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Snam and the Task Force on Climate-related Financial Disclosure

TCFD RECOMMENDATIONS

DISCLOSURE

GOVERNANCE
Declaring the governance model of the organisation in relation to the risks and opportunities related to climate change.

a)

Describing the supervision of the Board of Directors of the risks and opportunities related to climate change.

The Board of Directors (BoD), following its appointment and for its entire mandate, is informed with regard to climate change aspects and initiatives including through board induction sessions and it periodically oversees these aspects, assisted by different committees, including: the Environmental, Social & Governance (“ESG”) Committee, the Control, Risks and Related-Party Transactions Committee and the Remuneration Committee.

b)

Describing the role of management in assessing and managing the risks and opportunities related to climate change.

The management functions have specific responsibilities as part of climate change and report directly to the Chief Executive Officer, developing their activities in line with the Company’s climate strategy.

STRATEGY
Declaring the actual or potential impacts of the risks and opportunities related to climate change on the business, strategy and financial planning of the organisation.

a)

Describing the risks and opportunities relating to climate change that the organisation has identified in the short, medium and long-term.

Snam identifies transition risks and physical risks under risks related to climate change. Specifically, the former include political and legal risks, technological risks, market risks, reputation risks, while the latter include the risks due to acute or chronic phenomena.

b)

Describing the impact of the risks and opportunities related to climate change on the business, strategy and financial planning of the organisation.

For every risk related to climate change, Snam carries out an assessment of the operational impacts (industrial/business, economic, assets) and the specialist impacts (financial, legal, HSE, reputational and market) related to it and opportunities are identified that allow the associated impacts to be adequately managed.

c)

Describing the resilience of the organisational strategy, taking into consideration different climate-related scenarios, including a scenario of 2°C or lower.

Snam develops different gas supply and demand scenarios that take into consideration the profound transformation of the Italian energy system, with special reference to the role of natural gas, in the light of the possible developments of the energy and climate scenario globally, in line with the European decarbonisation strategy and with the internationally-defined agreements for slowing down the rise in temperatures and limiting the effects of global warming.
The scenarios defined by Snam over a time horizon to 2040 are: the Business-As-Usual (BAU) scenario, which projects current trends and features technological developments based solely on economic merit, the Centralized (CEN) and Decentralized (DEC) scenarios, which, respectively involve growth of programmable renewable energies such as green gases, using existing gas infrastructure, and an even more rapid development of electric power and non-programmable renewable energy sources.
Snam develops it own strategy based on these scenarios, and particularly the development scenarios. They are applied in the new 2019-2023 Strategic Plan and they are founded on three pillars: improving the core business, internationalisation and leadership to energy transition.

RISK MANAGEMENT
Declaring how the organisation identifies, assesses and manages the risks related to climate change.

a)

Describing the processes of the organisation to identify and assess the risks related to climate change.

The actual and prospective risks and opportunities associated with Snam's corporate strategy are identified, assessed and managed through the ERM model (Enterprise Risk Management), which integrates the risks and opportunities related to climate change. This model breaks down into three different phases:

  • Identification of risky events that could affect company targets through self assessment with Staff and Business Managers responsible for the implementation of initiatives aimed at the effective oversight of risks, both through specific analysis of the operational processes of every Company and the corporate Strategic Plan.
  • Evaluation of every event through the use of prioritisation matrices in which the probability of an event occurring and its positive or negative impact. The risks and opportunities are classified on the basis of 4 priority classes: low, medium, high and critical for risks; slight, moderate, good and excellent for opportunities.
  • Management of risks/opportunities identified through specific actions which may involve mitigation, monitoring and management interventions or the transfer of the risk.
 

b)

Describing the processes of the organisation to manage the risks related to climate change.

c)

Describing how the processes of identifying, assessing and managing the risks related to climate change are integrated in the overall risk management of the organisation.

METRICS AND TARGETS
Declaring the metrics and targets used by the organisation to assess and manage the significant risks and opportunities related to climate change.

a)

Declaring the metrics used by the organisation to assess the risks and opportunities related to climate change in line with its strategy and risk management process.

Snam demonstrates its commitment to promoting decarbonisation, through the monitoring and improvement of its performance and its targets for reducing climate-altering emissions and increasing energy efficiency.
Specifically, Snam monitors the following GHG emissions:

  • (Scope 1) direct emissions: emissions resulting from direct combustion processes or regarding fuels that are burnt within the Group, or by direct emission into the atmosphere of GHG (e.g. methane leaks);
  • (Scope 2) indirect energy emissions: emissions from the consumption of electricity, heat and steam;
  • (Scope 3) other indirect emissions: all other types of emissions that do not come under the two previous classes, in particular those resulting from the supply chain and employee business travel.

Snam also monitors its energy consumption and has special energy efficiency KPIs.

b)

Declaring the Scope 1, 2 and 3 greenhouse gas effect emissions (GHG) and related risks.

c)

Describing the objectives used by the organisation for managing the risks and opportunities related to climate change and performances related to the objectives.

In its Strategic Plan, Snam has set a target of reducing direct (Scope 1) and indirect (Scope 2) CO2eq emissions by 40% by 2030 compared with 2016, which will be achieved through strengthening the target previously set for reducing methane emissions which has changed from -25% to -40% compared with 2016 figures and the definition of a new target related to the 55% increase in green electricity by 2030.
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