Social aspects

Relevance and related risks

The material topics linked to social aspects, in relation to Snam’s activity, are:

• Economic performance and creation of value: economic sustainability and business growth are key objectives and factors that enable the company’s operations as a whole. Fostering the creation of shared medium/long-term value for all categories of stakeholders, through operative and financial efficiency and a commitment to the development of business that can generate value for all Group stakeholders are, in fact, essential aspects for Snam.
• Reliability of infrastructures and business continuity: Snam operates every day to ensure the reliability of the infrastructures and services so as to prevent and/or mitigate potential situations that may compromise continuity of business and public safety. For more information, see the paragraph “Summary data and information - Maintenance of plant safety and quality levels” of the Integrated Report on operations.
• Brand reputation: Snam protects and values its reputation with proactive, diversified communication, seeking dialogue with its reference public and aiming to expand it further. The company communicates through a multimedia strategy integrated between both traditional and digital channels - also involving its employees and partners as brand ambassadors - and through events and campaigns, to confirm Snam’s central role in the country system and as player in the energy transition on a national and international level, with special attention paid to the territories and communities in which it operates. For more information, see the paragraph “Stakeholders and the relational capital - The value of brand identity” in the Integrated Report on operations.
• Innovation: faced with a more complex, challenging scenario, Snam has paid close attention to research into new technologies with a view to increasing the efficiency of its business conduct yet further and reducing its environmental impacts. For more information, see the paragraph “Innovation in business development” of the Integrated Report on operations.
• Relations with the Authorities and quality of services: Snam is committed to supplying a quality service that can meet the demands and expectations of its clients, assuring a secure, reliable service over time, in compliance with principles of competition and equal treatment and access to infrastructures; to this end, Snam performs customer satisfaction surveys to improve its services offered. Snam also promotes constructive relations with the regulatory authorities and institutions, so as to develop services that are satisfactory to clients and, at the same time, focussed on the market needs and demands. For more information, see the chapter “Business segment operating performance” and the chapter “Other operating information and results - Market reputation” of the Integrated Report on operations.
• Relations with the local communities: Through the development and support of projects for local communities, Snam intends to positively impact the social fabric in all territories in which the company operates.

The analysis revealed that the topic of the supply chain is not material, but it is in any case monitored by Snam. Indeed, Snam adopted some time ago policies for the selection of its suppliers, collaborators and commercial partners based on fair, transparent processes that envisage the integration of sustainability criteria.

In connection with material topics relating to the social area, the most significant risks are linked to the possible breakage of conduct and increase in the severity of extreme weather phenomena, which may directly impact the continuity and quality of the service supplied.

Instead, with reference to the development of new infrastructures, the main operational risk is connected with possible delays in the progress made on construction activities. As regards Snam’s reputational profile and relations between the Company and the regulatory authorities, the most significant risks are linked to the maintenance of a suitable reputational profile with regards to the main stakeholders and possible breaches of sector rules and regulations.

The complete list of social risks is as follows. These risks are described in full in the chapter “Elements of risk and uncertainty”:

• Climate change risk within strategic risks;
• Risk linked to maintaining an adequate reputation profile for suppliers and subcontractors in legal and non-compliance risks;
• Possible violation of rules and regulations in legal and non-compliance risks;
• Risk of delays in the progress of infrastructure implementation programmes in operational risks;
• Risk of breakage or damage to the pipeline in operational risk;
• Cyber security risk in operational risk.

Policies, commitments and management model

Snam, in line with the guidelines of its Stakeholder Engagement Policy, maintains regular and frequent relations with local government bodies and with local stakeholder associations to share new plants projects.

The Snam business development model is based on sustainable growth and the promotion of social and economic development and continuous dialogue with all players in the communities and territories in which the company operates. In line with this commitment, in 2018, the Company published its Social Supply Chain Policy, which facilitates the involvement of social businesses in the supply chain and fosters the inclusion of such, also as subcontractors, through rewarding mechanisms in assessing the offers.

Through the Sustainable Development Policy and the Policy for the management of philanthropic activities and social initiatives, Snam also pledges to promote initiatives in the areas in which the Company operates to promote local development.

The initiatives on the territory integrate the comparison with the institutions and other stakeholders that takes place in the context of authorisation procedures and environmental impact assessment and, for some plants, also socio-economic. Relations with the territory are detailed in the paragraph on “Stakeholders and relational capital - Relations with the territory” of the Integrated Report on operations.

These activities are also supported by the work of the Snam Foundation. The foundation pursues innovative “business citizenship” practices to foster civil, cultural and economic development in priority areas of public interest, promoting partnerships and making available project capacities and competences.

Further information on the Snam Foundation can be found on the Company's website.

Over time Snam has built a network of relationships with local associations, Confindustria Energia and the authorities, with which it discusses issues of energy, economic and environmental policy. On a local and national level, the Company collaborates with regulatory entities and takes part in the work of associations and committees for which it makes its know-how and competences available in matters of social innovation and sustainable development. More information is available on relations between Snam and the associations on the Company’s website.

Performance Indicators

Below are the representative indicators of the results of the management of the social aspects. In 2018, a total of 35.5% of the gross global added value produced by Snam was reinvested within the Group (an increase on 2017: +1.7 percentage points), of which approximately 77% was allocated to the amortisation and depreciation of the infrastructures used in the production process (80% in 2017). As regards the main reference stakeholders, 2018 shows a greater incidence of Value Added distributed to employees (11.1%; +0.9 percentage points on 2017) through direct compensation comprised of wages, salaries and severance pay and indirect compensation comprised of social safety charges and costs for staff-related services (canteen services, travel cost reimbursement). The value allocated to the Public Administration through payment of direct and indirect tax records substantial stability (14.0%; no change on 2017). With reference to lenders, there was a reduction in the value distributed of 2.1 percentage points (9.8%; 11.9% in 2017) also against the benefits deriving from the optimisation actions implemented in 2016 and 2017, in particular the operations of liability management, despite the greater period average debt. The value distributed to shareholders through the distribution of dividends records a stable incidence (29.5%; 29.9% in 2017). In the presence of growth of a unitary dividend (+5% on 2017), as confirmation of the commitment to guarantee shareholders an attractive, sustainable remuneration, a reduction is recorded in the number of shares in issue against the buy-back of treasury shares performed by Snam as part of the share buy-back programme. Lastly, an amount of approximately 3 million euro was designated for local communities (0.1% of the value generated) through donations and sponsorship initiatives and environmental compensation pursuant to the law.