Good governance is a key factor in achieving sustainability objectives. Governance systems are aimed at attaining ever greater inclusion and participation, giving all stakeholders a say in decision-making processes.
Edison’s corporate governance model is based on this principle and, in line with the Group’s strategy, combines the pursuit of economic results with mechanisms to improve and strengthen relationships with all stakeholders. Edison’s model is consistent with the recommendations in the Code of Conduct endorsed by Borsa Italiana.
The Company’s main governance bodies are the shareholders’ meetings, the Board of Directors, the Board of Statutory Auditors, the independent auditors and the Supervisory Body set up pursuant to Legislative decree no. 231/2001 (the 231 Supervisory Body).
Edison’s Board of Directors acts both through executive directors and directors with powers of representation. It is assisted by advisory committees for control and risks, remuneration and independence. Marc Benayoun is CEO.
Edison’s governance structure is also supported by an Executive Committee chaired by the CEO and composed of the heads of the various divisions, managerial committees supporting top management and the Internal Audit Office, which reports directly to the Board of Directors.
A transformation team was created as part of Edison’s reorganisation to flank the CEO and Executive Committee as they update and innovate internal company processes in terms of flexibility, efficiency, digitalisation, collaboration and customer services, which will prove crucial as the Company faces rapid market changes in line with EDF’s CAP 2030 strategy.
The team kicked off its work by focusing on four working groups that represent key areas for the organisational transformation:
- Inclusion and plurality: support the business performance innovation and improvement process by promoting diversity.
- Internal mobility: establish rules and responsibilities that encourage and structure Edison’s internal mobility process.
- In time on target: simplify processes and cut down on time and costs without losing sight of customer needs.
- Entrepreneurship: encourage a widespread business spirit, creating space and time for brainstorming with a defined budget and flexible, quick process.
The sites are currently preparing tangible proposals that can be monitored based on KPIs, and they will be presented and rolled out by the first half of 2017.
A second wave of working groups will propose new ideas to enhance transformation and evolution.
The keys to the success of this initiative are top management’s support and all employees’ involvement and feedback: the sites are open and work in close cooperation with the Company, with a finger on the pulse of the external context.
Sustainability governance
The sustainability governance bodies are the Executive Committee and the Board of Directors. The former manages relationships with the Sustainability and CSR (Corporate Social Responsibility) Office, giving instructions, discussing projects and monitoring results, while the latter approves the sustainability report, published annually on accountability, strategic governance, transparency and disclosures. The sustainability report is also shared with the shareholders and is subsequently published for all stakeholders online.
To better integrate sustainability in the business, the Sustainability and CSR Office collaborates with the various divisions and business units, also with the contribution of the sustainability network.
In the last few months of 2016, the Sustainability and CSR Office formalised the internal network of focal points, with the aim of making the most of individual contributions, stabilising the structure of contacts and more efficiently integrating sustainability in the Company’s business by involving specific competencies.
The network’s activities include:
- participating in the definition of the Sustainability and CSR Office’s strategies (policy and objectives) and the action plan;
- periodically aligning with the divisions or business units on sustainability and CSR activities;
- gathering sustainability needs and incentives within the offices or business units;
- sharing with the Sustainability and CSR Office requests received from other stakeholders (especially external stakeholders) in the course of continuing activities;
- actively participating in the performance of specific projects and innovative actions.
The network’s activities will make it possible to more consistently and effectively support the sustainability of Edison activities, increase the commitment of everyone in the company and reinforce the integration of sustainability issues in the business. The network’s first work scope has been the co-design and preparation of this sustainability report.
At the same time, a work group was set up to update the sustainability policy. Indeed, the aim is to take advantage of the opportunities created by changes in the new energy context and in the organisational structure and to revise the policy to align it with the new context and the new corporate values (Respect, Responsibility and Integrity), consistently with the CSR objectives expressed by EDF. The new sustainability policy will be a better representation of the Company’s identity as much as it will combine the Company’s current position on certain macro sustainability issues (the Paris Agreement, SDG, etc.) through its approach to listening to stakeholder’s requests. Along with the new policy, which will be presented in 2017, certain strategic objectives will be set in collaboration with all business units, stakeholders and top management to support the Company’s position.
Internal control and risk management system
Edison’s internal control and risk management system consists of tools, organisational structures, procedures and rules for sound and proper company management in line with strategic and operating objectives. The system is compliant with applicable laws and regulations for proper and transparent reporting within the Group and to the market and prevents and limits the consequences of unexpected results. It is based on the code of ethics and organisational model pursuant to Legislative decree no. 231/01 (the 231 Model).
Edison’s code of ethics contains the values and principles on which its corporate ethics are based and lays the foundation for more sustainable business management by establishing a code of conduct and implementation rules. The code of ethics was shared with the subsidiaries, which approved it, and is binding for everyone acting in the Company’s name under specific mandates or proxies. It is distributed to all the Company’s employees and contractors.
The code of ethics is an integral part of the 231 Model and the basis on which the model was designed. It is periodically reviewed and updated in order to, inter alia, reinforce the principle zero tolerance for fraud and bribery, by explicitly referencing the 10 principles of the United Nations Global Compact for the protection of human rights, labour rights and the environment and to combat corruption.
In December 2016, Edison Spa’s Board of Directors adopted another update to the code of ethics, reflecting the new corporate mission and its new position as a responsible energy company committed to the development of sustainable energy. The new competitive position and the new external approach are summed up in the three corporate values that Edison has embraced: Respect – Integrity – Responsibility.
The recently proposed projects are a tangible expression of Edison’s continuous focus on ethics and integrity and demonstrate how, over the years, the code of ethics has become an increasingly integral part of the Group’s organisational culture and day-to-day operations.
The organisational, management and control model pursuant to Legislative decree no. 231/2001 comprises the rules and organisational procedures to prevent the committing of crimes and the Company’s consequent administrative liability. Edison adopted the 231 Model in 2004, following a scrupulous analysis of potentially at-risk activities and has constantly updated it over time to reflect changes in legislation and its organisation.
Activities to update the 231 Model and related protocols for conduct continued in 2016 to implement, in particular, the results of the assessment of environmental crimes recently introduced in the Italian legal system with Law no. 68/2015, which Legislative decree no. 231/01 has also been amended to cover. Furthermore, this entailed the adoption of an updated version of the environmental risk management protocol.
In addition, the Company completed activities to define the action plans for fraud risks classified as priorities as part of the fraud risk assessment (stage III) project. The risk indicators identified in the implementation of the action plan for accounts receivable and customer refunds may constitute the basis for specific fraud audits in the future, thereby extending ordinary audit to cover fraud prevention and fraud detection. A proposed text for anti-fraud guidelines was also prepared as part of this project.
The Board of Directors nominates the Supervisory Body, which is responsible for monitoring that the 231 Model functions properly and for updating it. The Supervisory Body reports half yearly on the 231 Model to the Board of Directors and to the Board of Statutory Auditors. It also monitors compliance with the code of ethics and the 231 Model in accordance with a specific procedure for reporting potential violations and via internal audits covering all business areas and including environmental and worker health and safety aspects.
In 2016, the new whistleblowing system was launched, enabling employees and third parties to report irregularities and potential crimes and integrating the channels already set up for reports to the Supervisory Body. The system provides for the use of an online platform – which employees may access via the company intranet and others may access via the Company’s website edison.it – hosted on a third party server using secure technology to protect whistleblowers and a pre-configured path so that the reports are as relevant and detailed as possible.
Alongside the new system launch, on one hand, the whistleblowing policy was published, governing in detail how the system works, how reports are handled and managed, how the whistleblower and accused party are protected. On the other hand, at the same time as the launch, an awareness campaign for employees and third parties was conducted with special news reports and a supporting tutorial video.
Whistleblowing is becoming one of the most effective weapons against illegal acts such as bribery, fraud, abuse of office and other serious crimes. A whistleblower is someone who sounds the alarm, calling an organisation’s attention to a dangerous situation by making a detailed report. Whistleblowing is a way to protect the common good and the company’s integrity.
This process helps overcome a cultural taboo and encourages conscientiousness in employees who, instead of looking the other way, can help fight dishonest conduct.
The Company is aware of the fact that its employees might be in the best position to notice irregularities and therefore play an active role in preventing them, reporting them and encouraging prompt action.
Precisely in order to prevent slander, defamation or unjustified reports, the online whistleblowing process that Edison has set up with Transparency International Italia using Globaleaks software guides the whistleblower through the reporting process, defining and correctly detailing the report. This process therefore helps sort reports of illegal acts or suspected acts of bribery, fraud, other crimes or other violations of the code of ethics.
Reports are made on a protected IT platform which is physically located on an external server and received by the company office responsible for compliance and ethics. The whistleblower may always report additional details or information anonymously. In this way, the whistleblowing report remains anonymous to protect the whistleblower.
Since the whistleblowing platform was launched in July 2016, only one report was received in 2016. Following checks and investigations, it was found to be irrelevant and was dismissed.
| INTERNAL CONTROL SYSTEM | ||||
| Internal auditing | Unit of measurement |
2014 | 2015 | 2016 |
|---|---|---|---|---|
| Total number of audits conducted by business area | ||||
| - Corporate & IT | no. | 11 | 11 | 10 |
| - Exploration & Production | no. | 3 | 5 | 2 |
| - Gas Midstream, Energy Management & Optimization | no. | 3 | 2 | 5 |
| - Power Asset Management | no. | 1 | 2 | 1 |
| - Marketing, Sales & Energy Services | no. | 4 | 4 | 3 |
Enterprise risk management
Edison has developed an integrated risk management model based on the international enterprise risk management (ERM) principles and, in particular, the CoSO (Committee of Sponsoring Organizations of the Treadway Commission) framework, with the main objective of adopting a systematic approach to identifying key risks for the Company in order to assess their potential adverse effects in advance and take the appropriate action to mitigate them.
For this purpose, Edison has equipped itself with a risk mapping and risk scoring methodology, in which risks are scored based on an assessment of their global impact, probability of occurrence and level of control. It has also set up a business risk model, developed in accordance with international and sector best practices. The model consists of an integrated framework encompassing the various types of risk that characterise the Group’s business. These aspects may be broken down into:
- external environmental risks, which depend on market conditions and the competitive context, as well as political legislative and regulatory developments;
- operating risks related to processes, assets, infrastructures and business management systems, with particular regard to production and marketing;
- strategic risks in connection with the definition and implementation of the Company’s strategic guidelines.
Specifically, with the coordination of the Risk Office, the heads of the various business units self-assess the risks to which their units are exposed and provide an initial indication of the mitigation actions that could be taken.
The results of this process are then consolidated at central level in a risk map in which the risks are prioritised based on their score and aggregated to further the coordination of mitigation plans for integrated risk management.
Furthermore, for risks associated with new projects in Italy and abroad, with the Corporate Social Responsibility Office’s direct involvement, the Company also assesses and analyses environmental, health, safety and efficiency aspects, which are key decision-making drivers in the evaluation of investments.
The results of the ERM process are included in periodic structured reporting to management, which evaluates the adequacy of the risk level assumed considering business objectives and the effectiveness of the control and mitigation measures adopted. Specifically, the main risks to which Edison is exposed are described in the “Risks and uncertainties” section of the directors’ report and in the section of the consolidated financial statements on the “Management of the Group’s financial risks”.