on the Ghanaian were carried out to verify local 13% in 2012 to 18% in 2014.

Sector-specific professional training Education and training are fundamental to the local authorities, is strategically Professional training programmes levers for development since they significant. The project encompasses are key factors in the inclusion and the design of a new facility and the participation of everyone in the social launch and implementation of specific life. In Vietnam and Turkmenistan a programmes for local talent. demanding training programme, created In 2014 a recruitment programme was young engineers and geologists involved and managed by Eni, has been put in initiated in Angola to select 28 young in Angola place. 14 people from Petrovietnam engineers and geologists for training Intensive training programmes: are attending an intensive deep water in certain areas such as drilling, training course in Italy with a duration production, large-scale projects, of two months. A second technical reserves and HSE. In Iraq a project was course of the same duration on the launched with the aim of developing local people topic of production is planned for the the skills of local people in the context in Vietnam beginning of 2015. In Turkmenistan a of the ZFOD, the Consortium controlled training plan has been set up in relation by Eni Iraq BV, and, in the context of to Well Operations which will involve the Oil & Gas industry, with the goal

12 local people for about a year in Italy. of developing knowledge for people in local people The launch of the project to build a the SOC (South Oil Company, a state- in Turkmenistan training centre in Ashgabat, presented owned company in Iraq). 68 overview | projects and activities | results

Partnerships engineering. The training programmes As part of the Eni Students Project, with universities will be delivered in Mozambique and in conjunction with the University In Mozambique, the “200 training abroad at highly specialized partner College of London, two initiatives were programme” to select and train universities such as the University organized in Mozambique (UEM, 200 Mozambican students has of Perugia, the Politecnico di Torino, Maputo and UniLurio, Pemba) involving involved 133 students to date on Oil the China University of Petroleum more than 200 students from high & Gas industry topics of which 20 in Beijing, and with the support of schools in the Country. In particular, have already been taken on in the experts from the University of Texas. two study days were organized at the subsidiary. The selection activities Eni has organized a selection universities, where selected students are carried out with the support programme, in conjunction with Eni spent time learning the basic principles of Eni Corporate University. In the Corporate University, for the recruitment on energy and the environment, Country, Eni has also launched and support of students on the Master’s with a particular focus on geology. the Eni Professors@UEM project Degree in Petroleum Engineering and The idea behind the project (already in collaboration with the Eduardo Geosciences. The selected universities implemented in India and Ghana) is Mondlane University in Maputo, with are the French Institute of Petroleum to encourage graduate students about aim of training 10 junior Mozambican (France), Imperial College (UK) and which university to choose to continue professors in the field of oil and gas the University of Leoben (Austria). their studies in the upstream sector.

Community investment and expenditure for the territory

In 2014 overall expenditure for the is periodically refinanced by the territory amounted to over 95.9 Board of Directors of the founder million euro and included community Eni. Approximately 70% of the total investments, contribution to local (67.4 million euro) was invested in Increase of the community initiatives, membership fees for community projects (community investment vs 2013 associations, sponsorships and investment) to encourage and contributions to the Eni Enrico Mattei promote community development in Foundation. The decrease compared the Countries in which Eni operates, to 2013 is due primarily to the Eni established through agreements or Foundation not requesting in 2014 conventions with local stakeholders. a top-up of its equipment provision 2014 saw increased investment in

which, based on the planned measures to protect the territory activities and subject to approval and the environment, to develop by the company’s statutory bodies, infrastructures and improve access governance and business ethics | people | environment | local development | energy and climate 69

to energy. Investments in the African Sub-Saharan Africa (22.7 million Nigeria, Ecuador, the Republic continent remain high with a total of euro). There are also significant of the Congo, and Mozambique 24.2 million euro, of which 90% in investments in Italy, Kazakhstan, (see also eni.com).

Community investments Community investment by intervention sector in 2014 (thousand euro) 4%

67,406 Relation with communities 63,052 and human rights 57,570 10% 3% Socio-Economic development Access to energy

11% Professional 31% training /coaching Infrastructure development

26% 2012 2013 2014 5% Environment Community health 7% 3% Instruction and education Culture

Community investments by geographical area in 2014

2% 34% North Africa Sub-Saharan and Middle East Africa

31% Europe 27% Asia, Far East and the Pacific 6% Americas 70 overview | projects and activities | results

Main projects for the development of communities in the world Globally, Eni promotes and implements a positive impact in the long-term. and interactive process, providing development projects aimed at The projects are implemented jointly systems to monitor and evaluate meeting the needs and expectations with stakeholders and are planned the effectiveness and results of the of local communities and having and managed through a transparent projects.

Improving living conditions in Congo

Partners: Local authorities. Collaborations: IPHD, Caritas, Medecin d’Afrique, The Earth Institute (Columbia University), AVSI. Intervention area: Industrial area around the onshore M’Boundi field in the Hinda District.Intervention sector: Health, education, access to water, agricolture, access to energy, gender empowerment, capacity building and social inclusion.

The Integrated Hinda Project (Projet the NGOs and associations and the Main results Intégré Hinda - PIH) is aimed at communities involved. As a result of Hinda Project improving the living conditions of of the construction of infrastructure Agreement signed in 2011 communities in the area around the for the primary intervention sectors 80% progress made on the project onshore M’Boundi field in the Hinda (schools, health centres, water wells), 3 health centres built People vaccinated in 2014: 17,871 District (approximately 25,000 people), 2014 saw an increase in access to of which 4,275 were pregnant thereby reducing the percentage of health services, the number of child women and 13,596 were children the population living below the poverty vaccinations and prenatal care, aged 0-11 months threshold. It aims to do this through primary education and the availability 9 schools built of which 4 in 2014, and launch of learning activities interventions in key development areas of clean water. In order to implement 21 wells built of which 9 in such as health, agriculture, access an integrated system to monitor and 2014 and related energy supply to water and energy, education and evaluate the effectiveness of the systems installed; set up training, capacity building and social project, the company is continuing its management committees activities. The activities are carried strategic collaboration with The Earth out using an integrated approach Institute of Columbia University. Field orientated towards valuing and surveys to collect data were carried strengthening the capabilities of the out in 2014 and the company began people and communities that live in to gather performance-related data the area. Throughout the activities on a monthly basis, which is vital for there are ongoing consultations with the continuous evaluation of results the main stakeholders including and the consequent improvement in

the local and national authorities, service quality. governance and business ethics | people | environment | local development | energy and climate 71

Education, health and water in Mozambique

Partners: Local authorities, SDPI, AIAS, DPCE, Community Council of Paquitequete. Collaborations: AVSI, Eni Foundation. Intervention area: Districts of Palma and Pemba, Cabo Delgado Province.

In Mozambique, based on the baseline The direct beneficiaries are 600 Main results in Mozambique analyses carried out, various projects children and 30 teachers, while there 600 children direct beneficiaries on public health, education and are 13,000 indirect beneficiaries of the education project and 13,000 indirect beneficiaries (children’s access to water are in progress in the including the children’s families and families and population) Pemba and Palma areas targeted by the general population. The school 20 doctors involved in the health the industrial projects. The hospital in was opened in 2014 and studies training programme Pemba is the subject of an initiative began on the implementation of the Inauguration of the Paquitequete aimed at strengthening emergency second phase. The participatory School (Pemba) services by delivering certified approach is promoted also through cardiology and traumatology training the direct involvement of parents and to 20 doctors, supplying equipment pupils in the committees. The “Water for the resuscitation and intensive care programme”, which is conducted in departments, and restructuring the conjunction with the Serviço Distrital medical gas installation. de Planeamento e Infraestruturas Furthermore, in the Palma district (SDPI) and the Administração an Eni Foundation intervention is de Infra-Estruturas de Água e in progress to improve services for Saneamento (AIAS), seeks to improve maternal-infant care (see the box the living conditions and health of the on page 75). With regard to primary population in the Palma area through education, there is an agreement in sustainable and long-term access to place between Eni, the Provincial drinking water, with a target of around Department for Education and Culture, 4,000 people. In 2014 an action the Town Council of Pemba and the plan was defined encompassing Community Council of Paquitequete to the hydrogeological mapping of the improve access to primary education in territory, the planning and design of the Paquitequete district (Pemba) with wells and the electrification of the the construction of a primary school, same, the selection of the installation the supply of scholastic materials, and areas and planning the activities for activities to raise awareness on social capacity building and awareness and environmental issues. raising among the community. 72 overview | projects and activities | results

Infrastructures, basic services and food safety in Nigeria

Intervention area: Bayelsa, Rivers, Imu and Niger Delta regions.

In Nigeria the projects are aimed at entrepreneurship through incentives for Main results in Nigeria improving living conditions of the host the creation of cooperatives and access Education: 33 projects launched, of which 11 completed communities focusing in particular on to micro-credit. the provision of infrastructure and basic In 2014 the main activities included the Infrastructure development: 52 projects launched, of which services in order to access clean water, distribution of seeds and production 17 completed education, access to energy (see the material in the fisheries and livestock Access to water: 14 projects dedicated paragraph on this subject) (14,672 improved seeds of sweet launched, of which 4 completed

and food safety. potato, 3,863 cassava scions and Community Health: 13 projects Education is favored through various 16,856 improved seedlings of banana ongoing projects for the training of teachers and and plantain, 87,560 fingerlings) with 1,256 farmers involved in the Green River Project students, construction of educational a relative increase of employment infrastructure, libraries and training opportunities and income to local centers, procurement of communities. Training on modern school material. The projects for access methods of agricultural production to water are aimed at installing a at 13 dedicated centers have been distribution network of drinking water realized regularly, involving more for local communities. than 630 cooperatives and offering a The Green River Project (GRP) professional support. continues. This multi-annual project 550 young people have been involved has the aim of supporting agricultural in a program for skills acquisition and development in the four states where professional equipment in the fields the subsidiary NAOC operates: Imo, of carpentry, welding, plumbing, Delta, Rivers and Bayelsa. During its 27 information technology, event year history, the project has benefitted management, fashion. 57 cooperatives more than 500,000 people. The project benefited from microcredit. Through involves three main areas of intervention, access to credit and the acquisition such as the distribution of agricultural of inputs and equipments, the and production inputs and services establishment of new cooperatives and and the related training, training for the strengthening of existing ones have skills enhancement and support local been favored. governance and business ethics | people | environment | local development | energy and climate 73

Health and education in Ecuador

Partner: Ministry of Public Health of Ecuador, Ministry of Education of Ecuador. Intervention area: Villano (28 villages).

In Ecuador Eni operates in the area services that have been established. Main results in Ecuador of the Amazonian rain forest, where In 2014, there were 4 healthcare 20,000 therapy administered around 3,200 people are living. facilities and 15 out-patient clinics in the health facilities

Through multi-annual agreements, staffed with qualified medical staff 1,000 children enrolled in the local Eni has initiated an intense programme which enabled 20,000 treatments to primary school of activities aimed at improving be administered during the year. With 6 new schools started up, 29 teachers trained and 343 health conditions in 28 villages in regard to education, Eni initiated a students enrolled the Villano area. By setting up and project with the aim of obtaining results 45 students enrolled at university optimizing health service networks, at all educational levels, from primary 5 students receiving support for their Eni aims to support the Country in school right up to university studies and university studies reducing the mortality and morbidity professional training. The long-term rates in the population caused by goals are: to achieve a primary school endemic diseases or pathologies. attendance rate of 100%; to increase The programme is directed at three the number of students enrolled at growth levers: training doctors and and attending high school; to reduce paramedics, raising awareness the number of students that drop out about disease prevention among of education completely; to increase communities, and the subsequent the opportunities to access university implementation of the medical education and professional training. 74 overview | projects and activities | results

Empowerment of particularly by women and children, Ministry of Labour in Mozambique, Eni communities through helped by the creation of management launched an ambitious project aimed education and training committees composed of women, the at reinforcing the professional skills Education and training play a provision of professional training to of the local population and increasing fundamental role in the creation of teachers and the creation of centres employment in the region through the opportunities for the local population. specifically dedicated to the education supply of didactic materials suitable Through agreements with the Countries, of women. In Mozambique, other for teaching various disciplines and for Eni is committed to supporting the primary education and professional training the centre’s future trainers. In education of young people for their training initiatives have also been 2014, the first year of the project, 3 entire educational career, from primary implemented in addition to the 200 teachers and 161 students received school to university. Eni has been programme, aimed at selecting training. In Kazakhstan, KPO is present in Pakistan since 2000 and has 200 graduates for training programs delivering education and professional always supported actions that promote or multidisciplinary professional training programmes that focus on the right to education and basic in the Oil & Gas sector. The project teaching English as a key driver in services in the Sindh region, which is to support the professional training improving access to the job market for one of the poorest in the Country. These centre in Pemba, in the region of its recipients. The teachers involved in interventions have made it possible Cabo Delgado, is an example of the primary and secondary education to maximize access to education, excellence. In agreement with the programmes are all local. The 250 children involved in 2014 come from

Investments in education and training for local communities a total of 11 schools in Aksai, the by intervention sector in 2014 Burlinskiy district and the surrounding (thousand euro) rural areas. The courses for adults were 35 49 developed by experts from the British Council. In 2014, 20 teachers from the Scolarships Collaborations 99 with universities Burlin district received training. Other educational activities 1,412 Professional coaching courses 715 Postgraduates 3,952 courses Other training activities 1,536 In 2014, expenditure Masters 112 for projects promoting 2,627 Primary and secondary education, professional Educational education courses programs/interventions coaching and training for 2,219 local communities amounted Construction/reconstruction of school infrastructure/education centers to 12.76 million euro. governance and business ethics | people | environment | local development | energy and climate 75

Eni Foundation Since it was set up in 2006 in medicines for mothers and babies. order to increase and improve the In 2014, 11 continuous training ability of Eni to give consistent and courses were organized for a total effective answers to the community of 174 health operators, with the expectations, Eni Foundation’s mission aim of extending the action taken to is to promote the protection of the strengthen the health centres to the rights of children with initiatives whole district. The direct beneficiaries aimed at promoting their overall of this initiative are women of child- well-being and development of the bearing age and children in the Palma most vulnerable. Eni Foundation district (around 3,000), while the plays a key role to help improve indirect beneficiaries, in addition preventive health care, diagnosis and to the health workers that receive treatment of major endemic diseases training, are the inhabitants of the systems, facilitating the access to Palma district (60,000 people). primary health care such as maternal Also in Ghana, in line with the local and child health care, immunisation Ministry of Health strategies, the programmes, training and health project aims to reduce infant and education in the community. Eni maternal child mortality. In 2014, in Foundation is currently active in two addition to the regional seminars held Countries: Mozambique and Ghana. in relation to planning the ongoing In Mozambique, the project to bolster training activities and the prevention emergency neonatal and obstetric of occupational risks for health services in the Palma district is workers, work focused on the less helping local health authorities to serviced areas where two community reduce infant and maternal mortality health centres were built and equipped rates by increasing the quality of and another two are being built. and access to health services and www.eni.com/enifoundation 76 overview | projects and activities | results

Access to energy

Access to modern energy services lever for sustainable development, local energy systems is part of Eni’s is fundamental in promoting rights, broadening the possibilities for female development strategy. This strategy social inclusion, the guarantee of a empowerment, decent work for all, the foresees initiatives in line with core more dignified life and sustainable sustainable development of production business activities, which are tipically growth. A reliable, sustainable and and consumption, the creation of defined in agreements formalised modern energy supply is a key factor safe and resilient urban areas and between the Parties (MOU). Attention is for ensuring basic services such as the protection of ecosystems and focused mainly on the African continent education, health, transport and biodiversity. where there is a greater concentration communication. Energy can be a The contribution to the growth of of energy poverty.

Eni promotes a programme of to local needs, in particular: processes with gas flaring recovery, investments for local development in • the development of on-grid and constructing infrastructure to Sub-Saharan Africa aimed at improving solutions, including the creation of produce and distribute electricity; access to energy for local communities. energy plans aimed at exploiting • the development of off-grid solutions The strategy is based on the research the natural resources of the through special stand-alone and development of solutions adapted Countries, optimizing production systems as generators and solar panel systems; • research and development of advanced technologies in relation to renewable energy and improving lifestyles (e.g. cooking food).

Ghana Nigeria

Congo

Existing projects

New projects

Mozambique governance and business ethics | people | environment | local development | energy and climate 77

Africa represents 15% of the world’s population but only 2% of the global energy demand, which indicates the potential that local development of this geographical area could have, also in business terms.

CEO Claudio Descalzi

Power stations and large local distribution networks, and in authorities regarding the construction energy infrastructures particular to the Electrique de Djeno of a 75 MW electric power station in the (on-grid solutions) and Centrale Electrique du Congo Cabo Delgado province, in the north of The Okpai power station in Nigeria power stations supplied by gas from the Country. In Ghana, in January 2015, was the first Eni project in the context the M’Boundi field (a total of 350 MW, Eni along with Vitol and the Ghana of the Gas Master Plan. It was built in around 60% of the installed capacity National Petroleum Corporation (GNPC) 2005, in agreement with the federal in Congo). Continuing in the same vein signed an agreement with the national government. The power station has an as the projects implemented in Congo authorities regarding the development of installed power capacity of 480 MW. and Nigeria, there are various Eni an integrated oil and solid gas project. In 2014, with a gas consumption of programmes in progress that envisage This will guarantee the energy needed to 629.55 MMScm, it generated 3.34 the extension of this approach to other accelerate economic growth in Ghana. million megawatt hours of energy, of Sub-Saharan African Countries where The OCTP (Offshore Cape Three Points) which 3.26 million were supplied to the company operates. In Mozambique, gas fields will be able to continuously the Power Holding Company of Nigeria an undertaking was signed in the resupply the thermoelectric power (PHCN). This was followed by the context of agreements with the national generation system in Ghana. activation of a contract to supply gas to the 150 MW electric power station Access to energy in Nigeria of the River State Government. In Okpai power station in Nigeria, 480 MW installed capacity. 2014, 65.75 million standard cubic 629.55 million standard cubic metres of gas consumed in 2014, 3.34 million megawatt-hours of energy generated, metres of gas were supplied to said 3.26 million megawatt-hours supplied to PHCN. power station. In the Republic of the 65.75 million standard cubic metres of gas supplied to the River State Government power station. Congo, installed capacity in the Country 11 communities connected to the national grid in 2014. was increased due to the integrated Supply of energy to the 36 communities by constructing networks connected to industrial plants. project to improve production capacity, 36 communities connected to stand-alone (off-grid) electricity the energy infrastructure and the systems with a total installed capacity of 9.2 MW. 78 overview | projects and activities | results

Integrated energy connected as of 2014 (with improving the living conditions of the for the development a combined installed capacity population in the M’Boundi area. The of communities of 36 MW), and through projects to help project included activities to install (off-grid solutions) connect communities to the existing electricity across all sectors. As of In Nigeria, 36 communities were national grid, involving carrying out 2014, Integrated Hinda Project has supplied with power in 2014 through electrical works, supplying generators improved access to electricity to 29 stand-alone (off-grid) electricity and procuring transformers (11 communities infrastructures (7 health systems, with a total installed capacity communities involved in 2014). In centres and 22 water wells) of which of 9.2 MW. Moreover, Eni has improved Congo, the supply of energy is a key 4 health centres and 17 water wells access to electricity in Nigeria by requirement in order to ensure the powered by electricity from solar panels building networks connected to oil increased effectiveness of the Hinda thus increasing the electricity available power plants, to which 36 villages were project (PIH), which is aimed at at the project structures.

Research studies on the application of innovative solutions Eni promotes studies to identify the Cabo Delgado province in the north of health centres, etc.). A study was best solutions for improving access to the Country and is aimed at supplying initiated on possible solutions regarding energy in the areas where interventions utilities to the infrastructure and access to energy and the management have been agreed. In the Republic primary services (water supply, schools, of drinking water in Angola. of the Congo, in relation to the Hinda project, studies are being carried out Access to energy in Congo on innovative systems for cooking Power station in Djeno (CED, 2009): doubling of power to 50 MW. Power Station in Congo (CEC, 2010): installed capacity 300 MW food. 2014 saw the completion of (60% installed capacity in Congo). research carried out in Mozambique Built and restructured 550 km of the high voltage transmission grid between Pointe Noire and Brazzaville. in conjunction with Self Energy Electrification of Pointe Noire: 350,000 beneficiaries, equal to 40% Mozambique and the Earth Institute of of the inhabitants, more than 6,500 lights installed and improved security in urban areas. Columbia University to plan and design Kouakouala project: power supplied to water well pumps, schools, health centres and street lighting. intelligent off-grid systems powered Integrated Hinda Project access to power energy for 29 communities also by renewables. This is seen as an infrastructures. optimal solution for rural areas in the Studies on clean cooking solutions. Innovation for industrial restructuring and the creation of new opportunities 79 Innovation for industrial restructuring and the creation of new opportunities.

Context

The last decade has been a critical and since 2009, 11 refineries with a The first conversion in the period for the petrochemical total capacity of 1.4 Mboed have been world of a conventional and refining industry in Europe. closed in Europe. refinery (Eni’s patent) The growth of low cost chemical At the same time, environmental allows an 80% saving production and refining operations protection and climate change in investment costs in Asia, together with the collapse legislation has had a significant compared to building a new of refining margins in Europe, have impact on all the downstream sectors severely tested the petrochemical and (prohibition on the production of biorefinery and the entry of refining industry in Europe, leading polyethylene bags, reduction of Eni in a new business. to the closure of numerous plants on greenhouse gases linked to fuel, the old continent. In the 2008-2014 the goal of increasing by 10% the period, fuel consumption fell by 20% bio-content of fuels by 2020, etc.). 80 case studies

Eni’s position

Eni nurtures its long-standing the additive thresholds in terms product are made possible by applying relationship with the Countries it of bio quotas are based on the innovative technological solutions operates in, acting responsibly in its calorific value of biodiesel, and the that are the result of investments role as a sustainable business that biodiesel produced at Porto Marghera in research and development and drives development, innovation and (Green Diesel) has a higher calorific collaboration with expert partners. social cohesion. value compared to other biodiesels The plant uses the proprietary In order to address the challenges commonly available on the market; Ecofining™ technology under presented by the crisis, Eni has this makes it possible to quantitatively development since 2005 in taken advantage of the results of reduce the amount of the “bio” partnership with the American its investments in research and has product to be added to conventional company Honeywell-UOP. This turned its attention to reconverting fuels. technology, which is based on the older industrial sites. Currently palm oil is the most used total hydrogenation of vegetable This resulted in the construction of biomass on the market for the oils, allows for broad flexibility with the first bio-refinery in the world to production of biodiesel due to its regard to the biological feedstocks be created from the conversion of a extensive availability on the market to be used as raw materials, which traditional refinery, using a patent and the scarce availability of second can be made up of various types of filed by Eni. and third generation feedstocks. oil-based biomass: vegetable oil, The biodiesel produced will be used The technology used by Eni therefore second generation feedstocks (animal by Eni in order to comply with the makes it possible to reduce the fat, used cooking oil) and advanced European regulations on the minimum demand for palm oil by around 15%. feedstocks (for example, oils from bio content in fuel (10% by 2020). This first reconversion at the Porto algae and waste, lignocellulose This biofuel will replace that which Marghera site in Italy (90 kilotonnes material, etc.). The main end Eni would otherwise have had to buy of biodiesel produced already in product is a high-quality diesel. Its on the market, produced by other 2014) entailed investment costs that characteristics are decidedly superior operators: in other words, in the were 80% lower than would have to the other products available on face of these regulatory constraints, been required to build a new refinery the market and it enables increased Eni has opted for the industrial from scratch. This made it possible to efficiency owing to reduced residue (“make”) solution rather than the requalify the existing industrial site. build-up in the combustion chambers. commercial (“buy”) one. Therefore, The site has been integrated into the Eni intends to gradually introduce the this investment will not increase local context and its reconversion has use of second and third generation global demand for vegetable oil, the full support of local economic feedstocks. In the first half of which will in fact be reduced given players since it has made it possible 2015, the first industrial trial began

the characteristics of the proprietary to keep employment at pre-crisis of second generation feedstocks technology that Eni uses. levels. (national used vegetable oils). Indeed the regulations provide that The process used and the final Additionally, advanced progress Innovation for industrial restructuring and the creation of new opportunities 81

has been made on the definition of • the palm plantations are not unions, institutions and Confindustria, initiatives to collaborate with public located in areas where there is a Eni also announced its plans to sector waste collection companies high biodiversity value and/or high build a second biorefinery at the operating in the Venetian hinterland, levels of carbon stock; Gela site, which it is estimated will in order to increase the collection of • greenhouse gases (hereinafter have a processing capacity of around used household oils and use said oils GHG) are reduced by at least 35% 710,000 tonnes of vegetable oil per as a feedstock in the biorefinery. The compared with the emissions year, with a biodiesel output of around Green Diesel obtained in this way can produced using petroleum-based 530,000 tonnes per year. be used to produce fuel with a high fuels. bio content, to be returned to the Also in 2014, Eni signed an important municipal companies for use in their When fully operational, the weight of memorandum of understanding collection vehicles. Thus an integrated NOX and SO2 emissions produced by at the Ministry of Economic and short (almost zero km) supply the plant will be respectively 45% Development aimed at re-launching chain is created maximizing energy and 65% lower than they would be the petrochemical plant in Porto use of the locally produced waste oils, if using fossil fuels, while particulate Marghera, which will become an which is undoubtedly of benefit to the emissions will be 32% lower. integrated hub of green chemistry. environment. With production estimated to begin Consideration is also being given In 2014, approximately 144,000 in about three years time, this is to possibly working with oil-based tonnes of refined palm oil (RBDPO) the result of a partnership with biomass refineries in order to reuse were supplied at the biorefinery in the American company Elevance the waste from said processing, such Venice. During phase 1, or rather, Renewable Sciences, which will as distilled fatty acids and glycerine until mid 2017, the biorefinery will provide part of the technology. (third generation feedstocks). supply approximately 360,000 tonnes The overall investment, taking into In the meantime, Eni has of vegetable oil per year. Phase 2 account the operational restructuring, implemented the necessary will also entail upgrading the plant amounts to around 200 million euro. specifications and controls to ensure (in 2017), which will increase the Work is continuing on the important the sustainability of the palm oil capacity of the biorefinery to around development of green chemistry supply. Procurement is carried out by 560,000 tonnes of vegetable oil initiated by Eni-versalis at Porto Torres the subsidiary Eni Trading & Shipping per year, with the total production (through Matrica, a joint venture which only procures oil that is ISCC of biodiesel amounting to around with the Italian company Novamont) certified (International Sustainability 420,000 tonnes per year. in order to produce bio-products & Carbon Certification - one of the In 2014, in the context of the from vegetable components which three standards recognized by the memorandum of understanding signed are used for bioplastics, bio-fuels European Union). on 6 November at the Ministry of (hydraulic fluids, engine oils), rubber This guarantees that: Economic Development with the trade and polymers additives (plasticizers), 82 case studies

agricoltural industry and personal are already up and running in addition care. Three plants, a research centre to a research centre (with a total with laboratories and 7 pilot plants investment of 180 million euro).

Regulations - 20-20-20 Directive: Economic scenario for energy: Use a quantity of biofuels Reduction of demand for engine fuels in Europe with a content of 10% of the energy contained by 20% in the period 2008-2014 in petrol in consumption by 2020

For Eni: the obligation to blend 500,000 tonnes of biodiesel 2009-2013 losses of approximately in 2015 and 1 million tonnes in 2020 6 billion euro in refining

Option for Eni Option for Porto Marghera (conventional refinery 80,000 barrels/day)

BUY option: MAKE option: CONVERSION option Economic unsustainability purchase of biofuel quotas production of biofuels for the existing plant of the current structure

New proprietary technology Ecofining

Advantages over other options

Financial capital: Target of economic sustainability for the site by 2017. Construction of a Green Refinery: synergies with pre-existing plants reduce construction costs by 75% (saving of 400 M€).

Natural capital: given the characteristics of the Green Diesel produced, the quantity of vegetable oil required is 15% lower than in the other processes used. Possibility to use the quota of second and third generation feedstocks.

Reduction in the weight of NOX and SO2 emissions respectively 45% and 65% and the reduction of particulate emissions by 32%.

Human capital: maintain employment (biorefinery personnel 200 people highly skilled).

Social and relational capital: in addition to the direct and indirect employment effects, pursuit of local procurement chains with second generation feedstocks (e.g. waste oils). Several meetings held with local institutions to present the project (Local Administrations, Trade unions, Confindustria).

Intellectual capital: development of new skills in the biorefining process and in the use of second and third generation feedstocks. 10 Eni patents registered.

Manufacturing capital: enhancement of the existing plant. Innovation for industrial restructuring and the creation of new opportunities 83

The scheme adopted highlights a reconversion of the existing refineries, the local economy, and reduce the series of options that the company has which have become highly competitive environmental impact of the previous considered in light of the changing in the new economic scenario. This plant. Furthermore, the future reuse market scenario, determined both business decision has had a positive of waste (third generation feedstock) by the economic crisis and the new effect on all the company’s capital, such as used oil will make further use sustainability parameters introduced not only in financial terms, but of resources that are currently wasted by European legislation with regard also with regard to natural, human, possible, thus reducing the impact to engine fuels. It also shows that the manufacturing, social and relational on the environment. The decision to company’s decision to produce its capital. In fact, in addition to the produce biofuel also enables greater own biofuels was possible primarily reduced use and more sustainable control over the sustainability of due to investments in research and cultivation of biomass, the conversion feedstock, making it possible to innovation (prior to the crisis). This in of an existing site into a biofuel apply and guarantee the principles of turn enabled the company to develop production plant makes it possible to sustainability throughout the entire its own proprietary technology for the save jobs, maintain relationships with value chain. 84 overview | projects and activities | results 2.5 Energy and climate For a long time, Eni has been developing a climate strategy aimed at mitigating the company’s impact on climate change, focusing in particular on reducing flaring, improving the energy efficiency and reducing fugitive emissions. In addition Eni is investing in research on the energy of the future.

Eni has a carbon management of the company’s operations. Eni’s climate strategy is as follows: strategy for mitigating climate change Eni recognizes the scientific evidence • Reduction of emissions through that integrates the operational on climate change presented in the improved energy efficiency, zero gas and managerial interventions with fifth report of the Intergovernmental flaring and fugitive emissions; the development of research and Panel on Climate Change (IPCC) and • Exploitation of natural gas, which technological innovation. This strategy is aware of the risks posed by climate is less carbon intensive than other has been implemented through action change to society, the environment fossil fuels, as a transitional source plans focused on specific intervention and its own business. In the context of energy during the move to areas: the exploitation of natural of the international climate change renewable sources (see case study gas as a transitional energy source agreements, in 2015 there will be on page 94); during the move towards the use of a conference on climate change in • Increasing investments in renewable renewables, the reduction of emissions Paris. The objective is to reach a feedstocks and energy sources: by improving energy efficiency, the global agreement for the post 2020 era - R&D on innovative sources of reduction of gas flaring and fugitive that will make it possible to continue renewable energy; emissions, and investments in research the process started with the Kyoto - Investments in green refineries in order to develop renewable and Protocol and keep the average global and in green chemistry (see case efficient energy solutions such as temperature rise to within 2% of the study on page 79); second generation biofuels, green pre-industrial era. Eni’s contribution • Climate change risk assessment in chemistry and solar power. to the achievement of this goal is the context of the integrated risk The projects and initiatives have been based on an established strategy to management process; developed based on risk assessments combat climate change and a series • International partnerships and

that incorporate climate change of partnerships and international transparent dialogue on the issue considerations into the management initiatives. with stakeholders. governance and business ethics | people | environment | local development | energy and climate 85

Greenhouse gas emissions reduction

Various inter-related measures have utility infrastructures. been adopted to reduce emissions in Since 2003, Eni has been part of the the production processes including Global Gas Flaring Reduction (GGFR) programmes to increase energy initiative, coordinated by the World efficiency, specific projects to reduce Bank, and is committed to the goal gas flaring and projects to reduce of zero routine flaring by 2030, which fugitive methane emissions. does not include gas flaring carried Gas flaring involves burning gas out for safety reasons or for strictly associated with oil that cannot be used operational reasons (production tests, owing to an absence of transports or drilling, etc.).

Volume of gas sent to flaring* (MSm3) 9,164 7,713 7,052 6,359 6,226 4,506 4,433 3,762 554 2,334 563 3,208 1,771 2006 2007 2008 2009 2010 2011 2012 2013 2014

Volume of gas sent to ﬂaring, of which: * From 2013 the gas sent to ﬂaring is splitted into two components

(CO2 and hydrocarbons) as required by the IPIECA guidelines on reporting. Volume of CO2 Volume of hydrocarbons

In this regard, 2014 saw the Total investments in flaring down achievement of some highly significant projects in Nigeria and Congo amounted goals: compared with 2013, the to approximately 1.7 billion dollars. volume of hydrocarbons flared was Compared with 2007, Eni has reduced reduced by more than 45%, owing the volume of gas flared by 75%. Further also to the implementation of flaring projects are also underway in Libya, down projects in Akri and Ogbainbiri Algeria and Egypt. The total amount (Nigeria) and the completion of the invested in flaring down since 2007 M’Boundi project (Congo onshore). exceeds 2 billion dollars. 86 overview | projects and activities | results

M’Boundi In March 2014, the flaring down station. The surplus gas is instead project project in the onshore M’Boundi reinjected into the wells. In this way, field in Congo was concluded thus currently 100% of the gas that before enabling the associated gas produced would have been flared is now used, in to be used rather than flared. The compliance with local legislation and project envisaged the installation of Eni’s commitment to the elimination two compressor trains with the aim of of routine flaring. The total cost of the sending most of the gas to the CEC project amounted to approximately (Centrale Electrique du Congo) power 300 million dollars.

The results confirm the commitments the socio-political situation in some made by Eni and its progress with Countries has slowed the realization regard to eliminating routine flaring in of the investments. spite of the fact that, in some cases, governance and business ethics | people | environment | local development | energy and climate 87

Eni’s commitment to combating climate for an O&G company (on average 5 Most of Eni’s Scope 3 emissions fall change also includes actions to mitigate times higher than direct emissions). under the category of “Use of the environmental impact associated Even though the company does not Product Sold” (natural gas and oil with the business throughout the entire have direct control over this category products such as gasoline, diesel, value chain (supply chain, products, of emissions, Eni is able to develop kerosene, etc.). consumers, etc.). initiatives and projects aimed at For years Eni has been committed to In this regard, Eni has been reporting reducing the environmental impact the development of high performance on the indirect emissions (Scope 3) through detailed reporting. fuels that have a reduced impact of the associated with its activities since Eni’s indirect Scope 3 emissions are environment. The eni blu+ products 2010, following the criteria of the main subject to independent certification allow to reduce the fuel consumption international standards, in particular, in compliance with the ISO 14064-3 to equal distance traveled, thereby the document Corporate Value Chain standard and are calculated based reducing also the indirect emissions

(Scope 3) Accounting and Reporting on the main activity indicators and in of CO2. Specifically, 82% of service Standard (WRI, WBCSD). Scope 3 accordance with the standard methods stations sell eni bludiesel+ product, emissions are numerically significant of the World Resources Institute (WRI). and 46% sell eni blusuper+.

Flaring down In Nigeria, work continued on projects million dollars and today it is possible to make use of the associated gas, to make use of around 95% of the gas in Nigeria with the target being to reach total produced: it is used in the production reuse of the gas by 2017. The of electricity, in the supply to the projects in progress consist mainly Eleme petrochemical plant or the LNG of upgrading the plants to treat the terminal in Bonny, or it is reinjected gas at low pressure and send it to the into the wells. Over the next three LNG terminal in Bonny or to the Brass years (2015-2017), the company terminal to be used as a fuel gas. plans to invest a further 400 million In 2014, the amount of gas flared dollars in new flaring down projects was 85% less than in 2007 due to (amounting to a total of 1.3 billion a total investment of more than 900 dollars invested). 88 overview | projects and activities | results

2012 2013 2014

Category tonnes CO2eq tonnes CO2eq tonnes CO2eq Use of Product Sold 288,797,567 281,689,906 272,902,694 - Natural Gas 187,089,559 182,869,641 174,572,782 - Oil products 101,708,008 98,820,265 98,329,912 Upstream Transportation & Distribution 1,059,987 1,020,959 1,049,925 - Maritime Transports 9 47,4 65 906,454 961,687 - Road Transports 112,523 114,506 88,238 Business Travel 111,973 106,247 99,952 Purchased Goods and Services* 235,728 104,816 205,052 Total 290,205,254 282,921,928 274,257,623

(*) Drilling activities subcontracted to third parties by Eni’s Group (E&P).

Even though the other categories order to promote the use of is committed to encouraging of indirect Scope 3 emissions have public transportation for the the development of a culture of a limited numerical impact, Eni is displacements home to work. sustainable energy use, both through committed to the promotion of a The initiatives for Eni’s suppliers are: advertising campaigns (e.g. “Rethink culture of greenhouse gas emissions • routes optimization in the logistics Energy”) and through consultation reductions, both to its own people and industry, in particular in the and the delivery of technical services towards its suppliers. maritime sector through the to consumers (advice and support To this end Eni is implementing the routes’ optimization and the ship offered to customers by the energy following initiatives for its loads. This initiative has allowed to stores in relation to energy efficiency people: obtain a total saving approximately in their homes).

• use of video conferencing systems 30 kt CO2eq in the last three years; In 2014 the initiative called Enjoy for meetings as an alternative to • adoption of green procurement continues. Launched by Eni in 2013, transfers; criteria also in the phases of this initiative consists of a proprietary • use of less impactful transportation procurement of goods and services car sharing service that is already as the train; (e.g. by facilitating the purchase widely in use in Rome, Milan and • use of methane-feeded corporate of goods at a lower energy Florence. The service represents a shuttles; consumption). sustainable, economic and efficient • benefits to employees in With regard to consumers, Eni alternative to the use of private cars. governance and business ethics | people | environment | local development | energy and climate 89

Energy efficiency

Energy efficiency is a fundamental since 2008 have resulted in a total systems, in 2014 EniPower gained tool in the reduction of emissions and saving of more than 380 thousand ktoe/ the ISO 50001 certification for the also has economic benefits that help year under normal operating conditions, SEF Srl company and Versalis for increase the competitiveness of all of equal to 1 million tonnes CO2/year. the petrochemical plant in Mantua. Eni’s industrial sectors. This energy Until 2013, these results were achieved These certifications are added to those saving not only helps to reduce climate mainly in the downstream sector obtained in the past for the energy changing emissions, but also makes through investments and managerial management systems at four refineries, it possible to contain emissions of interventions. In 2014, a project was two foreign petrochemical plants and nitrogen and sulphur oxides. In 2014, launched to identify efficiency initiatives five management sites. Eni implemented initiatives that make in the upstream sector aimed at Eni’s commitment to energy efficiency it possible to save around 60 ktoe/year reducing energy consumption. This has is demonstrated through the constant under normal operating conditions, already produced important results due attention paid to the energy intensity both in the upstream and downstream to optimization in the field of logistics. indices, including the Solomon Energy sectors. The initiatives implemented With regard to energy management Intensity Index (EII). 90 overview | projects and activities | results

Renewables

European environmental regulations The focus on renewables demonstrates require economies to achieve extensive decarbonization in the long term also the importance Eni places on the (2030-2050), with repercussions for development of sustainable energy. the energy industry which will have to Investments in research on future energies renew its business model in order to remain competitive. are essential in order to reduce the impact In this context, Eni has embarked upon on the environment and ensure the a process to research and evaluate the widespread adoption of renewables. potential of renewable energy, with the CEO Claudio Descalzi aim of identifying the sources in which to make a long-term investment. The current portfolio of R&D projects on renewables and the environment is a starting point in the selection to environmental monitoring and construction (7.4% efficiency). In the of technologies with the most remediation processes. concentrated solar power sector, basic development potential. Equally, the R&D activities are dedicated to the engineering has been completed for company’s diversified presence in Italy identification, development and a prototype of an innovative parabolic and abroad offers various opportunities application of technological solutions collector developed in conjunction for the realization of pilot initiatives to in the field of solar energy and energy with MIT and the Politecnico di support traditional Oil & Gas operations storage. For this reason research Milano. The selection of a site for the and local development. Eni guidelines projects are ongoing in collaboration realization of the project is currently in in the field of renewable sources and with prestigious international research progress. Initial technical and economic environmental protection are: centres and through the scientific assessments show investment costs are • Focus commitment on production network connected with the Eni award 20% lower compared with the state of processes, the use of biofuels and (including the Politecnico di Milano, the the art. on green chemistry; Politecnico di Torino, CNR, MIT and In the field of biofeedstock for the • Develop technologies for the use Stanford University). Among the most production of fuel which will have of solar energy with high capacity significant results achieved by Eni in to supplement fossil feedstocks in particularly if combined with the field of solar energy is the excellent accordance with European regulations, Oil&Gas activities, or used in laboratory performance of flexible the company is looking at using bio agriculture or in eco-sustainable polymer cells (>9% efficiency) and the products derived from waste that are

buildings; absolute record in the laboratory for not in competition with the food cycle. • Integrate renewable sources with the performance of luminescent solar Eni’s R&D portfolio is therefore aimed at innovative technologies in relation concentrators (LSC) integrated into identifying and developing increasingly governance and business ethics | people | environment | local development | energy and climate 91

sustainable supply chains that offer a through the fermentation of sugars bio-components for diesel. Two competitive advantage over that which from waste biomass is of a high quality products have been identified that can be bought on the market. and is able to replace palm oil in the have a high cetane* number and The projects currently underway green diesel production process. The offer various improvements over seek to develop second generation bio-oil obtained from the liquefaction the use of FAME. The development technologies for oil production by of organic waste or mud can instead of the production technology for using yeast that metabolizes sugars be used to generate electricity in these compounds has reached the from lignin and cellulose, substances a static engine, and can also be a pilot phase and work is in progress contained in the non-edible part of solution for the recycling of waste. to evaluate and acquire the data plants such as the stem, and also the Furthermore, a research project is necessary for the industrial scale-up. treatment and use of solid urban waste underway looking at ways to make Other activities carried out in or other organic waste material. Both use of glycerine, a by-product of conjunction with Syndial aim to technologies are at the pilot trial phase production of conventional biodiesel integrate renewable sources with and the necessary evaluations are in (FAME), as a component in the innovative technologies in relation progress for a test to be conducted on synthesis of molecules that could be to environmental monitoring and an industrial scale. The oil produced used as high-quality reclamation activities.

Research and development on renewables 2013 2014 Investments in renewables (million euro) 30 20.5 Investments in renewable / total of R&D investments (%) 15 11 Renewable patents 28 29 Research Institutes Eni collaborates with on renewables (number) 32 32 - of which in Italy 27 27 Investments on collaborations (million euro) 6.0 4.9

Collaborations with reserach centres

Research Institute in Italy

million euro total three-year worldwide investments

* In diesel engines, the cetane number is a measure expressing the readiness of the fuel at power; the higher the cetane number the greater the readiness. 92 overview | projects and activities | results

Research on renewables

2nd generation Green chemistry Electricity Flexible polymer green diesel and bio-refinery for local communities cells Bio-oil from liquefaction Support for Biofuels Concentrated of organic waste exploration activities solar power or mud

Current use of renewables by Eni Future use of renewables by Eni

Climate risk in business evaluations

Eni carries out an integrated assessment of the physical and regulatory risks relating to climate change, taking into account both quantitative aspects (operational-production, economic-financial) and qualitative aspects (reputation, social and environmental aspects) in order to develop appropriate operating strategies. This issue is pointed out to the Board and is subject to continuous improvement.

Carbon stranded asset

There is an ongoing debate on the in sustaining international economic scenarios such as the IEA 450. possible financial risks associated with growth over the coming decades and In general, Eni’s growth strategy the valuation of the Oil & Gas and that, in particular, natural gas will focuses on the development of coal companies in the IEA 450 low continue to play a key role in the move conventional assets, which constitute carbon scenario. Some researchers towards an energy mix with a lower almost the entire equity production, hypothesize that resources with a carbon content. while its exploration strategy is based greater marginal cost may not be Furthermore, Eni’s hydrocarbon on identifying basins with a low or produced in a scenario of growing reserves are chiefly made up of natural average break even price. decarbonization. gas and conventional petroleum with a This position was made public at the Eni believes that hydrocarbons will cost position that renders Eni projects recent Climate Conference in Lima

continue to play a fundamental role resilient in the face of low carbon (COP20). governance and business ethics | people | environment | local development | energy and climate 93

The risks and opportunities related to political and regulatory framework. Eni’s context of investment planning. the evolution of international climate investment evaluations always take into policy are managed by monitoring consideration the related legislative Risks relating to the physical impact and participating in the European context, paying heed to local climate of climate change are the subject of and international debate on climate policies such as emissions trading specific analyses conducted in order to change. Energy supply and demand, systems, carbon tax or restrictions assess future climate scenarios and to as well as the price scenarios, are on greenhouse gas emissions. Eni’s identify the most appropriate measures adjusted in line with changes to the forecast on CO2 prices are used in the to be taken in order to adapt.

International partnerships

Eni actively participates in the to fossil fuel producers. The second performance and actions taken to international debate on climate change. one will focus on maximizing efforts to combat climate change), the Climate In September 2014, Eni took part in monitor and reduce methane emissions & Energy working group of the World the Climate Summit held in New York in upstream activities. Business Council for Sustainable and in the UN Private Sector Forum, In 2014, Eni also signed up to the Development (in order to identify two particularly important events World Bank’s “zero routine gas common solutions to combat climate involving governments and companies flaring” initiative aimed at completely change), and for the last 7 years it has in working towards a new global climate eliminating routine flaring by 2030 been among the top companies in the agreement (COP21, Paris 2015). through the development of new energy sector with regard to disclosure In this context Eni announced its own projects to make use of the associated and performance according to the involvement in two important initiatives: gas. At the same time, it is also looking Carbon Disclosure Project. Finally, in the “Oil & Gas Climate Initiative” for solutions that will eliminate gas 2015 Eni is sponsoring a study of the and the “CCAC Oil & Gas Methane flaring in fields that are already in CEPS think-tank aimed at assessing Partnership”. The first initiative which production. the environmental, economic, and at launch also saw the participation social impacts of the policies that will of BG, Total, Pemex, Saudi Aramco Furthermore, for years Eni has be included in the future international and Sinopec and other companies been actively involved in the IPIECA agreement on climate change. are joining, will provide the industry working group on climate change, Greenhouse gas emissions are with an opportunity to contribute to the International Emissions Trading monitored through the use of a single finding climate change solutions and Association, the “Caring 4 Climate” reporting protocol, they are externally to illustrate the specific actions taken, initiative of the Global Compact (where certified and internally assessed by a overcoming some of the preconceptions it signed up to initiatives for the specifically dedicated team that answers that pervade public opinion with regard transparent reporting of the company’s to the company’s top management. 94 case studies

Natural gas: a key role in the future energy mix.

Reference context

Natural gas can play a key role in the global energy mix in 2012 to energy sources will make it possible the transition towards an energy mix 24% by 2040, indicating the most to reduce the risk of any interruption with a low carbon content, serving as sustainable growth rate of all the to the supply. It is anticipated a natural complement to renewable fossil fuels. that by the year 2025, the use of sources. Gas, which is the fossil In this context, the growth of the natural gas will exceed coal in the fuel with the lowest carbon content, global liquefied natural gas (LNG) production of electricity for OECD thanks to its flexibility and versatility market and the diversification of Countries. (from electricity to transport) can be used efficiently and is an abudant Electricity Generation emission coefficients (World) source of energy. (gCO2/kWh) For these reasons, it is an important source for the security of the entire 1,000 energy system. Compared with coal, 800 the use of gas allows not only for 600

400 a reduction in CO2 emissions but also numerous other pollutants thus 200

enabling a general improvement in air 0 quality. Coal Oil Natural gas Source IEA According to the New Policy

Scenario of the International Energy In Europe energy and environment changing emissions. Agency’s World Energy Outlook policies are being discussed The recent 2030 framework 2014, the global quota of natural and reviewed in order to achieve agreement on energy and climate gas is set to increase from 21% of a gradual reduction of climate defined in October 2014 sets more Natural gas: a key role in the future energy mix 95

ambitious goals than those in order to achieve the target is necessary to aim for an energy of the previous European reductions in GHG emissions and mix based on a combination of 20-20-20 strategy. Therefore, minimize environmental impact, it renewables and natural gas.

Eni’s position

Eni is involved in all phases of security of the supply in Europe section on Local Development, the gas value chain: production, and access to energy and local Access to Energy). gas and LNG supply sources, as development in Africa, minimizing In addition to its traditional uses, well as the generation and sale of the relative impact on climate and natural gas can contribute to electricity. Eni’s gas demand is the environment. This virtuous reducing carbon dioxide emissions satisfied by supplies from eighteen cycle between the two continents in the transport sector as it can Countries either through long-term will require investments and the be used as a compressed fuel for contracts or on the spot market. development of energy infrastructure sustainable urban mobility (CNG Its gas requirements are also and local markets. In order to meet technology) and in its liquefied satisfied through integration with the this challenge the stakes are placed form (LNG) for heavy road and sea upstream activities which allows Eni mainly on natural gas but also on transport. This is consistent both to take advantage of the growth of renewables, of which the African with European initiatives (e.g. the gas market and exploit the gas continent has a high potential. the Directive on the development equity reserves. In Eni’s portfolio This approach is in line with Eni’s of alternative fuels) and Italian the production of natural gas operations in Africa. Eni was the initiatives (the strategic plan for the represented about 50% of the total first international energy company diffusion of LNG in the transport hydrocarbon production in 2014. to invest in the production of sector launched by the Italian Important discoveries such as those energy in Africa using previously Ministry of Economic Development). made by Eni in Mozambique confirm flared gas, thereby reducing the In this context, on 29 April 2014, Eni’s future position as an important negative effects on the local Eni opened in Piacenza the first global player in the production of environment. The company has service station to supply liquid natural gas. implemented significant projects to methane (LNG) to provide fuel At the IEA’s World Energy Outlook facilitate access to energy through for heavy vehicles as part of the 2014 presentation, which was held the exploitation of gas in Nigeria European project known as “Blue at Eni (10 December, 2014), the and Congo and has entered into Corridors”, which aims to encourage company’s CEO Claudio Descalzi agreements in this regard in Ghana the use of LNG for road transport in stressed how an energy partnership and Mozambique. Furthermore, order to make it more economical between Europe and Africa would natural gas is at the centre of and sustainable. bring unique opportunities for Eni’s flanking policies for local Eni is committed to opening more of both continents in terms of the development, even in Italy (see these stations by 2017. “In addition to doing things right and respecting the paths we have set ourselves, our task is also to make sure that things are done. We have to start things but also check what we have decided.”

CEO Claudio Descalzi Performances > 98 Reporting principles and criteria > 122 Independent Auditor’s Report > 126 98 overview | projects and activities | results 3.1 Performances

Governance and Business Ethics Board of Directors

2012 2013 2014 Members of the Board of Directors (a) (number) 9 9 9 - executive 1 1 1 - non-executive 8 8 8 - independent (b) 7 7 7 - non-independent 2 2 2 - members of minorities 3 3 3 Board of Directors Annual Meetings 16 13 14 Average attendance at Board meetings (%) 97 97 100 Annual board induction sessions (number) 3 3 3

a) Refers to the previous Board, up until 8th May, 2014 and to the current Board from 8th May, 2014 onwards. b) Refers to independence as defined by the regulations, as referenced by Eni’s By-Laws; in accordance with the Corporate Governance Code, 6 of the 9 Directors appointed are independent.

The Board of Directors and the Board of Statutory Auditors, of independent Directors on the Boards of Italian listed and their respective chairmen, are appointed by the companies. Shareholders’ Meeting using the list voting system. Three The Board of Directors has created four internal committees Directors and two Auditors, including the Chairman of the having consulting and advisory functions: the Control and Risk Board of Auditors, are appointed by minority shareholders Committee, the Compensation Committee, the Nomination thus ensuring that the number of representatives of said Committee and, since 9 May, 2014, the Sustainability and minority shareholders exceeds the number required by Scenarios Committee, which all report to each Board meeting law. The number of independent Directors provided by the on the relevant issues being discussed. Specifically, with the company By-Laws is also greater than that required by law. establishment of the Sustainability and Scenarios Committee, In May 2014, the expiry of the terms of office led to a major the Board of Directors aims to ensure a further level of reshuffle of the Board of Directors and the Board of Statutory supervision over sustainability issues. Auditors. In particular, with regard to the composition of The Board has also assigned important internal control the Board, the Shareholders’ Meeting was able to take responsibilities to the Chairman, particularly in relation to account of the views expressed by the previous Board in the Internal Audit department. These responsibilities include terms of diversity, expertise, managerial experience and making proposals regarding the appointment, remuneration internationalism. The result, therefore, was a balanced and and resources of the Internal Audit Manager, and managing diversified Board, which exceeds the requirements of the law the working relationship directly on the Board’s behalf (without in terms of gender diversity. prejudice to the functional subordination to the Control and Following the reshuffle, the number of independent Directors Risk Committee and the CEO as the Director in charge of the on the Board (71 of the 9 Directors appointed, of which 8 internal control and risk management system). are non-executive) exceeds the number required by law, the On the proposal of the Chairman, the Board has appointed a Corporate Governance Code and also the average number Secretary, to whom the role of Corporate Governance Counsel

1) See note b) below the table. performances | reporting principles and criteria | independent auditors’ report 99

has also been assigned, who is responsible for providing Induction programme2 available, which is based on assistance and advice to the Board and the Directors, and presentations of Eni’s operations and organization given by who reports annually to the Board on the functioning of Eni’s top management. The Board has since decided to provide governance system. The Secretary reports hierarchically and more in-depth information on strategic issues relating to functionally to the Board, and consequently, to the Chairman risk and crisis management, taking into consideration the of the Board. Also, in view of the responsibilities of the role, international context in which the company operates. The the Secretary must be independent. Board has also decided take part in the pilot phase of the Every year the Board, with the assistance of an external “UN Global Compact LEAD Board Programme”3, which consultant and the supervision of the Nomination Committee, is dedicated to training Directors on sustainability issues, carries out a Board Review (a self-evaluation). An essential having already actively contributed to the development element of this review is the comparison with best practices at of the programme. With the support of an international national and international level. Following the Board Review, facilitator, who is an expert on sustainability, integrated if necessary the Board agrees on an action plan to improve its reporting and management, the Board dedicated the first performance and that of its committees. session to “The materiality of Sustainability”, with the aim of In order to support the Board of Directors and the Board raising awareness on the importance of sustainability for the of Statutory Auditors, in recent years Eni has made an company’s business strategy4.

Diversity in the management and audit boards of Eni Group companies5 2012 2013 2014 Presence of women on the Boards of Directors of Eni group companies 8.1% 14.0% 22.0% Presence of women on the Boards of Statutory Auditors of Eni Group companies 15.0% 27.6% 36.0%

The internal regulations on the “Corporate Governance of possible, taken into account. Eni companies”, subject to the requirements of the law, In line with these regulations, Eni’s commitment to provides that in selecting the members of the management reinforcing the presence of women on the management and audit boards of Eni’s Italian and foreign subsidiaries, and audit boards of Eni’s companies is ongoing, as the need for diversity (including gender diversity) is, where demonstrated by the percentages shown in the table.

Internal control and risk management system

2012 2013 2014 Integrated audits actions (number) 83 65 67 - scheduled audits 59 49 55 - spot audits 8 5 2 - follow-ups 16 11 10 Number of recommendations (corrective actions) 1,150 907 907 Number of Risk Assessments 98 35 18 Average time of corrective action completion (days) 83 78 78

A key role in the audit and assessment process for the Italian ex Legislative Decree no. 231/01 and Anti-Corruption internal control and risk management system (ICRMS) as compliance) in implementation of the annual Audit Plan a whole is assigned to Eni SpA’s Internal Audit department, prepared using a “top-down, risk based” approach and which conducts audits (operational, financial and approved, together with the resource budget, by the Board compliance audits focusing on the aspects covered by of Directors and, for aspects relevant for the purposes of

2) In keeping with previous initiatives, training of the Boards of Directors of subsidiaries with offices in the United Kingdom, France and the Netherlands continued in 2014. 3) Eni is a member of the UN’s Global Compact Lead Group. 4) The key issues covered by the training course are: What sustainability is; The business imperatives for sustainability; Strategic focus on sustainability initiatives; Sustainability in strategy and business model. 5) Number of positions occupied by women in proportion to the total number of positions. 100 overview | projects and activities | results

Italian Legislative Decree no. 231/01, by Eni SpA’s Watch • the risk assessment activities were reduced further Structure. compared with the previous year due to the broadening of With reference to the main activities performed by the Internal the scope of the integrated risk management process, the Audit department, it is noted that: results of which are used by the Internal Audit department • the number of integrated audits conducted in 2014 is in to plan the audits, integrating them, where necessary, with line with the average for the three-year period. In line with the risk assessments; the previous year, the average duration of the audits has • 2014 also saw the continuation of training initiatives in been affected by the incorporation into the same of the relation to the ICRMS directed at Eni SpA’s management Anti-Corruption audits and independent monitoring carried and the main subsidiaries in Italy and abroad. These out in order to comply with the Sarbanes-Oxley Act; initiatives aim to provide an organic and integrated vision • the average number of corrective actions per audit has of the ICRMS and develop awareness of the role of remained stable for the various sectors, and to date management in the implementation and operation of an substantial observance of the implementation times effective and efficient ICRMS. In particular, in 2014 “on for planned actions has been recorded, confirming the site” workshops were delivered in about 15 Countries attention paid by the audited structures to the time- in addition to Italy and the related e-learning course scales agreed; continues to be provided.

Whistleblowing management6

(number) 2012 2013 2014 Reports opened during the year, of which 136 172 119 - Internal control system reports divided according to the process that is the subject of the report 72 88 69 - procurement 23 30 16 - human resources 5 8 12 - commercial 11 7 11 - logistics 6 1 7 - HSE 5 6 4 - other (security, administration and financial reporting, maintenance, etc.) 22 36 19 Reports on other matters relating to alleged violations of the Code of Ethics 64 84 50 Reports that have been closed during the year divided according to the outcome 131 159 134 of the investigations, of which - founded at least in part with the adoption of corrective measures 27 34 20 - other matters 10 11 6 - internal control system 17 23 14 - unfounded, with the adoption of corrective/improvement measures 31 45 39 - other matters 11 21 11 - internal control system(a) 20 24 28 - unfounded 73 80 75 - other matters 40 46 25 - internal control system 33 34 50 a) It should be noted that the 14 Internal Control System that were filed in 2014 as “founded at least in part with the adoption of corrective measures” gave rise to 59 corrective actions of which: 18 disciplinary actions taken against employees, 12 against suppliers and third parties, 19 in relation to the internal control and risk management system, with the remaining 10 relating to other actions (legal, technical, etc.).

From 1 January to 31 December, 2014, 230 whistleblowing control system” and 50 of which related to “Other matters” reports were received, grouped together in 119 files, 69 (42%). In the same period, 134 files were archived in total, (58%) of which concern issues relevant to the “Internal 92 of which concerned the “Internal control system” (69%)

6) The data related to the reports contained in this paragraph refer to reports concerning Eni SpA and its subsidiaries, excluding the listed Italian subsidiary, which has its own autonomous report management structure. performances | reporting principles and criteria | independent auditors’ report 101

and 42 of which concerned “Other matters” (31%). actions were taken. The audits carried out on the 134 files archived in 2014 In conclusion, corrective actions were adopted in 44% of cases. had the following results: As of 31 December, 2014 there were still 31 files open • for 114 files the audits did not find any evidence to related to the “Internal Control System” and 41 files open confirm the facts reported, nevertheless for 39 files on “Other Matters”. (29%) improvement actions were taken in any case; • for 20 files (15%) the audits confirmed, at least in part, With reference to the management of reports concerning the content of the report and the appropriate corrective human rights issues, please see the next paragraph.

Human rights

2012 2013 2014 Hours of training on human rights (number) 576 667 700 Suppliers subjected to qualification procedures including screening on human rights 12,471 14,833 19,823 % procurement from suppliers subjected to qualification procedures including screening (%) 88 87 91 on human rights SA8000 audits carried out (number) 16 23 20(a) - of which follow-ups 8 9 12 Security contracts containing clauses on human rights (%) 65 84 90 Security people trained on human rights (number) 1,008 235 143 Critical sites covered by assessments/surveys 11 21 23 Sites verified by means of a check list 121 194 138 Countries with armed guards protecting sites 10 11 11 Hours of specific training to security officers/security managers 1,476 4,700 6,226 a) Of which 8 suppliers / sub-suppliers in Mozambique, Indonesia, Pakistan and Angola and 12 follow-ups on audits carried out in 2013 in Congo, East Timor and Pakistan.

In 2014, in addition to the ordinary checks during the for human rights7. qualification process, SA8000 audits were carried out on In particular, in 2014, 37 files were archived, of which: 8 suppliers and sub-suppliers in Mozambique, Indonesia, • for 31 files the audits did not find any evidence to confirm Pakistan and Angola and 12 follow-ups on 2013 audits in the facts reported, nevertheless for 10 files (27%) Congo, East Timor and Pakistan. In order to support these improvement actions were taken in any case; activities, in 2014 a further 5 people from Congo, Angola, • for the 6 remaining files, the audits confirmed, at least Indonesia and Mozambique were trained as SA8000 in part, the content of the report and the appropriate procurement auditors. In total 32 people received training, corrective actions were taken. including two Lead Auditors. As of 31 December 2014 there were still 19 open files related to human rights issues concerning mainly harassment or The following data relate to “Whistleblowing management” mobbing in the workplace, and relationships with institutions, concerning, among other things, issues related to the respect associations, local communities.

7) The data related to the whistleblowing reports contained in this paragraph refer to reports concerning Eni SpA and its subsidiaries, excluding the listed Italian subsidiary, which is equipped with its own autonomous report management structure. 102 overview | projects and activities | results

(number) 2012 2013 2014 Reports on human rights violations 31 39 37 (closed during the year and subdivided according to the outcome of the investigations), of which - founded at least in part with the adoption of corrective measures 4 3 6 - relations with institutions, associations, local communities 0 0 0 - harassment or mobbing in the workplace 3 3 4 - other (e.g. occupational health and safety) 1 0 2 - unfounded, with the adoption of corrective/improvement measures 7 13 10 - relations with institutions, associations, local communities 0 0 0 - harassment or mobbing in the workplace 4 10 8 - other (e.g. occupational health and safety) 3 3 2 - unfounded 20 23 21 - relations with institutions, associations, local communities 1 1 2 - harassment or mobbing in the workplace 12 14 16 - other (e.g. occupational health and safety) 7 8 3

Anti-Corruption training

See paragraph on Fighting corruption on page 36.

Transparency of payments

See paragraph on Integrity and transparency on page 33.

Value added

(euro million) 2012 2013 2014 Overall distributed net value added 22,489 20,442 13,957 - of which to human resources 4,877 5,555 5,693 - of which to shareholders 4,139 4,230 4,090 - of which to States and Public Administrations 11,679 9,005 6,492 - of which to financial backers 896 923 922 - of which to the company system 808 729 -3,240

The net value added distributed in 2014 was 13,957 million • 41% to human resources paid through wages, salaries euro, a reduction compared to the previous year. The main and welfare contributions; driver was the sharp decline in oil prices that affected on the • 29% to shareholders paid through the distribution of E&P results and the adjustment of the crude oil stocks to current dividends; values. Compared to the previous year the significant capital • 7% to financial backers, paid through financial charges; gains achieved in 2013 are important (sale of 20% stake in • -23% to the company system, paid through the share of Mozambique and a revaluation of the selling price of the stake in net profit reinvested in the company (profit for the year net Arctic Russia). Value added in 2014 was divided as follows: of dividends and the share used to restore the plant and • 47% to the State and Public Administrations through taxes equipment and intangible assets used in the production on the income of both Italian and overseas businesses; process). performances | reporting principles and criteria | independent auditors’ report 103

People

Employment

(number) 2012 2013 2014 Employees as of December 31 77,6 36 82,093 83,599 - men 64,789 68,505 69,949 - women 12,847 13,588 13,650 - Italy 26,602 26,586 25,791 - Abroad 51,034 55,507 57,808 Employees abroad by type 51,034 55,507 57,808 - local 39,668 43,121 45,864 - Italian expatriates 3,867 3,955 3,889 - international expatriates (including TCN) 7,49 9 8,431 8,055 Employees by type of contract 77,6 36 82,093 83,599 - temporary 35,885 38,803 29,519 - permanent 41,751 43,290 54,080 - part time 1,130 1,058 1,039 - full time 76,506 81,035 82,560 Senior Managers employed 1,468 1,471 1,468 Managers/Supervisors employed 13,174 13,613 13,870 Employees employed 38,396 39,844 40,337 Workers employed 24,598 27,165 27,924 Employees aged 18 - 24 4,201 4,635 3,753 Employees aged 25 - 39 35,121 36,870 38,844 Employees aged 40 - 54 29,872 31,076 31,220 Employees aged over 55 8,442 9,512 9,782 Employees by educational qualification 77,6 36 82,093 83,599 - less than secondary school diploma 15,477 10,353 10,645 - secondary school diploma 35,031 39,904 39,889 - degree 23,544 26,894 27,8 32 - postgraduate education 3,584 4,942 5,233 Number of permanent contract hiring 6,372 6,663 6,160 Number of permanent contract resolutions 5,228 5,847 6,514

In 2014 there were 1,506 employees more than in 2013, to the company’s 2013-2014 mobility plan. The average age of amounting to an increase of 1.8%. This number depends people working for Eni is 43.9 in Italy and 38.8 abroad. In 2014 on a decrease of 795 employees in Italy (currently 25,791 the majority of new entries abroad concerns mainly the I&C people, 30.9% of the company’s total employees) and an sector (4,501 total permanent hires) with a positive balance increase of 2,301 employees abroad (currently 57,808 between hires and resolutions and consequent increase in people, or 69.1% of the company’s total employees). employment in this sector equal to + 2,470 units. This increase In Italy, 1,167 people were recruited, 624 of whom were given is due mainly to the ongoing project characterized by a direct a permanent contract and 543 a temporary contract. The construction approach and the related review of human permanent hires (part of which are apprenticeship contracts) resource planning (Mexico, Canada). There has also been an include 360 graduates, equal to about 58% of the total. increase in the area of onshore drilling (Saudi Arabia) in order In Italy, 1,954 employment contracts were terminated, of to complete the fitting out of the new rigs. Approximately 48% which 1,322 were permanent and 632 temporary. These of the remaining permanent hires abroad in 2014 (1,035 in reductions were primarily related to restructuring activities and total) concern the upstream sector, in which a decrease of 72 104 overview | projects and activities | results

people occurred, compared to a negative balance between Congo and Norway, as well as the strengthening of engineering hires and resolutions. This reduction is due mainly to closure structures in Basingstoke, and the departure of local employees and downsizing of some projects, particularly in: Togo, at Tecnomare’s Kazakh branch. A total of 3,889 Italian Democratic Republic of the Congo, Poland, Iraq and China. expatriates work abroad in the 100% consolidated companies. Plans have in any case been made for the development of The local employees abroad increase of 2,743 units compared projects in Ghana, Mozambique, Indonesia, Algeria, Angola, to 2013 (equal to +6.4%).

Safety

2012 2013 2014 (Injuries/worked hours) Injury frequency rate 0.49 0.35 0.31 x 1,000,000 - employees 0.57 0.40 0.38 - contractors 0.45 0.32 0.26 (days of absence/worked hours) Injury severity index 0.021 0.014 0.014 x 1,000 - employees 0.026 0.018 0.019 - contractors 0.017 0.012 0.011 (total recordable injuries/worked Total recordable injury rate (TRIR) 1.17 1.04 0.89 hours) x 1,000,000 - employees 1.45 1.35 1.13 - contractors 1.01 0.86 0.73 (fatal injuries/hours worked) Fatality index 1.10 0.98 0.72 x 100,000,000 - employees 0.87 1.74 0.00 - contractors 1.23 0.53 1.22 Near misses (number) 2,862 2,911 3,130 Training hours on safety (hours) 1,259,228 2,112,319 1,025,362 - of which to senior managers 5,046 7,2 9 0 4,145 - of which to managers/supervisors 69,890 73,067 73,202 - of which to employees 312,817 996,364 355,891 - of which to workers 871,475 1,035,598 592,124 Expenditures and investments on safety (euro thousand) 363,805 400,650 361,229 - of which current spending 253,275 245,168 222,980 - of which investments 110,530 155,482 138,249

In 2014 the trend in safety improvement continued, recording By the end of 2015 it is anticipated that all subsidiaries with the lowest injury rate of the last ten years. The number of a significant HSE risk profile will be OHSAS 18001 certified. injuries fell by more than 20% compared with 2013 and more By the end of 2014 more than 80% of these subsidiaries had than 75% compared with 2006, falling from more than 750 already been certified. events to 170 in 2014. Expenditure on safety in 2014 related specifically to: studies Compared to 2013, there was a 7% improvement for on safety, procedures, risk assessments (49.8 million employees while for contractors it was 19%. The injury euro), personal protective equipment (33.7 million euro), frequency rate for the total workforce (equal to 0.31) has maintenance (29.8 million euro), the production of safety fallen by 12.6% compared to 2013. However, in spite of flares (23.1 million euro), the production and modification these positive results, there were 4 fatalities recorded among of fire-fighting systems and equipment (25.4 million euro), contractors in 2014. and rescue and evacuation equipment (6.1 million euro). performances | reporting principles and criteria | independent auditors’ report 105

Health

(number) 2012 2013 2014 Health Impact Assessments carried out 28 18 32 OHSAS 18001 certifications 101 109 122 Employees included in health monitoring programmes 64,518 70,458 76,971 Diagnostic procedures 341,995 355,762 381,321 - of which diagnostic tests 241,098 259,994 285,230 - of which laboratory protocols 100,897 95,768 96,091 Services provided by company health structures 536,958 548,386 571,399 - of which to employees 442,177 449,690 482,442 - of which to third parties 94,781 98,696 88,957 Vaccinations provided by company structures 23,700 22,795 20,043 - of which to employees 18,635 17,70 0 16,096 - of which to third parties 5,065 5,095 3,947 Repatriation for health reasons 200 179 201 - of which employees 175 162 180 - of which contract workers 25 17 20 - of which family members - - 1

In 2014 the implementation programme for the health Libya and 1 in Russia. and safety management system in all Eni companies went During 2014, 201 workers were repatriated for health ahead with the aim of achieving total compliance with the reasons, of which 157 were due to disease while 44 were the regulations and obtaining OHSAS 18001 certification for all result of an injury. Saipem handled 178 repatriations (161 subsidiaries with a significant HSE risk profile. employees and 17 contractors) and upstream there were 23 The business areas completed the health monitoring (19 employees, 1 family member and 3 contractors). The programmes producing a final result in line with that planned medical repatriations in the upstream sector were attributable by the competent physicians. mainly to the complex health risks posed in certain areas In order to assess the impact of projects on the health of the such as Iraq (6), Kazakhstan (5) and Congo (5). communities involved, the upstream sector completed 32 The reduction in the total number of Eni vaccinations reflects HIA and ESHIA (Environmental and social Health Impact the reduction recorded in the upstream sector with regard to Assessment) studies in 2014. The health impact assessments vaccinations given to third parties as well as employees. This were carried out in the following Countries: 7 in Nigeria, 6 in reduction is related to seasonal trends and the multi-annual Mozambique, 5 in Iraq, 3 in Algeria, 3 in Congo, 2 in Ukraine, duration of the vaccination cycles. The greatest number of 1 in Cyprus, 1 in Ghana, 1 in Southern Italy, 1 in Kenya, 1 in vaccinations were recorded in Congo, Nigeria and Egypt. 106 overview | projects and activities | results

Engagement of people

2012 2013 2014 Users with access to the MyEni portal (number) 23,578 25,088 26,172 Countries involved in the Cascade Programme 44 44 44 - Satisfaction of participants (positive feedback on the initiative) (%) 88 87 88

During 2014, the MyEni portal was reconfirmed as the main with the aim of communicating the company’s strategies tool for entering the world of Eni, for communication, and by business area, was run for the eighth time in 2014. support for daily activities. This year, the formula used in 2013 to make the programme The Italian version can be viewed by 26,172 people, more interactive and timely was confirmed. The intranet was whereas the international version (MyEni International) used to circulate the initial business meetings and unit staff is today accessible by every associate connected to the meetings were made a priority for all subsequent meetings. Eni online network and is the home page in 43 associate The level of general satisfaction with the initiative was high companies. and in line with that of previous years. In addition to Italy, The Cascade programme, targeted towards all Eni’s people the Cascade programme has involved 43 other Countries.

Industrial relations

(number) 2012 2013 2014 Employees covered by collective bargaining (Italy) 30,480 30,590 29,825 Consultations, negotiations with trade unions on organizational changes (Italy) (a) 359 278 236

(a) The minimum notice period for operational changes is in line with the provisions of the laws in force and the trade union agreements signed in the Countries in which Eni operates.

Enhancing people

(%) 2012 2013 2014 Employees subject to management review (senior managers) (a) 100 100 100 Employees subject to performance assessment tools 55 60 59 (senior managers, managers/supervisors and young graduates) Employees subject to potential assessment (young graduates and experts) (b) 33 23 19 (a) Refers to the percentage of senior managers to whom this procedure is applicable (b) The percentage drop is due to the extension since 2013 of the scope of analysis to include young graduates with up to 7 years of service.

Just like every other year, an annual review of Eni’s people management and 34% of young graduates. was performed in 2014. In 2014 Eni confirmed its commitment to performance In particular, a management review was carried out thus assessment, with total coverage, in Italy and abroad, of providing a complete picture of the company’s senior 97% for directors and senior managers and 56% for middle management. Specific reviews were performed for certain managers and young graduates, with an overall total of 59% managerial figures in order to assess their skills and abilities (see table). Coverage abroad (66% of middle management for the purposes of the succession planning process. This and 79% of young graduates) is significantly higher than was done to ensure that positions with significant managerial in Italy, a sign of increased engagement with the process. responsibility were adequately covered. The trend in Italy remains stable compared with 2013, with In 2014, the company used segmentation to map around signs of growth in the coverage of young graduates (+17%). half of the Eni workforce, more specifically 91% of middle Generally 2014 has been a year of transition towards a new performances | reporting principles and criteria | independent auditors’ report 107

Performance and Feedback system (the related procedure about its staff in Italy and abroad. In 2014, 721 assessments was published in May 2014), which integrates the two were carried out at Development Centres and Assessment activities with a view to simplifying the process overall. Centres. In percentage terms, the index is still affected by the Furthermore, 2014 saw the completion of the new HR increase in the pool of eligible candidates (raising the number Evolution system, an IT system that will support HR processes of years of experience in the company from 5 to 7) and by the and facilitate a more thorough application and management fine-tuning of the volumes of activities performed, also with a of the performance appraisal process by the Employer. view to optimizing the relative costs. In addition to this index, With regard to assessing potential, by looking at the data in the 210 individual assessments and management appraisals absolute terms, the total number of employees identified as carried out on middle managers and directors in 2014 are having potential confirms Eni’s commitment to learning more also worthy of note.

Equal opportunities

2012 2013 2014 Women employees in service (%) 16.52 16.53 16.33 Women hired 14.91 14.42 10.16 Women in managerial positions (senior and middle managers) 18.91 19.37 19.67 Women senior managers 10.79 10.85 11.24 Replacement rate by gender 1.22 1.14 0.95 - men 1.19 1.09 0.97 - women 1.37 1.58 0.77 Employees who took parental leave (number) 522 641 547 - of which women 409 500 434 Employees returning from parental leave 477 586 508 - of which women 352 452 400 Pay gap senior managers (women vs men) (%) 97 96 99 Pay gap middle managers and senior staff (women vs men) 96 98 96 Pay gap employees (women vs men) 97 94 94 Pay gap workers (women vs men) 104 102 101 Total pay gap (women vs men) 100 98 97

In 2014, 13,650 women worked for Eni (16.3% of total • 1.6% is for women with managerial responsibility and employees) of which 6,127 in Italy (23.8% of employees in average age of 60 years; Italy) and 7,523 abroad (13.0% of employees abroad). • the average age overall is 57 years, of which 24% greater In Italy, of the 624 people recruited during 2014, 20% were than or equal to 60 years. women. It should also be considered that, due to more favorable It should be noted that in 2014 the replacement rate of pension requirements, the adhesion of women in the mobility women (ratio between permanent recruitment/termination of program has been remarkable, in particular in Italy where permanent contracts) decreased compared with 2013 both is the majority of the women concerned. In effect, the 2011 in Italy and abroad, rising from 1.37 in 2012 to 1.58 in 2013, Italian pension reform introduced new and higher age and falling to 0.77 in 2014. requirements to access to pension for the majority of workers. The downward trend can be attributed to the departure This entails a progressively relevant increase for women of women that occurred with the 2013-2014 mobility (being favored until now), in order to adapt the requirements programme. for both women and men and comply with the provisions of As regard of these resolutions – all made with the the European Community. consensus of the two parties, women and the company However, the above-mentioned law has maintained for women – it is pointed out that: the possibility to access by 2015 to early retirement at 57 108 overview | projects and activities | results

years old and 35 years of contributions. This transition rule in accordance with a method used since 2011 which is therefore an opportunity to take advantage of minimum neutralizes, in the pay comparison, any effects deriving from requirements for the retirement, advantageous than those differences in role and seniority. This measurement was that will be in force starting from coming years. conducted at a worldwide level on a sample of more than 90% of the Eni population (approximately 76,000 resources in The number of women in managerial positions (senior over 60 Countries). The results of the analysis at a global level managers and managers), however, has increased. This went show a substantial alignment between the pay of women and from 18.49% in 2011 to 18.92% in 2012, before rising to that of men for the same role and seniority. There is a slight 19.38% in 2013 and then 19.67% in 2014. difference compared to previous years but it is statistically In 2014, the survey of the gender pay gap was updated, irrelevant.

Employment disputes

2012 2013 2014 Employment disputes (number) 1,383 1,607 1,355 Prevention/disputes ratio 864/1,383 577/1,607 658/1,355 Disputes/employees ratio (%) 1.80 1.95 1.62

In 2014, Eni continued its commitment to preventing and damaging agents, often linked to industrial sites only managing labour law disputes, working at the pre-trial phase subsequently acquired by Eni. The number of claims made with effective instruments to reduce the number of disputes connected with work contracts such as claims relating to the and the consequent costs. type of contract, recognition of pay differences and alleged Owing to the continued legal assistance provided, the downgrading or demotion, remain at an extremely low level level of conflict is low, taking into account the size of which, if considered in relation to the number of employees, the company and the complex structure of employment amounts to 0.31% of the employees in service at the end of legislation, particularly in Italy. Most of the disputes (25% December 2014. of the total) concern occupational diseases, which are This confirms a work organization model which allows Eni currently a typical feature of Italian employment disputes people, through a shared system of personnel classification, and are due to claims for alleged exposure to potentially to make the most of their skills and potential.

Training

2012 2013 2014 Training hours by type (hours) 3,132,350 4,349,352 (a) 3,207,027 (b) - HSE and quality 1,5 47,274 2,213,450 1,151,931 - Languages and ICT 311,142 339,058 290,914 - Conduct/Communication/Institutional 213,779 233,949 189,672 - Professional cross-sectoral 251,668 334,018 215,455 - Professional technical-commercial 808,487 1,228,877 1,359,055 Training expenditures (euro million) 55.67 75.91 60.93 (a) The total includes training activities carried out in 2013 in relation to the Iraq project for the subsidiary Zubair Field Operation Division. (b) The total does NOT include training activities carried out in 2014 in relation to the Iraq project for the subsidiary Zubair Field Operation Division, equal to 61,764 hours.

Training hours decreased by 26% compared with 2013 due to focus more on training related to core operations. to repeated budget cuts in 2014, which forced the company performances | reporting principles and criteria | independent auditors’ report 109

Knowledge management

(number) 2012 2013 2014 Knowledge community/network by application sector 63 65 66 - business 53 55 56 - cross-sectoral 10 10 10 Participants in the knowledge community/network by application sector 4,732 5,676 6,883 - business 4,098 4,909 6,037 - cross-sectoral 634 767 846

See paragraph on Professional Development on page 45.

Environment

Environmental Management System

2012 2013 2014 ISO 14001 certifications (number) 109 113 116 ISO 50001 certifications 6 8 11 EMAS registrations 10 10 10 Environmental expenditures and investments (euro thousand) 743,075 733,577 770,182 - of which current expenses 4 67,939 490,238 600,488 - of which investments 275,136 243,338 169,694

The majority of management systems for the main (storage, treatment, recovery, transport and recycling, operating sites are registered under the international ISO amounting to 106.7 million euro), air protection (plant 14001 standard and in Europe the main production sites modifications aimed at the reduction, monitoring and have undergone the EMAS registration process. analysis of pollutants, amounting to 59.9 million euro), By the end of 2015 it is anticipated that all subsidiaries with a water resources and discharges (creation and modification significant HSE risk profile will be ISO 14001 certified. of systems for the cooling, desalination, collection, By the end of 2014 more than 80% of these subsidiaries monitoring and treatment of water, and systems to reduce had already been certified. consumption, amounting to 43.7 million euro), the Environmental expenditures was related mainly to soil and prevention of spills (34.7 million euro), energy efficiency groundwater remediation (implementation of emergency and climate change (energy saving, flaring down and or permanent safety measures and decommissioning, containment of venting and fugitive emissions, amounting amounting to 277.8 million euro), waste management to 21.2 million euro). 110 overview | projects and activities | results

Protection of water resources and biodiversity

2012 2013 2014 Total water withdrawals (Mm3) 2,356.12 2,204.59 1,877.81 - of which sea water 2,142.82 2,002.22 1,704.97 - of which fresh water 188.70 183.93 162.48 - of which salt/salty water from subsoil or surfaces 24.59 18.44 10.36 Water used/kWheq produced (EniPower) (m3/kWheq) 0.012 0.017 0.017 Water withdrawals/crude and semi-finished producta processing (R&M) (m3/tonnes) 25.43 19.98 22.42 Total production water extracted (E&P) (a) (Mm3) 61.17 61.32 62.71 - of which injected into deep wells for disposal purposes 9.44 13.40 10.83 - of which re-injected 20.82 20.02 24.29 - of which discharged into surface water bodies or into the sea 26.94 24.60 25.26 - of which sent to evaporation ponds 3.97 3.30 2.32 Production water re-injected including those injected into deep wells (%) 49 55 56 for disposal purposes/Total production water Percentage of fresh water reused (%) 73.4 80.0 81.7 Fresh water discharged (Mm3) 130.62 136.52 132.52 Sea water discharged 1,931.74 1,823.73 1,590.61 Water resources and discharges expenditures and investments (a) (euro thousand) 83,415 51,336 43,725 - of which current expenses 39,808 37,15 8 27,13 4 - of which investments 43,607 14,178 16,591 Expenditures on landscape protection and ecosystems and (euro thousand) 5,863 5,925 4,668 biodiversity conservation (a) (a) The figure is part of the environmental expenditures and investments set out in the “Environmental Management System” table.

In 2014 there was a 14.8% (-327 Mm3) reduction in the total network). In EniPower, total water consumption fell in absolute amount of water used compared with 2013, due mainly to terms (-6%), while it remained stable compared to the kWheq the reduction in the amount of sea water used throughout all produced in relation to the greater use of sea water in the sectors, particularly the E&P sector where the amount of sea cooling processes at the Brindisi plant. The amount of fresh water used fell by more than 100 Mm3 following the water reused in Eni has increased overall compared with cut-backs to production activities in Libya. The amount 2013, surpassing 80%. of fresh water used, which represents about 8% of the Performance in relation to the production water in the E&P total water resources used, fell by 11.7% compared with sector has continued to improve, with the percentage re-injected 2013, due primarily to the reductions recorded in the increasing to 56%, reaching a record level of 96,200 m3 a day petrochemicals sector (-13.5%, equal to more than 15 Mm3, (91,500 in 2013). A significant factor in this result was the start 13 of which at the plant in Mantua following the optimization of re-injection activities in Zatchi (Congo) at the end of January of the pumping section and pressure on the distribution 2014 and in Ebocha (Nigeria) in November 2014. performances | reporting principles and criteria | independent auditors’ report 111

Managing oil spills

2012 2013 2014 Operational oil spills Total number of oil spills (> 1 barrel) (number) 107 99 82 - of which E&P 95 90 74 Volume of oil spills (> 1 barrel) (barrels) 3,759 1,901 1,179 - of which E&P 3,015 1,728 936 Oil spills due to sabotage / theft Total number of oil spills (> 1 barrel) (number) 222 287 286 - of which E&P 221 282 284 - of which R&M 1 5 2 Total volume of oil spills (> 1 barrel) (barrels) 8,669 6,002 14,401 - of which E&P (Nigeria) 8,436 5,493 6,610 - of which R&M (Italy) 223 509 7,791 Spill prevention expenditures and investments (a) (euro thousand) 63,771 51,141 34,673 - of which current expenses 8,354 10,054 5,213 - of which investments 55,417 41,087 29,460 (a) The figure is part of the environmental expenditures and investments set out in the “Environmental Management System” table.

The number of operational oil spills and the volume spilled the hydrocarbon content to be below the contamination have fallen over the last three years. In particular in the E&P threshold) and the preparation and presentation of the sector, to which most of the oil spills are attributable given Characterization Plan to the relevant bodies. the nature of its operations, a record low of less than 1,000 • Nigeria (E&P sector) where 284 sabotage/theft events barrels was reached in terms of the volume spilled (equal to occurred in relation to over 3,000 km of pipelines. a cube of just over 5 meters on each side). In 2014, E&P Compared with 2013, the number of events remains recorded a 47% reduction in the volumes spilled, a 20% essentially the same (281 in 2013) while the volume reduction in the number of events and a 47% reduction spilled increased amounting to 6,610 barrels (5,493 in in the value of the index relating to the volumes spilled per 2013), while remaining lower the average of the last four million barrels of oil equivalent produced. years (approximately 7,000 barrels). Furthermore, the The volume spilled due to sabotage in 2014 increase same average value of the last four years is below by far compared with 2013. the situation in 2010 (18,000 barrels spilled for sabotage) Sabotage occurred mainly in two Countries: and the two-year period 2000/2001 (in which the • Italy (R&M sector) to which 50% of the overall volume maximum value of 26,000 barrel /year has been reached). spilled is attributable following two attempted kerosene In line with international standards all the values above refer thefts from the Civitavecchia – Pantano pipeline, in to events involving more than 1 barrel. The data related the localities of Palidoro (RM) and Maccarrese (RM) to sabotage include spills due to oil theft attempts and respectively. Following completion of the emergency vandalism. management and containment operations at the sites Performance in relation to chemical spills also continues to concerned, work began immediately to restore the improve with a reduction in both the number of events and environment by absorbing the fuel and its concentration, the volume spilled (-15.2% and -31.6% respectively). The cleaning the embankments by removing the contaminated events concerned E&P (14 events with a total of 1,416 barrels vegetation and the top layer of the damaged soil, spilled, of which over 1,300 was attributable to a single oil monitoring water and soil samples with the support of spill at the Eni subsidiary Liverpool Bay Operating Company the mobile chemical laboratory (the analyses showed Ltd) and I&C (14 events with a total 109 barrels spilled). 112 overview | projects and activities | results

Air protection

2012 2013 2014 (tonnes NO eq) NOx (nitrogen oxide) emissions 2 115,571 103,736 89,916 NO emissions/100% operated hydrocarbon gross production x (tonnes NO eq/ktoe) 0.571 0.554 0.479 (E&P) 2 (g NO eq/kWheq) NOx emissions/kWheq (EniPower) 2 0.155 0.158 0.145 (tonnes SO eq) SOx (sulphur oxide) emissions 2 30,137 27,9 49 24,891 SO emissions/100% operated hydrocarbon gross x (tonnes SO eq/ktoe) 0.044 0.091 0.113 production (E&P) 2 (g SO eq/kWheq) SOx emissions/kWheq (EniPower) 2 0.027 0.017 0.001 NMVOC (Non-Methane Volatile Organic Compounds) emissions (tonnes) 49,562 44,027 27,978 TSP (Total Suspended Particulate) emissions 3,548 2,876 2,256 Air protection expenditures and investments (a) (euro thousand) 56,882 69,154 59,935 - of which current expenses 15,795 20,707 29,068 - of which investments 41,087 48,447 30,867 (a) The figure is part of the environmental spending and investments set out in the “Environmental Management System” table.

In 2014 there was an overall reduction of 13.3% in NOX consolidated Eni total, the change (-43.6% compared to 2013 emissions compared with 2013, owing to the contribution for emissions and -36.6% for the index relating to production) of all the business areas (specifically, -14.1% in the E&P is attributed both to reduced processing in the refineries, and sector, -26% in the G&P sector, -19.6% in the R&M sector to a change in the mix of fuels used, with increased use of and -25.4% in the Petrochemical sector). There was also natural gas.

a notable improvement in the emissions per product unit In the electricity generation sector, SOX emissions have been (-13.5% for E&P, -8.2% for electricity generation and -9.2% reduced by over 95% (both in absolute terms and if indexed for R&M). to production). This is due primarily to the elimination of the In E&P, to which 60% of the consolidated Eni total is contribution made by the EniPower plants, which reduced attributable, emissions fell by more than 9,000 tonnes, due their consumption of fuel and gas from the refineries to zero, to the variation in the fuel mix used in Indonesia, Kazakhstan and secondly, to the changes at the Taranto plant. and Nigeria, with a reduction in the consumption of diesel. NMVOC and TSP emissions have fallen respectively by 36.5%

In G&P the positive downward trend in NOX emissions can be and 21.5% compared with 2013. This is mainly attributable

attributed to the fact that the VeLoNOX burners installed at the to the reduction of flaring in the E&P sector. The reduction EniPower plants are now fully operational. of volatile organic compounds is also a result of fewer

In 2014, total emissions of SOX fell by 10.9% compared to movements of petroleum products in the R&M sector and 2013. The main contributors to this downward trend are the the downward trend in the petrochemical sector due to the refining sector (-4,714 tonnes), chemicals (-384 tonnes) shutdown of the Priolo and Porto Marghera plants. Particulate and G&P (-180 tonnes), while in the E&P sector there is an emissions in the G&P sector have also decreased significantly upward trend (+2,456 tonnes). (-74%) owing to the aforementioned fuel mix variations used In the refining sector, which contributes to about 25% of the by the power plants and to the consolidation scope. performances | reporting principles and criteria | independent auditors’ report 113

Protection of the soil and remediation

2012 2013 2014 Total waste from production activities (tonnes) 1,378,385 1,593,142 1,628,056 - of which from drilling activity 342,026 366,440 342,643 Hazardous waste from production activities 365,695 374,421 350,451 Non-hazardous waste from production activities 1,012,690 1,218,721 1,277,6 05 Waste from remediation activities (tonnes) 10,102,297 11,275,900 10,161,856 - of which hazardous 3,754,056 3,930,440 3,525,139 - of which non-hazardous 6,348,241 7,3 45,4 6 0 6,636,717 Waste management expenditures and investments (a) (euro thousand) 92,113 95,421 106,686 - of which current expenses 91,341 95,073 106,221 - of which investments 772 348 466 Soils and groundwater remediation expenditures and investments (a) (euro thousand) 197,4 6 8 193,977 277,8 5 4 - of which current expenses 182,112 186,014 267,025 - of which investments 15,356 7,9 6 3 10,829 (a) The figure is part of the environmental expenditures and investments set out in the “Environmental Management System” table.

Overall expenditure on remediation activities in Italy in 2014 Waste from production activities produced in 2014 was 43% more than in the previous year, amounting to (approximately 1.6 million tonnes) was up 2.2% around 278 million euro and marking a recovery from the compared with the previous year as a result of an increase sharp decline of the previous two years due to the delay in in non-hazardous waste (+4.8%), while hazardous waste receiving some preliminary authorizations from the Public fell by -6.4%. Administrations. The overall trend in the growth of non-hazardous waste is Remediation activities in Italy have mainly been carried out attributable solely to the I&C sector (+25%, amounting to a through Syndial, a company dedicated to the remediation of total increase of 83,000 tonnes) due to the start of work on contaminated sites following decommissioning (72% of total the first section of the South Stream offshore gas pipeline expenditure in 2014) followed by the chemicals sector (13%) in the Anapa area off the Russian shores of the Black Sea. and the R&M sector (10%). All other sectors recorded a reduction in non-hazardous Eni operations (more than 900 processes in progress) are waste compared with 2013. spread over 17 Sites of National Interest (refineries and With regard to hazardous waste, all areas of the business petrochemical plants) encompassing points of sale in the have contributed to the downward trend, with the sole R&M sector and well fields in the E&P sector, and there are exception of E&P, where the amounts produced have evidently extreme variations in the scale of any problems increased (+5.2%, equal to +9,100 tonnes) due to the launch related to the remediation activities. of production in Angola at the West Hub, and to an increase As for the production of waste from remediation, 95% of the in waste from drilling (oil-based mud) in Egypt and Cyprus. volumes produced refers to the water pumped in the process The most significant reductions in hazardous waste were in of remediating groundwater. As a result of the introduction the I&C sector (-27.6%, equal to -17,100 tonnes, due mainly of Article 243 of Italian Legislative Decree 152/06, measures to the shutdown for maintenance of the Scarabeo 7 drilling have already been finalized, and more are pending, aimed at operations and the decrease, compared with 2013, in the preventing this waste. In volumetric terms, the 10% reduction amount of waste produced by the Safco 5 project in Saudi compared with the previous year is partly due to this process, Arabia), R&M (-8.7%, equal to -7,500 tonnes), and which will be more evident in the coming years. the Petrochemical sector (-13.8%, equal to -6,400 tonnes). 114 overview | projects and activities | results

Local employees development

Employees abroad

(number) 2012 2013 2014 Employees in Africa 11,882 12,413 11,478 Employees in the Americas 9,403 13,547 15,694 Employees in Asia 17,495 17,59 6 18,462 Employees in Australia and Oceania 1,119 1,139 376 Employees in Italy 26,804 26,782 25,791 Employees in the Rest of Europe 11,135 10,812 11,798 Local employees abroad by professional category 39,668 43,121 45,864 - of which senior managers 223 213 201 - of which managers 3,798 4,004 4,096 - of which employees 19,683 20,522 21,662 - of which workers 15,964 18,382 19,905 Employees in non OECD Countries 37,659 38,336 40,893

In 2014 there were 2,743 more local employees abroad than number of senior managers has decreased (-6.9%). in 2013, amounting to an increase of 6.4%. For further remarks on employees abroad the reader is The results show an increase in the number of employees referred to the Employment table on page 103. (+8.3%), workers (+5.6%), and managers (+2.4%), while the

Ratio between Eni minimum wage policy and market minimum wage (1st decile) - (middle managers - senior staff)

Ratio Countries 100-115 Italy, Libya, Spain, Germany, Holland, France, Belgium, Romania, United Kingdom, Angola, Norway

116-130 Australia, Hungary

131-150 Gulf Countries, United States, Kazakhstan, India, Russia

151-180 China, Algeria, Egypt, Venezuela

> 180 Indonesia, Brazil

130 Global Average

In its policy for local people (see the part on local overseas providers (1st decile of local pay levels) refers to the section employees by professional category in the International of the workforce composed of middle managers and senior Development section), Eni defines relevant salary levels in staff. The analysis carried out relates to a sample of about terms of minimum/maximum ranges, in relation to the market 14,000 resources in 24 Countries chosen from those most data for each individual Country, monitored annually using representative in terms of business presence and strategic international providers. importance. The results of the analysis show that on average The comparison between the minimum levels defined in the minimum levels defined in Eni’s policy are in line with or Eni policies and the minimum market levels supplied by superior to the market minimums. performances | reporting principles and criteria | independent auditors’ report 115

Spending for the territory

(euro million) 2012 2013 2014 Total spending for the territory 90.568 100.547 95.851 - of which interventions deriving from agreements, conventions and PSAs 63.052 57.570 67.406 - of which short-terms investments related to initiatives in favour of the territory 3.377 0.813 0.419 - of which association memberships fees 1.803 1.800 1.859 - of which contributions to the Eni Foundation (a) - 10.000 - - of which sponsorships for the territory 18.618 26.469 22.272 - of which contributions to the Eni Enrico Mattei Foundation 3.718 3.895 3.895 (a) In 2012 and 2014, based on the financial requirements relating to the implementation of projects, Eni Foundation did not request any contribution.

In 2014, the overall spending in the territory amounted to fund in 2014 which, based on the planned activities and over 96 million euro and included territorial investments subject to approval by the company’s statutory bodies, is deriving from agreements, conventions and PSA (community periodically refinanced by the BoD of the Eni Foundation. investment), short-terms investments related to initiatives Approximately 70% of the total (67.4 million euro) was invested in favour of the territory, membership fees for associations, in community projects (community investments) to encourage sponsorship and contributions to the Eni Enrico Mattei and promote community development in the Countries which Foundation. This decrease compared with 2013 is due primarily host Eni operations, established through agreements or to the Eni Foundation not requesting a top-up of its endowment conventions with local stakeholders. 116 overview | projects and activities | results

Community investment

(euro million) 2012 2013 2014 Interventions on the territory based on agreements, conventions and PSAs by type 63.052 57.570 67.406 - training/professional coaching 9.886 13.527 7.699 - environment 9.698 9.164 17.823 - culture 1.300 1.713 1.727 - instruction and education 3.789 5.384 5.057 - health 3.886 2.931 3.570 - infrastructure development 20.344 15.176 20.717 - socio-economic development 6.357 5.792 6.451 - relationships with communities 7.077 2.332 2.455 - access to energy 0.715 1.551 1.907

In 2014, overall investments in the territory deriving from euro). In Italy there was a substantial increase in 2014, agreements and conventions (Community Investment) was up with expenditure amounting to 19.9 million euro. compared to 2013 and amounted to 67.4 million euro, 94% The increase is due mainly to activities related to the of which was invested in upstream activities. Investments in protection and valorization of the environment in Basilicata. the African continent remain high with a total of 24.2 million In addition to Italy, there are also significant investments in euro, of which 90% in Sub-Saharan Africa (22.7 million Kazakhstan, Nigeria, Ecuador, Congo, and Mozambique.

Sponsorships in the territory

(euro thousand) 2012 2013 2014 Sponsorships for the territory by intervention sector 18,618 26,469 22,272 - health 40 - 80 - training 185 183 233 - education 862 366 464 - environment 69 122 115 - culture 13,678 21,438 15,529 - social infrastructure 37 60 - - social interventions 3,748 4,300 5,851

Eni also works to benefit the community by supporting the common denominator, consistency with sustainability initiatives selected on the basis of different criteria, such as principles. In 2014, local sponsorship amounted to 22.3 affinity with the image and identity of the company, links million euro, of which more than 70% was dedicated to the with the territory, adherence to business goals and, as promotion of cultural activities in areas where Eni is present. performances | reporting principles and criteria | independent auditors’ report 117

Local content

Procurement by geographical area in 2014 Rest of Africa Americas Asia Italy Europe Oceania Number of suppliers used (number) 5,605 6,308 5,107 6,039 8,146 458 Total procurement (euro million) 6,006 5,078 13,884 9,250 7,979 603 - of which goods (%) 11.7 14.9 24.1 22.4 26.0 0.9 - of which works 10.1 10.9 43.7 12.6 22.2 0.5 - of which services 14.3 11.7 32.0 14.7 25.3 2.0 - of which not specified 40.4 4.4 22.3 22.3 10.5 0.1

Local procurement in 2014 by Country % procurement on the local market Countries Angola, France, Iraq, Ireland, Kenya, Luxembourg, Malaysia, Mali, Mozambique, Papua New Guinea, 0-25% Peru, Portugal, Russia, Spain, Switzerland 26-49% Algeria, Cyprus, Great Britain, Libya, Norway, Netherlands, Poland Saudi Arabia, Brazil, China, Republic of the Congo, Croatia, Gabon, Ghana, Italy, Kazakhstan, Pakistan, 50-74% Turkmenistan, Ukraine, Venezuela, Vietnam Argentina, Australia, Austria, Belgium, Canada, Ecuador, Egypt, Germany, India, Indonesia, Iran, Mexico, 75-100% Myanmar, Nigeria, Czech Republic, Romania, Singapore, Slovakia, Slovenia, the United States, Tunisia, Hungary

Relations with suppliers

2012 2013 2014 Procurement by macro-class (euro million) 31,811 32,814 42,800 - works 7,024 5,948 8,487 - services 15,283 20,047 24,416 - goods 5,449 5,200 8,141 - not specified 4,055 1,620 1,756 Supplier concentration top 20 (%) 15 17 23 Suppliers used (number) 32,621 34,848 31,555 Qualification cycles performed during the year 31,991 46,913 58,601 - of which with negative results (%) 6 9 6 Checks carried out following negative feedback and consequent (number) 381 451 480 actions taken - suspensions 69 106 114 - revocations 53 9 37 - alert statuses 259 336 329

See the section “Local content and value creation”, page 64. 118 overview | projects and activities | results

Relations with customers and consumers

R&M customer satisfaction 2012 2013 2014 R&M customer satisfaction index (Likert scale) 7.9 0 8.10 8.20 Customers involved in the satisfaction survey (R&M) (number) 30,438 29,863 24,081

In 2014, a clustering programme was launched for you&eni with the aim of providing them with a 360 degree vision of customers in order to optimize customer relationships, entailing the day-to-day operations that they manage at their point of the development of tailored one-to-one action plans for each sale, both from a technical perspective and, more importantly, cluster. A new Enistation app was launched to satisfy the needs with regard to the relationship with the end customer. For this and curiosity of our customers even when they are on the move. reason, in 2014 specialized courses were delivered in order to Within just a few months there were around 70,000 downloads. provide a more in-depth understanding of the various aspects Furthermore, in order to ensure excellent service, periodic of managing a point of sale. These included courses on tax training courses are held for operators on various topics. In administration, methane and LPG, and courses for eni café 2014, 20 courses were delivered to operators throughout Italy managers.

Satisfaction of gas and electricity customers regarding telephone services 2012 2013 2014 Eni customer satisfaction score (%) 89.7 92.9 93.4 (b) Panel average (a) 91.2 93.5 94.5 (a) The panel analysed refers to companies representing more than 50% of the market with more than 50,000 customers (source: AEEG research on the quality of telephone customer services of gas and electric suppliers in the 1st half of 2014). (b) The customer satisfaction score for 2014 refers to the first half of the year since, as of the date of publication of this document, the Electricity, Gas and Water Authority (Italian acronym: AEEGSI) had not published the data pertaining to the latter half of the year.

In 2014, Eni Gas & Power continued with the programme telephone services provided by suppliers of electricity and gas of initiatives aimed at increasing the level of customer for the second half of 2014. satisfaction and outlining a reference model for the quality Also in 2014, Eni Gas & Power continued to launch innovative of the gas and electricity service. In this scenario, the products and services that facilitate the choice of gas and customer satisfaction score (CSS) for Eni Gas & Power electricity contracts more tailored to individual energy needs, was 93.4, compared with a score of 92.9 in 2013. At the the management of bills and the choice of the best gas date of publication of this document, the AEEGSI had not and electricity related services, with a multi-channel access yet published the results from its survey of the quality of described as “best in class”.

AEEG Eni call centre performance 2012 2013 2014 Standard Percentage of customers who called (%) 97.1 95.5 96.3 80 and spoke to an operator (service level) Average call centre waiting time (seconds) 105 90 107 240 First Call Resolution (FCR) (%) 88 89 91 - Self Care (operations carried out autonomously 43 51 57 - by customers out of the total operations requested)

The Eni call centre results show that the average call 91% in 2014. waiting time of 107 seconds remains significantly below Furthermore, in this area a considerable increase the benchmark threshold of 240 seconds set by AEEGSI. was recorded in the number of operations carried out The percentage of requests resolved on the first call (First independently (self care) by gas and electricity customers, Call Resolution - FCR) increased from 89% in 2013 to rising from 51% in 2013 to 57% in 2014. performances | reporting principles and criteria | independent auditors’ report 119

Energy and climate

Climate change

2012 2013 2014

Direct GHG emissions (tonnes CO2 eq) 52,840,365 47,59 9,20 6 42,925,895

- of which CO2 from combustion and process 36,365,220 34,168,128 32,142,682

- of which CO2 equivalents from flaring 9,461,518 8,478,376 5,637,686 - of which CO equivalents from non-combusted methane 2 4,475,756 2,902,091 3,193,095 and fugitive emissions

- of which CO2 equivalents from venting 2,196,295 1,735,211 1,679,556

CO2 emissions from Eni plants subject to EU ETS 22,099,231 20,379,448 19,156,015 Quotas allocated to Eni plants subject to EU ETS 24,978,257 9,233,300 8,798,637 Eni plants subject to EU ETS (number) 39 40 43 Indirect GHG emissions from purchases from other companies (tonnes CO eq) 846,294 742,910 672,295 (Scope 2) (a) 2 Indirect GHG emissions other than those due to purchases (million CO eq) 290.205 282.922 274.258 from other companies (Scope 3) (b) 2 GHG emissions/100% operated gross hydrocarbon (tonnes CO eq/toe) 227.162 223.198 199.528 production (E&P) 2 (gCO eq/kWheq) CO2 eq emissions/kWheq (EniPower) 2 399.026 406.327 408.176 Volume of flared gas (MSm3) 4,506 3,762 2,334 Volume of vented gas 25.92 19.69 15.21

(a) The data for 2013 and 2014 include also the N2O emissions due to purchases from other companies.

(b) The data include the indirect GHG emissions (CO2, CH4 and N2O) from drilling operations outsourced by the E&P sector, from the sale of petroleum products and natural gas, from business trips, and road and sea transport outsourced to third parties.

In 2014, greenhouse gas emissions fell overall by 9.8% the reduction of shutdowns in Pakistan.

(equal to -4.7 million tonnes) in line with the reduction Combustion and process CO2 emissions in the E&P sector recorded in all sectors (-11.3% in the E&P sector, -10.2% fell by 2.6%, while CH4 emissions rose (+13.6%) due to in the G&P sector, -16.2% in the Petrochemical sector and the increase in fugitive emissions in Kazakhstan, which in -7.7% in the I&C sector) with the exception of the R&M sector turn resulted in an increase for Eni at the consolidated level where emissions rose by 2.8% in relation to the broadening of (+10%). the consolidation scope to include the former EniPower plant The trend in GHG emissions in the E&P sector remains in Taranto, and the extended operation in 2014 of the EST generally positive also in relation to production, with a plant at the Sannazzaro refinery. reduction in the emissions index of 10%. Eni’s overall performance in relation to GHGs is positively In Europe, within the framework of the Emissions Trading influenced by the results achieved in the E&P sector (a Scheme (ETS), in 2014 Eni’s consolidated greenhouse gas decrease of more than -2.9 million tonnes compared to 2013) emissions were 6% less than those in 2013. The free quotas due to reduced volumes of hydrocarbons flared (-44.8%) assigned in 2014 under the allocation rules in force during and of those vented (-22.7%) with a consequent reduction of the third ETS period (2013-2020) are not, however, sufficient GHG emissions from flaring (-33.5%, equal to more than 2.8 to cover the company’s needs (EniPower in the G&P sector is million tonnes) and venting respectively (-3.2%). particularly affected as, since 2013, it no longer receives free The reduction in the volume of hydrocarbons flared is due quotas except for those related to heat sold to third parties). mainly to the launch of flaring down projects in Nigeria The number of facilities increased from 40 to 43 due to the (launched in September 2013 in Akri and Ogbainbiri) and addition of 3 new plants of the subsidiary Eni Liverpool Bay in Congo (completion of the M’Boundi project in 2014). The Operating Company Ltd in the E&P sector. recorded decrease in the amount of vented gas is attributable The downward trend in the emissions of installations to the implementation of a specific project in Indonesia and to subject to the ETS is occurring in all sectors, with the sole 120 overview | projects and activities | results

exception of E&P where emissions (equal to 7.4% of the GHG emissions other than those due to purchases (so-called total) are increasing (+19.5% compared with 2013) due to Scope 3 emissions) recorded a drop of -3.1% compared the addition of the aforementioned 3 plants and the R&M with 2013, due also to the fall in emissions associated with sector, where they remain relatively stable (+1.7%). Indirect reduced sales.

Energy efficiency

2012 2013 2014 Electricity produced by type of source (EniPower) (TWh) 26.01 23.15 21.05 - of which from natural gas 24.44 21.53 19.72 - of which from oil products 1.57 1.61 1.32 - of which from renewables 0.00 0.01 0.01 Energy consumption from production activities/100% (GJ/toe) 1.557 1.536 1.668 operated gross hydrocarbon production (E&P) Energy Intensity Index (R&M) (%) 76.9 76.3 77.8 Net consumption of primary resources (toe) 14,629,243 14,225,297 12,463,585 - natural gas 10,126,614 9,964,105 9,341,204 - oil products 4,286,526 4,135,871 3,034,550 - other fuels 216,103 125,322 87,8 31 Primary energy purchased from other companies by type (GJ) 83,652,207 59,718,431 53,032,309 - electricity 15,388,688 15,754,341 18,378,010 - primary resources 63,387,463 39,655,649 31,775,816 - steam 4,822,549 4,308,440 2,585,406 - other sources (a) 53,507 0 293,076 Expenditures and investments on energy efficiency and climate (euro thousand) 72,042 75,349 21,249 change (b) - of which current expenses 822 198 155 - of which investments 71,220 75,151 21,094 (a) Including direct process heat, recovery heat and hydrogen. (b) The figure is part of the environmental expenditures and investments set out in the “Environmental Management System” table.

The initiatives to improve energy efficiency include, besides this regard with interventions that, when fully operational, will traditional investments, interventions of a managerial nature allow savings of more than 44 ktoe/year, amounting to more such as the adoption and certification of Energy Management than 70% of the consolidated Eni total. Systems (EMS). In Eni, the ISO 50001 energy management In the R&M sector, energy savings (under standard certification has been awarded to the R&M refineries in operating conditions) of around 12 ktoe were obtained with Livorno, Sannazzaro, Taranto and Venice, the petrochemical the implementation of the new projects in 2014. In the plants in Mantua (awarded in 2014), Oberhausen and petrochemical sector, activities developed in 2014 included

Szazhalombatta, the EniPower plant in Ferrara (awarded in efficiency initiatives with an impact on direct CO2 emissions 2014), the corporate offices of Eni SpA and the E&P company (with savings under standard operating conditions of around United Gas Derivatives (also awarded in 2014). 4.3 toe/year) and also initiatives aimed at reducing energy The energy saving initiatives implemented in Eni between consumption (with savings under standard operating 2008 and 2014 have made possible energy savings of almost conditions of around 1,000 MWh/year). 400 ktoe/year, amounting to a reduction in emissions of more In the G&P sector work continued on improvements to energy

than 1 million tonnes of CO2. The main contributors to this efficiency and the technical and economic optimization of the result are traditionally the refining and petrochemical sectors, use of plants in electricity generation. EniPower also continued but in 2014 the E&P sector played a more prominent role in to invest in renewable energy and alternative sources. performances | reporting principles and criteria | independent auditors’ report 121

Technological innovation

2012 2013 2014 R&D expenditures (euro million) 263 218 199 - R&D expenditures net of general and administrative costs 211 197 186 Tangible value generated by R&D - 937 728 People employed in R&D activities (full time equivalents) (number) 975 986 961 First patent filing applications 74 59 84 - of which filed on renewable sources 21 28 29 Existing patents 8,931 9,427 8,225 Average age of patents (years) 8.86 9.26 8.65

In 2014, Eni’s economic investment in scientific research R&M and Versalis. and technological development activities amounted to 186 In 2014, the entire value created by R&D was taken into million euro (199 million euro if we include general overheads account, whereas in 2013 it was only 77%. The ratio between attributed to research activities and amortizations). the benefits generated by innovation and the costs incurred The tangible value generated by R&D is measured by the by Eni’s R&D activities (net of general and administrative costs economic benefits related to the application of production and of Saipem activities) was 4.2 in 2014 (in 2013 it was 5.2). technologies/process innovation. This overall value is People involved in R&D activities as of 31 December, 2014 understood at 100% of the investment in the technological was equal to 961 resources (full-time equivalents), a slight applications projects and before tax. reduction compared to 2013. The valuations are based on actual data, or alternatively, in With regard to Intellectual Property supporting technological terms of the Net Present Value (NPV), for investment projects innovation, in 2014 a total of 84 new patent applications were that employ innovative technologies authorized by Eni in the filed, 29 of which are directly concerned with developing year and agreed with the lines of business and the competent technologies in the field of renewable energy sources. planning and control functions. The tangible benefits are The size of the total patent portfolio at the end of 2014 identified in a “what if” scenario, namely as the difference is significantly smaller than that for previous years, with derived from comparison with the application of the best an overall decrease of 12.8% compared with 2013. The alternative technology or, in the case of new products, as reduction relates mainly to the E&P and Versalis portfolios, the difference compared to the margin generated by the which were subject to a strategic review in 2014 with a view products replaced. The value created in 2014 through the to rationalizing the company’s intangible assets and focusing Eni’s innovative technologies and products (net of Saipem) on technologies pertaining to the core business or that have amounts to 728 million euro, due to the contributions of E&P, the greatest development potential. 122 overview | projects and activities | results

Reporting principles 3.2 and criteria

Basis of presentation

In a highly complex market context, 2014 marked a of the company, are all reflected in Eni’s reporting turning point for Eni. system, which is structured according to a multi-channel The management reshuffle, the new organizational logic providing for different levels of depth and different structure, the establishment of the Sustainability and communication methods to reach all of Eni’s stakeholders Scenarios Committee, and the strategic repositioning in an effective, timely and immediate manner.

Reporting system

In 2014, the company remained committed to integrated taking into consideration the “Oil & Gas industry guidance reporting, preparing its 2014 Integrated Annual Report in on voluntary sustainability reporting” contents produced by accordance with the principles of the International Integrated IPIECA/API/OGP. Reporting Council’s Framework issued in December The content of this document is also in line with the 2013. The methods used to create long-term value are Advanced Level of the Differentiation Programme and with therefore illustrated by the links between financial and the additional sustainability aspects provided by the Blueprint non-financial elements in company strategies, plans and for Corporate Sustainability Leadership of the UN Global results (see the 2014 Integrated Annual Report). Compact. In order to provide a more in-depth and comprehensive view At Country level, Eni is encouraging local reporting initiatives of the mechanisms used to create value and the contribution by its subsidiaries on sustainability aspects. These initiatives made to achieving the global development goals, Eni decided include the Country report and the launch of new local in 2014 to produce the “Eni for - Sustainable development websites (NAOC in Nigeria, Eni Norge in Norway, KPO in 2014 progress” document. Kazakhstan, Eni in Basilicata) which are of particular interest The document is prepared in accordance with the new “G4 to local and international stakeholders. Sustainability Reporting Guidelines and Oil & Gas Sector The company website, eni.com, provides further information Disclosures” issued by the Global Reporting Initiative (GRI) with on sustainability issues in order to supplement the a self-declared level of compliance “in accordance - core” and information provided in its reports.

Materiality and stakeholder inclusiveness

In 2014, Eni designed a process to ensure that material engagement, to internal and external communication issues are agreed at the highest level and that they are and reporting, and to the implementation of operational considered in all company processes, from integrated decisions. Materiality is the result of a process of risk management, to strategy planning, to stakeholder identification, evaluation and prioritization of sustainability performances | reporting principles and criteria | independent auditors’ report 123

issues that significantly impact on the company’s capacity relation to the impact that they could have both inside and to create value in the short, medium and long term, as outside Eni, as illustrated in the table below. In the coming described in more detail on page 22 of this document. years Eni will focus on the identification and implementation Following these activities, an analysis was carried out aimed of specific actions aimed at expanding the scope of the at identify the boundary of the various material aspects in material aspects collection and reporting.

Aspect Boundary Inside the Outside the Material aspects (G4 disclosure) organization organization Limitations Economic performance  Market presence  Indirect economic impact  Procurement practices  suppliers Reporting not extended to suppliers Energy  Water  Effluents, Biodiversity  suppliers, Emissions  Reporting partially extended to suppliers customers Occupational health and safety  suppliers Training and education  local security Security practices  forces Supplier Human Rights Assessment, Supplier Environmental Assessment,  suppliers Reporting not extended to suppliers Supplier Assessment for Labor Practices Local communities  Anti-Corruption  suppliers Reporting partially extended to suppliers Asset Integrity and Process Safety  (sector disclosure) Fossil fuel substitutes (sector disclosure)  124 overview | projects and activities | results

Reporting boundary and sustainability context

This document contains Eni’s consolidated performance specifically indicated in the text. With regard to data on indicators for the 2012-2014 period and an analysis of health, safety and the environment, the consolidation scope the related trends. The information included relates to Eni is defined on the basis of the operational criterion (control SpA and its consolidated subsidiaries. The consolidation of operations). For example, under this approach, emissions perimeter is the same as that for the 2014 consolidated reported represent 100% of the emissions for each financial statements, with the exception of certain data installation operated by Eni.

Quality principles for sustainability reporting

The performance data shown have been reported with the aim previous years were also checked and updated by the of giving a balanced and clear picture of company actions and respective data owners. Therefore, any changes in 2012 and characteristics. 2013 data as compared to those published last year are due Information and quantitative data collection process has been mainly to these adjustments. structured to ensure comparability of data across several The data were collected using a dedicated information system, years, to enable a correct reading of the information and which guarantees the reliability of information flows and a complete view for all the stakeholders interested in Eni’s accurate monitoring. performance. This process is based on the measurement The Report was subject to a limited assurance engagement methods defined in the reporting procedures: lower or by an independent company, auditor of Eni Group’s different levels of accuracy are indicated in the margin for consolidated financial statement as of 31 December, 2014. the data presented. When entering the data for each subject The audited data and information are marked with the “External area, in addition to the data for the reporting year, the two Assurance” label in the “GRI Content Index” (see eni.com).

Calculation methods

The methods used to calculate value added, the injury The frequency index is calculated as the ratio between the frequency and severity rates, the refining energy intensity number of injuries leading to absence from work (including index, the emission indices and the value generated by fatalities) and millions of hours worked; the severity index is research are shown below. defined as the ratio between days of absence due to injuries Value added represents the wealth generated by the company (excluding fatalities) and thousands of hours worked. in carrying out its activities. The method chosen for this The refining energy intensity index represents the total report is total value added net of amortization. Total net value of energy actually used in a given year in the various value added is divided between the following beneficiaries: refinery processing plants, divided by the corresponding employees (direct remuneration composed of wages, salaries value determined on the basis of predefined standard and provisions for severance payments (TFR) and indirect consumption values for each processing plant. For remuneration consisting of social welfare contributions); comparison between years, the data for 1994 have been Public Administration (income tax); financial backers taken as the baseline (100%). (medium and long-term interest paid for the availability of In order to highlight medium and long-term sector specific

borrowed capital); shareholders (dividends distributed); and performance on CO2 and pollutants emissions water the company (retained earnings). withdrawals and energy efficiency, three indices have With regard to safety performance, injury frequency and been defined to represent the following operating contexts: severity rates are shown for employees and contractors. hydrocarbon production, refining and electricity generation. performances | reporting principles and criteria | independent auditors’ report 125

These indices take into account the substantial differences innovation. This overall tangible value is applied to 100% in working conditions recorded over the years and allow for of the investment in the technological applications projects performance comparison by normalizing emissions based and is before tax. The benefits may be identified based on on operating data. actual results (final values) or expected value (net present The refining indices are calculated from the equivalent value - NPV). The assumptions applied on a case by distillation capacity provided by a third party; the hydrocarbon case basis for the calculation are shared with the relevant production indices cover gross operated production; and the technical structures/business units. energy sector indices measure electrical and thermal energy The tangible benefits are identified in a “what if” scenario, that produced in equivalent kWh. Greenhouse gas emissions is as the difference (delta) derived from comparison with the

(GHG) relate to CO2, CH4 (methane) and N2O (nitrous oxide); application of the best alternative technology or, in the case methane and nitrous oxide are converted into CO2eq using a of new products, as the difference compared to the margin Global Warming Potential (GWP) of 21 and 310 respectively. generated by the products replaced. Intangible benefits are The method for assessing the value generated from research recognized by assessing on the one hand the effectiveness allows the benefits of R&D to be calculated in terms of both and efficiency of the company’s innovative capacity over time tangible and intangible value. through the number of first filings of patent applications, and The tangible value is measured by the economic benefits on the other by the diffusion of specialized know-how and the related to the application of product technologies/process effectiveness of research in supporting operating activities. 126 overview | projects and activities | results

Independent Auditors’ 3.3 Report performances | reporting principles and criteria | independent auditors’ report 127 128 overview | projects and activities | results eni spa

Registered Office Piazzale Enrico Mattei, 1 - Rome - Italy Share capital: € 4,005,358,876.00 fully paid-up Business Register of Rome taxpayer’s code 00484960588

Other Branches Via Emilia, 1 San Donato Milanese (MI) - Italy

Piazza Ezio Vanoni, 1 San Donato Milanese (MI) - Italy

Page layout and supervision Korus Srl - Rome

Print Primaprint - Viterbo

Printed on XPer Fedrigoni paper Relazione Finanziaria Annuale 2014 Annual Report 2014

*00157* *00158*

Fact Book ITA 2014 Fact Book ING 2014

*00159* *00160*

Eni In 2014 Eni For ITA 2014

*00161* *00162*

Eni For ING 2014 Relazione sul Governo societario 2014 ITA

*00163* *00164*

Relazione sulla Remunerazione 2015 ITA Relazione sul Governo societario 2014 ING