Basis of presentation

In 2010, after the fourth edition of the annual Sustainability Report, Eni began a process leading towards the preparation of an integrated report according to (i) the recommendations of the International Integrated Reporting Committee (IIRC) and of the Professional Associations, (ii) the standards indicated in the “Sustainability Reporting Guidelines, version 3.0” defined in 2006 by the Global Reporting Initiative (G.R.I.), obtaining for its 2010 reporting the G.R.I. A+ application level.

In 2011, following inclusion in the Pilot Programme launched by the IIRC, Eni continued the process of preparing an integrated report. In the management discussion of the Annual Report it provided for the presentation of financial and sustainability disclosures, supplementing the annual report with a specific section entitled “2011 Consolidated Sustainability Statements” (hereinafter Sustainability Statements) which presents the key performance indicators counted on an annual basis by Eni.

The Eni Group’s 2011 sustainability reporting and the performance indicators referring to the three years 2009-2011 included in the present section have been prepared in accordance with the “Sustainability Reporting Guidelines, version 3.1” issued by the G.R.I. (Global Reporting Initiative), with particular reference to the principles of materiality, completeness, stakeholder inclusiveness and sustainability context.

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Materiality and stakeholder’s engagement

The materiality analysis carried out to select sustainability information aims to define the topics considered most relevant and significant for the Company and for its main reference stakeholders.

The level of interest and the external significance of the subject matters arise from the context in which Eni works, from the evolution of trends that characterised not only the energy industry but also the entire international panorama, and from the commitments undertaken by Eni at an international level.

The stakeholders considered in the definition of materiality include rating agencies, institutions, governments, international associations, NGOs and Eni’s people (for additional information see the paragraph “Stakeholder engagement activities”). The level of internal significance of sustainability topics is, instead, determined analysing the short/long-term strategy, observed also in the light of the sustainability performance relating to the reporting year.

The results that emerge from comparing the external and internal expectations are, finally, reassessed by the senior managers responsible for defining the relevant topics, publicly presented.

Reporting boundary and sustainability context

The sustainability information contained in this section and in the management discussion of the Annual Report is integrated at several levels into the document. In the management discussion the financial information is supplemented by sustainability information with reference to the strategy, the operating context, the market, the scenario and the business model.

The following section contains the performance indicators at the Eni consolidated level for the 2009-2011 period and an analysis of the trends in the main sustainability indicators in the three years of reference.

The information included refers to Eni SpA and its consolidated subsidiaries. The consolidation boundary coincides with that of the 2011 Consolidated Financial Statements, with the exception of certain data expressly indicated in the text.

For health, safety and environmental data the consolidation domain is defined on the basis of the operational criterion (control over operations): according to this approach, the emissions reported at the level of interest for stakeholders refer to 100% of the emissions of a plant operated by Eni. Vice versa with the equity share criterion, which is used in the Consolidated Financial Statements, the emissions associated with a plant are expected to represent the quota of economic interest in that specific plant.

Principles of quality assurance for the sustainability reporting

The performance data reported have been gathered with the aim of providing a balanced and clear picture of the Company’s actions and characteristics. The information and quantitative data collection process was organized so as to ensure data comparison over several years, in order to provide an accurate reading of the information and a comprehensive vision to all stakeholders interested in the evolution of Eni’s performance. The specific indicators and data of the different business segments are presented on the website eni.com.

The Consolidated Sustainability Statements is based on measurement processes defined in the reporting procedures: lower or different accuracy levels are indicated at the margin. During the data loading by the referents of each thematic area, in addition to put the data for the reporting year, the two previous years were also checked and updated; therefore, any changes in the data relating to 2009 and 2010 with respect to the previous year’s publications, are due to these restatements. The data are collected by means of a dedicated information system, which ensures that the information flows are reliable and correctly monitored. The sustainability information is subject to assurance by an independent company, the auditor of the Eni Consolidated Financial Statements as of December 31, 2011.

Calculation methods

The calculation methods for the added value, for the injury frequency rate and injury severity rate, the refining energy intensity index and the emission indexes are illustrated below.

The added value represents the wealth generated by the Company in carrying out its activities. The configuration chosen in this Report is that of Overall Added Value net of amortisation and depreciation. Net Overall Added Value is divided among the following beneficiaries: employees (direct remuneration consisting of wages, salaries and provisions for termination benefits, and indirect remuneration consisting of social welfare contributions); the Public Administration (income taxes); financial backers (medium/long-term interest paid for availability of borrowed capital); shareholders (dividends distributed); the Company (quota of reinvested earnings).

As regards performance on people safety, injury frequency rate and injury severity rate are presented for employees and contractors. The frequency rate is calculated as the ratio between the number of accidents leading to days of absence 1 (including fatalities) and millions of hours worked; the severity rate is defined as the ratio between days of absence 1 due to accidents (excluding fatalities) and thousands of hours worked.

The refining energy intensity index represents the total value of the energy effectively used in a given year in the various refining process plants, in ratio to the corresponding value determined on the basis of standard consumption predefined for each process plant. To compare the data over the years the figure for 2005 was taken as a reference (100%). To highlight in the medium and long term the specific performance by sector regarding CO2 emissions, three indexes have been defined representing the following operations: hydrocarbon production, refining and electricity generation.

These indexes take into account the substantial differences of the work conditions through the years and enable performance to be compared thanks to normalisation of emissions according to operational data.

The refining indexes are calculated based on the equivalent distillation capacity provided by a third party agency, the hydrocarbon production indexes refer to the net operated production, while the electricity sector indexes refer to the electrical and thermal energy produced in terms of equivalents MWh. Greenhouse gas emissions (GHG) refer to CO2 and CH4 (methane); the methane is converted into CO2eq using a Global Warming Potential (GWP) of 21. As regards the new methodology for evaluating the value created by the research activities, it makes possible to associate a value with R&D results in terms of both tangible value and creation of intangible value. Tangible benefits measure the value created for the Company by applying innovative product/process technologies. This value is calculated using as a starting point operating data from the Division/Company or official models for assessing the value of industrial projects. The calculation assumptions applied case by case are shared with the competent technical structures/business units. The tangible benefits are obtained in a “what if” approach, that is as a delta with respect to applying the best alternative technological solution or, in the case of new products, as a delta with respect to the margin generated by the products replaced. The benefits can be recognised as results or in terms of expected value (net present value, NPV). In particular, benefits of E&P projects are considered at 100% including the portions of the partner. Intangible benefits are recognised assessing on the one hand the effectiveness and efficiency of the Company’s innovative ability over time through the number of first filings of patent applications, on the other the diffusion of specialised know-how and the effectiveness of research in supporting operating activities.

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We are a major integrated energy company, committed to growth in the activities of finding, producing, transporting, transforming and marketing oil and gas. Eni men and women have a passion for challenges, continuous improvement, excellence and particularly value people, the environment and integrity.