Snam S.p.A Investment Proposal -- Draft
To: Clark Hansen, CEO of AMDP
From: Alessandro Perna, Junior Analyst for AMDP (Energies division)
Date: March 12th, 2025
Subject: Investment Proposal of Snam S.p.A
After careful analysis and consideration, I recommend that AMDP invests in Snam S.p.A. This company is a leader in the energy sector that is pivoting towards a more sustainable way of doing business and is excelling at that. It would be a great opportunity to invest in Snam S.p.A. for Anima Mundi Development Partners.
Assumptions
As an analyst, I have to follow very precise rules to respect what is asked and make sure the company I am presenting reflects what is expected of me and AMDP as a whole. Hence, I have worked on a business that operates in a socially responsible, environmentally sustainable, and profitable way. These are the assumptions and guidelines I used when analyzing Snam S.p.A
Triple Bottom Line
The triple bottom line is a business concept that companies should care about more than just their profit. This concept relies on the 3 Ps:
Profit: The financial performance of a company produced for the shareholders
People: An Organization’s commitment to positively impacting society
Planet: The impact a firm has on the planet (Miller, 2020)
Corporate Social Responsibility
Usually broken down into four categories, corporate social responsibility– CSR –is the idea that a business has a responsibility to the society that exists around it. The four main types of CSR are:
Environmental
Ethical
Philanthropic
Economic (Stobierski, 2021)
Social Enterprise
A social enterprise has specific social goals. They aim to maximize profits while also caring about the impact they might have on society and the environment. (Social enterprise: What it is, how it works, and examples)
Carbon Footprint
The carbon footprint of a company is the amount of carbon dioxide, greenhouse gases, or other compounds emitted by a firm in the atmosphere. Businesses have to calculate it for these reasons:
First step toward carbon reduction
Being transparent is good for business
It’s good for the bottom line
Finally, to calculate it you have to look at all of a company’s direct emissions. (How to calculate your business's carbon footprint)
Overview of Snam S.p.A
Background
Snam, standing for Società Nazionale Metanodotti (National company for methane pipelines) was founded on October 30, 194,1 and is headquartered in San Donato Milanese (near Milan, Italy). Snam’s original purpose was to build and commercialize methane pipelines and gas. In the year 2000 the company separates from the state and goes public on the Italian stock market. Now, the company works in natural gas transportation and storage infrastructure. It is perceived a leader in its field because it operates more than 17% of Europe’s gas storage capacity, and its green investments are strengthening its reputation among European leaders (Landini, 2024).
Financials
Snam’s financial metrics are unstable, but we can analyze some points:
They have had a significant issue in 2022
They are on track to fix it
Their earning per share (EPS) did not suffer as much as their Net Income
Analysts expect a 6% growth in revenue and a 2% growth in their EPS for 2025 (Company financials data | Pitchbook).
Overall, I would say that Snam is a solid company with irregular net income caused by varying prices in gas and external factors they can’t control, such as the Russian invasion of Ukraine.
Company Claims
Snam has different commitments in matters of carbon footprint, CSR, and social enterprise:
A greener future with greener energies
1,523km of H2-ready network.
Production of biomethane.
Reducing their Carbon footprint
Carbon Capture and Stockage (CCS) projects.
Net zero by 2050 for all emissions, direct and indirect.
Caring for the environment
Project Arbolia was set up in 2020, and over 75,000 trees were planted in Italy.
People
In the company, they focus on women empowerment and technical training.
Outside the company, the Snam Foundation was founded in 2017 to help communities with energy overconsumption and school drop-outs, offer employment opportunities, and combat food waste.
Expert Opinions
Opinion #1
Snam received many honors and certification for their commitment towards the people and the planet. So I will cover one people related award they received and one environment related certification.
Snam S.p.A made it on the Bloomberg Gender-equality index in 2023 which selects companies that distinguished themselves in 5 central categories:
Leadership and talent pipeline
Equal pay and gender pay parity
Inclusive culture
Anti-sexual harassment policies
External brand
This index allows investors to undestand which companies are investing in their communities and empowering women (Companies take action on diversity and inclusion in Bloomberg's 2023 gender-equality index | press | Bloomberg LP). This clearly validates the effort stated by Snam S.p.A.
Opinion #3
On matters of sustainability, Snam S.p.A is part of the United Nations Global Compact 100 index. This index reflects the 100 companies that have distinguished themselves for having an impact on their sustainability issues while keeping a good financial performance. In order to qualify the companies need to respect the ten principles of the UN Global Compact which are divided into four categories:
Human Rights
Labour
Environment
Anti-corruption
Through this index, Snam S.p.A become relevant as a good financial investment as they are thought to be a strong performing and environmentally friendly company by the UN (The Ten principles: UN global compact).
Recommendation
I do recommend that AMDP invests in this company. From a financial perspective, Snam S.p.A seems like a risky investment however they have a lot of room for growths and their losses are only linked to external factors. Hence, with the development of H2 and other sustainable fuel options, Snam S.p.A can become a true pillar for energy transportation and stockage, in Europe. On a sustainable front, it is widly recognized and has many certifications for the work they have been doing. With many projects and initiatives to promote sustainability and reach carbon reduction goals, Snam S.p.A is aiming in the right direction to convert from a gas company to a future leader in the H2 business.
Works cited
Miller, Kelsey. “The Triple Bottom Line: What It Is & Why It’s Important.” Business Insights Blog by Harvard Business School, 8 Dec. 2020, online.hbs.edu/blog/post/what-is-the-triple-bottom-line.
Stobierski, Tom. “What Is Corporate Social Responsibility? 4 Types.” Business Insights Blog by Harvard Business School, 8 Apr. 2021, online.hbs.edu/blog/post/types-of-corporate-social-responsibility.
The Investopedia Team. “Social Enterprise: What It Is, How It Works, and Examples.” Investopedia, Investopedia, 16 July 2024, www.investopedia.com/terms/s/social-enterprise.asp.
Brightly. “How to Calculate Your Business’s Carbon Footprint.” Brightly, 9 Jan. 2025, www.brightlysoftware.com/blog/calculate-carbon-footprint.
“Snam S.p.A. (BIT:SRG) Public Company Profile.” S&P Capital IQ, www.capitaliq.com/CIQDotNet/company.aspx?companyId=54497244. Accessed 25 Feb. 2025.
Landini, Francesca. “Italy’s Snam to Invest to Prepare Gas Grid for Green Fuels | Reuters.” Reuters, 17 Oct. 2024, www.reuters.com/business/energy/italys-snam-invest-prepare-gas-grid-green-fuels-2024-10-17/.
Company Financials Data | Pitchbook, pitchbook.com/platform-data/financials. Accessed 27 Feb. 2025.
Snam 2023 Sustainability Report
“Companies Take Action on Diversity and Inclusion in Bloomberg’s 2023 Gender-Equality Index | Press | Bloomberg LP.” Bloomberg.Com, Bloomberg, 31 Jan. 2023, www.bloomberg.com/company/press/bloomberg-2023-gei/.
“The Ten Principles: UN Global Compact.” The Ten Principles | UN Global Compact, unglobalcompact.org/what-is-gc/mission/principles#:~:text=The%20Ten%20Principles%20of%20the,United%20Nations%20Convention%20Against%20Corruption. Accessed 27 Feb. 2025.
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