The 2019-2022 Strategic Plan
In an energy sector that is undergoing major changes, gas infrastructures will therefore continue to play a key role in decarbonisation.
Late November 2018, Snam launched the new 2019-2022 Strategic Plan, which maps out the route that will allow the Group to rise to the challenges connected with climate change and help reduce emissions, minimising the rise in global temperature and limiting the costs of natural gas to end users.
In the new Plan, Snam expects to increase its investments up to 5.7 billion euro, approximately 10% more than the 5.2 billion envisaged by the previous Plan. The growth can be traced to the development of new businesses in the energy transition sector, to the continuous attention to reducing emissions and the increase in investments in maintenance and replacement works for the existing network. In particular, 4.8 billion of investments will regard the transmission network, 0.7 billion storage and regasification and 0.2 billion the new businesses linked to the energy transition. A quarter of investments in the transmission segment will be dedicated to development initiatives like the TAP interconnection, the north-west connections, methanisation and development projects of cross-border flows.
Investments in storage and LNG will instead mainly go towards strengthening the Fiume Treste storage plant. In addition to this, 200 million will instead be used to develop new businesses for decarbonisation: the biomethane segment, energy efficiency and sustainable mobility.
The continuous improvement of the results of the regulated core business, the new initiatives, the solid performance of international activities, the focus on technological innovation and the creation of value through the financial structure allow Snam to envisage sustainable growth in the main indicators throughout the Plan period. As compared with 2017, EBITDA is expected to rise by an average of 3.5% per year during the Plan time frame, net profit by more than 4% per year and net earnings per share (EPS) by an annual average of more than 5%.
In order to diversify the sources of finance and bring the financial strategy as closely into line as possible with the Group’s general objective of making its business more sustainable in the medium/long-term, Snam has decided to look to sustainable finance initiatives. These operations will allow the company to invest in specific projects in environmental sustainability and the development of technological infrastructures, thereby making an active contribution towards the fight against climate change. In this regard, in 2018, Snam finalised the transformation of the 3.2 billion euro in syndicate credit facilities, into a sustainable loan, the third largest sustainable loan to ever have been stipulated worldwide and the largest by a gas utility company. This loan envisages bonus/malus mechanisms according to the achievement of certain ESG (Environment, Social, Governance) KPIs. In addition, in November 2018, Snam published the Climate Action Bond Framework, which defines the criteria for the future issue of debenture loans aimed at financing investments in environmental sustainability.
The new Strategic Plan in fact integrates the ESG values, making them an integral part of Snam’s growth strategy. As regards environmental protection, the new Plan sets more challenging targets in respect of the reduction of methane emissions, envisaging a 25% reduction in methane emissions by 2025 (with an interim target of -15% in 2022), as compared with the previous target of 10% by 2021.
Of the investments envisaged, 850 million will go to the Snam - TEC (Tomorrow’s Energy Company) project for the integration of new technology to monitor the network and control and reduce natural gas emissions and consumption, as well as for initiatives regarding biomethane, renewables, energy efficiency and sustainable mobility. Additionally, in 2018, Snam adhered to the Task Force on Climate-Related Financial Disclosures (TCFD), undertaking to provide clear, structured reports on its activities in connection with climate change. The result of this commitment is the document “Snam in Change – Financial Disclosure on Climate Change”, which shows Snam’s activities using the climate change lens.
Snam’s attention to safety is confirmed by the launch of the new Snam4Safety programme, created to increase the safety at work culture of employees and suppliers. ESG values are also integrated into Snam’s corporate governance, with it today being the only Italian company, and one of just four worldwide, to have arranged for a global partnership with Transparency International for the fight against corruption.