developing the core business through organic growth (network construction and maintenance and an increase in the number of redelivery points served), M&As, Minimum Geographical Areas (ATEMs) for conducting tenders and assigning the gas distribution service, calculated as 177 pursuant to the definition of Article 1 of the Ministerial Decree of 19 January 2011. The Municipalities belonging to tenders and opportunities abroad;
digital transformation and technological innovation, which also enable Italgas to play a key role in the energy transition;
seeking new opportunities for growth in the sectors of energy efficiency and the integrated water service, using all the Group’s expertise;
maintaining a sound and efficient financial structure to support the growth opportunities and continue to ensure adequate return for shareholders.
These objectives involve the entire Group in an overall, consistent effort, and are inspired by a model that integrates the sustainability principles at all levels. ESG topics are in fact the matrix in which the four drivers of the Plan are inserted, as well as being the keystone that links them together, guiding investment choices. Choices that meet the environmental, social and governance sustainability criteria and serve to give Italgas a leading role in the processes of energy transition towards the decarbonisation of the economy and consumption, while continuing to ensure the continuous creation of value for shareholders and the local areas where the company is present and operates.
Innovation and sustainability as the foundations for the future
The growth of Italgas, the contribution of the Group’s assets to the creation of the net-zero energy mix envisaged by the European Union for 2050 and the very future of the gas distribution sector itself continue to revolve around digital transformation. That is why Italgas has allocated a further € 1 billion to the digitisation of assets and processes, as well as to the reskilling of its people, in the 2020-2026 Strategic Plan. This commitment will be reflected in an overall investment of around € 2 billion in 2022, making the company the world’s first utility with a fully digitised network. A digital network is an infrastructure with built- in devices capable of giving and receiving information and can be controlled remotely and in real time. It is a necessary condition for the accommodation and distribution of renewable gases other than methane, such as hydrogen, biomethane and synthetic methane.
Italgas has chosen to transfer this important knowledge base, together with the best practices acquired in gas distribution, to other similar business areas, with the aim of fostering an efficiency boosting process. Within this context, € 240 million of investments was allocated to extending the digital skills to the water network management and energy efficiency sectors, in which the associated companies Italgas Acqua and the ESCos Seaside and Toscana Energia Green operate. In the water sector, the aim is to further improve the quality and efficiency of managed networks by means of a two-level intervention plan. On the one hand, by installing “water smart meters” to replace traditional meters for the 30,000 users served; and on the other, through the widespread installation of sensors along the networks, to enable the monitoring of all operational parameters of the infrastructures at all times, prompt and increasingly accurate detection of any faults and fast intervention in the event of leaks. Similarly, digital know-how is being rapidly and effectively put to use with the launch of various innovative projects aimed at saving energy and reducing the carbon footprint of consumptions. One such project is “Savegas”, a service offering energy efficiency measures for buildings, with a turnkey system to cut bills by up to 20%.
Digital transformation also concerns processes and people. In the case of the processes, driving this great change is the Italgas Digital Factory, which, operative since late 2018, has also continued working during lockdown. Inside the Digital Factory, physical and virtual rooms work in agile mode to digitise the company’s processes, creating a number of innovations that have further improved day-to-day operations. A practical example of this is the WorkOnSite application, one of the many created by the Digital Factory, which uses artificial intelligence to verify the conformity of worksites and the progress of works remotely (which was crucial in enabling the rapid reopening of worksites following the lockdown); or ShareView, smart glasses that allow technical experts to support their colleagues even from a great distance, so they can share their knowledge.
As for the people, all Italgas employees have now been provided with at least one mobile device and are involved in training, refresher and digital reskilling programmes. This approach proved invaluable during lockdown, to rise swiftly to the challenges of reorganising work and increase everyone’s skills. Moreover, with masses of data being collected from our infrastructures, people need to be in a position to interpret and use them in the best possible way.
Sustainability is therefore pivotal to the company’s business: it is at the heart of the Group’s operational and strategic decisions and, in the long-term, ensures consistency with the principles of respect for the environment, development of people and empowerment of the local communities. In this regard, we can see why, when defining the strategic drivers for 2026, Italgas was guided by the five pillars that represent the basic principles of sustainability with which the company has identified from day one: nurturing an ESG culture, choosing to put people first, creating value for the local area, customers and the market, and helping to make the system safer and more effective. These pillars are translated into objectives and measures for short- to medium-term implementation. They are also the source of the specific policies officialising the company’s commitment, including:
The sustainability and stakeholder engagement policy, which defines its vision on environmental, social and governance topics relevant to the corporate identity;
The Corporate Citizenship Policy, to further consolidate support for the local communities;
The Diversity and Inclusion Policy, to promote matters of diversity and encourage progress and innovation;
The Human Rights Policy, protecting human rights and equal opportunities;
The HSEQE Policy, to promote full compliance with the standards protecting health, safety, the environment and energy performance;
Policy for managing dialogue with all shareholders.
These policies are periodically updated and supplemented.
The target of a zero-emissions economy by 2050, set by the European Union as part of the Green Deal, has made it urgent for the individual Member States to decarbonise consumptions and reduce the carbon footprint of all manufacturing activities to zero. This urgency is also a great opportunity to ensure a better future for the younger generations.
This is the challenge posed by the transition in progress, which, in terms of energy, translates into a circular economy model based on energy vectors that are decreasingly dependent on non-renewable sources and serve to promote the recycling of agricultural, municipal and industrial waste. Against this backdrop, the role of gas distribution networks will remain crucial, thanks to their widespread nature that makes them strategic assets for the transportation of renewable gases such as hydrogen, biomethane and synthetic methane (e-gases), in the not-too-distant future.
It is common knowledge that digitisation is the true enabler of this process in the gas distribution sector. Digitisation increases efficiency, improves safety, network management and the quality of the service, enables predictive maintenance, for more effective control of the operating parameters, and helps guarantee operation under any conditions.
Having successfully completed the first phase of this transformation process, Italgas is now faced with essentially three challenges:
The methanisation plan being implemented by the Group in Sardinia is a perfect example of the new generation of infrastructures devised by Italgas. The networks we are constructing on the island – “digital native” with built-in sensors, designed to accommodate fibre-optic cables – are set to transform gas distribution in Italy and Europe.
Reducing fugitive emissions is another essential challenge to enable the gas sector to meet European environmental targets. From this perspective, the commitment and results of Italgas are unrivalled in Europe. In 2018, the company used Picarro Surveyor, the most cutting-edge technology in the field of network monitoring and the detection of gas leaks; last year, it launched a trial based on the use of drones and satellite images to monitor the above-ground portion of difficult-to-access pipelines, without interrupting the traditional scouting work carried out worldwide to identify new technologies and solutions aimed at making the detection of fugitive emissions increasingly accurate and effective.
Lastly, Power-to-Gas technology is another way in which gas and electricity sectors are merging, able to offer important solutions to back up the inflexible nature of renewables. With Power to Gas, surplus electricity produced from these sources can be stored and handled in the form of green hydrogen or synthetic methane through the gas networks. This is an important development that gives the storage of renewable energies a spatial, as well as temporal, dimension. Based on the above, Italgas has set up a Power to Gas pilot project in Sardinia, the biggest in Italy, in collaboration with major partners from the world of scientific research. The project launch is scheduled for 2022.
THE SUSTAINABILITY PLAN
The Sustainability Plan, which has reached its third year, consists of 5 key pillars, 12 objectives and short- to medium-term actions aimed at achieving these objectives. In 2020, 41 such actions were carried out.
The fundamental pillars forming the basis of Italgas’ sustainability structure are:
For a Sustainable future: international initiatives and working tables
Since 2018, Italgas is an official member of the Global Compact, the initiative created 20 years ago by the then United Nations Secretary-General Kofi Annan, to promote a sustainable global economy which encourages companies to adopt strategies consistent with development increasingly geared towards social and corporate responsibility. The Global Compact encourages companies all over the world to create a network for sustainable development. To do this, it requires participating companies and organisations to act in accordance with the 10 universal principles of the Global Compact, which refer to human rights and labour, environmental protection and the fight against bribery.
Oil and gas methane partnership initiative – ogmp 2.0
In 2020, Italgas officially joined the second edition of the Oil and Gas Methane Partnership Initiative (OGMP 2.0), the voluntary initiative aimed at helping companies cut methane emissions in the Oil&Gas sector, created by the Climate and Clean Air Coalition (CCAC) and by the United Nations Environmental Programme (UNEP) and launched for the first time during the United Nations (UN) Secretary-General’s Climate Summit in 2014.
From 2020, the initiative was extended to sectors midstream and downstream of the O&G chain, therefore also including all natural gas transportation and distribution activities. The OGMP 2.0, which remains a voluntary initiative, essentially strives to encourage participating companies to adopt increasingly effective and incisive methodologies to control, measure and reduce emissions. To this end, the OGMP requires participating companies to define increasingly accurate company protocols such as to bring about, within five years, a cut in emissions in line with the greenhouse gas emissions reduction targets set by the COP21 conference in Paris, consistent with a 45% cut by 2025, taking the 2015 values as the baseline.
Participating companies are required to report emissions data with an increasing degree of accuracy on five different levels, starting with the overall data on plants managed, calculated based on standard emission factors, right up to, at the end of the final year, accurate information measured at site-level, for each specific type of plant and material used by the company when carrying out its operations. This major effort is in line with the objectives for continual improvement that Italgas has undertaken in recent years.
In return, companies participating in the OGMP obtain the recognition of a “gold standard” in the management of methane emissions, initially in connection with adherence to the initiative and subsequently confirmed based on the actual progress made towards achieving the announced reduction targets.
During the official presentation of the OGMP 2.0, held on 23 November 2020, attended by the Executive Director of the UNEP, Inger Anderson, the EU Commissioner for Energy, Kadri Simson, the President of the Environmental Defense Fund, Fred Krupp, and the Nigerian Environmental Minister, Mohammad Mahmood Abubakar, Italgas showed its commitment as a company in the Downstream sector on a global level, thanks to the participation of the CEO, Paolo Gallo.
OGMP member companies, including Italgas, are working on defining individual voluntary targets to reduce methane emissions by 2025. These targets are set to be communicated to the UNEP in spring 2021.
Statement from Business Leaders for Renewed Global Cooperation
In 2020, Italgas, in the person of its CEO, Paolo Gallo, signed the “Statement from Business Leaders for Renewed Global Cooperation”. This important statement, promoted to mark the 75th anniversary of the United Nations, bears witness to Italgas’ commitment to achieving an increasingly sustainable, transparent and inclusive business model, year after year. Italgas decided to sign the Statement, which aims to boost the principles of inclusive multilateralism and cooperation around the world by focusing on the three key dimensions of the ESG (environmental, social and governance). The objectives and ideals represent the line of action of Italgas and of many of the world’s top companies. The statement was signed by more than 1,000 CEOs from all sectors and countries to mark the anniversary of the United Nations. An anniversary that came at one of the most difficult times the world has lived through in recent economic and social history, but which made the sense of common purpose demonstrated during the meetings with the UN representatives and the companies which, year after year, pursue the Sustainable Development Objectives (SDSs), even more necessary.