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Once again, Hera ranked first in the Integrated Governance Index 2022. What are the most qualifying aspects of the strategic governance approach that underpin the Group’s excellent performance?
This recognition simply confirms that, at Hera, Governance is an essential element that has inspired and materially guided the success achieved over time, with a sustainability integrated and transversal to all business areas. A Governance cast into real facts, which has led to value creation through a well-targeted process of territorial and dimensional expansion. A Governance that has allowed us to exceed, year after year, the ESG targets set and then reported in the Sustainability Report – a tool that Hera has pioneered since 2006 together with the Annual Report. Finally, a Governance that is well structured according to the peculiar features of its majority public shareholding and multi-utility business model. Despite the succession of four CEOs, this solid approach ensured continuity in the vision and execution of the strategy itself, to the benefit of all stakeholders, as proven by the significant increase in market capitalization – sixfold since the time of the IPO in 2002.
In the 2022 Integrated Governance Index based on 2021 performance, Hera achieved the highest possible score of 100/100 in two areas: that of the Corporate Governance and Sustainability Code and that of Human Resources, also achieving scores of 90/100 or higher in other two areas, ESG Digital Governance and integration of ESG criteria in both remuneration and business strategies. These performances reflect governance decisions taken with far-sightedness and conviction, then translated into real tools that are constantly being refined, as in the case of the Ethics Committee: such Committee was set up in 2007 and in 2018 it also took on responsibilities in the field of Sustainability, becoming the Ethics and Sustainability Committee. Similarly, the need to link management remuneration to the achievement of ESG targets in the medium-to-long term has found expression in the Balanced Score Card of the short-term incentive system, which identifies a precise set of target projects, based on the Group’s strategic map: this component now has a relative weight that for directors can range from 50% to 80%, while for executives from 40% to 70% of the total.

What are the essential elements that make it possible to define the governance of Hera as a truly ‘integrated’ governance?
Sustainability governance, or “integrated governance”, is, by ETicaNews’ own definition, a frontier territory. Governance practices and processes aimed at considering, in addition to economic factors, all ESG factors in the definition of strategies, especially long-term ones, are constantly evolving.
In Hera, this phenomenon takes shape, as we have indicated, through a series of concrete actions and initiatives, in response to the evolving complexities of the external scenario. Since 2003, the Company has included Corporate Social Responsibility in its strategy, evolving towards the perspective of Shared Value, with the aim of continuously improving its competitiveness and pursuing sustainable development, according to the United Nations goals.

The ESG identity of a company is constantly forming and evolving over time. What were the most significant improvements that Hera made in the last year analysed by the ETicaNews assessment, i.e., 2021?
Substantial progress was made in 2021. One for all, the Shareholders’ Meeting of 28 April 2021 amended Article 3 of Hera’s Articles of Association, supplementing it with the Corporate Purpose that the Company aims to achieve in the performance of its business activities. Thus, Hera confirmed its commitment to develop a sustainable business model for its shareholders, mostly through the creation of Shared Value. The integration approved by the Shareholders specifies that “Hera organises and carries out its business activities also in order to promote social equity and contribute to achieve carbon neutrality, the regeneration of resources and the resilience of the services system managed for the benefit of customers, the ecosystem of its territory and future generations”.
No less important are also the activities to raise awareness and promote the culture of diversity, both inside and outside Hera Group, through a stronger networking with stakeholders; the adoption of the ‘Policy for managing the Dialogue with Shareholders and Bondholders in general’; lastly, the reporting, in the Non-Financial Statement 2021, of activities consistent with the taxonomy of the European Union, in line with the Recommendations of the TCFD, even anticipating the regulatory obligation from 2023.
In most recent time, the centrality of ESG issues has found new confirmations. An example is the transformation into a Benefit Company of the subsidiary Hera Luce, which has included in its Articles of Association the commitment to generate benefits for stakeholders. Another confirmation comes from the issue of Hera’s third green bond of 500 million euro, in May 2022, structured to finance specific investment projects in circularity and energy efficiency.

What achievements have required a more structured process to mature over time?
For example, Hera’s Code of Ethics, which is subject to continuous revision for improvement. The Code has been designed like a tailor-made suit, which undergoes continuous refinement and enrichment to inspire and guide the actions of all the people who work at Hera and collaborate as partners of the Group. It is a constantly evolving tool: we are currently working on the fifth revision of the Code, which involves not only the top management, but also employees and social partners, following an in-depth benchmarking analysis on comparable companies that involved the Group’s executive, middle and senior management.
Hera’s approach to governance involves continuous improvements, also based on checks against external stimuli. The Board meeting of 23 February 2022, for example, examined the letter sent by the Chairman of the Corporate Governance Committee of Borsa Italiana, verifying that the Company’s Governance is already fully in line with the recommendations received.