Enel's CEO is the acclaimed king and emperor of the climate change challenge.
By Fernando Napolitano
This week edition of The Economist, a British weekly magazine, anoints Francesco Starace, Enel’s Chief Executive, the European Climate Centurion. https://www.economist.com/business/2020/11/28/how-enel-became-europes-climate-centurion.
He is the acclaimed king and emperor of the climate change challenge. He is the most well-known executive within the utility industry (king) but also renowned outside of it for the successful strikes he has executed around the world in tangential sectors, from telecom to fin-tech (emperor). Enel operates in 32 countries, is among the top foreign investors in renewable energy in the US, and will invest “€160bn by 2030 to virtually triple its renewable-energy capacity to 120 gigawatts and transform its grids in Europe and Latin America to prepare for an all-electric future”.
This is uncompromisingly good news for Enel – employees, shareholders, stakeholders – and for Italy and Rome, where Enel is headquartered. The Italian government and the Municipality of Rome are the subject of criticism for mismanagement, a further fog on Italy’s image abroad.
Starace’s crowning, however, offers the opportunity for some considerations.
First and foremost, the strategic need to own and lead the nation’s narrative abroad. Italy does not enjoy a France-24 equivalent, an all-encompassing media that supports the French system by addressing the international audience, being in English, Spanish and Arabic. It compares itself to BBC World News, and offers facts, data and debates that complement the coverage of other international media outlets. Said differently, whoever covers France professionally and ethically must check, among other sources, what France-24 has to say.
The Economist covers Italy often, and although insightful, the narrative is sometimes tinged with decadent, depressive and romantic views of La Dolce Vita. A non-Italian speaker and habitual reader of The Economist will, this week, breath in relief in learning about Enel and good things happening in Italy.
There is no desire to be hagiographic. To the contrary, Italy’s governments have all fallen short in tackling the fundamental strategic issues. Italy must implement structural reforms if it wishes to fully exploit the €209 billion Recovery Fund. It must eradicate corruption, withdraw the state and the regions from managing the economy, streamline the bureaucracy, contain tax evasion, reform the justice system and the labor market, reduce the tax pressure, and enhance legal power against organized crime, among other tasks.
While this long list of problems is the natural source of journalistic coverage and narrative, Italy has many more positives in its favor than recognized. A media broadcaster in English, from Italy, would support that narrative in providing a balanced view on what is in the Italian basket. It would make news like Enel not “extra-ordinary” but ordinary in a league of excellence that other Italian, less famous, economic realities play into. Enel and its management do deserve credit for their accomplishments. This should have been communicated in a far better way, with higher frequency and much earlier, and would have been if Italy had the means. A lot more happens in Enel arrondissements which are worth projecting abroad, ENEL X being an example. Enel is, however, not an island; rather the leader of an articulated value chain of excellences that spans the territories in which it operates. It all starts from Italy. NEWEST is working to scale-up “The Voice of Business” with foresight partners to ensure the shortfalls above are not perpetuated.
Secondly, the excellent example of Enel goes beyond its financial success and high profile sustainability position. Enel is bravely leading into uncharted waters on how to support the creation of a new culture, to bring into sight innovative horizons for the benefit of all, implement solutions, and, lastly, through excellence and prestige Enel inspires policy makers in identifying recipes to ignite economic growth and job creation. According to the Influence Relevance and Growth Index (IRG) – a proprietary NEWEST index– Enel scores a hefty 26 points out of 30, the perfect score. IRG measures quantitatively 10 parameters (1) attributing to each a score from 0 to 3. Modern corporations want to score 20 or above to be (pro) active participants and leaders in reshaping the western societies.
IRG, bluntly, recognizes the structural changes occurring in the societal context. Among the four pillars of western society—governments, NGOs, media and corporations— the public impression of competence and influence, and the respect it engenders, has tilted in favor of corporations. The Edelman TRUST BAROMETER, which tracks and analyses trust in those four pillars over the last two decades, reveals a world of seemingly stagnant distrust except for corporations. 74% on the interviewees say that the CEOs should lead the change and not wait for government to impose it. It is 9 percentage points increase vs 2018.
One of the overlooked traits of globalized players such as Enel is that it is unfolding according to the rule of law. Previously it was often deep disruption, such as war, which unfortunately created the circumstances which might allow positive change. Over the last thirty years the world of business has undergone a profound transformation. Companies have generated unprecedented wealth, acquired state of the art skills and sophisticated management models. In the process they have monopolized largely, if not exclusively, the pool of available talents. The public sector, in contrast, has remained at the margins of globalization. It has lost three decades of seminal know-how which is instrumental to effective intermediation between the interests of capital and the well-being of the population at large. Populism is to a large extent the “brainchild” of this intermediation deficiency.
The pandemic has, mercilessly, emphasized further this status. None of the western governments can claim victory, let alone being a best practice, in COVID 19 management.
So, a structural change is occurring where the private sector needs to adapt, to change positioning, perspective, language and acquire the skills that such a new eco-system requires. These skills and perspectives should be taught to future generations. Enel is among the world leaders in this new practice.
In the US, the CEO of JP Morgan is pursuing the same path and made this explicit in his letter to shareholders in March 2019.
“The third section … is about … American public policy, … I try to give a comprehensive, multi-year overview of what I see as some of our problems and suggest a few ways they can be addressed… American public policy … is a major concern: businesses, governments and communities need to work as partners, collaboratively and constructively, to analyze and solve problems and help strengthen the economy for everyone’s benefit.” He continues:
The American Dream is alive — but fraying for many.
We must have a proper diagnosis of our problems — the issues are real and serious — if we want to have the proper prescription that leads to workable solutions.
All these issues are fixable, but that will happen only if we set aside partisan politics and narrow self-interest — our country must come first.
Governments must be better and more effective — we cannot succeed without their help. The rest of us could do a better job, too.
CEOs: Your country needs you!
America’s global role and engagement are indispensable.”
On August 2019 the Business Roundtable, uniting 181 CEOs of American corporations, signed the “Statement on the Purpose of a Corporation” that follow these lines and philosophy.
In what might appear to be unexpected or surprising in some narratives of Italy, there also exists a silent, high-tech Italy: an eager member of the European Union, hardworking, committed and talented. That Italy needs to exit its cradle and not only to walk, run and gesticulate, but to start talking, including in clear English, to the world.