Enel’s 2018-2020 Strategic Plan focuses increasingly on the growth of renewables and the development of low-carbon technologies, including the digitalization of networks, the installation of charging stations, software platforms and public lighting, thus abandoning investments in coal plants and the construction of large infrastructure projects with a high environmental impact. This strategy allows the Group to be more flexible and to minimize the impact on the ecosystem, local area and community.

Operating across such a vast geographical area necessarily implies engagement with different entities and an in-depth knowledge of the local area and the needs of the various stakeholders, in order to identify targeted solutions. Each infrastructure project is therefore considered in view of observations from the communities and the stakeholders involved, which in some cases (mainly involving relocations) can result in criticism or partial uptake. In the latter cases, the Group could be exposed to reputational risks, also in relation to interaction with local suppliers, as well as operational risks linked to delays in the execution of projects or their closure, with possible repercussions also on the supply chain. The involvement of stakeholders in planning processes and in the development of infrastructure is extremely important, especially for those cases in which the construction of a new plant involves the relocation of a part of the population residing in the surrounding areas. Relocation management cannot be separated from the involvement of the populations and the people concerned – or from a careful assessment of the psychological and social problems that can occur at individual and collective level. The approach in selecting potential sites is therefore to minimize the need for relocation of the population as much as possible through an analysis of the economic, political, cultural and socio- demographic aspects, including analysis of the daily life of the communities living in the area of influence, the distribution of the population, organizational forms, the levels of employment and pay. In cases where the relocation option goes ahead, the plan is developed in compliance with international standards on the subject, taking into consideration any impacts on the different forms of physical, human, economic, environmental and cultural resources of the populations concerned. Where it is necessary to implement resettlement projects, these are implemented in compliance with the legislation in force in the country involved and with any local regulations that specify the relocation conditions and the methods for calculating the related economic compensation. Enel’s sensitivity on this issue is also reflected in the Human Rights Policy which was approved by the Board of Directors in 2013. Below are the most significant cases underway, the positive and/or negative impacts on the territory (actual or ‘feared’) and the manner in which the Group companies involved are promoting a proactive dialogue to achieve solutions that are as widely shared as possible in relation to plants built in the past but which have remaining issues.

Bocamina plant (Chile)

The Bocamina II plant is a 350 MW coal-fired thermal power plant, built since 2007 in the Municipality of Coronel, Bío Bío Region, Chile. The plant is part of the Bocamina coal-fired power plant complex, whose first unit of 128 MW was built in the 1960s and put into operation in 1970. Construction of the second unit took place in an area adjacent to the first, where about 1,300 families were living.

Since the construction of the second unit, the first agreements with local communities have been signed in the Municipality of Coronel to manage the relocation processes of families living in the central area. At the end of 2017, 1,099 out of a total of 1,337 families have been relocated. Specific areas requiring attention emerged during the process, including the need to rebuild the school and church that were present in the original site in the new area or any defects in the construction of about 200 houses, which made such a relocation more difficult for families.

Therefore, in January 2017, Enel decided to start a detailed analysis, taking the main international relocation standards into account, including the IFC standard no. 5 “Land Acquisition and Involuntary Resettlement”, to define a specific action plan aimed at creating an ever-greater integration between the Company and the Coronel community.

The main actions undertaken concerned:

  • the creation of a joint technical working group (community, company and CITEC - University of Bío Bío) aimed at carrying out a census of houses that require improvements and to draw up the relevant plans;
  • the creation of a dashboard summarizing the impacts on the quality of life of families because of the constructive defects of the houses in which they lived since 2010 and the quantification of the related compensation;
  • the reconstruction of the school and the church in the new neighborhoods;
  • the launch of the project “Mi barrio, nuestro barrio” (“My neighbourhood, our neighbourhood”) which includes redevelopment projects for new and pre-existing neighbourhoods.

A project was started in the Cerro Obligado community in collaboration with a local NGO to combine economic- social development and circular economy with the aim of training 4 women in eco-sustainable construction techniques. Thanks to this project, each of them opened their own neighbourhood carpentry shop where they recycle pallets and other materials for the construction of ecological objects and furniture. The carpentry shop is also equipped with electric vehicles for the deliveries of the works carried out.

Furthermor casa abierta Coronel, is present, a reference point for the whole community, in line with the Open Power vision of the Group, where it is possible to openly dialogue with the company, receive information, communicate any complaints and evaluate solutions with a group of experts. The basic criteria are transparency, fairness and non-discrimination.

Finally, Enel has invested in environmental projects related to the plant in recent years, including the construction of two “domes” (unique in the country), covering the coal storage area. In mid-2017, it also launched a pilot project to transmit the CO2 emissions data of the Bocamina I plant in real time to the Superintendencia del Medio Ambiente (SMA). Bocamina I is the first plant in Chile to carry out this activity.

Further information is available in the Sustainability Report of Enel Generación Chile (www.enelgeneracion.cl).

Alto Bío Bío plants (Ralco, Pangue and Palmucho - Chile)

Enel Generación Chile manages 3 hydroelectric plants in the Alto Bío Bío area (Ralco, Pangue and Palmucho), an area that is characterized by the historical presence of Pehuenche indigenous peoples. Numerically, the Pehuenche population in the area of influence of the plants totals about 3 thousand people, made up of 800 families in 10 communities (Pitril, Callaqui, El Avellano, Aukiñ Wallmapu, Quepuca Ralco, Ralco Lepoy, El Barco, Guayalí, Pewen Mapu and Ayin Mapu).

Agreement with Alto Bío Bío families

In February 2017, an important collaboration agreement was signed with 25 families from the Aukiñ Wallmapu community to start local development projects. The agreement settles the conflict related to the impacts generated during the construction of the Ralco plant.

In March 2017, Enel Generación Chile officially handed over its ancestral cemetery to the community of El Barco. The handover took place thanks to the support of the Director General de la Corporación Nacional de Desarollo Indigena (CONADI) of the Bío Bío Region, thus solidifying the response to a commitment that the Company had taken with the community following the construction of the Pangue power plant.

In June 2017, Enel Generación Chile signed two agreements with the El Avellano and Quepuca Ralco communities. The agreement settles the conflict caused by the impacts on these communities of the construction of the Ralco plant.

Diversification program for products derived from hazelnut processing, Alto Bío Bío

Following requests made mainly by the El Avellano community, a project is now underway to develop Chilean hazelnut- based products. Enel Generación Chile has promoted this project together with the University of Concepción, the El Avellano community, the Alto Bío Bío Municipality and the Pehuen Foundation, thus allowing a historical activity to become a micro-entrepreneurial activity.

Shared and sustainable water management

The Ministry of Public Works and Enel Generación Chile signed an agreement, subsequently ratified also with the local associations that manage the irrigation channels of the Saltos del Laja area, in the Bío Bío Region. The aim of the agreement is to improve the flexibility in the use of water, ensuring the supply to families and the production of energy. The initiative is the result of the joint work of the Canalistas de Laja and Canalistas Zanartu associations, Dirección de Obras Hidráulicas, Dirección General de Aguas, Enel Generación Chile, Ministerio de Agricultura, Ministerio de Energía and Comisión Nacional de Riego.

In December 2017, an agreement was also signed with the Municipality of Antuco to start a pilot project to promote tourism in the area of Salto del Trubunleo during the summer.

To manage contingent or emergency situations in a rapid and coordinated manner, a specific communication system has been set up between the Enel Generación Chile Pangue and Ralco power plants, the Angostura power plant in Colbún, the Municipalities of Alto Bío, Quilaco and Santa Bárbara and the Ministerio del Interior y Seguridad Pública (ONEMI) and the Ministry of Energy.

Further information is available on the Enel Generación Chile Sustainability Report (www.enelgeneracion.cl).

El Quimbo plant (Colombia)

El Quimbo is the most impressive engineering work carried out by the Enel Group in recent years and one of the largest hydroelectric investments in South America. With an installed capacity of 400 MW, the plant is set in the Huila region, about 350 km south-west of Bogotá. The project involved a total investment of about 1.2 billion US dollars, accompanied by a major assistance plan for local populations, including the construction of new housing units, the construction of new bridges, including the longest rural viaduct of the country, and initiatives to protect biodiversity in the area, such as the restoration of over 11 thousand hectares of tropical vegetation on the left bank of the reservoir and the construction of veterinary rescue centers.

Since the beginning of the project, the Group’s generation company in Colombia, Emgesa, has shown its absolute willingness to engage with regional and national stakeholders and has developed a specific socio-environmental management plan. Specific initiatives for families who live or own property in the area of influence of the project, as well as for those who work or have commercial activities and services in this area, have been agreed in an open, collaborative manner. The program also addresses those who carried out non-formal economic activities locally. The families surveyed and in possession of the requisites envisaged were given the opportunity to decide between relocation (collective/individual) and the sale of their land.

Of the 152 families who opted for relocation, 40 chose individual relocation, or receiving land for a business project or a home. The remaining 112 families opted for relocation to the 4 collective settlements (Montea, Santiago y Palacio, Llano de la Virgen, San José de Belén), with new homes equipped with essential services and located in an urban context with schools, churches, multifunctional sports facilities, football fields, green areas, waste collection centers and waste water treatment plants.

Social and cultural management

515

psychological, family and community support actions for relocated families

157

llective training courses

183

individual advice sessions on the realization of agricultural-zootechnical production projects (PPA - proyectos productivos agropecuarios)

As part of these activities, specific training courses have been developed and agreements with institutions and other local entities involving one or more areas have been established, including: basic accounting, measurement methods, techniques for improving pastures and treatments for disease prevention in cattle.

Through the initiative “Sembrando valores, cosechando lideres” (“Sowing values, creating leaders”), Emgesa has developed actions to promote positive values and attitudes in the management of children and young people of resettled populations, and to strengthen the sense of local belonging by giving value to each family member.

In 2017, the company finalized the activities associated with the “salud y saneamiento básico” program, dedicated to health issues with a positive impact on the communities. In the same way, it also promoted the expansion of communication channels between municipal and regional authorities in response to public health events. In particular, the following activities were carried out:

68

training courses on health

72

courses on healthy lifestyles

75

activities to promote healthy living conditions

Preparation and publication of a brochure to promote awareness and healthy lifestyles

Part of the resettlement and recovery process also involves strengthening social and community organizations. Training and institutionalization work in 2017 was carried out on organizations such as the “Junta de Acción Comunal de Garzón” and the “asociaciones de usuarios”, who will have to administer and manage irrigation districts. Similarly, Emgesa has promoted institutional alliances with the municipal administrations, the government of Huila, the “Agencia de Desarrollo Rural y Asojuntas Garzón”, to support community associations and sustainable development processes.

Local economic development

100%

of the families of collective resettlements in Nuevo Veracruz and Santiago y Palacio have an agricultural production plan

17PPAs

closed in 2017, after 100% of the agreed investments had been completed and their objectives achieved

over 1,500

technical assistance sessions

In 2017, several training sessions were held aimed at providing tools to achieve a self-sufficient productive economy. These had three fundamental aspects: rational use and management of water for consumption and irrigation; production, marketing and industrial development techniques; administration and organization of producers in order to promote production and marketing.

The Sirolli “Enterprise Facilitation®” methodology was also adopted, which involves an inclusive, bottom-up and collaborative approach aimed at creating a network of skills (technical, managerial and marketing) to launch new businesses. The project includes periodic meetings and panels organized by a facilitator to promote and enhance business ideas and opportunities by involving potential entrepreneurs and interested stakeholders. After just one year, more than 170 local business initiatives have been launched thanks to this approach.

Environmental management

In 2017, programs continued with a view to preventing, managing and monitoring the environmental impact associated with the project. In accordance with the provisions of the Environmental Authorization, the following have been established: 1. a wildlife management plan, which has enabled over 33 thousand animals to be rescued and treated; 2. a management program for fish and fisheries; 3. a habitat recovery plan for wild fauna, which calls for the planting of almost 7 thousand plants and the installation of various structures for the protection of fauna. Emgesa has also built a research center, whose work continued during the year for the breeding of native species for repopulation. It is also home to a laboratory specialized in forestry seeds, an arboretum and an environmental classroom. More than 1,500 people attended the 120 guided tours of the research center during the year. In July 2017, the “Cerro Matambo” Civil Society Natural Reserve (RNSC) was also set up within the natural national parks of Colombia. With an area of over 900 hectares, it is the largest park in the Huila Department and the second largest reserve in the dry tropical forests above the Magdalena river basin. In the largest part of the reserve (about 600 hectares), conservation and monitoring activities of natural assets are being developed, while the rest is used for ecological recovery through the reforestation of native species.

Communication channels

Emgesa has established specific communication channels to inform and answer all questions of the community about the project (dedicated web page, Twitter channel, official channel on YouTube, periodic magazine). Monthly meetings were held with national and Communication channels international interest groups, as were periodic monitoring meetings with the Huila government, municipalities, environmental authorities, control bodies and representatives of the company, and guided tours of the project were offered.

Further initiatives and information are available in the Emgesa Sustainability Report 2017 (www.emgesa.com.co/en) and on the project website (http://www.proyectoelquimboemgesa.com.co/site/default.aspx).

Legal proceedings

In relation to the El Quimbo project for the construction of a 400 MW hydroelectric plant by Emgesa in the Huila region (Colombia), the Ministerio de Minas y Energía and the AUNAP (Agriculture and Fisheries Authority) jointly presented a protection agreement on December 24, 2015 before the criminal court requesting authorization as a precautionary measure. On January 8, 2016, the criminal court decided to accept the precautionary measure requested by the Ministry and AUNAP, and provisionally authorized the El Quimbo to begin operation with immediate effect. The precautionary measure granted by the criminal court would remain in force until the judge of the Huila dealt with the merits of the matter, namely the revocation or confirmation of the precautionary measure previously issued by the local administrative court. In a ruling of February 22, 2016, the Huila judge initially ruled on the merits by provisionally authorizing production for a period of six months. Pending the proceedings, the same judge asked Emgesa to prepare a technical project to ensure compliance with oxygen levels and the issue of a guarantee of about 20,000,000,000 Colombian pesos (about 5.5 million euro). With the ruling of April 11, 2016, the Huila Administrative Court again confirmed the temporary withdrawal of the precautionary measure until August 2017. Therefore, in the absence of contrary legal measures, the Quimbo plant is continuing to produce energy since the oxygenation system adopted by Emgesa has so far allowed the oxygen levels imposed by the Court to be achieved. The proceeding is currently at a standstill due to the Court’s assessment of a settlement proposal between the parties, presented on November 27, 2017, and of which the competent authorities were also informed. On January 24, 2018, the Huila Court delivered a judgment opposing the acceptance of the settlement agreement that was challenged by the parties.

For more details, please refer to the description contained in the Enel SpA Annual Report at December 31, 2017 available on the website www.enel.com.