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Given the global challenges we face as a company and that mark the economy as a whole, in 2021 we created the ENEL STAKECAP©TM model, which introduces new metrics to fully define the concept of value creation at Enel. We were inspired by the principles embedded in the Stakeholder Capitalism theory, popularized in 1984 by R. E. Freeman and taken up by the World Economic Forum, in “Measuring Stakeholder Capitalism: Towards Common Metrics and Consistent Reporting of Sustainable Value Creation” (September 2020), recently recommending that organizations adopt a specific set of metrics that integrate sustainability and finance.  This integration has become a necessity, and any assessment of the ability to create value must take account of all of the various stakeholders with which an organization interacts.

We introduced the concept of “Value for All” a few years ago and, in conjunction with the most recent Capital Markets Day, we highlighted not only our profitability targets, but the potential benefits to our stakeholders as well.

The model we now propose adopts new financial metrics and concepts of value creation, distribution of value to stakeholders, and a dynamic, evolving set of indicators that take account of the needs of the various stakeholders and measure the quality of our actions as they affect these stakeholders, all within the scope of the broader objective of creating value.  

The metrics used to measure the organization’s financial performance and standing reflect an integrated approach to long-term sustainability in a manner that is not limited to measuring success based merely on traditional financial indicators, such as net income or free cash flow. These more traditional concepts have been expanded to embrace an analysis of the effects of our operations on the sustainable growth of communities, society, planet, people, suppliers, customers, debt holders and investors. In short, we assess the quality of our organization

Our new ENEL STAKECAP©TM model is founded on 5 pillars, as shown in the figure below.

The 5 pillars of the new ENEL STAKECAP©TM model
VALUE CREATED is the first of these new metrics and represents the sustainable financial performance of the organization. This value is then available either for distribution (value distributed) or for future growth (value retained). Our customers, suppliers, and other partners are the indirect beneficiaries of the value we create, as they benefit from their interactions with the organization through products, services, and opportunities for partnership and development.
Value Created - ENEL STAKECAP©TM model

However, these new metrics are not enough to fully represent the new set of corporate performance to the benefit of all stakeholders. Financial performance indicators need to be supplemented by other general indicators or metrics that are specific to each stakeholder that define QUALITY, i.e. the sustainable, responsible manner in which that financial performance is achieved.

VALUE DISTRIBUTED defines how much of the value created is distributed to direct beneficiaries. As such, it represents our decision to share a portion of the value created among the various stakeholders and to retain a portion to fuel future growth. The stakeholders identified as being direct beneficiaries of these decisions include our employees, communities, debt holders, and shareholders. 

Value Distribution - ENEL STAKECAP©TM model
By subtracting value distributed from value created, we get value retained, which, under this model, serves as financing to support the pursuit of sustainability targets and future growth. More specifically, this value – associated with the financial support of stakeholders – provides the organization with all the funding needed for a DEVELOPMENT STRATEGY to be pursued through organic investments or business combinations. The plan of investments needs to focus on achieving sustainable goals to the benefit of both the organization and our stakeholders. The quality of these investments is measured based on their alignment with: (i) the SDGs of relevance to the organization; (ii) the goals defined under the European taxonomy; and (iii) the needs of our communities.
% of investments related to the SDGs and aligned to the Taxonomy
The financial effort required by capex (or the remaining net surplus) is supported by other stakeholders who provide the financial resources necessary to ensure the strategic  growth path.
Financial Effort - ENEL STAKECAP©TM model
The model cannot evolve without the help of a new strategy of COMMUNICATING with our stakeholders that constantly presents results achieved and our plans for the future in a structured manner. This new way of thinking and of acting, backed by an integrated approach to reporting that combines financial aspects with sustainability, must encompass all stakeholders so that they are more engaged in our operations and enjoy stronger relationships with us.