ENDESA 2017-2019 Sustainability Plan · Sustainability Priorities to lead Energy Transformation ... Approval of Directive 2014/95/UE ... Vs 2005 Vs 2005 ~ 0.3 GW Hydro

ENDESA

2017-2019 Sustainability Plan

Index

ENDESA´s Business Model1

Context analysis

Sustainability Priorities to lead Energy Transformation

2017-2019 Roadmap: Sustainability Targets

Global Agenda 2030: ENEL and ENDESA’s commitments to UN SDGs

2

3

4

5

2

Index


Context analysis




2

3

4

5

3

ENDESA´s Business Model

4

Key Business Figures

~50%Free CO2 production(2)

12.3 Mnend users

116 TWhDistributed Energy

11 MnElectricity customers

1.5 MnGas Customers

NOTE: Data as of 31/12/2016

1: Gross capacity

2: Production (TWh bus bars)

23.7 GW Installed capacity(1)

69.8 TWhProduction(2)

6.4 GW Renewable + Hydro

Capacity(1)

5

ENDESA´s Business Model2016 Key Financial Figures

13.54

0.64

2.05

2.08

Power sales

Other sales and services

Regulated revenue from electricity

Electricity Distribution

€ 18.3 Bn

2016 SALES

2.2

0.5

0.4

OPEX

CAPEX (O&M)

CAPEX (Investment)

€ 3.1 Bn

2016 CAPEX & OPEX

35%

11%2%

52%

Generation and supply

Non-mainland

Renewables

Distribution

€ 3.4 Bn

2016 EBITDA

Data as of 31/12/2016

6

ENDESA´s Business Model2016 Key Non-financial figures

100 % of energy produced in

ISO 14001 certified facilities

43% CO2 emission reduction

(compared to 2005)

26 biodiversity projects

developed in 2016

+800,000 beneficiaries in the

200 social investment projects

developed in 2016

29.3% women in managerial

positions

~ € 2,000 Million in sales to

+6,000 suppliers in 2016

+ € 16 Million invested in

R&D in 2016

Leadership in Customer

Satisfaction(2% over competitors)

+80% employees trained in

ethics in 2016

Environmental Figures Social Figures Economics and Ethical Figures

Data as of 31/12/2016

Renewed in Sep 2016Score: 86/100

Renewed in October 2016 Score: B (Climate) y A- (CDP

Water)

Included in Sep 2016Leaders in Social dimension

Renewed in Nov 2016 (World, Europe and Eurozone)

Renewed in

January 2016

Index


Context Analysis




2

3

4

5

7

Framework for Sustainable Development

8

Building Transparency

Approval of Directive 2014/95/UE

regarding disclosure of non-financial

and diversity information by certain

large undertakings and groups

Spanish Sustainable

Development Strategy

Approval of the 2014-2020

Spanish CSR Strategy to progress

towards a more competitive,

productive, sustainable and

inclusive society and economy.

Responsibility of Board of

Directors

Approval of the Code of Good

Governance of listed companies

of the CNMV, that links

Corporate Social Responsibility

to the highest level of decision.

Paris Climate Change Agreement, COP 21

The Paris Agreement’s central aim is to strengthen

the global response to the threat of climate change

by keeping a global temperature rise this century

well below 2 degrees Celsius above pre-industrial

levels and to pursue efforts to limit the temperature

increase even further to 1.5 degrees Celsius.

October

2014

October

2014

February

2015

October

2015

December

2015

New Frameworks to promote Sustainability and Corporate Responsibility launched in the previous years

Sustainable Development Goals

Agenda

Adoption of the 17 United Nations

Sustainable Development Goals, to

eradicate poverty, protect the planet

and ensure prosperity.

.

GLOBAL ECONOMY

Urbanization

Digital and

Technological

revolution

Decentralized energy

management

EFFECTS RISKS

Urban growth driven

by developing world

Large scale urban

infrastructure needs Urban Poverty

Big data

Change of security

and policies to focus

on dealing with

cyber crime

Emerging multi polar

world order

Failure/shortfall of critical

infrastructure

Adverse consequences of

technological advances

Large scale Cyberattacks

Challenges and global opportunities

PEOPLE

Demographic change

Civil Society

strengthening

ENVIRONMENT

Climate change

Decarbonization of

energy mix

Resources stress

An aging world

Rising inequalities

Faster dissemination

of information

through social media

accelerates action

Increasingly

connected

population

Profound social instability

Large scale involuntary

migration

High structural unemployment or

underemployment

Unpredictable,

dramatic ecosystem

impacts

The challenge of

global cooperationFood and

agricultural pressure

A greater role for

cities

Extreme weather events (e.g.

floods, storms, etc.)

Failure of climate change

mitigation and adaptation

Food crises

Increased water

demand

Energy demand on

the rise

Water crises

9

Sustainability Trending Topics

10

Materiality Analysis Result

Financial

Strength

Innovation and

Operational

Efficiency

Ethic Conduct and

Good Governance

Energy

EfficiencyCustomer

relationships

Economics and

Governance

Social

Customer

Area

Responsible Relationship

with Local CommunitiesOccupational

Health and Safety

Sustainability Topic

Note: results of the materiality analysis carried out in 2016 to identify stakeholders expectations based on internal and external consultations.

Renewable

Energies

Traditional

Technologies

Efficiency

Climate

ChangeDecarbonization

Index


Context Analysis




2

3

4

5

11

12

Good Governance

Health and Safety

Environment

Supply Chain

Financial value creation

Dig

ita

liza

tio

n

Custo

me

rDecarbonization

Efficiency

Human Capital

Local Communities

ENDESA´s industrial priorities

Sustainable Business Model

Responsible Business Management

ENERGY MIX DECARBONIZATION

DIGITALIZATION

CUSTOMER FOCUS

OPERATING EFFICIENCY AND INNOVATION

INTEGRITYLOCAL

COMMUNITIESHUMAN

CAPITALENVIRONMENTAL

SUSTAINABILITY

SUPPLY

CHAIN

HEALTH AND

SAFETY

Stakeholder

expectations

Sustainable Development

Frameworks

Su

sta

ina

bilit

y P

rio

riti

es

CONTEXT ANALYSISSUSTAINABILITY STRATEGIC PRIORITIES

Defining priorities

ENEL commitments to UN SDGs

Decarbonization

Customer orientation Digitalization

Efficiency

Inte

rna

l d

ime

nsio

nE

xte

rna

l d

ime

nsio

n

Smartgrids

12

ENDESA 2017-2019 Sustainability Plan

13

DIGITALIZATIONCUSTOMER

FOCUS

VALUE ADDED

SOLUTIONS

QUALITY

ENERGY MIX

DECARBONIZATION

HUMAN

CAPITALLOCAL

COMMUNITIESINTEGRITY

ENVIRONMENTAL

SUSTAINABILITYSUPPLY CHAIN

CO2 EMISSION REDUCTION

RENEWABLES

SUSTAINABLE BUSINESS MODEL

HEALTH &

SAFETY

OPERATING EFFICIENCY

AND INNOVATION

Responsible Business Management

ASSETS

CLIENTS

PEOPLE OPEN

INNOVATION

ASSETS

MANAGEMENTECONOMIC

AND

FINANCIAL

VALUE

CREATION

Structure

Index


Context Analysis




2

3

4

5

14

4.7 4.7

1.7 2

2016 2019

Energy Mix Decarbonization

15

CO2 emission reduction Free-CO2 Production

Renewable capacity development

51

29 2720

100

2005 2016 2020 2030 2040 2050

Energy Mix 100% Decarbonized by 2050

43% 47% ~61% ~80% 100%

100% CO2 emission reduction by 2050

540420 367 302

1110

2005 2016 2020 2030 2040 2050

22% 32% ~44% ~80% ~100%

Absolute emission (MtCO2)1

Specific emission (tCO2/GWh)1

33%

49%54%

63%75%

100%

2005 2016 2020 2030 2040 2050

Free-CO2 emission production (%)

Vs 2005

Vs 2005~ 0.3 GW

Hydro

CAPEX 2016-2019: € 502 Million

Renewable (Wind, PV…)

Installed Capacity (GW)

1: Estimation considering the total production of ENDESA at bus bars.

NOTE: Data includes acquisition of EGPE from July 2016

<~

~

<

Production (GWh)

7.2 6.9

1.25

2016 2019

+50%

~ € 10 Million

Digitalization

16

Approach Investment (2016-2019 CAPEX)

Customer

Asset

• Assets digitalization

• Smart Grids (LV, MV & HV)

• Process

• Facilities

• Competences

• Back office

• Customer

relationship

• New Services

• Organization

• Framework

• Training

• Cloud migration

• Technological

update

• Efficiency

• Interaction

• Connectivity

People

Cyber security

Platform

Cloud

~ € 830 Million CAPEX in digitalization for 2016-2019 period 1

Thermal Generation Assets

~ € 760 Million

Distribution Assets

~ € 60 Million

Customers

1: Gross investments (It does not include capex referred to VAS)

1.9

3.6

2016 2019

17

Thermal Generation Assets Customers

Digitalization Project in

Besos Power Plant

Big Data Project for Thermal

Generation Assets

management

8%

15%

2016 2019

4.5

5.7

2016 2019

Digital Customers

(Mn)

Digital Sales

(%)

N. of customers

with e-bill

(Mn)

x 2.5 x 2

x 2

Distribution Assets

0%19%

71%

2016 2017 2019

HIGH VOLTAGEMEDIUM VOLTAGELOW VOLTAGE

9.211.2

12.5

2016 2017 2019

35%

People

Development of programs for

digital transformation

of employees

(E-talent program)

~ 2,000

Employees engaged

Period 2017-2019

Visits to Twenergy

(Mn)

62%75%

93%

2016 2017 2019

Digitalization (cont.)

LV: Smart meters

(Million) (accumulated)

MV: Smart remotes

(% plan)

HV: Remote control

system technological

upgrade

(% plan)

1.6

3.7

2016 2019

18

Ciber Security

Web application exposed at Internet protected by

applicative advanced solutions at Cyber security

Constitution and accreditation of

CERT (Computer Emergency Response Team)

(In 2017)

Scope Main Objectives

Cyber security awareness events

every year

+15

25%

75%100%

2016 2017 2019

Digitalization (cont.)

Customer Focus

Value-Added Services (VAS) Quality

~90

200

2016 2019

Gross Margin

(€ Million)

Renewable E - Mobility Efficiency Air ConditioningIoT Maintenance

x 2.2 Margin Increase

Solutions Portfolio

€ 242 Million

2016-2019 CAPEX

Gross Investment

(€ Million)

Value-Added Services

1st ranked Company

in Customer Satisfaction period 2017-2019

Customer Satisfaction

19

6.36.8

7.2 7.2

2014 2015 2016 2019

Global Customer Satisfaction Index

(Domestic, Business and Large customers)

Operating Efficiency and Innovation

20

Operating Efficiency Open Innovation

Distribution Electricity losses (1)

(%)

8.4%7.9%

7.4%

2016 2017 2019

12%

Interruption time(min)

58

5756.3

2016 2017 2019

Energy Recovery ( 2017-2019)3,776 GWh

~3%

DISTRIBUTION

RENEWABLE ENERGY

98% 98.2% 98.2%

2016 2017 2019

93.6%

96% 96.2%

2016 2017 2019

Wind – Solar – Biomass

(Efficiency, %)

Hydro

(Efficiency, %)

Period 2017-2019

Launch of OPEN POWER

challenge every year1

New innovative start-up every

year2

Launch of new Innovation

Projects every year

Innovation Events every year

Quality

100% Power

generation Facilities

(obtain in 2017 and maintain)

100% Hydro Facilities

(obtain in 2017 and maintain)

2

2

ISO 9001 Certification

Period 2017-2019

100% Renewable

Facilities (Wind; PV)

(maintain in 2017-2019)

1: The figures do not include HV Transmission Grid losses

21

176

240

240240

240240

2015 2016 2017 2018 2019 2020

Access to energy

+ 1.37 MM (2015-2020)

+ 960,000 people benefited in 2017-2020

period

+ 3 MM (2015-2020)Commitment

Local Communities

People benefited (thousands)32

41.5

4242

4242

2015 2016 2017 2018 2019 2020

Socioeconomic Development

+241,000 (2015-2020)

+ 168,000 people benefited in 2017-2020

period

+ 1.5 MM (2015-2020)

People benefited (thousands)

Contribution

4

31.6

32

32

32

32

2015 2016 2017 2018 2019 2020

Access to Education

164,000 (2015-2020)

~ 128,000 people benefited in 2017-2020

period

+ 400,000 (2015-2020)

People benefited (thousands)

Note: Data until 2020 have been included in order to be aligned with public ENEL commitment with the Sustainable Development Goals (2015-2020). Moreover, ENDESA and ENDESA’s Foundation activities are included.

Access to energy: Includes projects to minimize economic barriers to access to energy, promotion of training capacity and capacity in the field of energy, promotion of energy efficiency, awareness of the use of energy and technological development and

infrastructures to facilitate the Access. Moreover, programs to facilitate access to energy to people in vulnerable situation are included.

Socioeconomic Development: Includes projects to promote employment and generate economic activity in the community, Transfer of knowledge and training, Support to local business activities, Infrastructure development and Community network

Education: Includes projects to support training activities involving students, families, colleges and universities and promotion of academic training, in general, not related to energy, through scholarships, chairs, etc.

Access to

electricity for

vulnerable

households

People per year

(period 2017-2020)

+60,000

Commitment

Contribution

Commitment

Contribution

Integrity

22

Good governance & Transparency Ethical Conduct

Development of the internal regulation to prevent

market abuse

Transparency promotion regarding diversity

in the Board of Directors and related

Commissions: Implementation of Directive UE

2014/95 regarding disclosure of non-financial and

diversity information.

30% of Women in the Board of Directors

in 2020

Employees trained in ethics (%)

Score over 95/100 in the Code of Conduct criteria of Dow

Jones Sustainability Index, in the period 2017-2019.

100% of Verifiable claims analyzed within 90 days in the

period 2017-2019

85%90%

97.5%

2016 2017 2019

Annual verification of the efficiency of the Criminal Risk

Prevention Model

Human Capital

23

Performance Appraisal

Employee Satisfaction

100%

Coverage Participation Feedback

2017-2019 period (% employees) *

99% 93%

Diversity

Work-life Balance

+5,000

employees benefited due to the

improvements implemented at the

workplace

(accumulated 2017-2019)

42 50 60

2016 2017 2019

Services that promote employee

work-life balance**

100%

Climate Survey

Coverage

80%83% 84%

2016 2017 2019

Participation (% employees)

30.45%33%

37%

2016 2017 2019

16.4% 16.5%

18.5%

2016 2017 2019

% Women new hires Managerial positions covered

by women (%)6.5% 2.1%

Training

2017-2019 period

33 33 31

13 13 15

2016 2017 2019

Face to face Online

Average training per employee every year

46Average training

hours per employee

every year

* Number of offices included in the Project: 5 in 2016 and 6 from 2017. Annual increase corresponds to the extension of services offered to other offices.

** The perimeter considered is ENDESA’s workforce, including Enel Iberoamerica employees and without considering ANAV.

5.19

3.01

1.64

1.01 1.19 1.14

2010 2012 2014 2016 2017 2019

Occupational Health and Safety

24

Health

Safety

Awareness

Safety evaluations done

under EcOS Program (Extra Checking On site)(1)

45

Period 2017-2019

~ 27,000Medical check-ups (2017-2019 period)

+ 720awareness programs on

Health and Safety promotion

in period 2017-2019

0 fatal accidents (employees + contractors)

Accident ratio reduction

Accident ratios

230 235245

2016 2017 2019

Number of Actions

+ 198,000Safety Inspections in

company and contractors

facilities

1: EcOS program includes a deeper on-site evaluation in which safety, health, environment and quality issues are checked.

2: From August 2016, Enel Green Power España is included.

Combined Injuries Rate (LTIFR)2 (employees and contractors)

Reduce

23%Environmental Footprint

by 2019

(compared to estimated 2016)

Environmental Sustainability

25

Environmental Management Air Quality

Water Management

Biodiversity and environmental awareness

+ 20 Biodiversity Projects per year

2017-2019

+ 234,000Number of beneficiaries of the environmental

awareness and nature restoration projects

(2017-2019)

Maintain

100%Generation Facilities

(Thermal + Nuclear)

certified by ISO 14001

Maintain

100%Distribution activity

certified by ISO 14001

Specific Water consumption in

Power Plants

0.88

0.65

2016 2019

SO2

NOx

Particulates

Specific Emission (g/kWh)

~26%

1.19

1.01

2016 2019

(2017-2019)

Waste Management

Waste production(Hazardous and Non-hazardous)

Period (2017-2019)

Note: Data regarding generation include: Thermal Generation, Nuclear and Renewable

< 35 mg/kWh

Per year in 2017-2019 period

15%< 45,000

Tons per

year

Recovery of coal-fired

products (%)(2017-2019)

> 18% annual

< 930 m3 / GWh per year

Environmental Sustainability(cont.)

26

Fleet Management

+500,000 Kms

with e-Car Sharing service

(2017-2019)

+350

Parking slots for electric

cars at ENDESA’s offices

in 2019

10% Emission Reduction by 2019 (vs 20161)2

+33%

Travels with shared taxi

service by 2019

Sustainable Mobility

Employees mobility

In itinere

In Mission

+250

Electric vehicles

purchased by

employees in 20172,062 2,0121,762

424420

410

78 110

250

2016 2017 2019

Combustion Hybrid Electric

x3Electric Vehicles by 2019

(vs 2016)

17%Hybrid Vehicles by 2019

14%Reduction in the internal

Combustion Fleet by 2019(vs 2016)

2,564 2,542 2,422Total Fleet

1: Emissions as of 31/12/2016: 6,531 ton CO2

2: Emission reduction due to the electric mobility plan for employees or the use of shared taxi service not included.

109 109 108

2016 2017 2019

15.815.7 15.6

2016 2017 2019

Environmental Sustainability(cont.)

27

Offices Management

Energy consumption1

(GWh)

-500 MWh ~1,000 m3

0.5% Annual Reduction

Water consumption1

(million m3)


Waste Production

(packages)1

(ton)

~0.2 ton


~45,000 m2

Office portfolio surface

optimization (m2 reduced)

(2017-2019)

+30% Reduction of CO2 emissions in ENDESA's offices by 2019 (vs 20162)

Reduction of consumption and waste production Space optimization

~ € 26.2 Mn

Invested for the Integration of

the offices into the environment

(2017-2019)

27

Social activities carried out in

propietary assets

(2017-2019)

Waste Production

(paper)1

(ton)

~1 ton


1: Only SIGAEC (22) Buildings are included.

2: Emissions as of 31/12/2016: 11,971 ton CO2

31.431.2

30.9

2016 2017 2019

63.863.5

62.8

2016 2017 2019

55% 57%

65%

2016 2017 2019

Sustainable supply chain

28

Suppliers Contractors

63% 65%

75%

2016 2017 2019

Purchase Volume (€)

Qualification1 Performance Assesment2

0%20%

60%

2016 2017 2019

55% 65%80%

2016 2017 2019

15% 20%

60%

2016 2017 2019

Human Rights Health and Safety Environment

Purchase Volume (€)

(prior to service) (after service)

1: Supplier Qualification System

2: Vendor Rating System

3: Generation Line Suppliers not included.

~ 1,500

contractors3

work with ENDESA

Audits to contractors on social, ethical

and environmental issues

(period 2017-2019)

>60%% of the Qualifications that verify issues related to:

Datos acumulados

Economic and financial value creation

29

EBITDA (Bn €) NET PROFIT (Bn €)

3.4 3.4

3.7

2016 2017 2019

+9%

The leadership on energy transformation will allow ENDESA to create

Sustainable Economic Value in the period 2017-2019

Dividend per share (€)

1.4 1.4

1.7

2016 2017 2019

+21%

1.33

1.37

1.57

2016 2017 2019

+18%

Minimum DPS of € 1.32 per share

Index


Context Analysis




2

3

4

5

30

UN Sustainable Development GoalsENEL and the Sustainable Development Goals

Supporting education activities for

400,000 people until 2020

Promoting affordable, sustainable and

modern energy to 3 Million people until

2020

Promoting employment and sustained,

inclusive and sustainable economic growth

for 1.5 Million people until 2020

Being Carbon neutral in 2050 and emission

reduction under 350 gCO2 /kWh in 2020

(-25% vs 2007)

2030 Agenda for Sustainable Development ENEL’s Commitment to UN SDGs

31

32

1: (% reduction vs. 2005)

2: Data refered to 2016-2019 period

3: Vulnerable customers certified by the corresponding Departments of Social Services of the Public Authorities

4: The Objective has been updated to 12.5%

Note: Endesa also contributes to commitments set out by Enel on SDG 4 (Education) and SDG 8 (socioeconomic development) through the social initiatives performed by the Company and its Foundation

ENDESA´s contribution to UN SDGs

(2021)

23

1

4

33

2017-2019 Sustainability Plan

Decarbonization of the Energy Mix

Digitalization

Customer Focus

Aiming at operating efficiency and innovation

Engaging the local communities

Integrity

Human Capital

Occupational Health and Safety

Environmental Sustainability

Sustainable Supply Chain

Economic and financial value creation

1 2 3 4 5 6 7 8 9 10 11 12 13 1514 16 17

Enel Group’s Public commitment to United Nations

UN Sustainable Development GoalsENDESA’s contribution to UN SDG’s through 2017-2019 Sustainability Plan

ENDESA’s contribution to UN SDGs communicated to investors in November 2016

The 2017-2019 Sustainability Plan contains the description of the actions that aim to contribute

to the achievement of the objectives set by the Company in its 2017-2019 Strategic Plan.

The actions described in the 2017-2019 Sustainability Plan are based on the business

hypothesis of the 2017-2019 Strategic Plan so that the same factors and risks are applied and

therefore the results of such actions could differ materially from those expected.

Disclaimer

Documents

ENDESA 2017-2019 Sustainability Plan · Sustainability Priorities to lead Energy Transformation ... Approval of Directive 2014/95/UE ... Vs 2005 Vs 2005 ~ 0.3 GW Hydro