Eni’s strategy on climate change

The main challenge for the sector is to ensure clean and sustainable energy in line with the UN’s 2030 Agenda. Eni, aware of the ongoing climate emergency, intends to play an active role in the energy sector’s virtuous path to contribute to carbon neutrality by 2050, in order to limit average global warming within the 1.5°C threshold at the end of the century.

Eni's mission is inspired by the Sustainable Development Goals (SDGs) and demonstrates the journey the company has taken to address the energy sector’s so-called dual challenge. The dual challenge is to ensure access to efficient, reliable and sustainable energy for all, while reducing climate-changing emissions, to combat climate change in line of the objectives of the Paris Agreement.

Following a period of profound transformation, which allowed the Group to grow and diversify its portfolio, while at the same time strengthening its financial structure, Eni has launched a new phase in the evolution of its business model, combining economic, financial and environmental sustainability with an intense focus on long-term value creation for all the stakeholders.

Despite the complex situation caused by the pandemic, Eni has decided to accelerate its transformation path. In February 2021, Eni announced its new strategy to relaunch short, medium and long-term operational targets, which outline the evolutionary and integrated path of the individual businesses and that will lead Eni to carbon neutrality by 2050.

Eni will pursue a strategy that, by 2050, aims to achieve net zero on GHG Lifecycle emissions Scope 1, 2 and 3 (Net GHG Lifecycle Emissions), and the associated emission intensity (Net Carbon Intensity) for the entire life cycle of tge energy products sold, further strengthening the intermediate decarbonization targets.

The Eni of the future will be even more sustainable, with increasingly digitalized operations and customer services, and will see its role as a global player in the energy world strengthened. The progressive development of the renewables business, with related energy supplies reaching 4GW by 2024, 15GW by 2030 and 60GW by 2050, will further boost this. New business will be developed based on circularity, the use of biogas and the recycling of waste and end products. In addition, the production capacity of bio-refineries will be doubled to around 2 million tonnes by 2024, with a 5/6 fold increase by 2050, as well as the increase in blue and green hydrogen to power Eni's bio-refineries and other energy-intensive industrial activities.

This evolution will be based on know-how, proprietary technologies, innovation and the flexibility and resilience of assets, and will allow us to seize new opportunities for development and efficiency.

Eni is committed to aligning its capital plans and investment decisions to its GHG reduction targets and decarbonization strategy – which will lead Eni to carbon neutrality by 2050 in line with the scenarios compatible with keeping global warming within 1.5°C – by progressively reducing the share of expenditures dedicated to O&G activities, selecting investment projects against strict emission thresholds and boosting allocation of funds to expand renewable generation, circular economy, and new energy vectors. Eni's long-term decarbonization targets have been recognized as aligned with the Paris Agreement's more ambitious goal of keeping global average temperature increase within 1.5°C, by the 2021 assessment performed by TPI (Transition Pathway Initiative), among the very few energy companies achieving this result. Eni has clearly defined both its long-term decarbonization objectives and its intermediate GHG emissions reduction commitments as fixed targets, not ambitions, which represent the focal point of Eni's actions for the next thirty years. Eni’s strategy outlines the evolutionary and integrated path of each business, while providing flexibility on individual contributions according to market trends, technological scenario and reference regulations, to maximize the opportunities arising from the energy transition. According to its decarbonization Strategy, Eni also commits to phasing out investment in unabated carbon-intensive assets or products as a necessary condition to reach carbon neutrality by mid-century.

To support the company's decarbonization process, Eni has planned investments for the 2021-2024 four-year period of approximately €5.7 billion for decarbonization, the circular economy and renewables, including scientific and technological research activities designed to support these areas. Investments in the forestry programme also continue with REDD+ projects to protect primary and secondary forests in Africa, South Asia and Latin America. The aim is for progressive growth in the medium to long term, leading to an annual portfolio of carbon credits capable of offsetting over 20 million tonnes in 2030 and over 40 million tonnes by 2050.

Eni's decarbonization strategy envisages a progressive reduction in hydrocarbon production in the medium term, and an increasingly important role for gas, with the aim being to reach a 60% share of the production mix by 2030 and more than 90% by 2050.

LNG is making a decisive contribution to the growth of gas and Eni is developing a model that will make it a leader in the market. Over the next few years, the portfolio is expected to grow with a forecast of traded volumes greater than 14 MTPA to 2024 with a significant increase (+45%) over traded volumes in 2020. These activities will help make Eni's portfolio more sustainable and enhance the value of natural gas as a fossil fuel with lower GHG emissions. The use of technologies such as Carbon, Capture and Storage will make it possible to store 7 million tonnes of total CO₂ per year by 2030 and 50 million tonnes by 2050. The use of CCS technology solutions in electricity generation plants, in LNG plants and for the production of blue hydrogen, will allow a further reduction of the carbon footprint of gas.

To this end, aware of the importance of maximizing the climate benefit from the use of gas, Eni is a partner in various initiatives for implementing voluntary activities to reduce methane emissions throughout the entire Oil & Gas production process, and that promote the implementation of regulations and targets on the reduction of methane emissions along the natural gas chain.

The progressive mitigation of its carbon impact makes gas a fundamental energy source to accompany the transition to a low-carbon energy mix, thanks in part to the replacement of the most polluting fossil sources in electricity generation and energy-intensive industries. It will also help ensure electric power system balancing by integrating intermittent renewable sources.

Portfolio resilience is ensured by a regular review of the portfolio of assets and new investments, to identify and assess potential emerging risks associated with regulatory changes on emissions and the physical conditions for carrying out operations.

The process of managing risks and opportunities associated with climate change is part of the Integrated Risk Management Model (RMI), developed by Eni to support management in the decision-making process by enhancing awareness of the risk profile and related mitigations. Climate change is analysed, assessed and managed by considering five reference drivers relating both to transition risks – market scenario, regulatory and technological evolution, reputational issues – and to physical risks, such as extreme or chronic meteorological and climate phenomena. The analysis is carried out with an integrated and cross-cutting approach that involves specialist functions and business lines and allows for the assessment of risks and opportunities related to climate change.

The Board of Directors has a central role in managing the main issues related to climate change. On the issue of climate change, the BoD is mainly supported by three Directors' committees: Sustainability and Situations Committee, Control and Risk Committee and Remuneration Committee.

The Sustainability and Scenarios Committee examines the integration between strategy, future scenarios and the medium/long-term sustainability of the businessof and examines scenarios for preparation of the Strategic Plan. During 2020, the SSC looked in depth at climate change issues in all its meetings, including the outcomes of the 2019 United Nations Climate Change Conference (COP25), energy scenarios, state-of-the-art research and development for the energy transition, Eni's decarbonization strategy, forestry activities and climate partnerships, Eni's responsible engagement in climate policies within trade associations, climate resolutions and assembly disclosure of peers.

The Control and Risk Committee supports the BoD in the periodic review of the main risks, including climate change, which takes place on a quarterly basis. The Remuneration Committee also plays an important role in this area, proposing the general criteria for the annual incentive plans for the CEO and executives with strategic responsibilities to the BoD, which include specific targets related to the reduction of GHG emissions.  

Eni has long been committed to promoting full and effective disclosure in the area of climate change. Transparency in climate change reporting and the strategy implemented by the company have enabled Eni to be confirmed, once again in 2020, as a leading company in the Climate Change disclosure program of the CDP. The A- rating achieved by Eni has been equalled by only a few other companies in the sector and is well above the global average score of C, on a scale from A and A- (Leadership level) to D (minimum). CDP is an international non-profit organization that drives companies and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests.

In addition, in 2020, a new report was published by the Transition Pathway Initiative (TPI), a global investor-led initiative that assesses the progress of companies in the low-carbon transition. For the first time, Eni was awarded the highest rating for management quality, as result of the completeness of its decarbonization strategy, and a high ranking for the emissions performance of sold products.

Moreover, Eni intends to play an active role in the energy sector virtuous path to contribute to carbon neutrality by 2050 and to limit average global warming within the 1.5°C threshold at the end of the century, also leveraging on active engagement with all stakeholders and through a constructive dialogue with climate policymakers.

The principles guiding Eni’s climate policy advocacy activities are published in "Eni’s responsible engagement on climate change within business associations" and summarized below:

• Support the goals of the Paris Agreement
• Identify the role of natural gas in order to support the transition of the energy mix
• Back carbon pricing mechanisms
• Embrace increasing energy efficiency and low carbon technologies
• Support the role of a natural climate solutions
• Support full climate transparency and disclosure, through appropriate set of rules and standards

Eni’s climate-related lobbying activities are detailed in the ad hoc section of CDP Climate Change Questionnaire (pag. 152). Moreover, the European Commission publishes the list of meetings with the Commission and contributions to public consultations in its Transparency Register (available at the link), while in the US context, Eni reports periodically to the Congress on its lobbying activities (available at the link).

Eni has been submitting its GHG emissions to a third party audit process both within its sustainability reporting, since 2006, and also with a specific assurance assessment, since 2011, to ensure full reliability of its climate disclosure data Since 2019, Scope 1 and Scope 2 GHG emissions related to Eni’s operated activities have been subject to a reasonable assurance assessment, with the aim of guaranteeing even greater reliability of the data with a strategic relevance for Eni. The reasonable assurance statement was released by an external audit firm (PwC), also responsible for the audits of the Annual Report, the Consolidated disclosure of Non-Financial Information and Eni for, that carried out the assignment in accordance with ISAE 3000 and ISAE 3410 standards. Moreover, a limited assurance statement was released for the Net Absolute GHG Lifecycle Emissions and Net Carbon Intensity KPIs, included in Eni’s 2050 carbon footprint reduction targets, and from this year, also for the Net Carbon Footprint Upstream indicator.