Paolo Scaroni:
The crisis we are experiencing has overturned many established notions that had so far underpinned our economic model. The effect is like seeing mighty idols tumbling one by one: doubts are arising in people's minds about things they had never doubted before, and this could cause a breach in the confidence that holds the whole system together.

Today like never before, companies play a crucial role and have a great social responsibility. People should feel that the workplace they go to every day is their safe haven: companies should offer a strong, shared set of values and a key to interpret what is happening in the world, they should prove that they are determined to pursue a clear course, and that everyone can have a role in this objective.  In other words, the organization must offer safety and confidence to people as we go through the storm – most importantly, confidence in the fact that the decisions that are being made will allow us to navigate past the crisis and to direct the change.
On the other hand, a crisis of this magnitude might perhaps "clear the fog" and redefine priorities. Those, like Eni, who have operated in a fair and responsible manner will come out strengthened. Over time we have built a strong social memory, and our stakeholders are unlikely to perceive any discrepancies between our set of values on the one hand, and our conduct on the other. This is the essence of a solid reputation.
Now as never before, we need to strengthen our relations within the company in order to maintain and enhance the confidence we have earned.

Ernest Moniz:
The global economy is clearly facing immense challenges, and this spills over to how we work together to face the world's urgent energy and sustainability challenge – forward-looking energy companies, research and educational institutions, governments all working together. Eni has transitioned from oil & gas multinational to integrated energy company through a clear vision of the future, and its many relationships and alliances are integral to this strategic development.  I view and value the partnership between Eni and MIT as a very good example of this.

Paolo Scaroni:
Being an integrated energy company, engaged in the search for the energy sources of the future together with other major industry operators, is the strength on which Eni relies to be a credible player for all our stakeholders.  
A key aspect of innovation is cooperation with oil and gas producing Countries. Our company has a competitive advantage because of the legacy left by Enrico Mattei, who first believed and invested in relations with the producing Countries. We have identified opportunities for new models of cooperation, and we are building on those models.  
We have already entered into agreements based on the awareness that a producing Country "chooses" Eni because the company can offer proven and tangible benefits as regards the creation of opportunities for social and economic development for the entire nation.  This provides stability to our investments, because it allows us to establish long-term relationships.
We now need to go one step further: strategic agreements are necessary with producing Countries who are able to guarantee a fair share of risks and profitability. The oil industry needs cooperation, in the interest of a price stability that is beneficial to producers, and even more to consumers - who need steady supply just as much as producers need steady demand.

Ernest Moniz:
Focusing on the development of all Countries – industrialized and developing, energy producers and consumers - is vitally important. As the world experiences extremely difficult times, we cannot opt out of recognizing the needs and investing in the growth potential of all regions. Providing energy and growing sustainability is a virtuous cycle that is beneficial to everyone.  Development and fairness will also support enhanced security, which is another necessity for global sustainability.

Paolo Scaroni:
Undoubtedly, companies play a vital role in this respect.  We need to state this forcefully at all times, even at times like the present when no organization, whether public or private, seems to deserve the complete trust of the citizens. Large organizations like Eni are called on to promote innovation in the entire system, not just in the areas of technology and research. Our new models of cooperation with the producing Countries are based on the strategic need to favour their development. This also means promoting human rights, protecting the environment and engaging in common efforts to weather major changes wherever we operate.

Ernest Moniz:
Protecting the environment calls for strong and coherent action to mitigate the risks of climate change.  Our understanding of the regional impacts of climate change is still in the early stages, but areas thought to be at very high risk include polar regions, the Middle East, and Africa.  This can have profound implications for energy supply, major societal dislocations, and consequent environmental, economic, and security consequences worldwide.  Innovation in technology, policy, and business models are all called for, and both Eni and MIT are tackling these with determination – including through our strategic partnership.

Paolo Scaroni:
Renewable sources are one of the ways to build a less carbon-intensive world, where oil has a smaller role than it has today.
Very likely, we will see a sharp discontinuity in the way of producing energy, and for this we must be prepared. Today, renewable sources are affected by two basic limitations: one is related to costs, and the other to low energy density and power. Cost constraints can be partly compensated by policies aimed at incentivizing the use of alternative energy, whereas technological limits require significant investments in research efforts. We must steer research in the right direction in order to resolve these issues, and this is what we are doing by investing in research on a source that has very high potential, namely solar energy.

At the same time, we should not overlook the fact that another low-carbon energy source is available in the form of natural gas. Eni has a leading position in the European gas market and actively contributes to the security of supplies in Europe.  We are going towards a progressive integration of the entire supply chain, and our credibility is based on solid ground: Eni was the first company in Europe to invest heavily in the gas business. This is one of Enrico Mattei's great legacies, and over time we have been able to achieve leadership also in pipeline management, while our ability to set up deals with the producing Countries allows us to have a wider range of supply sources than any other company.   
The fact of being a truly integrated energy company, i.e. of having developed our gas segment, gives us on the one hand a clear competitive advantage even at times of extreme oil price fluctuations like the present one, and on the other allows us to carry out a well-balanced transition towards renewable sources.

Ernest Moniz:
I am optimistic about development of advanced renewables through cutting-edge research and accelerating their deployment at large scale. A change in this direction is certainly needed, not only in technology. Innovation must integrate with new business models. For example, in supporting research on renewable sources I think Eni is going in the right direction.
As regards natural gas, the least carbon intensive fossil fuel, we are convinced that it will be a critical and growing energy source as carbon dioxide emissions are more and more strongly constrained in the next several decades. Our relationship with Eni is an important strength.  Business experience is an essential backdrop to good energy policy.  And furthermore, I believe that large energy companies are essential for accelerating introduction of clean technologies at large scale –linking their capital, supply chains, and distribution networks with a sustainable vision.

Paolo Scaroni:
I think this need for acceleration should be extended to the management of human resources, and particularly of the company's talents.  Young people who are capable and strong-willed must be allowed to find ways to develop and show their potential. This is why at Eni we try to create situations of discontinuity, career paths for people with an extremely high potential, even outside the ordinary development processes ensured by organizational mechanisms. People's age should not limit their authority.
Valuing merit within diversity  is key to promoting cultural innovation within the organization.

Ernest Moniz:
It is crucially important to recognize and encourage young talents, particularly of diverse education backgrounds, able to think "outside the box" to find new solutions. At universities, we should never forget that our first product is not research, but the students themselves who will shape the world of tomorrow. Some of them will work in the energy industry, in large companies like Eni. Others will be members of Governments or will join non-government organizations.  Many will be opinion leaders. If during their time at MIT they see companies working for the future in cooperation with their University, they will understand how energy enterprises offer important perspectives and operate for change.  And our energy industry partners can build relationships with tomorrow's energy technologists, economists, and planners. Our confidence in the future rests with young people such as the graduate student Eni-MIT Energy Fellows.  

Paolo Scaroni:
I am convinced that there can be no innovation without an understanding of the value of diversity. I like to quote Lorenz and Lorsch, who back in the 70s argued that the secret of a company's success is to promote close interaction between widely diverse people.  My front line is composed of people who are very different from each other - who think and address problems along very different lines. I tend to mistrust companies that only hire people with the same basic training and require the same skills, just as I mistrust those where all diversity is suppressed in the name of a standardizing approach. I firmly believe that a diversity-centered corporate culture is challenging, and yet it is what we need to pursue, because a company's innovation capability is driven by the pooling of different personalities, ideologies, skills, and geographic origins.
Valuing diversity means having the cultural tools to do so.  In order to work with Eni, each of our people must be thoroughly familiar with the history and culture of the areas where we operate. When I travel to a Country to sign a deal, I consider the knowledge of that Country's history and culture as a negotiating prerequisite.  The relationships between Russia and the young eastern European nations, for example, cannot be understood and explained unless you are familiar with the past events that have marked these relationships. This is why culture, in the widest meaning of the word, is an essential aspect of our work, and perhaps the most important true source of innovation.

Paolo Scaroni interviewed by Angela Wilkinson

Why don't you start by giving me your view, and then I will step in when I've got a question. I am interested in trying to get to the man behind the messages in this report.

A few years ago I had the pleasure of meeting Sir Adrian Cadbury, who wrote a book about corporate governance in the early 1990's. In Sir Adrian's view, the broadest way of defining social responsibility is to say that the continued existence of companies is based on an implicit agreement between business and society. A company is licensed by society to provide goods and services, and generate profits, only if it delivers economic and social benefits for the wider community in which it operates. The essence of the contract between society and business is that companies are bound not to pursue their immediate profit objectives at the expense of the longer-term interests of the community. I like this definition because it spells out that the community will only accept you as long as the benefits it receives from your presence are greater than any negative impact you may cause. If you break this contract you will ultimately not be allowed to operate. This is certainly true at the local level, but it can also be true at a global level if what you do goes against the interests of society. What I found convincing about this concept is that it explains why corporate social responsibility, or Sustainability if you prefer, is not an option but a necessity.

So your notion of Sustainability is about this social contract between business and society, but also about respecting the longer term interests of social development and progress?

Absolutely. Social development and environmental protection are part of the long-term benefits that companies provide to the communities in which they operate. This explains why Sustainability is so important. On the other hand, this approach also benefits companies. All these activities, as well as being necessary, also contribute to the efficient management of an organization. Another important aspect of value creation is the management of people. I have worked in companies for many years, and I have long thought that the real secret of management is to be able to integrate very different people within the same organization. A company in which everyone has the same cultural and social background is weak. Diversity is a great asset. And Eni is certainly a very diverse organization. There is also a third area where Sustainability leads to value creation. When a company deals with governments - which oil companies frequently do, because in oil-producing countries our ultimate counterparty is the government - it has to have the wider interests of the country at heart: the environment, the fulfilment of the local population's needs, economic development and the involvement of local enterprises.

I'd like you to look back a little. Twenty years ago the oil sector was not thinking about corporate responsibility or Sustainability. It was very concerned about environmental management. Since then, its outlook has broadened. Why has it changed?

Let me try to explain my view. When developing countries are rich in oil, there is a tendency for the oil industry to suck in a disproportionate amount of the country's skilled people. So when local governments want to develop initiatives that fall outside the oil sector, they often turn to us simply because we are a big organized presence in that country. Nowadays, our contracts generally include some social activities. These can range from rice cultivation in Nigeria to the development of a vaccination programme in the Congo. Oil companies are asked to give something back to the community. And we are asked to manage these initiatives - which fall outside our normal business - because we have an organization which is able to do so.

Let's talk about the relationship within the energy sector between international companies and national companies. This relationship seems to be changing. What are the implications?

In this area, I see a cyclical effect. When the oil price goes up, the power of oil-producing countries and of their national energy companies goes up too. This also has implications on what oil producing countries require in terms of local development, local employment and investment in activities which lie outside our core business. Broadly speaking, their requirements increase. And this is where Sustainability becomes a competitive advantage. Let me give you an example. In Africa, there is still a lot of gas flaring. Investing to capture and use associated gas to produce and sell electricity is the best thing one can do from the point of view of corporate social responsibility. It reduces gas flaring, which has negative impacts on the environment. Meanwhile, one also produces electricity. And electricity is life. When a community has access to electricity, everything changes. One can have telephones, computers, and industrial activities. It is very important. We have been developing this process, and have applied it in Nigeria, the Congo and Angola.

That's very clear. Let's turn to the global energy system. Climate change is going to be the world's big potential game-changer, according to the inter-governmental panel on climate change. It seems that, in the long term, we are committing ourselves to a set of unprecedented environmental conditions.

Regarding climate change, despite the ongoing debate we take the view that we should behave as though it were a conclusively proven phenomenon. What can we therefore do? We can reduce our CO2 emissions as much as possible. And, looking at the longer term, we need to invest in the only form of alternative energy which really has the potential to meet our planet's energy needs: solar power. We are convinced that the sun is the only viable longterm alternative to hydrocarbons. On this front, we have signed an agreement with the Massachusetts Institute of Technology to develop research programmes on solar energy, and will invest $50 million in the project. The objective is to replace silicon in the production of electricity, because silicon technology is 50 years old, expensive and very energy intensive. We believe that other materials, such as polymers, will provide the solution in future.

For me the role of business is to navigate and take on the challenges that society faces. What are the dilemmas and tensions you are facing?

Our sector faces a number of challenges. But our job is to overcome them with pragmatism and common sense. One example is the issue of gas supply security, which is widely debated in Europe. And no wonder. In Europe, two out of every three houses are heated using natural gas. Turning to electricity, 80% of the incremental capacity built in Europe over the last 15 years is gas-fired. Gas consumption continues to grow, while domestic production declines. As a result, our gas imports will have to grow from the current 300 billion cubic meters a year to 600 billion cubic metres in 2020, and our continent will essentially depend on two suppliers - Russia and Algeria - which are not part of the EU. This increasing dependence on a product as essential as gas gives rise to recurrent concerns on our continent. We at Eni have to do everything we can to contribute to Europe's gas supply security.

The priorities on which Eni will focus its efforts in terms of Sustainability - how did you choose those?

The target I set was gaining admittance to Sustainability indices such as the FTSE4Good and the Dow Jones Sustainability Index. That ensured we had a clear objective. And if one works to meet these indices' criteria, that usually means one is moving in the right direction. The other thing which I did in Eni, and which I had also done in Enel and in Pilkington, was to make the Sustainability metrics an integral part of the company's reporting system. This means that we can monitor our performance at regular intervals, ensuring we are meeting the targets that we have set ourselves.

You have come from a major energy user, Pilkington's glassmaking business, to the energy-producing side. What's the main difference between the two?

In glass-making, energy is a crucial element of your overall costs - roughly the same as labour. That means that, in order to maximize efficiency, you have to minimize your energy consumption. But even looking at the issue from the point of view of those who produce energy, I still believe it is essential to tell our customers how to rationalize their energy consumption. That's why we have launched a campaign to educate Italian families about energy efficiency. The campaign is called Eni 30PERCENT because it tells families how to reduce their expenses for energy consumption by 30%. By following our 24 simple suggestions, the average Italian family can save €1,600 a year without significantly altering their lifestyle.