Analysis of eligibility and alignment
In 2022 Acea carried out the preliminary activities required under the reporting obligations defined by the Disclosures Delegated Act, developing a cross-disciplinary and synergetic project involving the Administration, Finance and Control Department, the Investor Relations and Sustainability Department and the Companies included within the reporting boundary of the Consolidated Non-Financial Statement32.
Specifically, the eligibility analysis was updated for this year, with the aim of identifying the activities conducted by the Group that correspond to those listed and described in Annexes I and II of the Climate Delegated Act - focused respectively on the climate change mitigation and adaptation objectives - and taking into account the Complementary Delegated Act. This analysis led to a slight reduction in the number of eligible activities from 27 to 22, associated with 5 sectors identified by the Regulation33. Of these eligible activities, 20 may contribute to the achievement of both the climate change mitigation and adaptation objectives, while 2 contribute to the mitigation objective only.
The reduction in the number of eligible activities is attributable to the exclusion of activities potentially carried out by the Group but not actually conducted in the year under review, which therefore were not associated with economic KPIs during the reporting year, and activities which, on closer analysis, were not in fact applicable or were more appropriately associated with another operating area described by the Regulation.
Furthermore, in compliance with the provisions of the Regulation, the alignment to the Taxonomy of Acea’s eligible activities was analysed to identify the Group's environmentally sustainable activities according to three sets of criteria:
- substantial contribution criteria34: for each eligible activity, the compliance with the technical screening criteria was verified to establish its substantial contribution to achieving the mitigation and/or adaptation objective;
- Do No Significant Harm (DNSH) criteria35: analysis of the technical and regulatory requirements to ensure that the activity not only substantially contributes to at least one Taxonomy objective but also does not cause any significant harm to any of the other environmental objectives;
- minimum safeguards36: analysis to verify that the activities that contribute substantially to at least one environmental objective and do not cause significant harm to the others are carried out in compliance with the minimum social safeguards set out in the Human and Employment Rights Regulation.
The technical screening criteria for a substantial contribution identify quantitative thresholds that establish the limits within which an activity can be considered environmentally sustainable and/or describe the qualitative characteristics that make an activity aligned without the need to meet specific technical thresholds.
With regard to the DNSH criteria, please note that Annexes I and II of the Climate Delegated Act define the conditions under which eligible activities do no harm to the other environmental objectives. These criteria may consist of specific provisions or general “recurring” criteria. In the first case, the requirements are specific to the activity under analysis and limited checks must be carried out. Recurring criteria, however, are outlined in the five Appendices to Annexes I and II of the Climate Delegated Act, which mostly refer to compliance with European or national standards or the performance of assessment activities. The Group has adopted two approaches for the DNSH analysis: for the specific criteria, the capacity of each individual activity to meet the requirements was evaluated, while for “recurring criteria” (the Appendices), the best practices available for each Business Area were considered in order to guarantee, where possible, compliance with the requirements for each eligible activity. To complete the alignment analysis of the Taxonomy-eligible activities, Acea verified the compliance with the minimum safeguards which introduce into the assessment of the environment sustainability of an economic activity, the minimum human and employment rights protections required, as established by the relative international standards37 (see the dedicated box).
VERIFICATION OF COMPLIANCE WITH THE MINIMUM SAFEGUARDS
Italian human and employment rights law governs these principles and their relative specific aspects such as privacy, health and safety, corruption, fair competition, tax and environmental protection. As well as acting in compliance with the national laws in force, Acea also conducts its business according to a sustainable and inclusive growth strategy, operating in line with the Universal Declaration of Human Rights, the ILO Conventions and the principles issued by the United Nations Global Compact, of which it is a signatory. This commitment is enshrined in the Group Code of Ethics, the most recently updated version of which was produced in collaboration with internal resources and external consultants specialised in corporate ethics, and approved by the Acea Board of Directors on 9 November 2022. The Code of Ethics states that: Acea considers as inalienable in the definition of its values the UN Universal Declaration of Human Rights for the respect of natural and universal rights, the International Labour Conventions and Recommendations issued by the International Labour Organization (ILO), such as those relating to fair treatment and non-discrimination, the protection of child labour, the fight against forced labour, the freedom to form trade unions and the right to collective bargaining, the European Union's Charter of Fundamental Rights.”
Acea monitors the topics that underpin the minimum safeguards of the Regulation through the use of prescriptive instruments (such as Group policies, Guidelines, etc.) and organisational and operating models (appointed units, procedures, management and control systems).
These include:
Code of Ethics: a set of principles and rules of conduct that underpin the Organisation, Management and Control Model and apply to "all persons who, in any capacity, directly or indirectly, permanently or temporarily, in Italy or abroad, operate in the interest of Acea and its subsidiaries", which guide all corporate practices "towards all stakeholders", also with the help of contractual clauses for adherence to specific social obligations for those who work on behalf of the company.
Whistleblowing: a confidential and restricted channel for employees and external parties to report potential conduct in breach of the Code of Ethics, supported by an ad hoc procedure for handling such reports;
Ethics Officer: a collegiate body that manages the reporting system and monitors compliance with the values expressed in the Code of Ethics in relations with all Group stakeholders. Organisation, Management and Control Model: a management system pursuant to Legislative Decree 231/2001 that identifies the procedures developed to mitigate the risk of oences committed by directors, managers or employees in the interest or to the advantage of the Group, which is constantly being revised and updated. The Code of Ethics, the Organisation, Management and Control Model and the relative Oversight Committee each represent an essential component of a broader and more structured Internal Control and Risk Management System (ICRMS) adopted by Acea.
Antitrust Compliance Programme, Antitrust and Consumer Protection Compliance Manual, Organisational Regulations for Antitrust Compliance and Unfair Commercial Practices and Guidelines for Antitrust Compliance and Consumer Protection: rules and safeguards to prevent and counteract anti-competitive behaviour and to protect the consumer and the principle of fair competition, which must be adhered to by Group personnel, commercial partners, suppliers and partners.
Anti-corruption Policy: set of rules, controls and safeguards to prevent corruption and bribery offences against the public and private individuals, supported by the Corruption Prevention Management System (ISO 37001, in the process of being adopted).
Privacy Governance Guidelines: guidelines for implementing policies to protect the personal data of employees, customers, suppliers, shareholders, partners and persons whose personal data are processed by the Group and that ensure the application of the GDPR.
Management and Sustainability Systems Policy, Quality, Environment, Energy and Safety Management Systems: to promote a culture of quality, respect for the environment, occupational health and safety and energy saving.
Equality, Diversity & Inclusion Committee, Equality, Diversity & Inclusion Policy, Procedure on the Protection, Inclusion, Promotion of the Diversity and Well-being of Workers, Diversity & Inclusion Plan and Dashboard: initiatives to assess risks and actions to be taken to promote diversity, inclusion and equal opportunities, also engaging with employees to consider their opinions and proposals.
Health and Safety Management System, QASER questionnaire, Vendor rating, Ecovadis model: tools for managing the health and safety of people both within the organisation - specific training, risk assessment and continuous monitoring - and outside the Group, as in the case of contracted works and services, to oversee every phase of the relationship between supplier and company, including assessing suppliers' performance on indicators relating to punctuality, quality and safety, and ESG criteria.
Tax Management Procedure: outlines and regulates the roles and responsibilities of the parties involved as well as the tax management auditing activities38.
Based on the analyses, in 2022 Acea identified, out of a total of 22 eligible activities, 14 fully aligned activities, 6 partially aligned activities39 and 2 non-aligned activities. For all eligible activities, the substantial contribution to the climate change mitigation objective was evaluated (see Tables 6, 7, 8 and 9).
In particular, observing the distribution of eligible and aligned activities, including only partially aligned activities, for each business area40, and considering that certain activities are eligible for several operating sectors, in the water business area there are 6 eligible activities in the "Water supply, sewerage, waste management and remediation" sector, and, following the verification of the Substantial Contribution and DNSH criteria, there are three fully aligned activities and three partially aligned activities. CapEx associated with the activity “Material recovery from non-hazardous waste”, coupled with the climate change mitigation objective, were valued as part of a CapEx Plan aimed at expanding Taxonomy-aligned economic activities. Acea Ato 2 also planned the construction of a treatment plant for the sand from the treatment processes and from the sewage network cleaning, which will make it possible to recover up to 80% of the solid input material. Total CapEx sustained during the year was #0.05 million, while total investments over the course of the Plan will amount to approximately #8 million. The plant is expected to be completed by 2024 and therefore the aligned economic activity will be expanded, in line with the Regulation, within a period of less than five years.
In the Environment business area, which operates in the waste processing sector, there are six eligible activities (attributable to the "Energy" and "Water supply, sewerage, waste treatment and remediation" sectors), of which 4 were aligned, 1 partially aligned and 1 not aligned; in the Generation business area, which operates in the field of electricity production, there are 8 eligible activities (attributable to the "Energy” (including "Gas"), "Transport", "Construction and real estate activities" and "Professional, scientific and technical activities" sectors), of which 6 are fully aligned, 1 partially aligned and 1 not aligned; in the Energy Infrastructures business area, operating in the electricity transmission and distribution sector, there are 3 eligible activities (attributable to the "Energy" and "Construction and real estate activities" sectors), 2 of which, following verification of the substantial contribution and DNSH criteria, were fully aligned and 1 partially aligned (only marginally misaligned); in the Engineering and Services business area, which operates in a range of research, innovation, design and laboratory activities for Group companies41, there is 1 aligned activity (in the "Water supply, sewerage, waste treatment and remediation" sector); finally, in the Energy business area (commercial and trading activities) there are 6 eligible activities (in the "Water supply, sewerage, waste treatment and remediation"42, "Transport", "Construction and real estate activities" and "Professional, scientific and technical activities" sectors), all of which are aligned. Electricity sales, which represent the Group’s core business and accounted for 52% of the Group's turnover in 2022, are excluded, as sales are not currently included in the list of activities listed in Annexes I and II of the Climate Delegated Act for the first two climate targets.
32 See Disclosing sustainability: methodological note for the process of defining the scope and the list of companies therein. Note that these Companies, identified for their adequate representation of the performance and the impacts generated by the Group (pursuant to Italian Legislative Decree no. 254/2016), cover, with reference to the KPIs set out by Regulation (EU) 2020/852, 91% of the turnover, 95% of the CapEx and 94% of the OpEx of the full list of companies consolidated on a line-by-line basis.
33 In particular, the activities managed by the Group, considered eligible, fall under the following sectors: Energy; Water supply, sewerage, waste management and remediation; Transport; Construction and real estate; Professional, scientific and technical activities.
34 Articles 10, 11, 12, 13, 14, 15, 16, 19 of Regulation (EU) 2020/852.
35 Article 17 of Regulation (EU) 2020/852.
36 Article 18, section 1 of Regulation (EU) 2020/852, specifically, OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights, including the principles and rights set out in the eight core conventions identified in the ILO Declaration on Fundamental Principles and Rights at Work and the International Bill of Human Rights.
37 Please also consult the Final Report on Minimum Safeguards, published by the Platform on Sustainable Finance in October 2022.
38 In the Final Report on Minimum Safeguards, published in October 2022 by the Platform on Sustainable Finance, the topic of taxation considered the OECD Guidelines for Multinational Enterprises and was considered relevant to risk management purposes. In view of this, while not directly applicable to Acea given the nature of its business, the matter is also discussed here (see also the chapter on Institutions and the Company for more details).
39 Partial alignment may occur in the case that for the same activity, certain Companies in the business area are aligned and others are not aligned, or when for certain companies in the area, the activity meets the technical screening criteria only for a portion of the plants/infrastructure.
40 Companies belonging to several business areas may be eligible for the same activity; consequently, the total number of eligible activities in the sector is higher than the number of eligible activities at Group level. See The Corporate Identity and the Relations with the Environment section of this document for more details of the activities in each business area.
41 Intercompany activities are removed from the accounting of the KPIs, in accordance with the Regulation.
42 For the operation of the mini composting plants (Smart Comp), linked to the Composting of organic waste.