Controls and Risks

The Internal Control and Risk Management System (ICRMS) is a set of tools, organisational structures, regulations and business rules put in place to facilitate the sound management of the Company in line with the business goals set by the Board of Directors. It provides proper means for the identification, measurement, management and monitoring of risks, while also ensuring that information is circulated as appropriate.

ICRMS Actors and the three levels of control

 

 

The Eni ICRMS is structured along the following three levels of internal control:

• first level of control: identifies, assesses, manages and monitors the risks for which it is responsible, for which it identifies and implements specific management actions;
• second level of control: monitors the main risks in order to ensure the effectiveness and efficiency of their management; also responsible for monitoring the appropriateness and operation of controls implemented for the main risks. It also provides support to the first level in defining and implementing adequate systems for managing the main risks and the associated controls;
• third level of control: provides independent, objective assurance on the appropriateness and effective operation of the first and second control levels and, more generally, on the Eni ICRMS as a whole.

The structure of the first and second control levels is consistent with the size, complexity, specific risk profile and with the regulatory environment in which each company operates.

The third level of control is exercised by the Internal Audit Unit of Eni SpA, which, on the basis of a centralised model, performs its controls using a risk-based approach to the overall Eni ICRMS, monitoring Eni SpA and the subsidiaries.

Eni Regulatory System

To ensure the integrity, transparency, propriety and effectiveness of its processes, Eni adopts rules for the performance of business activities and the exercise of powers, guaranteeing observance of the general principles of traceability and segregation.

Each component of that system is supplemented by the Company’s Code of Ethics, which identifies the fundamental values, among others, of the formal and substantive legitimacy of the conduct of the members of corporate bodies and all employees, and transparency, also in term of accounting, and the dissemination of a mentality directed at the exercise of control.

Eni is fully aware that investors rely on the full compliance of the corporate bodies, management and employees with the set of rules making up the corporate internal control system.

On July 28, 2010, Eni’s Board of Directors approved the basic guidelines for the New Eni Regulatory System, with the goal of rationalising, supplementing and simplifying Eni’s regulatory system.

On June 23, 2016 Eni’s Board of Directors approved an update of the Fundamental Guidelines to bring the Regulatory System into line with Eni’s current organisational structure, better integrating it with corporate processes and making it easier or the subsidiaries to use.

Anti-Corruption Compliance Programme

To address the high risks faced by the company in carrying out its activities, Eni has adopted an Anti-Corruption Compliance Programme – a system of rules and controls first introduced in 2009 aimed to prevent corruption in line with the principle of “zero tolerance” outlined in Eni’s Code of Ethics and international best practice. In particular, Eni SpA and all its subsidiaries in Italy and abroad are required to adopt and implement the Anti-Corruption Management System Guidelines approved by Eni’s Board of Directors in 2014 aimed at preventing all forms of corruption involving both public officials and private parties. The company’s anti-corruption compliance programme is further strengthened and updated, with a view to continuous improvement, by taking account of best practices . Moreover, Eni does everything it can to ensure that entities and companies not controlled comply with Eni’s anti-corruption standards. The Anti-Corruption Compliance Unit, which manages specialist activities to ensure the effectiveness of the Compliance Programme for Eni SpA and its unlisted subsidiaries in Italy and abroad, reports to the Eni SpA Executive Vice President Integrated Compliance Department. The Unit is responsible for the verification of due diligence assessments with regard to the integrity, professional reliability and reputation of potential contractual partners, in the management of “red flags” (or warning signs) and the drafting of contractual principals in areas at risk of corruption. It makes regular reports to the controlling bodies and the Watch Structure of Eni SpA. To make the strategy for combating corruption even more effective, Eni invests in continuous training programmes in Italy and abroad aimed at ensuring that staff have sufficient awareness about anti-corruption laws and internal regulations on anti-corruption. It also provides guidance on how to recognise and manage red flags. Disciplinary measures against employees as well as legal action and remedial measures in respect of contractual parties are foreseen in the event of violations.

On January 2017, Eni obtained the ISO 37001:2016 "Antibribery Management Systems" certificate of conformity of Eni SpA for its Anti-Corruption Compliance Program, the first international standard for the management of antibribery systems. The verification process was conducted by the certification company RINA Services SpA, leading certification body in Italy.

Eni is the first Italian company to receive that certification.

Organisational, management and control Model 231

The discipline of the “administrative liability of legal entities deriving from offences” (Legislative Decree 8 June 2001 no. 231), on which Eni’s Model 231 is based, decrees that companies may be subject to fines or other punishments for offences committed or attempted – in Italy or abroad – in the interest/for the benefit of the company by its representatives, Directors or managers, or one of its financially and functionally autonomous organizational units. This also applies to those with even de facto management and control responsibilities (such as senior managers) and to anyone subject to the direction or supervision of all the people mentioned above. 

Eni’s Model 231, of which Code of Ethics is an integral part and essential general principle, was adopted for first time by Eni’s Board of Directors in December 2003 - January 2004 and subsequently amended (finally on the 23^rd November 2017). At the same time when Model 231 was adopted, Eni’s Board of Directors created also a Supervisory Board (“Watch Structure”) to oversee the Model’s effectiveness to report on its implementation to the top management. The Watch Structure is made up of internal and external members, including the Chairman, with specific requirements. The same Watch Structure performs the functions of Guarantor of the Code of Ethics.

Responsibility for updating Model 231 lies with the Chief Executive Officer, with the exception of modifications to the General Principles, which must be approved by the Board of Directors after prior notification to the Board of Statutory Auditors. Eni encourages the adoption and effective implementation by all the subsidiaries of adequate systems for the prevention of the risks of corporate responsibility deriving arising from crime. To this aim, the rules of Eni internal regulatory system ensure that all Subsidiaries of Eni adopt, in the management of the activities at risk of corporate liability, control principles and instruments that are consistent with the control principles and instruments laid down in this Model 231.

The representatives designated by Eni SpA in the corporate bodies of the companies in which stakes are held, consortia and joint ventures shall promote the adoption of systems to prevent the risk of corporate responsibility deriving from a crime, consistently with the measures adopted by the companies of the Eni group.

Whistleblowing

Eni allows anyone – employee or third party – to submit a report, confidentially and anonymously, on issues of internal control or other issues that violate the Code of Ethics. Such matters might include non-compliance with the law or external regulations, Company rules and procedures, the fraudulent or illicit use of company assets and corporate information, so-called “mobbing”, harassment or conflicts related to personnel management. The rules governing this area are contained in the ruling “Reports, including anonymous, received by Eni SpA and its subsidiary companies in Italy and abroad”, approved by Eni’s Board of Statutory Auditors, as the Audit Committee pursuant to SOA regulations.

NOTICE: You can follow this link only for the purposes indicated. If you are an Eni customer and wish to raise an issue of a commercial nature connected to Fuels, Gas and Electricity supply and services, Car Sharing, please follow this specific link.

Alerts may be sent using a special form.

Transactions involving interests of Directors and Statutory Auditors and transactions with related parties

Eni’s Board of Directors approved rules to ensure procedural transparency and probity relating to all transactions in which a director or a statutory auditor has an interest, as well as transactions with related parties.

The rules, which distinguishes the discipline of the transactions due to their relevance, incorporates relevant Consob Regulations, extending them to all transactions carried out by subsidiaries with related parties of Eni with the aim of providing protection, extending also the definition of related party.

The Board of Directors gave a central role to independent directors appointed to the Control and Risk Committee, or to the Compensation Committee in case of operations on remuneration.

In order to ensure the effective monitoring of operations, the CEO is required to present to the Board of Directors and to the Board of Statutory Auditors, bi-monthly and six-monthly, details on the operations carried out during the reporting period. With regard to public disclosure, the relevant provisions of the Consob Regulations have been fully adopted.

The rules were lastly amended on 4 April 2017 in view of further alignment with the relevant benchmarks and best practices in the area, in particular on the small amount thresholds, on the aggregation of small amount transactions and on periodic disclosure to corporate bodies.

Antitrust Management System Guideline

The commitment to respect - effective, substantive and zero-tolerance - of the rules (Antitrust) aimed at the creation and maintenance of a competitive market context - that is, a market context that encourages companies to excel in quality, economy and innovation of the products and services provided - is one of the fundamental values ​​of the Eni Code of Ethics and its corporate culture. In order to ensure full compliance with the Antitrust Rules, more than ten years ago Eni has adopted a special regulatory instrument. It has introduced - within Eni itself and its Italian and foreign subsidiaries - knowledge of Antitrust legislation and ensuring the adequate prevention of violations. In the context of continuous improvement, this regulatory tool was updated in 2011 and lastly completely revised to turn it into an Antitrust Compliance Program, approved by the Board of Directors in April 2017 and encoded within the "Management System Guidelines Antitrust "(MSG Antitrust), which in turn provides for the adoption of further regulatory instruments of further detail. In line with the international best practices which inspired it, the Compliance Program Antitrust is based on three fundamental pillars: prevention, monitoring and sanctions, as well as the zero tolerance criterion: the conviction of acting for the Company's greatest profit cannot in any case make tolerable a breach of antitrust law.

In order to ensure the correct application of the Compliance Program Antitrust and to ensure its effectiveness, the organizational structure "Antitrust, Consumer Protection, Privacy and Financial Regulations Legal Compliance" operates under the direct responsibility of the Executive Vice President of the Integrated Compliance Department of Eni SpA. This structure, through the "Antitrust Compliance Unit", carries out the activities of preventing and monitoring the Antitrust risks through, inter alia: (i) staff training; (Ii) the prior analysis of sensitive business initiatives - in accordance with a stream of interlocutors with punctually coded business functions - for the definition of possible antitrust risk mitigation measures; and (iii) the periodic mapping of areas exposed to antitrust risks, resulting in measures to prevent and / or mitigate them.

Market Abuse

Eni recognizes that information is a strategic business asset and as such must be managed so as to safeguard the interests of the Company, its shareholders and the market.

Internal treatment of corporate information, internal management of inside information

In order to ensure that all Eni Personnel are aware of the value of this information and the consequences of mismanaging such information, on 29 October 2012 the Board of Directors, acting on a proposal from the CEO and after consultation with the Control and Risk Committee, approved the Market Abuse procedure (hereinafter also "MSG"), as required by the Corporate Governance Code.

The Procedure, in tracing the evolution that information may undergo within Eni, introduces principles of conduct for preserving the confidentiality of corporate information in general, ensuring that information is used by employees and members of the corporate bodies in accordance with the principles of sound management of information within the context of the duties assigned to them, set out also in Eni's Code of Ethics and with corporate security measures.

On 3 July 2016, the new European market abuse rules – namely the Market Abuse Regulation, or “MAR” (Regulation (EU) No 596/2014 and the implementing and delegated acts of the European Commission) - became directly applicable in the Member States. They replace and supplement those regulatory measures for incompatible aspects.

The direct applicability of the new legislation to Eni made it necessary to begin updating the MSG in 2016. The release of the new MSG is being delayed until the legislative, regulatory and interpretive framework has been established, particularly at the national level.

Internal management and market disclosure of inside information

Pending the issue of the new MSG, information and training programmes for Eni staff and for its subsidiaries, including the corporate bodies, were carried out on the new legislative provisions and the associated requirements and, in particular, distributed operating instructions to the corporate functions most affected. Specifically, were established and disseminated:

 

     i) information flows and flows of authorization, that accurately identify the roles and responsibilities connected with the classification of an information as “inside information” and, subsequently, for the preparation of press releases, to disclose information to the public as soon as possible, or otherwise the possible use of the delay procedure following communication of inside information to the public, to ensure that all the regulatory conditions for its application have been satisfied;

     ii) supporting quantitative criteria to assess certain types of operations that may constitute inside information, without prejudice of regulatory conditions;

     iii) safeguards, including organisational protections to ensure that information, particularly inside information, remains confidential;

     iv) documentation standards in support of procedural flow operations, including the standard contract clauses that ensure compliance with the new rules in dealings with counterparts and third parties were reviewed.

 

With reference to the principles for public disclosure of inside information, the internal procedure that establishes them in transparency, fairness and non-manipulative intent, materiality, clarity, completeness, traceability, consistency, equal access to information and informational symmetry and timeliness is still applicable. The MSG established as well the rules for acquiring data and information from subsidiaries that is necessary to provide accurate and timely information to the Board of Directors and to the market on events and circumstances that may give rise to inside information is still applicable.

Furthermore, the MSG establishes rules so that press releases with price sensitive information (i) contains all the information necessary to enable a complete and accurate assessment of the events and circumstances represented, as well as references to and comparisons with the content of previous press releases; (ii) any significant change in inside information subject to disclosure that has already been made public is disseminated without delay in the manner specified by applicable regulations.

List of persons with access to inside information

The list of persons with access to Eni inside information has been brought into line with the new legislation; Eni has also opted to create a “permanent” section of the list for the Eni personnel who meet the strictest regulatory requirements. Changes were also made to the methods and deadlines for the entry in and any subsequent cancellation from the list as well as the procedures for notifying the person involved of such entry or cancellation and of the reasons for the action, citing the specific rules of conduct and associated penalties and emphasising that any data and information received, even subsequent to cancellation from the list, but be kept confidential.

Internal dealing

The new rules, pursuant to European rules, have been provided to interested subjects in a disclosure that: (i) identifies relevant persons (which, for Eni SpA, are the Directors, Statutory Auditors, magistrate of the Court of Auditors, Senior Officers that report to the CEO and the Chairman and, in any case, members of the Management Committee) and persons closely associated with them; (ii) defines transactions involving shares and debt instruments issued by Eni and other financial instruments linked to them; (iii) describes the obligations for disclosure to Consob and the public of transactions, carried out directly or through nominees, by relevant persons and persons closely associated with them; (iv) establishes rules of conduct for relevant persons (other than the shareholders of Eni) and persons closely associated with them, governing the procedures and deadlines for notifying Eni of transactions, as well as the deadlines for disclosure to the public of such filings, which are to be made directly or through the Corporate Secretariat of Eni SpA, which also provides for publication of the filing on the Internal Dealing section of the website. 

New black-out period rules have also been issued. They prohibit relevant persons from carrying out transactions during certain periods of the year (coinciding with the 30 days that precede the public release of an accounting document), the calendar for which is continually updated, with reminders sent to relevant persons.