ESG: tailored for
sustainable business

Environment, society and governance, three different perspectives to look at the role of business today and in the future. What are ESG criteria and why are we talking about them more and more?

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In 1984, philosopher and economist Robert Edward Freeman introduced stakeholder theory in his most famous essay^[1], an implicit response to the current of thought that posited profit as the sole objective of business. Stakeholders according to Freeman, in fact, are indeed the investors, but also the people who work for the enterprise, the customers, the supply chain, the local communities where the plants are located, and all those who, in various ways, are distinguished by having a stake, that is, an interest in the activities of the enterprise.

Something has broken in the dominant economic theory: the enterprise has stopped being an island and has become an archipelago of relationships among people. This theory, today, has changed the criteria by which companies are evaluated both economically and by their ability to create value in all relationships. Stakeholder engagement has thus become part of the corporate strategy-setting process that also touches on environmental, social and governance (ESG) aspects.

[1] Strategic Management: A Stakeholder Approach

ESG then is the acronym that refers to these three criteria for assessing a company's commitment:

• Environmental: ranges from reducing impact (e.g., regarding greenhouse gas emissions or consumption of natural resources) to making a positive footprint (e.g., with biodiversity protection);
• Social: refers to the relationship with all stakeholders, considering aspects such as occupational health and safety, diversity and inclusion, and respect for human rights;
• Governance: refers to the structure of the company, its decision-making processes, risk management, transparency and business ethics.

These criteria are used by investors, through ESG ratings, to evaluate sustainable business models and new investment opportunities. These are also based on the information contained in sustainability reports, documents that, when mandatory, become increasingly rigorous in their reporting aspects, on a par with financial reports.

The concept of responsible investment is not new if we think that as early as the 18th century some religious communities avoided investing in activities considered far removed from their morals. What used to be a modus operandi that exclusively invested the sphere of values has expanded in recent decades, involving environment and society and gradually taking a central role in the very evaluation of a business. Beginning in the 1990s, the approach to environmental policies changed: in the span of a few years, what was previously seen as a cost for the company was then considered a real development asset. The adoption of the United Nations Principles for Responsible Investment (PRI) in 2006 marked a turning point, providing a global framework for integrating ESG criteria into investment decisions. The European Commission is also intervening in this scenario, with its 2018 Action Plan on Sustainable Finance recommending ten actions to be taken at the European level to encourage the channeling of financial investments toward a more sustainable economy, consider sustainability in risk management procedures, and strengthen transparency and long-term investment. In particular, it sets out the main guidelines for reporting climate-related information, so as to create a reference taxonomy to define what is sustainable and identify areas where sustainable investments can have the greatest impact.

The United Nations 2030 Agenda for Sustainable Development has defined 17 Sustainable Development Goals (SDGs) that represent a global call to action. By integrating ESGs into their strategy, companies-along with institutions and the third sector-can also play a key role in achieving the SDGs. Investing in renewable energy, for example, means contributing to SDG 7, while promoting inclusion intervenes in SDG 8.

Plenitude's sustainability strategy, integrated with its business, has outlined a model of doing business centered on sustainable growth goals and is based on five pillars: Governance, Climate and Emissions, Business Sustainability, People, Community.

These pillars allow efforts to be focused on the goals deemed most in line with the company's mission, strategy and initiatives undertaken. Through the business model adopted, Plenitude is actively committed to contributing to 10 of the 17 Sustainable Development Goals (SDGs) defined by the United Nations 2030 Agenda. Consistent with this path, in 2021, it updated its Articles of Incorporation by becoming a Benefit Corporation. This commits the Company to four specific purposes of common benefit:

• Spreading the culture of sustainable energy use;
• Solutions and technologies for the responsible use of energy;
• Promotion of diversity and inclusion;
• Customer centricity and transparent and fair approach.

The result of this work has been well summarized in the Sustainability and Impact Report 2023, published in May 2024, attached to the budget document. Here one can read about the results achieved in a context where Plenitude currently operates in more than 15 countries offering energy solutions to more than 10 million customers. In this document, alongside the results achieved, future targets are stated and the transformation path undertaken by Plenitude to increasingly become an enabler of the energy transition is analyzed, with the goal of zero net Scope 1, 2 and 3 emissions by 2040.

Alongside the milestones achieved, the Sustainability Report and Impact Report 2023 indicates those set for the near future such as providing certified electricity from renewable sources to 100 percent of its customers by 2030, thus also to the Business to Business (B2B) segment, and significantly expanding its network of electric vehicle charging points, aiming for 24,000 points by 2024 and 40,000 by 2027. Or even engage in the promotion of diversity and inclusion, with a goal of reaching 50 percent women in total employees by 2025, invest in people by offering a modern welfare plan, and promote continuing education. At the same time, Plenitude is active in supporting local communities, investing in initiatives to spread the culture of sustainable energy use, and supporting projects to combat energy and educational poverty and social inclusion. A path we are telling you about because we believe that the relationship between people, inside and outside the company, is a fundamental moment of doing business while pursuing purposes of common benefit.