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Shared Value and Strategic Priorities

Why do we want to create shared value?

We believe that companies must make the difference by orientating their strategy to growth based on responses to problems and opportunities in the external context.

This is why we joined the UN Global Compact and adopted a new strategic approach based on shared value, which aims to maximize joint value creation both for the company and for the communities in which we operate, by responding to "calls to action "of the Global Agenda.

Our approach to shared value

For Hera, the creation of shared value is the result of all those business activities that generate operating margins and meet the global agenda drivers, i.e. those "calls to action" for change in specific fields, set out in global, European, national and local policies.

A process was started in 2016 to identify Hera's approach to Creating Shared Value (CSV). Inspiration was taken from Porter and Kramer's indications in 2011 and taking into account the new EU communication on CSR of the same year. The programme made it possible to identify our own definition of CSV which is steering our approach to CSR and has enhanced our sustainability reporting with new views and perspectives, among which quantification of EBITDA generated by "shared value" activities and projects, and of investments made in this area.

 
 

What is the Global Agenda?

With Global Agenda we mean the strategic sustainability policies that at the global, European and national levels identify priorities, targets and quantitative targets and which drive the necessary change for the future of the planet.

From the analysis of the UN Agenda to 2030 and 45 policies we have identified three priority areas: efficient use of resources, innovation and contribution to development, intelligent use of energy.

 
 

What is the contribution to the UN objectives at 2030?

We have identified 11 of the 17 objectives to be achieved by 2030 according to the UN Agenda, to which we have associated the 52 "Faremo ..." (objectives for the future) reported in the 2018 Sustainability Report.


What is the relationship between social responsibility and the creation of shared value?

Hera’s new approach to CSR merges the prospect for the creation of shared value with the integration of sustainability (already envisaged since the Group’s establishment) into its strategies and business activities.

This results in activities and projects that:

-         improve its environmental and social sustainability performances mainly related to the businesses it manages (also, but not exclusively, in relation to the law and sector regulations);

-         generate operating margins that are consistent with the Global Agenda drivers.

This latter point is a major development in Hera Group’s traditional approach to CSR, which will increase the shared value generated by overlapping business and Global Agenda priorities.

 

 
 

How do we measure shared value?

The Hera Group continues to report "shared value" EBITDA (started for the first time with the 2016 sustainability report), i.e. the portion of EBITDA resulting from projects and activities that respond to the "calls to action" classified in the three CSV Drivers: in 2018, this value totalled Euro 375.2 million (equal to 36% of the total), a 14% increase compared to the previous year. This result is in line with the 2018-22 Business Plan, created so that approximately 40% of 2022 EBITDA will derive from business activities that respond to the priorities of the global sustainability agenda.

A roughly 14% increase in "shared value" EBITDA is recorded against a 5% increase in the Group's overall EBITDA (equal to Euro 1,031 million) compared to the previous year.

The prevailing contribution derives from activities and projects related to the efficient use of resources (Euro 260.6 million), followed by those related to innovation and contribution to development (approximately Euro 78.2 million). The smart use of energy accounts for Euro 66.9 million in 2018.




 
 

The 2018-2022 Group Business Plan targets a 2022 “shared value” EBITDA exceeding Euro 470 million, equal to +43% increase compared to 2017, reaching 40% of the Group’s overall EBITDA.

The approximately 150 million increase during the time interval of the plan compared to 2017, equal to a 3/4 increase in the Group’s 2022 overall margins, derives mainly from the development of activities in the CSV drivers: “smart use of energy” (Euro +59 million), “efficient use of resources” (Euro +64 million) and “innovation and contribution to development of the area” (Euro +27 million).

 
 
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Page updated 4 June 2019

 
 
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