Letter to stakeholders
Our 2017 sustainability report… is completely new: the scenario and our answers
We are proud to present this year a completely new sustainability report which allows us – once again – to testify our strong commitment to a system of accountability and the central role we assign to measuring the results achieved and the impacts generated, with the aim of identifying room for improvement and effectively communicating with our stakeholders.
Our sustainability report for 2017 offers a new and cutting-edge representation of its content, which focuses on the creating shared value (Csv), in line with the strategic approach towards sustainability we established in 2016. From this perspective, the results achieved by the Group and our future targets are brought together – for the first time – with a summary of the scenario regarding sustainability, taking into account the size of Hera’s businesses, in order to represent our positioning and provide our own response to the important challenges faced by the communities for whom we work.
Our new strategic approach works: shared value Ebitda is up by 10%
In 2016, we acknowledged that our vision of Csv was inspired by Porter and Kramer and the latest EU communication on Csr: shared value is created by business activities which generate Ebitda for the company and respond to the drivers of the global agenda as well. These activities respond, more specifically, to those calls to action for change towards a sustainable growth indicated by the UN’s 2030 Agenda and other global, European, national and local policies. This definition of Csv is the basis for our new and evolved approach to sustainability, which, along with renewing our non-financial reporting, also represents for us an important guideline for future strategy and new planning.
We have identified three drivers for creating shared value: (i) smart use of energy, (ii) efficient resource management and (iii) innovation and contribution to local sustainable development. These drivers also represent for us a new reference for a new aggregation of economic results. 2017 shared value Ebitda reached 329 million euro, up 10% over 2016. This outcome is part of the trajectory marked by the 2017-2021 Industrial Plan, which was devised in such a way for about 40% of Ebitda to come from Csv activities by 2021.
In line with this perspective, in 2017 we acquired new tools for comparison and inspiration, by joining programs such as the UNGC CEO Water Mandate and the Ellen MacArthur Foundation’s CE100, the global network of the 100 companies most committed to the transition towards a circular economy.
Hera for a smarter use of energy: energy efficiency is a priority for us and our clients
Our initiatives in the framework of Iso 50001, presented in detail in our report “Value to Energy”, allowed for a reduction of energy consumption reaching 8,300 toe, i.e. -3.6% compared to 2013. The plan for improvement provides for further energy efficiency initiatives which will allow an overall savings of 4.4%, close to the 5% target set for 2020.
A number of energy efficiency initiatives are also implemented between customers and business partners, to whom we offer our know-how. In 2017 seven new agreements were signed with trade bodies and local companies. Additional new commercial offers launched in 2017 integrated this set of proposals, allowing our clients to analyse and reduce their consumption.
The extension of the exclusive use of renewable electricity to AcegasApsAmga and Marche Multiservizi to supply power to their business activities, the opening of the construction site for building the plant for biomethane production in Bologna, the production of 607 GWh of renewable energy and the carbon footprint for energy production dropping by 16% compared to 2015 all integrate, without completing, the framework of our contribution to countering climate change.
Hera for an efficient use of resources: a relevant role in the transition towards a circular economy
In 2017, the Group further improved its contribution to the development of a circular economy and achieved the EU’s goals well in advance. In particular, the use of landfills for disposal of urban waste further decreased to 7%. This outcome confirms that we have reached EU’s goal almost 20 years in advance and places our region on the same level of the best-performing European countries. Separate waste collection reached 57.7%, five points over the national average.
The seventh edition of the report “Retracing Waste”, verified by Dnv-GI, provides guarantees to the users we serve as to an effective recovery of collected separate waste, which rose further and topped at 94.6%. The report provides a further contribution to evaluating the position of the territory served in comparison with the EU’s recycling goals: the total recycling rate of 48% ranks well in comparison with the aim of 55% for 2025, while the packaging recycling rate of 68% has already exceeded the goal for 2025. For the first time, this outcome was aided by the contribution of Aliplast, which produced about 103 thousand tons of recycled plastic in 2017.
Moreover, our strong commitment to the sustainability of the sewage treatment system made progress in 2017. Our main projects were focused on Rimini and Trieste, upgrading the Servola treatment plant in the latter city (as of March 2018). Finally, the long-term plan for upgrading urban areas continued: 91% of urban areas (100% in Emilia-Romagna) were upgraded by the end of 2017.
Hera for innovation and sustainable development of the local area: important results in 4 areas of impact
In 2017 we obtained meaningful results in Csv areas linked to economic and job development of the local area, innovation, digitalisation and air and soil protection.
The share distributed to local providers reached 66% of total results, coming to 592 million euro (+6% over 2016), while about 6,500 new jobs were created. This data confirms our major role in developing the local area. As far as new jobs are concerned, 807 people facing hardship were hired in 2017, also recording a further increase.
Investments in innovation are equal to 78 million euro, for projects in four areas: smart city, circular economy, utility 4.0 and customer experience. In the smart city area we highlighted smart eco-friendly islands, monitoring environmental quality, video monitoring and IT and mobility services. In the circular economy area, in 2017 we launched three projects aimed at recovering material or energy from wastewater sewage sludge, and the Biorefinery 2.0 project.
As far as digitalisation is concerned, along with a number of projects aimed at further digitalising operational processes, in 2017 our commitment to the development of digital channels for customer relations continued. Relations with customers are also characterized by the constant increase of customers registered in our online service (19%) and e-billing service (20%). Our commitment to this topic, along with attention to local communities, involved launching a new promotional campaign for e-billing – named Digi e Lode – including economic bonuses for digitalisation in local schools.
Air protection confirms its prior positive results: the ten waste-to-energy plants managed have an average level of emission into the atmosphere which is 86% below legal limits, and the co-generation plant in Imola has an average concentration of PM10 which is 99% below legal limits. Finally, regarding soil protection, the planning introduced by HeraTech in 2016-2017 reused 75% of all soil.
In conclusion, our results in measuring the creation of shared value, which we can now report in a new and cutting-edge way, give us the confidence to state that 2017 was an important milestone along our path of growth and, for various reasons, represented a new starting point. We are also aware that it is fundamental to maintain our commitment to the other dimensions which complete our social responsibility profile, whose results remain a key factor in our non-financial reporting. Our governance system, our dialogue with local communities, our customer-centred and high-quality service, our attention towards our employees and the role of our suppliers are the organizational bases and levers though which we are building a new business perspective capable of providing an effective response and a tangible contribution to the important challenges for the new development model that lies ahead of us.
Tomaso Tommasi di Vignano
Chief Executive Officer