Snam S p A : ESG Virtual seminar (Transcript)

ESG Seminar - Conference call

Tuesday, April 20, 2021, 15:30

Investor Relations Snam T [phone] [e-mail]

MODERATORS: MARCO ALVERÀ, CHIEF EXECUTIVE OFFICER ALESSANDRA PASINI, CHIEF FINANCIAL OFFICER FRANCESCA PEZZOLI, HEAD OF INVESTOR RELATIONS

FRANCESCA PEZZOLI: Good afternoon, ladies and gentlemen, and welcome to the first Snam ESG seminar. Before starting, we will project a short video from Mrs. Cavatorta, Chairwoman of Snam ESG Committee, who will introduce today's seminar. She couldn't be here, so she sent this short welcome message. Then Marco Alverà, Snam CEO will explain our ESG priorities and how they are embedded into our strategy. After, we will have dedicated session on our plans and key achievement on environmental, social and government issues, and finally closing remarks with some…on our create value through sustainability.

At the end of the presentation, there will be time for Q&A. If you want to submit a question, please use the chart. I will collect all the questions and submit them to the relevant speakers at the end of the presentation. So we can start with Mrs. Cavatorta video. Thank you.

LAURA CAVATORTA: Hello everybody. I am very happy to welcome you to today's session of Snam's first ESG Investor Presentation. I am Laura Cavatorta, Chairwoman of the ESG Committee of Snam, a committee that we proudly launched in 2019 as one of the first ESG committees of Italian companies. We are very aware that we are living in very turbulent times, when companies are being called upon to be actors of change. Recent survey shows that 61% of the respondents see companies as the most trusted institutions of our times, and this is a big responsibility. The traumatic experience of the COVID pandemic has at least given us the opportunity to

pag 2 / 25

show our proximity to our employees and communities in conjunction with also our foundation carrying out an important and compassionate work. The recovery will occur through green and digital transitions, which will be key factors in the next months and years for a sustainable future. And Snam is at the forefront of the energy transition.

So the Snam's commitment to ESG issues can be seen throughout all the areas of our work witnessed also by the time spent by myself and my fellow Board members. We estimate 40% of our Board of Directors time spent on ESG issues. Let me make some examples. A wide range of ESG objectives from reducing the emissions to the increasing of women in managerial positions, to the sustainable finance, is part of our short or long-term incentive systems with an ever increasing weight in the remuneration policy of management. We also introduced into our bylaws our purpose and the importance of gender diversity, which we will guarantee over time even at the end of the national legal obligations.

And then we launched an ESG scorecard covering 22 KPIs and many of the 17 SDGs. Let me take…let me say a word about our stakeholders, who are really key to all we do. Through our work with them and thanks to their commitment, we are able to generate a broader impact on many ESG factors, reducing emissions, improving diversity, promoting the circular economy, so in a way, we are playing an important role in transforming a significant part of this small and medium enterprise landscape.

Last but not least, I would like to add that we are proud also of our integrated and very rich reporting, which is something we work on to continuously improve and make a useful tool for investors and other stakeholders to assess our performance. In short, we are working to make Snam a more diverse company that can respond to the urgent challenges of our times, climate change, social wellbeing, whilst delivering value to our investors.

pag 3 / 25

Thus I am very happy to introduce this…today's session to you all and I leave the floor to Marco Alverà, who with his management team will take you through our key areas. And then of course, there will be time for a Q&A session at the end. So thank you and thank you for your interest in Snam.

MARCO ALVERÀ: Thank you all for joining us and good afternoon. Snam is a purpose-driven company. According to Aristotle, the purpose of each individual lies at the intersection between his or her talents and the needs of the world. The same is true for companies. And this is why four years ago, we interviewed dozens of colleagues at various levels in the organization to really come up and distil what we think are Snam's core talents on one side and the needs of all our stakeholders on the other. That's how we defined our purpose, energy to inspire the world. This starts from the observation that a lot more than just our engineering skills are necessary. And we've leveraged on eight years of experience of technical expertise to position ourselves to deliver ample, sustainable and affordable energy intending to play a key role in the energy transition. And effective purpose strengthens the sense of belonging within the organization, and over time generates superior commitment and therefore superior growth. Our purpose is also the North Star [ph] of our company. Finding one's purpose though is the first step, then you have to make it concrete. It has to help define the values, set the strategy and orient the day-to-day decisions in the execution and implementation of that strategy.

Because of our purpose, ESG is fully integrated in everything we do. On E, our strategic plan is geared towards net zero, both our own net zero thanks to our target to achieve scope 1 and 2 carbon neutrality by 2040. And net zero of what we call the system of all our stakeholders. This we achieve, not only by de-carbonizing or helping de-carbonize what will transit through our infrastructure, but also through our start-ups for new businesses that are focused on enabling our own customers to achieve their net zero targets as soon as possible.

pag 4 / 25

On S, the social front, we're focused on our people in our communities, we want to create an inclusive, diverse work environment that nurtures and develops skills and we support communities through our work with a Snam Foundation on issues such as educational and energy poverty, and equal opportunity for women. We believe well-being is a key factor of the S in ESG. We will launch a world well-being movement later this year with other companies to promote the measurement of well-being not only for our employees, but for society as a whole. We're also working with leading researchers on this key topic.

On governance, ESG, as Laura just said, is integrated in our corporate processes to align our company with the interest of all stakeholders. Transparency and accountability are key pillars of our approach. In this context, we've launched an ESG scorecard with a three-year timescale and subject to annual control and review.

With our new ESG scorecard, we've set ambitious forward-looking targets on E, S and G. On E, it's about natural gas emissions, energy savings, green innovation, land protection and biodiversity. On S, it's about welfare, employee engagement, safety, gender diversity, responsible and sustainable supply chain and local communities. On G, its governance structure and it's functioning, infrastructure reliability, anti-corruption. We will monitor all the KPIs and update the scorecard annually in the belief that only what gets measured gets done.

Focusing on our approach on the environment, our pathway to net zero has two pillars. First of all, we've set a carbon neutrality target on our scope 1 and 2 emissions, which are under our direct control by 2040, with an intermediate target to reduce them by 50% by 2030, compared to 2018, about 10% of our 4.7…€7.4 billion CAPEX plan is devoted to net zero investments of which the key ones are a methane leak detection and repair campaign to eliminate fugitive emissions and a program to substitute gas fired compressor with electric ones. As well as reducing direct CO2

pag 5 / 25