Preparation criteria

2012 was Eni’s second year of adhesion to the Pilot Program launched by the International Integrated Reporting Council (IIRC) to pilot the Integrated Report. In line with the “Prototype of the International Framework” published by the IIRC, Eni has continued integrating financial and sustainability information, showing the relationship between elements of the scenario and competitive context, performance and strategic direction within the Operating and Financial Review section of the 2012 Annual Report. In addition, this year’s integrated report has been enhanced with examples of application of the business model as well as a description of the integrated risk management model. The section entitled “2012 Consolidated Sustainability Statements” (hereafter Consolidated Sustainability Statements) contains the key performance indicators monitored on an annual basis.

The 2012 sustainability report and the performance indicators for the 2010-2012 three year period included in this section have been prepared in accordance with the “Sustainability Reporting Guidelines, version 3.1” issued by the GRI (Global Reporting Initiative) and the related “Oil and Gas Sector Supplement”, with particular reference to the principles of materiality, completeness, stakeholder inclusiveness and sustainability context.

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Materiality and stakeholder inclusiveness

In order to define the priority sustainability issues both in terms of relevance to external stakeholders of reference and of internal significance to the Company, in 2012 an analysis of materiality was conducted. Its result are the sustainability themes reported in this document.

The level of external interest in sustainability issues is found through an analysis that considers the following factors: the political, economic, social and energy scenario at a global and local level, the benchmarking on a panel of companies from the Oil & Gas and other sectors similar to Eni in size and geographic aspects, the capital market and ethical rating agencies demands, the analysis of the press and the web, requests that the main stakeholders have done to Eni with different communication procedures and channels. In addition to the financial community, stakeholders considered are Governments and local institutions, international and national associations, NGOs and citizens interested in Eni’s work, and Eni’s people (for further information see paragraph “Stakeholder engagement”).

The internal significance level of sustainability issues is determined on the basis of the analysis of the strategy and of short and long term objectives, combined with the evaluation of the results and of the sustainability performance of the reporting year. Joint consideration of external and internal significance leads to the identification of areas of priority and of greater materiality to the Company, shared with all the the interested Company units and approved by the top management.

Reporting perimeter and sustainability context

The sustainability information contained in this section and in the Operating and Financial Review section of the Annual Report is integrated at several levels within the document. Within the Operating and Financial Review, financial information has been integrated with sustainability information with regard to the operating context, strategy, business model and integrated risk management system, as well as governance. The following section contains Eni’s consolidated performance indicators for the 2010-2012 period and an analysis of the relative trends.

The information included relates to Eni SpA and its consolidated subsidiaries. The consolidation perimeter is the same as that for the 2012 Consolidated Financial Statements, with the exception of certain data specifically indicated in the text. This year, the data are shown net of Snam’s contribution for the entire three-year period, due to the sale of Snam ordinary shares, equal to 30% less one share of the voting capital of the company, to Cassa Depositi e Prestiti. This disposal was completed in October 2012.

With regard to data on health, safety and the environment, the consolidation score is defined on the basis of the operational criterion (control of operations). For example, under this approach, emissions reported represent 100% of the emissions for each installation operated by Eni.

Vice versa, the equity share criterion, used in the consolidated financial statements, requires that the emissions associated with an installation reflect the percentage financial interest in that particular installation.

Principles of quality assurance for sustainability reporting

The performance data shown have been reported with the aim of giving a balanced and clear picture of Company actions and characteristics.

The collection process for information and quantitative data has been structured to ensure comparability of data across several years, to enable a correct reading of the information and a complete view for all the stakeholders interested in the trends in Eni’s performance.

The indicators and specific data for the various business sectors are shown on the website eni.com.

The Consolidated Sustainability Statements are based on the measurement processes defined in the reporting procedures: lower or different levels of accuracy are indicated in the margin for the data presented. During the allocation of data by the people responsible for each topic, in addition to loading data for the reporting year, the two previous years were also verified and updated. In addition, this year, given the change in consolidation perimeter due to the disposal of Snam, the data have been recalculated net of Snam’s contribution in order to ensure comparability over a three-year period. Therefore, any changes in the data for 2010 and 2011 compared to those published last year are due to these adjustments. The data were collected using a dedicated information system, which guarantees the reliability of information flows and accurate monitoring. The sustainability information has been certified by an independent entity, the auditing company for the consolidated financial statements of the Eni Group as of December 31, 2012.

Calculation methods

The methods used to calculate value added, the injury frequency rate and injury severity rate, the refining energy intensity index, the emission index and the value generated by research are shown below.

Value added represents the wealth generated by the Company in carrying out its activities. The form chosen for this report is total added value net of amortization. Total net added value is divided between the following beneficiaries: employees (direct remuneration composed of wages, salaries and TFR - employee termination indennity - and indirect remuneration consisting of social welfare contributions); Public Administration (income tax); financial backers (medium and long-term interest paid for the availability of borrowed capital); shareholders (dividends distributed); the Company (retained earnings).

With regard to safety performance, injury frequency and severity rates are shown for employees and contractors. The frequency rate is calculated as the number of accidents leading to days of absence (including fatalities) divided by millions of worked hours; the severity rate is defined as the ratio between the days of absence 24 due to accident (excluding fatalities) and thousands of worked hours. The calculation of the injury frequency rate and severity rate does not take into account accidents while travelling.

The energy intensity index of refineries represents the total value of energy actually used in a given year in the various refinery processing plants, divided by the corresponding value determined on the basis of predefined standard consumption values for each processing plant.

For comparisons between years, 2005 data have been taken as the baseline (100%). In order to highlight medium and long-term performance on CO2 emissions, three indexes have been defined to represent the following operating contexts: hydrocarbon production, refining and electricity generation. These indexes take into account the substantial differences in working conditions recorded over the years and allow for performance comparison by normalization of the emissions based on operating data.

The indexes of refineries are calculated from the equivalent distillation capacity provided by a third party entity; the hydrocarbon production indexes cover effective net production; and the energy sector indexes measure electrical and thermal energy produced in equivalent kWh. Greenhouse gas emissions (GHG) relate to CO2 and CH4 (methane); methane is converted into CO2eq using a Global Warming Potential (GWP) of 21.

The new method for assessing the value generated from research allows the benefits of R&D to be calculated in terms of both tangible value and intangible value. The tangible benefits measure the value created for the Company through the application of innovative product/process technologies. This value is calculated using the operating data of the division/company or official models used to assess the value of industrial projects as a starting point. The assumptions applied on a case by case basis for the calculation are shared with the relevant technical structures/business lines. The tangible benefits are identified in a “what if” scenario, that is as the difference derived from comparison with the application of the best alternative technology or, in the case of new products, as the difference compared to the margin generated by the products replaced. The benefits may be identified based on actual results or expected value (net present value - NPV). In particular, benefits of E&P projects are entirely taken into account, including the shares of partners. Intangible benefits are identified by assessing on the one hand the effectiveness and efficiency of Company innovative capacity over time through the number of first time patent applications filed and, on the other, the spread of specialist know-how and the effectiveness of research in providing support for operating activities.

  1. The term “day of absence” means absence from work of at least one calendar day, excluding the day of the accident.

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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.