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.