Methodology Note

Introduction and presentation of the document

The Directors’ Report that Snam has attached to the 2016 consolidated financial statements reports in full on data and information of an economic-financial and non-financial nature through a format known as integrated thinking, developed on the basis of the framework proposed by the IIRC (International Integrated Reporting Council), for the purpose of representing the business model and creation of sustainable value.

At the same time, the Company continues to publish a separate sustainability report, although it is synergistic with the above-mentioned report, for the purpose of giving a full and exhaustive reporting on material issues, for the benefit of stakeholders and, specifically, SRI and Global Compact analysts, and in compliance with the GRI guidelines.

Consolidation scope and criteria

The report contains data and information with reference to the financial year ended 31^st December 2016, with the exception of information relating to corporate governance and the ownership structure, which are updated at the publication date. The activities included in the scope of reporting are:

• Corporate (Snam S.p.A. with the subsidiary Gasrule Insurance Limited);
• Transport (Snam Rete Gas S.p.A.);
• Liquefied Natural Gas regasification (GNL Italia S.p.A.);
• Storage (Stogit S.p.A.).

Note the scope of reporting has changed compared with the previous financial year on account of the separation of the activities relating to the distribution of gas in Italy, the sector in which Italgas and its subsidiaries and associates operated.

In order to maintain comparability with previous years, the data for 2014 and 2015 were recalculated and reported without the distribution data.

There are no differences, on the other hand, in the consolidation criteria adopted in comparison with those in the Financial Report.

Reporting process and methods

The process of collecting data and information and of preparing the report is coordinated and managed by the sustainability unit of the Snam corporate in conjunction with the various corporate functions and operating companies. The publication of the document, at the same time as the Financial Report, takes place after the approval of the Snam Board of Directors on 6^th March 2017.

The economic and financial, operating and governance data is taken directly from the Financial Report and from the Report on Corporate Governance and Ownership Structure. The data on the environment, personnel and relating to other aspects dealt with in the document are collected directly from the competent functions.

The calculation methods used for determining the various parameters of the indicators are given in the specific reference paragraphs. To guarantee the comparability of the indicators deemed most significant over a period of time and to give the reader the opportunity of comparing the performance achieved, the current values have been compared, using graphs and tables, with those for the previous two financial years. Snam has tried within this document to place equal emphasis on positive and negative aspects, providing, where deemed appropriate, a comment on the results achieved, including the facts and events that the Company was involved with in 2016.

The contents of the report are also supplemented with additional information published in the section on sustainability on the website www.snam.it.

Application of the GRI-G4 guidelines

The report is prepared in conformity with the G4 version of the Global Reporting Initiative Guidelines.

The breadth and depth of the reporting of the issues dealt with in the document reflect the results of the materiality analysis, carried out using specific methodology and updated annually under the scope of the planning cycle for sustainability undertakings and measures. In this regard, note that it was updated in 2016 following the distribution business leaving the scope of activities.

For the purpose of applying the G4 guidelines, the results that emerged from the materiality analysis are associated with the list of material aspects listed in the standard.

Based on covering the standard disclosures and indicators associated with material issues, Snam’s self-declared level of adherence to the G4 guidelines is “in accordance – comprehensive”.

As far as the material aspects for which the reporting has not yet been extended to the external perimeter are concerned (“Limitations regarding the perimeter of the Aspect”), Snam is committed to implementing specific measures in the coming years which will allow the scope of the reporting to be gradually extended.

Assurance

The report was audited by the independent auditors (E&Y S.p.A.) in accordance with the principles and indications of the International Standard on Assurance Engagement (ISAE 3000) issued by the International Auditing and Assurance Standards Board (IAASB). The results of the audits conducted are given in the Independent Auditors’ Report attached.