Enel: Powering its way to strong governance


Enel: Powering its way to strong governance Ethical BoardroomBy Fabio Bonomo – Head of Enel’s Corporate Affairs Department



Enel is a world-leading mutlinational player in electricity generation and distribution as well as in the energy management value chain, with a particular focus on Europe and Latin America.

The company was established in 1962 as a state-owned entity through the nationalisation of approximately 1,250 private power Italian companies with the mission to provide electricity throughout Italy. In 1992, Enel was transformed into a joint stock company and later, in 1999, following the liberalisation of the electricity market in Italy, it started to internationalise its activities in the power business.

As a result of this international expansion, the Enel Group is now well diversified geographically across Italy, Iberia, the rest of Europe, South America and North and Central America, with a presence also in Africa, Asia and Australia. In 2017, networks, retail and renewables contributed to around 90 per cent of the group’s EBITDA, of which 75 per cent is regulated or quasi-regulated.Enel: Powering its way to strong governance Ethical Boardroom

Since 1999 Enel has been listed on the Italian Stock Exchange. With a current value of around €53billion, Enel is the biggest company by market capitalisation within European utilities. Enel has the highest number of shareholders of all Italian companies, counting approximately 850,000 between retail and institutional investors, including the most important international investment funds, insurance companies, pension funds and ethical funds.

The Enel Group includes 13 companies whose shares are listed on the Argentinian, Brazilian, Chilean, Peruvian, Russian, Spanish and United States stock exchanges.

Corporate governance and achievements

Enel’s corporate governance is fully compliant with the principles set forth in the Italian Corporate Governance Code and is inspired at the same time by international best practice.

Enel: Powering its way to strong governance Ethical Boardroom

Enel’s corporate governance is highly appreciated by investors mainly for the strong presence of both independent directors (78 per cent) and directors nominated by institutional investors (three out of nine), according to the slate vote mechanism. Other main strengths include a fair and transparent remuneration policy applicable to directors and senior officers and a sound internal control and risk management system.

Regarding gender diversity, three out of nine directors are women, including the chairman Mrs Grieco who, as from July 2017, also chairs the Italian Corporate Governance Committee, entrusted with the task of monitoring the implementation of the Italian Corporate Governance Code and ensuring its alignment with the relevant regulatory framework and best practices.

Among the most significant initiatives adopted by Enel’s board of directors on a voluntary basis to raise the corporate governance standards are:

  • Starting from 2014, the chairmanship of half of the committees set up within Enel’s board of directors – currently, the control and risk committee and the related parties committee – has been entrusted to directors drawn from the ‘minority’ slate filed by institutional investors
  • In 2016, Enel’s corporate governance committee was renamed corporate governance and sustainability committee, to reflect its wider accountability on sustainability issues stemming from the assignment of specific new tasks. With the enactment of the Italian legislation implementing EU Directive 2014/95 on the ‘disclosure of non-financial and diversity information’, this committee now has a stronger commitment to support the board of directors on sustainability issues
  • Both Enel’s corporate governance and sustainability committee, and nomination and remuneration committee carry out an in-depth analysis of the outcomes of the shareholders’ meetings vote, in order to evaluate any possible amendments to Enel’s governance and remuneration practices that would better meet the shareholders’ expectations. Engagement activities held with institutional investors and proxy advisors have led in recent years to outstanding results in terms of the approval of board proposals by the shareholders’ meeting. This is demonstrated by the increasing consensus on Enel’s remuneration policy, which has been approved from 2013 onwards with the favourable vote of more than 90 per cent of the share capital represented at the meeting by institutional investors
  • Another valuable governance practice was the adoption in 2016 by Enel’s board of directors of a contingency plan aimed at regulating the steps necessary to ensure that the company’s activities are regularly carried out in ‘crisis management’ cases, i.e. should an early termination of the CEO’s mandate occur
  • In May 2017 Enel was at the forefront in achieving the ISO37001:2016 certificate of conformity of its anti-bribery management system (AMS). The AMS is based on a stable commitment to the fight against corruption, as stated in the Zero Tolerance Against Corruption Plan adopted within the Enel Group. The other pillars of the AMS are the ‘organisational model’ adopted under the Italian legislation on corporate liability for crimes committed by directors, officers and employees, the Enel Group Code of Ethics and the Enel Global Compliance Programme; finally, it is worth mentioning the importance of the Enel Group whistle-blowing policy
  • In light of the Enel Group multinational and multi-listed dimension, in 2015 Enel’s board of directors approved some recommendations aimed at strengthening the corporate governance of Enel’s listed subsidiaries and ensuring the sharing of international best practices with those companies

The corporate governance of the Enel group will soon be strengthened even further with a self-regulatory tool aimed at establishing efficient and coherent cross-border group management strategies and practices, within a framework that ensures an adequate protection of the corporate interest of each subsidiary and the fair treatment of its stakeholders. In fact, as a result of a one-year project, characterised by the participation of leading international academic governance experts, in December 2017 Enel’s board of directors approved a handbook, to be subsequently submitted to the relevant bodies of its subsidiaries.

“Enel’s sustainable business model is ideally positioned to navigate decarbonisation, urbanisation and electrification trends and will drive long-term shared value for the stakeholders, communities and people involved in its activities”

This handbook identifies uniform practices and solutions, applicable in the different jurisdictions of the Group companies, to the issues raised by conflict of interests of directors and related parties’ transactions.

Sustainability as a cornerstone of business

Enel sustainable business model is ideally positioned to navigate decarbonisation, urbanisation and electrification trends and will drive long-term shared value for the stakeholders, communities and people involved in its activities. Enel is fully aware that non-financial information is increasingly scrutinised by investors to gauge the ability of companies to develop industrial plans that are sustainable over time.

Enel’s attention to sustainability issues has evolved over time and is currently deeply embedded in day-to-day business practices, with a constant search for innovative ways of creating shared value at all levels of the value chain in the different geographies of the Group’s presence.

Enel’s strategic plan 2018-2020 clearly shows the deployment, across the board of the 17 United Nations Sustainable Development Goals (SDGs), of Enel’s sustainable business model throughout the value chain. In particular, the plan confirms and strengthens a specific commitment, originally undertaken in September 2015, to reach the following SDG targets:

  • 800,000 beneficiaries of high-quality, inclusive and fair education by 2020, doubling the previous target of 400,000 beneficiaries (SDG 4)
  • Three million beneficiaries of access to affordable and clean energy by 2020, mainly in Africa, Asia and South America (SDG 7)
  • Three million beneficiaries in terms of employment and sustainable and inclusive economic growth by 2020, doubling the previous target of 1.5 million (SDG 8)
  • Climate change: reduction of emissions to less than 350gCO2/KWheq by 2020 (SDG 13)

The outstanding results achieved by Enel are proven by the steady presence of the company in the most important sustainability indices, such as the Dow Jones Sustainability Index (since 2004), FTSE4Good (since 2002), ECPI (since 2007), Euronext Vigeo (since 2013) and STOXX Global ESG Leaders (since 2014).

Moreover, in 2017 Enel was admitted to the A-list of the CDP (formerly the Carbon Disclosure Project), which includes the companies which, at global level, stand out for the effectiveness of their strategy in taking up the opportunities and managing the risks of climate change.


About the Author:

Fabio has been the head of Enel’s Corporate Affairs Department since 2014. He previously held different managerial positions inside the same Department, starting from 2000.

He represents Enel within several think tanks at Italian and European level dealing with company law and corporate governance. He is the author of articles regarding company law and corporate governance published in professional journals and newspapers, and has been a speaker at several conferences and roundtables on the same issues. From 2014 until 2016 he was lecturer of comparative corporate governance at the University of Rome “La Sapiens”. Born in Rome in 1967, he graduated in law summa cum laude and then passed the bar exam.