Statement needing to be verified: According to some Italian newspapers, Eni's sustainable bonds are used exclusively to finance projects that meet ESG criteria (respect for the environment, social standards and good governance).
Context: At the time of the launch of a climate-related in 2023, Eni had (and still has) hundreds of hydrocarbon exploration and production projects in its portfolio. The money raised by the 'sustainability-linked bond' may have been used in some of these contexts. This investigation shows how five major Italian newspapers contributed to the dissemination of potentially misleading or incomplete information about Eni, while at the same time guaranteeing the oil company ample space for paid advertising.
On 16 January 2023, Italian oil giant Eni launched a 'sustainability-linked' bond on the Italian market. Eni has 552 different oil production and exploration projects, and the money from the 'sustainability-linked bond' could have been used for some of them.
Among the most recent projects in which the Italian oil giant is operating are the Baleine deposit in the Ivory Coast, which has a potential of 2.5 billion barrels of oil, offshore exploration in Namibia and gas production in Egypt.
This 'sustainability-linked' bond is worth two billion euros and its success was also made possible by a massive media campaign in which Eni used newspaper articles and advertising space to present itself to the public as a company committed to decarbonisation and energy transition. (See the first part of this research).
Today it is possible to quantify this campaign and how Italian savers may have financed some of the 552 extraction projects of the six-legged dog, 96 of which have been operational since 2015, the year the Paris Agreement was signed, as explained in a Greenpeace report.
The Italian press celebrates the fake ‘green bonds’
"Eni launches the first green bond. A minimum yield of 4.3% for retail investors. What you need to know and how to subscribe” (La Stampa) or “Eni launches sustainable bonds for small investors” (La Repubblica) are just some of the many potentially misleading headlines used by Italian newspapers in the weeks leading up to the launch of Eni's €2 billion bond. Potentially misleading, because Eni's "sustainability" bond is actually not very "green" and would have very little sustainability, as we shall see.
Glossary
Bond: a security issued by a company or public body. For the holder, it is an investment that gives the right to repayment (plus interest) at maturity. For the issuer, it is a way of raising money in the market.Green or sustainable bond: a bond whose issue is linked to activities that must have a measurable positive impact on the environment (e.g. building a solar or wind farm).Sustainability-linked bond: a bond whose issue is linked to environmental, social or governance (ESG) sustainability objectives measured by key performance indicators (KPIs) (e.g. reduction of Scope 1, 2, 3 emissions).Carbon credit: A certificate giving the right to emit one tonne of CO2 or equivalent greenhouse gas. Governments and companies can buy or sell them on the market.
According to a report by the NGO Reclaim Finance, for every euro invested in renewable energy, Eni invests 12.9 in fossil fuels. From 2024 to 2027, the company plans to invest 84% of its annual resources in fossil fuels and only 16% in renewables.
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“Applying this ratio to the proceeds of the bond, Eni could have invested 1.68 billion in business as usual, i.e. in oil and gas activities, which, according to the United Nations Intergovernmental Panel on Climate Change (IPCC), should be drastically reduced to comply with the Paris Agreement," comments Antonio Tricarico, public finance and multinationals campaigner at Re Common, an association that campaigns for a just transition. We have repeatedly asked Eni to comment on Tricarico's hypothesis, but have never received a reply.
First things first, Eni has not issued "green bonds" but a "sustainability-linked bond": while the former require the issuer to use the money for specific environmental projects, the latter only require companies to meet certain sustainability targets, known as Key Performance Indicators (KPIs).
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The Eni sustainability-linked bonds analysed here are linked to two targets: the first is to increase renewable energy production by 5 gigawatts (GW) by 2025 compared to 2022 (Eni's final target is 15 GW in 2030); the second is to reduce direct greenhouse gas emissions (oil and gas production and refining) and those associated with energy consumption (internationally classified as Scope 1 and 2, respectively) by 65% by 2025 compared to 2018 levels. Failure to achieve this will result in a penalty of 0.5% above the base rate of 4.3%.
Categories of emissions
Scope 1: direct emissions (extraction and refining of oil and gas) by the companyScope 2: direct emissions associated with the consumption of energy purchased by the companyScope 3: indirect emissions from upstream suppliers and downstream customers Upstream emissions: emissions generated by activities that precede Scope 1 and 2 emissions in the value chain, such as the production and supply of energy or raw materials.Source:GHG Protocol
The information on the targets was faithfully reported by the newspapers, which, however, did not highlight how "the impact on sustainability of reducing these emissions is limited", as Moody's subsequently pointed out in its assessment of Eni's financial plan linked to sustainability. In particular, the rating agency defines the scope of KPI 2 (reduction of upstream Scope 1 and 2 emissions) as "relatively narrow", which "limits its relevance".
Furthermore, Moody's notes that "the company's future investments will lead to carbon lock-in effects", i.e. they will postpone or prevent the transition to alternative sources. Another element neglected in all the published articles is the use of the term "net emissions", a ploy that could allow Eni to meet its targets without actually reducing its emissions, as confirmed by experts.
The sustainability score (SQS) of Eni's financial plan, calculated by Moody's. The overall score is 'medium', which is 4 on a scale of 5, with 1 being the maximum. Source: Second Party Opinion on Eni's Sustainability Linked Financing Framework, April 2023.
The sustainability score (SQS) of Eni's financial plan, calculated by Moody's. The overall score is 'medium', which is 4 on a scale of 5, with 1 being the maximum. Source: Second Party Opinion on Eni's Sustainability Linked Financing Framework, April 2023.
How Eni becomes sustainable
Analysing Eni's 2023 Sustainability Report, we can see that the emissions selected by Eni (Scope 1 and Scope 2 upstream, i.e. the activities that precede the value chain, such as the production and supply of energy or raw materials) represent only 2.2% of total emissions (Table 1). Part of the reduction in emissions could be due to the purchase of carbon credits.
Carbon credits are tradable instruments that represent the verified reduction or removal of CO2 from the atmosphere. “Companies can offset emissions by buying them on a special market if full decarbonisation is not immediately feasible. The proceeds from their sale are reinvested in projects designed to ensure sustainability. Despite their potential, there are concerns about transparency, effectiveness and the risk of greenwashing” says Tushar Saini, a researcher at GreenWatch, an organisation funded at the University College Dublin that specialises in using artificial intelligence to assess and monitor the authenticity of companies' environmental claims.
ENI main target indicators 2023
Table 1: Upstream Scope 1 and 2 emissions and total emissions, Source: Eni 2023 Sustainability Report. The figure of 2.2% for the expected reduction in emissions is derived from the ratio of net upstream emissions to net global emissions.
The 65% reduction in Scope 1 and 2 emissions compared to 2018 requires Eni to emit no more than 5.18 million tonnes of CO2 (Scope 1 and 2) in 2025. Indeed, between 2022 and 2023 (the year of the sustainability commitment), the carbon credits purchased by Eni have almost doubled. Since 2019, Eni has exponentially increased its purchase of carbon credits, from 0 to 5.9 MtCO2 in 2023.
An interesting fact: if we add the Scope 1 and 2 emissions of 2023 to the carbon credits purchased by Eni, we obtain exactly the CO2 emissions of 2018, which Eni has committed to reduce by 65% by 2025.
“Eni's progress towards the sustainable bond target of reducing net Scope 1 and 2 emissions appears to have been achieved primarily through the use of carbon credits," comments Josephine Richardson, Managing Director and Head of Research at the Anthropocene Fixed Income Institute, a research centre specialising in, among other things, research on sustainability bonds such as the one launched by Eni.
And the flow of carbon credits seems to be continuing. With the support of the NGO GreenWatch, we have analysed data from the Verra and Gold Standard registries and can now demonstrate that between 2021 and 2024, Eni will have used just over 11 million carbon credits to offset its upstream Scope 1 and 2 emissions. By 20 February 2024, one year after the bond was issued, almost 5.3 million tonnes had been offset.
But that's not all: “Since 2020, Eni and all its subsidiaries have offset a total of 11 million tonnes of CO2 through carbon credits, and the reports show that they are of questionable quality, which means that the real impact of the projects may not be so positive," comments Tushar Saini, researcher at GreenWatch.
In many of the articles analysed, sustainability targets are vaguely described, often in English without translation. 'Net upstream carbon footprint status', 'Net upstream Scope 1 and Scope 2 emissions', 'Net upstream carbon footprint (Scope 1 and 2) equal to or less than 5.2 MtCO2eq by 31 December 2025 (-65% compared to 2018 baseline)' are some of the ways in which the articles presented the sustainability targets without including information useful for understanding them.
If the articles had included an explanation showing Eni's total emissions data, readers and investors would have understood that 91% of Eni's emissions are excluded from this bond, namely 'Scope 3' emissions, i.e. those generated by suppliers and customers, such as those resulting from the combustion of oil sold by Eni to produce goods and services. “Including the emissions generated by the company's suppliers and customers (so-called Scope 3) would have been an opportunity for a high impact sustainability bond," comments Josephine Richardson, Managing Director, Head of Research at the Anthropocene Fixed Income Institute.
Despite the many limitations of Eni's bonds, one news article analysed as part of this research commented on the sustainability targets as follows: "In short, a very strict path".
We contacted the newspapers and provided a list of the articles analysed, asking what sources were used to write the texts, whether sources other than Eni press releases were used, and whether the articles were requested by Eni. Despite repeated requests, none of the newspapers replied.
Italian newspapers’ ranking of Eni bonds
During the subscription period, investors were unable to take account of these restrictions, as none of the articles published by the five main national newspapers (Corriere della Sera, La Repubblica, Il Sole 24 Ore, La Stampa and L'Avvenire) mentioned this information, despite the fact that the low positive environmental impact in terms of direct and indirect emissions predicted by the Eni bond was already evident in the 2022 Sustainability Report.
The analysis commissioned by Greenpeace Italy revealed a journalistic approach that could be defined as superficial, with a lack of verification of data and little completeness of information in the 32 articles published by the newspapers in January. Eight other articles with the same characteristics were published by the ANSA and Askanews agencies. In addition, during the same period, 71 advertisements for Eni with references to sustainability were published in the newspapers considered. The newspapers gave space to all the information on the bond, some more than others, but none of them interviewed experts in the sector or critical voices, nor did they analyse the data to understand whether Eni's sustainability goals were credible.
In 37.5% of these articles we can speak of real disinformation. The Eni bond was presented as a 'sustainable bond', 'green bond' or 'green bond', which are completely different credit instruments used by companies to finance specific environmental projects. Why were the newspapers talking about 'green bonds'?
“Green bonds are very successful because people understand them. It’s a very simple label. People like the idea of giving money to a company and knowing exactly how it will be used—for example, to build a wind farm. This way, they know they have directly contributed to that project. Sustainability-linked bonds like Eni’s offer much more flexibility, which however can lead to more complexity for investors" explains Richardson.
In short, Eni's bond was promoted by newspapers and agencies as a 'green bond' or 'sustainable bond' in 19 out of 40 articles published (online and in print) by the 5 major Italian newspapers and agencies. Almost 50% of the publications therefore used inappropriate terminology in relation to the financial instrument launched by Eni.
While journalism has been accommodating to the hydrocarbon giant, critical questions have come from the financial world: On 10 May 2023, the Fondazione Finanza Etica, as a critical shareholder of Eni and member of the Shareholders For Change coalition, asked in the preliminary assembly why Scope 3 emissions – indirect emissions generated by suppliers – had not been included in the sustainability-linked bond. The KPIs [key performance indicators] that include Scope 3 emissions have a target date of 2030 and were therefore not used for the 'Eni sustainability-linked 2023/2028' bonds, which mature in 2028,' Eni replied.
On 15 May, however, Eni issued two bonds: one linked to sustainability with a maturity date of 2027 and a traditional 10-year bond (maturity date 19 May 2033) for a total of 1.25 billion euros, but without environmental targets, which in this case could have included Scope 3 emissions.
Eni and the greener marketing of the ‘sustainable’ bond
‘Much of this uncritical approach is due to the pressure that Eni has on the media. Journalists practise a sort of self-censorship and the sector journalist knows that Eni is paying your salary through advertising’, comments Roberto Giovannini, columnist for Materia Rinnovabile, environmental journalist ex La Stampa, creator and former coordinator of La Stampa Tuttogreen.
Let's go back to the meeting of 10 May 2023: Eni declares that it has dedicated a greater amount than in 2021 to advertising investments in the Italian media, mainly following the bond issue linked to sustainability targets. However, it did not indicate the amounts and, to date, has not responded to our question regarding the amount of advertising expenses.
In January 2023, the five monitored newspapers offered a total of 71 advertising spaces to Eni, of which 30%, or 42%, were dedicated to sustainability-linked bonds.
The advertisement for the Eni bond, which like all the other generic advertisements occupied a full page in the various newspapers, shows large wind turbines positioned on lush green hills. ‘With Eni bonds linked to sustainability, transition and growth are possible’, it says.
The advertisement for the Eni bond, which like all the other generic advertisements took up a full page in the various newspapers, shows large wind turbines on lush green hills. ‘With Eni bonds linked to sustainability, transition and growth are possible’, it says. The generic advertisements that were repeated 41 times in one month, with green backgrounds, wind turbines and photovoltaic panels, also referred to “Security & Change” and “Stability & Transformation”.
La pubblicità dell’obbligazione legata alla sostenibilità di Eni comparsa sui quotidiani nel mese di gennaio 2023; Fonti: quotidiani Corriere della Sera, La Repubblica, La Stampa, Avvenire, Il Sole 24 Ore.
Image 2: the advertisement for Eni's sustainability-linked bond that appeared in newspapers in January 2023; Sources: newspapers Corriere della Sera, La Repubblica, La Stampa, L'Avvenire, Il Sole 24 Ore.
Overall, therefore, the ranking of content compiled (Graph 3) includes all articles published by the newspapers, both online and in the newspapers, and all advertisements (generic and specific on bonds in the newspapers), published in the month of January 2023. Il Sole 24 Ore is first in the ranking. The Confindustria newspaper dedicated 11 articles and 16 advertisements to Eni in January. Next in line are La Stampa (22), Corriere della Sera (21), La Repubblica (18) and finally Avvenire (15), which published 13 advertisements and two small inserts dedicated to Eni's ‘green bonds’ in its paper edition.
A recent report by the Italian National Commission on Stock Exchange overseeing (Consob) shows that 50% of Italian savers are interested in sustainable investments. Of these, 81% use newspapers to a medium to high degree for information. Unfortunately, the economic crisis that has affected the press for a quarter of a century now means that newspapers have fewer and fewer resources to gather and verify news. A phenomenon confirmed by Roberto Giovannini of Materia Rinnovabile: "We are witnessing a general impoverishment of the industry, which has led to a general impoverishment of the quality of newsrooms and journalistic products. Even today there are hundreds of articles talking about bad weather when they should be talking about the climate crisis. This makes it very difficult for the reader to understand environmental issues.
The union between the press and the fossil fuel industry is nothing new, and it seems that Eni has years of experience behind it, as Giorgio Steimetz, alter ego of Guglielmo Ragozzino, already said in 1972 in the book Questo è Cefis. L'altra faccia dell'onorato presidente (Ami publisher): "Advertising, configured in this way, loses much of its bite as a market catch, it probably earns just enough to pay for itself, it is not productive according to the good rules of accessory investments. More precisely, it is an undoubtedly excellent deal of a political nature. ENI is paying a very high proportion of the raw cost of a product called 'silence' with advertising.”
🤝 This article is published in collaboration withIrpiMedia; it is part ofVoxeurop's investigation into green finance and was produced with the support of theEuropean Media Information Fund (EMIF) andJournalismfundEurope
The sole responsibility for any content supported by the European Media and Information Fund lies with the author(s) and it may not necessarily reflect the positions of the EMIF and the Fund Partners, the Calouste Gulbenkian Foundation and the European University Institute.
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