Adopted last September, the Sustainable Development Goals reflect the best aspirations for a world in transition. Building on the Millennium Development Goals of 2000, the SDGs integrate all stakeholders across developing and developed nations, challenging each to confront the global goals of sustainable development, social justice and equity. Combined with the Paris Agreement, reached last December at the COP21 climate talks in Paris, the business community is taking up the challenge like never before.
What does any of this really mean on the ground? How do aspirational goals translate into business decisions into a better life for people? How can business leaders determine if their strategies align to the SDGs, measure their progress, and manage a rapidly changing global landscape?
Reaching any destination requires knowing where you are and where you want to go. When heading out into unfamiliar territory, a map or a compass can keep us on course. Fortunately, there is such a “compass” for businesses staking their claim in a sustainable new energy economy. Developed by GRI, the U.N. Global Compact and the World Business Council for Sustainable Development, the SDG Compass is a roadmap for businesses in all stages of their journey toward sustainability.
TriplePundit spoke with Andrea Valcalda, head of sustainability for the Italian-based Enel Group, to discuss how this global energy company incorporates the SDG Compass into its mission and daily operations.
Enel Group talks with Triple Pundit
TriplePundit: Let’s talk about SDG 7, affordable and clean energy for all. How is Enel working to achieve affordable and clean energy in both the developed and (especially) developing world?
Andrea Valcalda for Enel: Enel’s new sustainability-based vision, “Open Power to help address some of the world’s biggest challenges,” gives us a strong strategic position on a number of key issues, such as access to energy, climate change, and urbanization. Industrially, this means a focus on renewable energy development, digitization of distribution networks, energy management and efficiency, and leaner ways of both managing and making changes to our traditional generation fleet. We are investing in these areas in order to create a steady supply of clean and affordable energy for mature and emerging countries, making our business “greener” and ensuring steady returns for our shareholders.
Enel has 10.5 gigawatts of renewables and 26 GW of large hydro in its 87 GW of installed capacity. These sources generated around one-third of the electricity produced by Enel worldwide in 2015, and we will invest 9 billion euros in increasing our renewable energy capacity between 2016 and 2019, meaning that more than 50 percent of the Group’s resources for growth are being directed towards green power in emerging and mature economies. Our aim is to increase clean energy’s share of Enel’s installed capacity to 53 percent by 2019. By 2050, we want to become an entirely carbon-neutral company.
But we are going further. Enel is promoting a strategy that integrates sustainability into business processes through the entire value chain, in order to consolidate a business model focused on the creation of long-term shared value. Enel’s sustainability credentials led to the company being ranked #5 in Fortune magazine’s 2015 “Change the World” list, a ranking that shines a spotlight on businesses that make addressing social challenges part of their strategy. The Group, which is both the only utility and only Italian company to be included in the list, was ranked fifth out of the 50 companies selected by the magazine, and was hailed by Fortune for “charging the barricades when it comes to clean power.”
We are strongly committed to ensuring access to clean, sustainable electricity to increasing numbers of customers, in order to match social needs with our business activities. And we are addressing energy needs both in emerging countries and mature markets. In emerging countries, we are supplying energy services and creating or strengthening infrastructure to boost access to electricity, including in remote areas. In mature markets such as Spain and Italy, it also means tackling fuel poverty and helping removing economic barriers for people in need.
For instance, in Spain, we have launched voluntary energy efficiency training courses for customers on low incomes. In emerging markets, from Latin America to Africa and Asia, Enel has developed and is still exploring innovative ways of connecting more people to secure, sustainable energy, focusing also on off- grid and mini-grid solutions.
In the Chilean village of Ollague, for example, Enel built the world’s first high-altitude microgrid, which combines a PV solar plant, a mini-wind turbine generator and a co-generation system for the combined production of electricity and hot water, all integrated with a sophisticated electrochemical storage system. The hybrid system satisfies the energy needs of the whole community of around 300 people, as well as the heating of the local school.
Together with an international partner, Enel will build a portfolio of solar mini-grids in Kenya, which will have a total installed capacity of 1 megawatt and will bring clean energy to 20,000 households, small businesses, schools, and healthcare centers, connecting around 90,000 people to the grid. The project will also provide customers with an easier and more reliable payment system through a mobile phone prepayment application. In South Africa meanwhile, Enel’s YouPower offer combines distributed generation and storage with innovative technologies such as home automation and other digital energy services.
Educating people about renewables and energy efficiency encourages social and economic development, and that’s why Enel has developed programmes that aim to drive energy access. Through our ENabling ELectricity initiative, we are supporting the United Nations Sustainable Energy for All program, which pushes for electrification in remote, rural and poor areas around the world.
Our work with the Indian NGO Barefoot College has gives women from isolated areas around Latin America training to become solar engineers, enabling them to install and maintain solar panel systems in their local communities. Our Powering Education program supports inclusive education and aims to increase literacy rates in Africa, initially through the donation of hundreds of solar lamps to schools in the Amboseli National Park in Kenya.
3p: How is this work tied to the concept of the developing world “leapfrogging” energy development so emerging economies can grow without a concurrent expansion of fossil fuel energy dependence?
AV: According to the International Energy Agency’s World Energy Outlook 2015, renewables are expected to account for over half of new electricity output between now and 2040.
Renewables projects, with their flexibility and short time to market, are particularly well-suited to emerging countries, which often boast particularly high levels of energy resources and have urgent electricity needs driven by population growth, economic development or simply the remoteness of human settlements.
But that’s not all. The energy industry is going through a profound transformation in which the traditional, large fossil-fuel generation-based paradigm is expected to lose ground. Digitization, the increasing cost competitiveness of renewable technologies, more efficient storage systems, and the changing role of customers, who are now able to produce their own energy and even sell it onto the grid, are just some of the key elements at the heart of a rapidly changing industry.
The market can no longer afford big conventional plants that need 10 years before they start delivering returns. By the time these big plants are completed there is the very real risk that either their capacity may not be needed anymore or that their technology will be obsolete and therefore priced out of the market.
Enel has fully embraced this new energy paradigm by departing from merchant exposure, large plants, and investments in new coal capacity.
3p: How has Enel utilized the SDG Compass to further its goals?
AV: Enel is constantly managing and measuring its sustainability performance by using and developing instruments to ensure an integrated, standardized system of similar projects, information, and data which are constantly updated on the basis of trends in operations and relevant standards, while promoting the sharing of best practices and experience.
According to the SDG Compass, Enel has linked the SDGs to all sustainability processes. The guide helped us to use a common language and maximize our contribution to the goals. Enel Materiality Matrix issues and priorities are linked to the SDGs and GRI standards, and the Enel Sustainability Plan includes opportunities to make positive contributions to the SDGs through core business activities, as well as to reduce current and any potential negative impact (with a focus on SDGs where Enel is committed). Furthermore, Sustainability KPIs are linked to SDGs for driving, monitoring, and communicating progress.
The projects, activities, performance and main results, including progress on the SDGs in line with the SDG Compass, are presented in Enel’s Sustainability Report.
3p: Besides SDG 7, what other SDGs is Enel pursuing in its business operations?
- SDG 4: Supporting education activities for 400,000 people by 2020 through projects similar to those already launched, such as Powering Education in Kenya, education support program in South Africa and scholarship programs in Latin America.
- SDG 8: Promoting employment as well as inclusive and sustainable economic growth for 500,000 people.
- SDG 13: Adopting initiatives aimed at combating climate change, with the goal of achieving carbon neutrality by 2050.
Besides these four public commitments, Enel, through the other objectives of its Sustainability Plan, contributes to many others goals, like SDG 6 regarding clean water with the target of reducing, by 2020, water consumption per kWh produced by 30 percent compared to 2010, or SDG 9 – Industry, innovation and infrastructure – with the target of 30 million of smart meters installed or re-installed between 2015 and 2019.
We do believe that when a company places its processes in line with the SDG Compass it will have a clearer view on how business helps to achieve goals. The SDGs define a common framework of action and language that will help companies communicate more consistently and effectively with stakeholders about their impact and performance.
Image credit: U.N. Women via Flickr under creative commons license