Governance

Even though only savings shares continue to be listed on the MTA, Edison continues to comply, on a voluntary basis, with the Code.

As a result, the Company’s system of corporate governance, which is the set of standards and behaviour guidelines deployed to ensure the efficient and transparent functioning of its corporate governance and internal control systems, was thus over time substantially consistent with the recommendations of the Code and was revised from time to time to reflect amendments to the Code with the limited and immaterial exceptions that will be explained below. In this regard, it should be noted that, in 2021, the process was nearly completed for adjustment to the new recommendations contained in the 2020 edition of the Code, according to the guidelines provided by the Board of Directors at the meeting on December 7, 2020. The Code is posted on Borsa Italiana’s website.

Although Edison qualifies, pursuant to the Code, as a Company subject to Concentrated Ownership but not as a Large Company. Nevertheless the Board of Directors has used only two of the flexibility options allowed for companies subject to concentrated ownership that are not large, namely: the possibility of not establishing an Appointments Committee and not adopting Succession Plans, believing instead that it is appropriate to comply with:

(a) the following 4 recommendations intended for Large Companies:

• one-third of the members of the administrative body are independent;
• the independent Directors meet at least once a year in the absence of the other Directors to consider matters deemed of interest with respect to the functioning of the Board of Directors and the management of the company;
• the maximum number of positions that may be held by an individual Director has been specified;
• the Control and Risk Committee has been established;

(b) the following 2 recommendations intended for companies different from those who are subject to Concentrated Ownership:

• the board self-assessment is conducted annually;
• when the Board of Directors is re-elected, it provides guidelines to the Shareholders’ Meeting on its optimal composition.

The corporate governance structure of Edison, an Italian company, defined by the Bylaws is based on the traditional organisational model which provides for the distinction of the roles and responsibilities between the administration body and the control body, and is composed of the following bodies: the Shareholders’ Meeting, a Board of Directors (which also operates through the Chief Executive Officer and the Directors who are empowered to represent the Company and is supported by Committees established with the framework of the Board of Directors), a Board of Statutory Auditors, the Independent Auditors and the 231 Oversight Board. In addition to those listed above, governance entities include the Special Meeting of Savings Shareholders and the common representative of the category.

The illustration that follows provides an overview of Edison’s governance model.

Governance is integrated by the business organisation and implemented through the managerial structure, which is divided into divisional organisational structures for the management of the various business areas, which ensure the development and operational management of the portfolio of activities assigned, and divisional organisational structures for the management of common transversal corporate activities and processes, which ensure direction, coordination, control, specialist support and services to the business structures/operating companies and the management of the related operational risks.

The essential elements of the business organisation consist of:

• the 5 Business Divisions: Gas Assets, (which as of January 1, 2021 absorbed the Exploration & Production Division), which is responsible for the development and management of gas infrastructure; Power Assets, which is entrusted with the management of the power generation portfolio; Gas & Power Portfolio Management & Optimisation, which is entrusted with activities related to the management of the portfolio of gas-LNG import contracts, gas logistics and energy management activities of the power portfolio; Gas & Power Market, which is entrusted with the management of the portfolio of gas and electricity trading activities and sales in end markets; Energy & Environmental Services Market, which is entrusted with the management of activities relating to the energy and environmental services sector, and the 7 cross-company and support divisions (Finance; Legal & Corporate Affairs; Human Resources & ICT; External Relations & Communication; Strategy, Corporate Development & Innovation; Institutional Affairs, Regulatory & Climate Change - which took this name as of April 2021, following the separation of Sustainability activities into another specific organisational structure - and Engineering). All the Divisions are in turn organised into Business Units and Departments, each responsible for managing important and homogeneous business areas or areas that provide support and services to the business areas;
• the Executive Committee (“Comex”), established in 2012, the composition of which was changed over time due to changes in the organisational structure, led by the Chief Executive Officer and comprised of the managers of the Divisions representing the main business areas, which provides support for the activities of the Chief Executive Officer in identifying the Group’s action and development policies and assessing the main initiatives. This body includes the managers of the 5 Business Divisions and the managers of the 7 cross-company and support Divisions;
• management committees to support Top management in the management of specific and relevant decision-making processes and/or particular issues, including the Commitments and Investments Committee, the Risk Committee, the Audit and Ethics Committee, the Sponsorship-Contribution-Donations Steering Committee, and the Advisory People Development Committee;
• the Code of Ethics, the specific models, protocol and management systems concerning issues governed by Legislative Decrees No. 231/2001 and No. 262/2005, concerning the protection of privacy, protection of health, occupational and environmental safety, subject to systematic updates to take into account the evolution of regulations and changes in the Group’s organisational structure, internal operating procedures, the proxy system and internal and external delegations of authority;
• the Internal Auditing Department, which reports directly to the Board of Directors, provides support and liaison services for the activities of the 231 Oversight Board and, at the operational level, is coordinated by the General Counsel Department, to which the Board of Directors assigned responsibility for facilitating interaction by the Internal Auditing Department with the Board of Directors, the Board of Statutory Auditors and the 231 Oversight Board.

Neither Edison nor its strategically relevant subsidiaries are subject to non-Italian laws that may affect their governance structure. Two companies, one Italian and one foreign, are subject to the unbundling regulations for gas transportation and storage.

Sustainability governance

With specific regard to issues relating to sustainable development, for several years the Company has focused its efforts on long-term economic growth, which is also able to enhance the reference social and environmental context.

In support of its activities, the Board of Directors has assigned since 2016, among the various advisory and propositional functions, the oversight of sustainability issues to the Control and Risk Committee, as described in detail in the “Control and Risk Committee” section.

In this context, the CEO’s Office & Sustainability, reporting directly to the Chief Executive Officer, was formed in 2021. This department, which is part of the Institutional Affairs, Regulation, Climate Change & Sustainability Division, has been entrusted with responsibility for developing, under the guidance of the Board of Directors and in collaboration with the management, the medium- and long-term sustainability policy, with reference to relevant stakeholders for the Group, and for promoting its sharing inside and outside the company.

Working alongside the Chief Executive Officer and the Chief Sustainability Officer is the Stakeholder Advisory Board (SAB), a committee made up of members representing different categories of stakeholders, which aims to support the company in identifying the most important sustainability issues including material issues, focus on challenges and opportunities for Edison and make recommendations and suggestions on strategies and developments.

The Company has also established a Network of representatives for sustainability, consisting of employees from the various business areas, which supports the CEO’s Office & Sustainability in the process of integrating sustainability into the business.

The CEO’s Office & Sustainability also coordinates the Company’s non-financial reporting process.

Indeed, in terms of transparency, starting from 2017, in line with the EU provisions incorporated into the Italian legal system with Legislative Decree No. 254 of December 30, 2016, Edison has also prepared a Non-Financial Disclosure (“NFD”) which is an integral part of the financial statements documentation. In this regard, please recall that starting from 2004 Edison was one of the first companies in Italy to prepare a Sustainability Report on a voluntary basis, which it subjected to a voluntary audit by the Independent Auditors. The NFD relating to the year 2021 was approved by the Board of Directors at its meeting on February 16, 2022.

Furthermore, with the aim of focusing initiatives and reinforcing the Company’s attention and commitment to social sustainability, a foundation dedicated to Corporate Social Responsibility has been set up, called EOS (Edison Orizzonte Sociale), which pursues civic, solidarity and socially useful objectives. The purpose of the Foundation is to support nonprofit associations in their capacity-building process and to improve the quality of life of the most vulnerable segments of our society through projects of social and cultural innovation and to counteract educational poverty, as well as to enhance the Edison and national historical and artistic heritage.

For more details, please refer to the NFD, available on Edison’s website (www.edison.it - Our Company - Sustainability).