1 Consolidated Non-Financial Reporting Drawn up Pursuant to Articles 3
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Consolidated non-financial reporting drawn up pursuant to articles 3 and 4 of Italian Leg. Decree 254/2016 1 Content Sustainability, Strategy and Shared Value ...................................................................... 5 Letter to stakeholders 5 About us 8 Sustainability for the Hera Group 11 Sustainability KPIs 16 Shared value 17 Shared value .................................................................................................................... 24 Smart use of energy 24 Objectives and performance 24 Promotion of energy efficiency 26 Spreading renewable energy 35 Reduction of greenhouse gas emissions 42 Case study 47 Efficient use of resources 50 Objectives and performance 50 Transition to a circular economy 52 Sustainable management of water resources 84 Case study 94 Innovation and contribution to development 105 Objectives and performance 105 Spreading innovation and digitalization 108 Economic development and social inclusion 122 Development of occupation and new expertise 136 Air and soil protection 144 Case study 158 Bases and organisational levers .................................................................................. 171 Governance and creation of value 171 Objectives and performance 171 Sustainability and risk management 171 Economic value for the stakeholders 187 Shareholders and financial institutions 190 Dialogue with our stakeholders 199 Quality, cost and safety of customer services 216 Objectives and performance 216 Customers 217 Cost of services 219 2 Service quality 230 Quality of drinking water 234 Safety and continuity of the service 238 Customer relations 243 Case study 248 People 250 Objectives and performance 250 Planning of roles and skills, selection and onboarding 251 Management of the skills and training 256 Development of the individuals 260 Welfare, diversity and inclusion 265 Health and safety 270 Industrial relations 274 Case study 279 Suppliers 282 Objectives and performance 282 Suppliers 282 Qualification, selection and assessment of suppliers 284 Contract management 297 Supplier relations 299 Case study 299 Focus on shared value, area by area ........................................................................... 301 Methodological guide to the Report ............................................................................. 310 GRI contents reference table ........................................................................................ 320 Independent Auditors’ Report ...................................................................................... 325 Annexes .......................................................................................................................... 326 3 Analytical list of contents Absence ............................................................ 256 Members of unions .......................................... 280 Approach to sustainability .................................. 12 Methodological guide .............................. 315; 330 Balanced scorecard ..................................... 14; 266 Organisational model for corporate crime Biodiversity ....................................................... 159 prevention ....................................................... 185 Branch offices ................................................... 247 Pending legal proceedings ............................... 211 Certified suppliers............................................. 288 Protection of personal data ............................. 249 Climate survey .................................................. 204 Qualification of the suppliers .......................... 286 Code of Ethics ................................................... 187 Quality of readings ........................................... 234 Collection of bulky waste ............................. 60; 61 Relations with Local Authorities ...................... 214 Commercial Conduct ........................................ 220 Relations with the investors ............................ 194 Communication ................................................ 208 Remuneration .................................................. 262 Complaint management ................................... 248 Risk analysis ..................................................... 180 Consumer groups and trade associations ........ 204 Safety downstream of the meter .................... 245 Continuity of the electricity service .................. 240 Shareholding structure breakdown ................. 198 Continuity of the water service ........................ 245 Social cooperatives .......................................... 137 Control of the suppliers .................................... 289 Social Cooperatives .......................................... 136 Corporate governance ...................................... 173 Stakeholders .................................................... 201 Corporate Management system ....................... 187 “takeholders dialogue ad osultatio Corporate vehicle fleet ..................................... 155 initiatives ......................................................... 201 Cost of services ................................................. 221 Stock Performance........................................... 192 Disposal of municipal waste ............................... 65 Strikes .............................................................. 281 Dispute Resolution ........................................... 249 Sustainability KPIs ............................ 331; 332; 333 District heating ................................................. 151 Tariffs for families facing hardship .................. 133 District heating bill ............................................ 232 Tenders involving economically advantageous Electric transportation ...................................... 159 bids................................................................... 291 Electricity bill .................................................... 225 Thermal energy produced ................................. 39 Energy Efficiency ................................................. 28 Total energy produced................................. 40; 41 Expense for waste collection and disposal ....... 229 Waste prevention initiatives ........................ 62; 63 Gas bill .............................................................. 224 Waste produced ................................................ 83 Green Bond ................................................. 41; 198 Water consumption ........................................... 89 Health and safety .............................................. 272 Water leak fund ............................................... 164 HeraLab ............................................................. 206 Water network components ............................. 86 Imola plant emissions ....................................... 154 Water network losses ........................................ 87 Invoicing quality ................................................ 236 Water service bill ............................................. 227 Litigation ...................................216; 249; 281; 301 Website ............................................................ 209 Media relations ................................................. 210 Work accidents at suppliers............................. 300 4 Sustainability, Strategy and Shared Value Letter to stakeholders Our sustainability reporting: confirmations and new ideas The sustainability report that we are presenting reinforces the innovative contents introduced in 2017 which focused on creating shared value (CSV). The positive results that we have been able to report once again this year and the new targets set for the future are our responses to the important environmental, social and economic challenges that the communities we serve are facing. Consistent with the goal of further improving our accountability profile, the report includes new pages where results are presented by single area served. A fifth report has been added to our thematic sustainability reports which focuses on Goal 17 of the UN Agenda. It deals with the large range of activities that involve Hera and the citizens and entities of the communities we serve. A new purpose: business strength to regenerate the ecosystem and the environment The economic, social and environmental changes we are currently witnessing and that are in some ways of epoch-making significance, are so profound that it is not enough for companies to simply contain the negative impact of their work. Furthermore, in a context where institutions struggle to create effective shared solutions, communities have growing expectations towards the world of business, which is increasingly called upon to address the social and environmental challenges ahead of us. We believe that the answer lies in our approach towards the creation of shared value. This approach calls for reconsidering the connection between CSR and business strategy, bringing the former at the very heart of the latter. While CSR had so far considered the what and how of business - i.e. it was reactive -, shared value focuses on why, embracing the actual reason why the company exists - its mission and strategy - and the qualifying aspects that make it stand out from others. We believe that the companies of the future are those that use business strength to regenerate the ecosystem and the environment. We will use our best endeavours to make Hera become one of them. Reporting: from