ESG

The acronym ESG stands for “Environmental, Social, and Governance” and is used to describe a range of important topics for evaluating a company's performance beyond just economic and financial metrics. It also considers the company's social and environmental impact, as well as the quality of its management. In a context where the financial world increasingly uses this approach as an additional lens to assess corporate risks and performance, the Hera Group, as a listed company, is committed to being transparent about how it addresses ESG issues relevant to its business, and to highlighting those it particularly prioritises within its growth strategies.
 

What does ESG actually mean?

Environmental: this component covers the company's activities related to the environment, such as, for example, the impact on climate change, the management of natural resources, energy efficiency, the reduction of waste and polluting emissions.

Social: it refers to business practices related to employee relations, human rights, diversity and inclusion, occupational safety, accountability to local communities and other relevant social issues.

Governance: this area concerns the corporate governance structure, including aspects such as transparency, business ethics, the management of conflicts of interest and the fight against corruption.

The main ESG themes addressed by the Hera Group

The themes listed take into account the results of the Hera Group’s 2024 double materiality analysis reported within the Sustainability Report.

There are 20 main ESRS reporting areas where we combine sustainability and competitiveness.

Reporting areas based on double materiality analysis include:

• Economic and financial opportunities
• Positive impacts
• Mitigation of negative impacts

Due to the specific nature of its business, the Hera Group operates in three areas of crucial importance for the world in which we live and for the world in which we would like to live. Waste management, water and energy services are three areas at the centre of a new model that balances business needs and different ESG issues and is based on circularity, resource protection, people's well-being and decarbonisation.

Since 2016, we have been working according to a Creating Shared Value (CSV) model, which holds together the success of the business and the well-being of people and the Planet. This model was introduced into the concept of Purpose included in the Company's Articles of Association.

What unites our approach to creating shared value and corporate social responsibility with ESG issues?

The creation of shared value (CSV) is driven by all activities and projects that generate operating margins while addressing the priorities of the UN Global Agenda. These priorities are calls to action aimed at promoting sustainability, and they align with the areas of competence of the Group, as indicated by policies at the European, national, and regional levels, as well as by megatrends. At the same time, CSV activities and projects, together with the corporate social responsibility aspects contained in our Code of Ethics, are part of the ESG themes addressed by the Group.

Our strategic approach identifies 3 drivers of change:
•    ENERGY: pursuing carbon neutrality.
•    ENVIRONMENT: regenerating resources and closing the circle.
•    LOCAL COMMUNITIES (AND BUSINESS): enabling resilience and innovating.

This approach is the backbone of our corporate culture and of the mindset of the people who manage economic and business activities every day to create value. This value is created not only for our company but also for all stakeholders, as we believe this is the only truly sustainable way to create long-term wealth. It is a concrete approach that shapes the strategies of business plans, company budgets and the actions of all operators. It is a measured and certified value, which allows us to verify progress on various fronts and enables our Group to increase its commitment year after year to achieving the priority goals set by the UN for the protection of the planet and people.

ESG-RELATED FINANCE

With this approach, the Group has obtained concrete support from investors in financial markets who are sensitive to ESG aspects. A significant investment plan to further increase the sustainability of our actions provides the opportunity to obtain financial support by issuing Green Bonds and Sustainability-linked bonds exclusively dedicated to developing fully sustainable activities. Every year Hera reports on how the funds raised have been used to contribute to improving the Group’s environmental and social performance. Today, over 50% of the financing obtained is sustainable, allowing the company to secure the necessary resources for investments at attractive interest rates, including mechanisms that incentivise meeting or surpassing the sustainability targets set by contract.