Operational risks

The risks discussed in this section are as follows:

Health and safety

The main health and safety risks to which Enel personnel and contractors are exposed are associated with operations at the Group’s sites and assets. The violation of the laws, regulations and procedures governing health and safety, work environments, management of corporate structures, assets and processes, which could have an adverse impact on the health of employees, workers or stakeholders, can give rise to the risk of incurring administrative or judicial penalties and related economic, financial and reputational impacts. These risks were identified through an analysis of the main events that have occurred in the last three years. In particular, in terms of probability of occurrence, mechanical incidents (falls, collisions, crushing and cuts) are the most common, while the most severe in terms of potential associated impact are electrical incidents (possibly fatal injuries).

In addition, in relation to the presence of the Group in different areas of the world, employees and contractors could be exposed to health risks connected with potential emerging infectious diseases of a pandemic and potentially pandemic nature, which could have an impact on their health and well-being.

Enel has adopted a Declaration of Commitment to Health and Safety, signed by the Group’s top management.

In implementing the policy, each Group Business Line has its own Occupational Health and Safety Management System compliant with the international standard BS OHSAS 18001, which is based on the identification of hazards, the qualitative and quantitative assessment of risks, the planning and implementation of prevention and protection measures, the verification of the effectiveness of the prevention and protection measures and any corrective actions. This system also considers the rigor employed in the selection and management of contractors and suppliers and the promotion of their involvement in programs for continuous improvement of safety performance.

The Enel Group has defined a structured health management system, based on prevention and protection measures, which also plays a role in the development of a corporate culture aimed at promoting the psycho-physical health and organizational well-being of workers, as well as helping to balance personal and professional life.

Furthermore, with regard to emergencies relating to health, safety and the environment, a unit has been set up within the HSEQ department of the Parent with liaisons in each Business Line and Country in order to ensure the definition of the global strategy and policies for emergency management and their adoption in every Group organization. In particular, this organizational structure and the related management processes make it possible to direct, integrate and monitor, both at Group level and in the individual countries in which it operates, all the prevention, protection and intervention actions aimed at protecting the health of employees and contractors, also in relation to exogenous health risk factors that may not be strictly related to work activities.

Environment

Recent years have seen the continuation of the growth in the sensitivity of the entire community to risks connected with development models that impact the quality of the environment and ecosystems with the exploitation of scarce natural resources (including raw materials and water).

In some cases, the synergistic effects between these impacts, such as global warming and the increasing exploitation and degradation of water resources, have increased the risk of environmental emergencies in the most sensitive areas of the planet, with the risk of sparking competition among different uses of water resources such as industrial, agricultural and civil uses.

In response to these needs, governments have imposed increasingly restrictive environmental regulations, placing ever more stringent constraints on the development of new industrial initiatives and, in the most impactful industries, incentivizing or requiring the elimination of technologies no longer considered sustainable.

In this context, companies in every sector, and above all industry leaders, are ever more aware that environmental risks are economic risks. As a result, they are called upon to increase their commitment and accountability for developing and adopting innovative and sustainable technical solutions and development models.

Enel has made the effective prevention and minimization of environmental impacts and risks a foundational element of each project across its entire life cycle.

The adoption of ISO 14001-certified environmental management systems across the entire Group ensures the implementation of structured policies and procedures to identify and manage the environmental risks and opportunities associated with all corporate activities. A structured control plan combined with improvement actions and objectives inspired by the best environmental practices, with requirements exceeding those for simple environmental regulatory compliance, mitigate the risk of impacts on the environment, reputational damage and litigation. Also contributing are the multitude of actions to achieve the challenging environmental improvement objectives set by Enel, such as those regarding atmospheric emissions, waste production and water consumption, especially in areas with high water stress.

The risk of water scarcity is directly mitigated by Enels development strategy, which is based on the growth of generation from renewable sources that are essentially not dependent on the availability of water for their operation. Special attention is also devoted to assets in areas with a high level of water stress, in order to develop technological solutions to reduce consumption. Ongoing collaboration with local river basin management authorities enables us to adopt the most effective shared strategies for the sustainable management of hydroelectric generation assets.

Finally, appropriate terrestrial, marine and river monitoring actions are being implemented in ecosystems to verify the effectiveness of the measures adopted to protect, restore and conserve biodiversity.

Procurement, logistics and supply chain

The purchasing processes of Global Procurement and the associated governance documents form a structured system of rules and control points that make it possible to combine the achievement of economic business objectives with full compliance with the fundamental principles set out in the Code of Ethics, the Enel Global Compliance Program, the Zero-Tolerance-of-Corruption Plan and the Human Rights Policy, without renouncing the promotion of initiatives for sustainable economic development.

The procedures governing procurement processes are all designed to ensure conduct imbued with the utmost respect for key values such as loyalty, professionalism, collaboration, transparency and traceability of decision-making processes.

These principles have been incorporated into the organizational processes and controls that Enel has voluntarily decided to adopt in order to establish relationships of trust with all its stakeholders, as well as define stable and constructive relationships that are not based exclusively on ensuring financial competitiveness but also take account of best practices in essential areas for the Group, such as the avoidance of child labor, occupational health and safety and environmental responsibility.

 

In this sense, the Global Procurement procedural system guides the daily operations of the various procurement units, which by systematically adopting tender procedures ensure maximum competition and equal access opportunities for all vendors meeting the specified technical, economic/financial, environmental, safety, human rights, legal and ethical requirements.

 

The supplier qualification system applies to the entire Enel Group and governs compliance with the aforementioned requirements. Enel uses the qualification systemeven before the procurement process begins – to verify that its potential suppliers are in line with its strategic vision and expectations in all the areas mentioned and that they are inspired by the same values.

The global supplier qualification system enables the accurate assessment of companies wishing to participate in procurement procedures and represents a guarantee for Enel, since it gives the Group an updated list of suppliers of proven reliability to draw from and makes it possible, in compliance with applicable regulations, to call on suppliers in procurement tenders initiated by Group companies. The qualification procedure is completed by the Supplier Performance Management process, which monitors supplier performance with regard to the appropriateness of their conduct during the tender, quality, punctuality and sustainability in the execution of the contract.

Direct procurement without a competitive tender can only be used in exceptional cases, duly motivated, in compliance with applicable legislation.

 

The effectiveness of supply chain risk management is monitored using a number of performance indicators (including the concentration of contracts with individual suppliers or industrial groups, the suppliers dependence on Enel, the turnover rate of suppliers, etc.), for which thresholds are specified that guide the definition of the procurement strategy.

 

The actions taken to counter the impact of the COVID-19 emergency have focused in differentiating supply sources to avoid interruptions in the supply chain and the remote performance of activities that would ordinarily require physical interaction between Enel and the supplier (e.g. inspections at the company).

People and organization

The profound transformations of the energy sector, which has experienced sweeping technological developments, require companies in the industry to recruit people with new experience and professional skills, as well as imposing the need for major cultural and organizational changes. Organizations must move to adopt new, agile and flexible business models. Policies to enhance diversity and to manage and promote talent have become key factors for companies that are managing the transition and have a widespread geographical presence.

Enel places the people who work for it at the center of its business model: the management of human capital is a priority for which specific objectives have been established. The main goals include: the development of the digital capabilities and skills made necessary by the Fourth Industrial Revolution, as well as the promotion of reskilling and upskilling programs for employees in order to support the energy transition; the effective involvement of employees in the pursuit of the corporate purpose, which ensures the achievement of better results while offering greater satisfaction to our people; the development of systems for evaluating the working environment and performance; the dissemination of diversity and inclusion policies to all countries in which the  Group operates, as well as instilling an inclusive organizational culture based on the principles of non-discrimination and equal opportunity, a key driver in ensuring that everyone can make an effective contribution. In addition, Enel is developing specific initiatives to foster the diffusion of agile working methods in business processes. The Group is committed to enhancing the resilience and flexibility of organizational models through simplification and digitalization in order to enable the effectiveness and autonomy of our people within new flexible working schemes, which have already been effectively tested in the response to the COVID-19 pandemic emergency, which will be a key element of future approaches to work.

Compliance

The risks discussed in this section are as follows:

Risks connected with the protection of personal data

In the era of the digitalization and globalization of markets, Enel’s business strategy has focused on accelerating the transformation towards a business model based on a digital platform, using a data-driven and customer-centric approach implemented along the entire value chain.

The Company, which is present in more than 40 countries, has the largest customer base in the public services sector (about 70 million customers), and currently employs some 67,000 people. Consequently, the Group’s new business model requires the management of an increasingly large and growing volume of personal data in order to achieve the financial and business results envisaged in the 2021-2023 Strategic Plan.

This exposes Enel to the risks connected with the protection of personal data (an issue that must also take account of the substantial growth in privacy legislation in most of the countries in which Enel operates). These risks may result in the loss of confidentiality, integrity or availability of the personal information of our customers, employees and others (e.g. suppliers), with the risk of incurring fines determined on the basis of global turnover, the prohibition of the use of certain processes and consequent financial losses and reputational harm.

In order to manage and mitigate this risk, Enel has adopted a model for the global governance of personal data that provides for the establishment of positions responsible for privacy issues at all levels (including the appointment of Data Protection Officers at the global and country levels) and digital compliance tools to map applications and processes and manage risks with an impact on protecting personal data, in compliance with specific local regulations in this field.