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Ethical Code

Terna is a leading grid operator for energy transmission. The companymanages electricity transmission in Italyand guarantees its safety, quality andaffordability over time. It ensures equalaccess conditions for all grid users. It develops market activities and new business opportunities with the experience and technical expertiseacquired in managing complex systems.It creates values for shareholders with a strong commitment towardsprofessional excellence and with a responsible approachtowards the community, fully respecting the environment it operates in.

Ethical Code

| Ethical Code Terna

INTRODUCTION

THE 10 UN GLOBALCOMPACT PRINCIPLES

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SECTION 5

SECTION 4

SECTION 3

SECTION 2

SECTION 1

SECTION 5GENERAL REGULATIONS AND APPLICATION

OF THE CODE

SECTION 4COMMITMENTS FOR CODE COMPLIANCE

AND REQUESTED CONDUCT

SECTION 3PRINCIPLES OF CONDUCT IN RELATIONS

WITH STAKEHOLDERS

SECTION 2LOYALTY TOWARDS THE COMPANY, CONFLICTS OF INTERESTAND PROTECTION AND PROPER USE OF CORPORATE ASSETS

SECTION 1ETHICAL PRINCIPLES

PURPOSE OF THE ETHICAL CODE

The Ethical Code is a tool for preserving thecompany’s values and integrity over time. Itprovides a set of positive principles and standardsof conduct (hence the term “code”) that Terna hasvoluntarily chosen to adopt and to make public asa tangible expression of its intentions towards thesubjects with whom it comes into contact (an“ethical” choice).The Code is a touchstone for everyday work. Everyaction performed and every relationshipestablished, whether between people or towardsthe outside world, has a positive or negative effecton the company.Professional integrity, honesty and the honouringof commitments lay the groundwork for trust.Breach of these values, recognised by thecommunity and by the market, unfair or unlawfulactions can cause damage that is difficult toredress. Damage can take various forms, forexample, it can affect the company’s image, andabove all its reputation and its credibility, and it canhave detrimental repercussions on market trustand the trust of shareholders and stakeholders, butalso the trust of customers, suppliers and the verypeople that work or wish to work for Terna.

Compliance with the Ethical Code and constantapplication of its principles can avoid all this.The Ethical Code also aims to help peoplerecognise the ambiguous or potentially riskysituations that they may encounter in performingtheir activity, as well as to identify relations orconduct that are not crystal clear and that candamage Terna.

Hence thorough knowledge of the Ethical Code isa duty, as is its application. The company’sreputation and success depend on the attention ofeach and every person.

SCOPE OF APPLICATION AND VALIDITY

This Ethical Code applies to Terna SpA. It isbinding on the directors, employees and all thosewho work in the name of and on behalf of Terna,as it forms part of corporate provisions. Whereexpressly provided, it is also binding on certainexternal stakeholders in their contractualrelations with Terna. As a general rule, however,Terna would hope that its stakeholdersspontaneously embrace the principles uponwhich the Code is based, that they accept theCode and apply it as the foundation for mutualtrust-based relations1.

In its Ethical Principles (section 1), the parts ofthe Code relating to loyalty towards thecompany, conflicts of interest and protection andproper use of corporate assets (section 2) andthe General Guidelines concerning relations withstakeholders (at the beginning of each chapter ofsection 3), apply to the whole Group, includingits direct and indirect subsidiaries, both in Italyand abroad.

In view of the cultural, social and economic differencesof the various countries in which Terna operates,individual subsidiary companies may adopt their ownguideline documents which, complying with the spirit

1 “Stakeholders” means all those who directly or indirectly enter into relations with Terna, such as its shareholders, employees, associates,customers, suppliers and business partners, but also the authorities to whom Terna refers in performing its business. On a more general level,a company’s stakeholders are those subjects whose interests influence or are influenced by the effects of its activities.

INTRODUCTION

6 | Ethical Code Terna

and, where possible, drawing inspiration from thecontent of the other sections, supplement the ParentCompany’s Ethical Code with principles of conductspecific to their activity and operating context. Ternarequests that its subsidiaries establish principles ofconduct consistent with the highest local standards, interms of environmental protection, safety and workers’human rights.

STRUCTURE

Terna’s Ethical Code is divided into five sections:

• Terna’s fundamental ethical principles;

• conduct requested, especially employees, with regard to three broad issues that cut across

the whole organisation: loyalty to the company,conflicts of interest and protection and properuse of corporate assets;

• the main guidelines on the conduct to be observed in relations with stakeholders,grouped into eight categories towards which Terna intends to follow standard conduct;

• Terna’s commitments to ensure compliancewith the Code and requested conductwith regard to certain stakeholders;

• The provisions for implementation of the Codeand the reference figures responsible for updating the Code and collecting reports and to whom to apply if clarification is required.

Introduction | 7

ETHICAL PRINCIPLES

01THE ETHICAL CODE IS BASED ON A NUMBER OF GENERAL ETHICALPRINCIPLES THAT REPRESENT BROAD UNIVERSAL VALUES FORMING THEESSENCE OF EVERY ASPECT AND EVERY INSTANT OF COMPANY LIFE, ANDON FOUR PR INCIPLES THAT TERNA RECOGNISES AS PART ICULARLYSIGNIFICANT TO ITS OWN ACTIVITY AND NATURE.



THE GENERAL PRINCIPLES

Lawfulness is the cornerstone upon which thewhole Code stands. Compliance with the law isunwaivable not only in Italy but also in the othercountries in which Terna’s business isperformed. Under no circumstances will abreach of this principle be justified, not even inthe name of Terna’s interests. As the substanceof national legalisation may differ from countryto country, Terna intends to acknowledge anumber of fundamental internationallyaccepted ethical principles. Specifically, itacknowledges and undertakes to comply withthe ten United Nations Global CompactPrinciples, the highest values that the UnitedNations recommends to companies, and whichsummarise the most important documentsaccepted at international level in terms ofworkers’ and human rights, respect for theenvironment and the fight against corruption. Italso refuses involvement with subjects thatcarry on unlawful activities or activitiesfinanced by unlawfully funded capital.

Another general principle is honesty, necessary togain credibility within and without the company andto establish trust-based relations with stakeholders.As a consequence of this principle, Terna will notcondone corruption2 in any guise or form.

Lastly, responsibility, which means considering theconsequences of Terna’s actions, being attentive totheir impact on the community and the environmentand to the sustainability of long-term growth.

TERNA’S FOUR PRINCIPLES

• Good management at all levels, that is, thecapacity to guide and govern the company in abalanced and profitable manner, but also eachindividual’s commitment to work in aneffectiveand efficient manner, providing at alltimes and expecting high standards of quality.This principle includes, as essential condition formutual trust between company and thefollowing elements:

- result-related components: quality of service,financial performance, enhancement ofinfrastructure over time;

- process-related components: spread of acommon culture of safety and awareness ofrisk, both individual and general; developmentof risk management systems; identification ofreference criteria for corporate decisions anddefinition of procedural standards;

- strategic components: company’s evolutionand future ranking within its sector and widercontexts.

• Respect, a very broad and sensitive issue,because it affects the individual in hispersonal/private sphere as well as in hisworking life, and also, more generally theattitude of the company with regard to itscommitments towards stakeholders. As far asin-house relations are concerned, respect firstlymeans protecting employees’ physical andmoral integrity and valorising them as keyresource to competition and success. Instead,

2 Global Compact is an international initiative to support ten universal principles relating to human rights, labour standards, the environmentand the fight against corruption, which has been embraced by companies, United Nations agencies, trade unions and civil societyorganisations. They are universally accepted as they derive from the Universal Declaration of Human Rights; the International LabourOrganisation’s Declaration on Fundamental Principles and Rights at Work; the Rio Declaration on the Environment and Development; theUnited Nations Convention Against Corruption. The ten UN Global Compact principles are provided in full on page 30 of this Code.

T H E E T H I C A L C O D E I S B A S E D O N A N U M B E R O F G E N E R A L E T H I C A LPR INC IPLES THAT REPRESENT BROAD UN IVERSAL VALUES FORMING THEESSENCE OF EVERY ASPECT AND EVERY INSTANT OF COMPANY L IFE , ANDO N F O U R P R I N C I P L E S T H AT T E R N A R E C O G N I S E S A S PA R T I C U L A R LYS IGN IF ICANT TO ITS OWN ACT IV ITY AND NATURE.

Ethical Principles | 11

outside company, it means maintainingprofessional relations with customers andsuppliers, but also listening to otherstakeholders – such as local authorities or themedia – regarding them as interested parties tobe considered, informed and involved. Lastly, itmeans carrying on business in a way that iscompatible with the surrounding environmentand in everyone’s interest.

• Fairness, the founding principle for correct andimpartial conduct. It represents the capacity tomaintain a constant balance between specificand general interests, of the individual and thecompany, of all shareholders and of every griduser and supplier. This principle is important in agreat number of relations, but is particularlysignificant in three cases. The first relates to thetreatment of people, whose skills and merits, aswell as duties, must be given fair consideration.

The second refers to relations with the electricitysector operators, where non-discrimination andimpartiality are mandatory for Terna. Lastly thethird case concerns relations with the generalpublic, where the requirements of the territory onwhich Terna plants stand (or are to beestablished) must be reconciled with the generalservice costs.

• Transparency, in actions, communications anddisclosure, is a key element to offering reliabilityto internal and external stakeholders. It concernsthe sphere of corporate management, whichmust be clear and verifiable, and concerns thedisclosing of information on the company to theoutside world. Disclosure, in particular, must notonly comply with the established procedure at alltimes, but must also be simple, comprehensible,timely and accurate and – if published – easilyaccessed by all.

02

T H E R E G U L AT I O N S P R O V I D E D T O T E R N A E M P L O Y E E S T O H E L P T H E MAV O I D C O N F L I C T S O F I N T E R E S T, W O R K W I T H D I L I G E N C E A N D P R O T E C TC O R P O R AT E A S S E T S , S H O W T H AT L O YA L , P R O P E R A N D T R A N S PA R E N TC O N D U C T A R E F U N D A M E N TA L VA L U E S F O R T H E C O M PA N Y


LOYALTY TOWARDS THE COMPANY,CONFLICTS OF INTEREST

AND PROTECTION AND PROPER USE OFCORPORATE ASSETS


CONFLICTS OF INTEREST

Conflict between personal and company interestsarise when conduct or decisions implemented inworking activity can generate an immediate ordeferred advantage for oneself or one’s relatives oracquaintances, to the detriment of companyinterest.

Examples of situations that may create conflicts ofinterest are provided below:

• performing a top-management function (CEO,director, head of function) while havingeconomic interests with suppliers, customers orcompetitors (holding of shares, professionaloffices, etc.);

• having responsibility for Terna’s procurement, orcontrol over the execution of supplies, andperforming working activities for suppliers;

• taking advantage personally – or throughrelatives – of business opportunities of whichknowledge has been gained through the positionheld in Terna;

• accepting money, presents (valuables, trips,various types of free gifts) or favours (e.g.recruitment or career progress for relatives) frompersons or companies that have or intend toenter into business relations with Terna;

• recruiting, promoting or acting as the directsuperior of a relative or of a person with whomthere is a close personal relationship.

Conflicts of interest have a direct effect on theperson involved, limiting or influencing objectivejudgment. Anyone realising or believing he isinvolved in a conflict of interest, or who feels uneasymanaging a professional situation due to externalinterests or who does not feel free to makedecisions and perform his activity, must report tohis superior or to the other functions identified incorporate procedures, so that the situation may beclarified and directions provided on how to act. Thisprocedure applies regardless of the extent of giftsor benefits received or promised, of the family tie orpersonal relationship involved or of other variables.

Beyond the personal perception of conflicts ofinterest, it is however necessary to follow thefollowing general rules:

• with regard to the specific case of free gifts orother types of presents, some form part ofnormal business practices or common courtesy,while others exceed this limit and can be directedat gaining preferential treatment in business

GENERAL GUIDELINES

THE REGULATIONS PROVIDED TO TERNA EMPLOYEES TO HELP THEM AVOIDCONFLICTS OF INTEREST, WORK WITH DILIGENCE AND PROTECT CORPORATE ASSETS,SHOW THAT LOYAL, PROPER AND TRANSPARENT CONDUCT ARE FUNDAMENTALVALUES FOR THE COMPANY. PROFESSIONAL LOYALTY MEANS RECOGNISING, IN AWORKING CONTEXT, CASES OF CONFLICTS OF PERSONAL AND CORPORATE INTERESTAND RESOLVING THESE IN THE INTEREST OF THE COMPANY. IT MEANS, FOR EXAMPLE,AVOIDING CONDUCT DIRECTED AT UNLAWFULLY INFLUENCING PUBLIC OFFICERS OREMPLOYEES OF OTHER COMPANIES TO OBTAIN PREFERENTIAL TREATMENT FORTERNA, BUT IT ALSO MEANS INFORMING THE OUTSIDE WORLD THAT THE REFUSAL OFCERTAIN ATTITUDES IS NOT JUST A FORMAL STATEMENT, BUT A SUBSTANTIVE ONE.THE SAME GOES FOR THE PRINCIPLE OF PROTECTION AND PROPER USE OFCORPORATE ASSETS: THE COMPANY BELONGS TO EVERYONE AND ITS INTEGRALVALUE IS A GUARANTEE FOR THOSE WHO WORK FOR IT. CONDUCT THAT IS NOTBASED ON COMPLIANCE WITH THESE PRINCIPLES PROVES COSTLY FOR ALL.

Loyalty towards the Company and Protection and Proper Use of Corporate Assets | 15

relations. Terna asks its employees to refuse giftsthat exceed a modest value or where there isdoubt over appropriateness;

• cases of next of kin who are employees ofsuppliers, customers, competitors of Terna orsector authorities must be reported, when theiractivity or function may have repercussions onTerna. Directors must ensure they report updateof their offices.

In line with the principles of the Ethical Code, inorder to prevent conduct intended to corrupt orinterpretable as such, Terna establishes standardsof conduct with regard to gifts made to externalsubjects. As a general rule, gifts must be madeexclusively to promote the company’s image andbrand. For this reason, Terna:

• does not approve any form of gift that mayeven only be interpreted as exceeding normalbusiness practices and common courtesy, oraimed at gaining preferential treatment in theperformance of any of its activities.Specifically, it forbids any form of gift that mayinfluence the independence judgement – orlead to assurance of any advantage –addressed to Italian and foreign public officers,auditors, directors of Terna S.p.A. andsubsidiaries, statutory auditors or theirrelatives;

• does not approve valuable gifts, not even in thecountries in which this type of exchange iscustomary practice between business partners.This regulation concerns both gifts promised oroffered as well as those received;

Loyalty towards the Company and Protection and Proper Use of Corporate Assets | 17

In any case, Terna abstains from any practice thatis contrary to the law and to normal businesspractices or not permitted by the Ethical Codes – ifthese are known – of the companies or entities withwhich it has relations.

LOYALTY TOWARDS THE COMPANYAND PROTECTION AND PROPER USEOF CORPORATE ASSETS

Terna expects loyal and diligent conduct from allemployees and compliance with the employmentcontract and corporate provisions. All-roundcollaboration is in fact fundamental to thecompany’s positive performance.

Firstly this means pursuing with commitment,expediency and diligence the objectives set by thecompany and by direct superiors, working inaccordance with procedures. It implies compliancewith the Ethical Code and, for those withmanagement responsibilities over others, ensuringcompliance with the Code from co-workers andproviding them with assistance in its application. Italso means protecting the company’s interest inevery working situation, for example, ensuring thatsuppliers fulfil their contractual commitmentstowards Terna.

Fair and loyal conduct towards the company alsoimplies the commitment to guarantee protectionand proper use of corporate assets, which isexpected from all Terna’s employees and all thosewho have access to its structures.

• Firstly everyone is expected to operate withdiligence in order to protect corporate assets,through responsible conduct and compliancewith the operating procedures governing use,and accurately documenting employment ofassets;

• the corporate assets assigned to each employeemust be used sparingly and with considerablecare: they must not be used improperly or insuch a way as to cause damage or to limitefficiency, or contrary to the company’s interest;

• everyone is required to preserve and protect theresources with which they are entrusted: hencethey must implement the most suitablemeasures to prevent theft and they mustpunctually report shortcomings in the securitysystems, threats or potentially damaging eventsto their direct superior or to the function incharge of security or control.

One of the most important corporate assets is theinformation and data that Terna possesses onexternal subjects, employees, structures andcorporate activities. The corporate functions incharge define appropriate procedures to ensurethat information is protected, kept confidential andthat the controlled disclosure both within andoutside the company follows specific, authorisedchannels.

• Hence protecting corporate resources meansnot disclosing information on Terna’s affairsoutside the company. Specifically, it means notallowing confidential information (whetherconcerning Terna or in its possession) to beacquired by persons outside the company orother than those authorised to handle it;

• IT applications are fundamental work tools andeach employee is responsible for their use.

Hence they must:

- strictly abide by the provisions set forth incorporate security policies, to avoidcompromising the good working order of ITsystems and their protection;

- refrain from sending threatening or abusiveemail messages, refrain from using low-levellanguage, from making inappropriatecomments that can cause personal offence ordamage the company’s image;

- refrain from navigating on websites withindecent and offensive content;

- in general, refrain from using IT equipment forpurposes that are illegal or that maycompromise its good working order forcorporate use.

03THE CODE IS A TOUCHSTONE FOR EVERYDAY WORK. EVERY ACTIONPERFORMED AND EVERY RELATIONSHIP ESTABLISHED, WHETHER BETWEENPEOPLE OR TOWARDS THE OUTSIDE WORLD, HAS A POSITIVE OR NEGATIVEEFFECT ON THE COMPANY. PROFESSIONAL INTEGRITY, HONESTY AND THEHONOURING OF COMMITMENTS LAY THE GROUNDWORK FOR TRUST.

PRINCIPLES OF CONDUCTIN RELATIONS WITH STAKEHOLDERS



RELATIONS WITH SHAREHOLDERS,FINANCIAL ANALYSTS AND LENDERS

• Terna’s commitment to shareholders is toimplement wise management practices thatreconcile its economic/financial marketobjectives with the requirements of safety,quality and cost-effectiveness of the service forwhich it is concession holder;

• an efficient Corporate Governance system is notonly essential to corporate management andcontrol, but is also an increasingly importantcompetitive factor for maximising the valuedistributed to shareholders. It is a tool thatsafeguards market rules as well as all thecomponents of the shareholding structure. HenceTerna adopts a Corporate Governance systemthat complies with the provisions of Italian law, isin line with the Code of Conduct for ListedCompanies and has been substantiated on thebasis of internationally recognised best practices;

• to protect corporate integrity, Terna adopts anddevelops a system to manage, anticipate andcontrol risk. This system aims to protect Ternafrom, and as far as possible prevent, potentialcrises.

• Terna also adopts a system of control,organisation and management directed atguaranteeing transparency, accuracy andveracity in corporate reporting (financialstatements, periodic reports, prospectuses, etc.)as well as preventing corporate offences (falseaccounting, rigging the market, market abuse,false reporting to supervisory authorities or othermechanisms aimed at privileging specificinterests, to the detriment of company interests);

• no specific categories of shareholders orindividual shareholders are intentionally orgenuinely favoured through selective use ofconfidential information;

• disclosure to shareholders is timely, constant andsymmetrical towards all investors: in addition tomandatory reports, Terna provides maximumavailability and permanent communicationchannels dedicated to shareholders, includingthrough its website. It implements specially-developed information campaigns, inaccordance with practices observed by listedcompanies;

SHAREHOLDERS, FINANCIAL ANALYSTS AND LENDERS

SHAREHOLDERS, FINANCIAL ANALYSTS, BANKS, CREDITORS,LENDERS, RATING AGENCIES

GENERAL GUIDELINES

TERNA’S CHIEF COMMITMENT TO SHAREHOLDERS IS THE CREATION OF VALUE, WILLBE ACHIEVED BY ENSURING THAT MANAGEMENT, IN THE LONG AND SHORT TERM,IS FOUNDED ON GOOD CORPORATE GOVERNANCE POLICIES, TRANSPARENCY,PROTECTION AND EXPANSION OF ASSETS. HENCE AN ESSENTIAL ELEMENT OF THERELATIONSHIP WITH SHAREHOLDERS, BUT ALSO WITH LENDERS AND ANALYSTS, ISTRUST, GAINED THROUGH CONSTANT DIALOGUE AND TIMELY, REGULAR ANDSYMMETRICAL DISCLOSURE OF INFORMATION TO ALL SHAREHOLDERS.

Principles of conduct in relations with stakeholders | 21

• all those who have access to information that isnot available to the public and is capable ofinfluencing the performance of listed shares orfinancial instruments (even other than thoseissued by Terna) must avoid conduct that canconstitute or favour insider trading. This provisionrefers to employees, members of the Board ofDirectors, Statutory Auditors, executive managers,senior managers, members of the auditingcompany or other collaborators. In this respectappropriate internal dealing procedures are alsoadopted with regard to disclosure of information;

• institutional investors and small shareholders areensured homogeneous and simultaneousdisclosure: hence the financial statements,mandatory interim reports, presentations to thefinancial community and other important noticesare all available on the website. This is to ensurethat investors’ decisions may be based on thoroughknowledge of the company’s strategic choices, onthe management performance and on the expectedreturn from invested capital.


RELATIONS WITH EMPLOYEES

• Terna undertakes to avoid all forms ofdiscrimination based on age, gender, sexualpreference, health, race, nationality, politicalopinions and religious beliefs.

• It respects workers’ right to set up representativeassociations, acknowledges the role of the morerepresentative trade union organisations and isopen to dialogue and discussion on the majorissues of mutual interest.

HEALTH AND SAFETY

• To achieve efficient and effective prevention ofaccidents on the workplace, safety must beeveryone’s concern;

• the appropriate corporate functions ensureaccident prevention policies are up-to-date,comparing these with the best practicesadopted in similar activities and by adopting thebest technologies available.

They establish procedures, work methods andoperating instructions that are clear, coherentand comprehensible at all levels. They promoteawareness of risk and knowledge of preventivemeasures with appropriate training initiativesand maximum accessibility to documentation;

• those in charge of activities ensure that theirresources comply with preventive measures.They do their utmost to avoid attention lapsesoccurring in the performance of risky activities.They assimilate indications from co-workers forimproving safety and protecting health. Underno circumstance is compliance with safetymeasures subordinated to the interest ofaccomplishing the work on time;

• employees follow applicable safety regulations in astrict and conscientious manner, encouragingnoncompliant colleagues to do the same andreporting any shortcomings or areas of improvementto those responsible for safety aspects.

EMPLOYEES

EMPLOYEES, DIRECTORS, ASSOCIATES, EMPLOYEES’ REPRESENTATIVES,TRADE UNION ORGANISATIONS.

GENERAL GUIDELINES

TERNA BASES RELATIONS WITH ITS EMPLOYEES AND ASSOCIATES ON RESPECT FORHUMAN RIGHTS AND PROTECTS PHYSICAL INTEGRITY AND MORAL DIGNITY, IN ALLASPECTS OF WORKING LIFE. IT EXERCISES HIERARCHICAL AND ORGANISATIONALAUTHORITY WITH FAIRNESS AND WITHOUT ABUSE OF POWER. IT SPREADS ANDCONSOLIDATES A CULTURE OF SAFETY AMONGST WORKERS BASED ON RISKAWARENESS AND PREVENTION, ALSO ENSURING THAT WORKPLACES ARE SAFE,HEALTHY AND DECENT. TERNA CONSIDERS THE PROFESSIONAL CONTRIBUTION OFITS EMPLOYEES AN INDISPENSABLE FACTOR TO SUCCESS: HENCE IT VALORISESHUMAN RESOURCES, PROVIDING THEM ALL WITH CLEAR AND ACCESSIBLEINFORMATION AND TRAINING NECESSARY TO PERFORMANCE OF THEIR WORK. ITINVESTS IN DEVELOPMENT OF SKILLS POSSESSED, FAVOURS A HANDS-ONAPPROACH TO WORK, RECOGNISES AND REWARDS INDIVIDUAL SKILLS AND MERITS.


HUMAN DIGNITY

• Conduct involving systematic discrimination,humiliation, psychological violence or isolationagainst associates and colleagues is notpermitted, for whatsoever reason, as it is anaffront to human dignity;

• sexual harassment or sexually orientatedbehaviour or comments that may offendpersonal sensitivities (for example, displayingimages with explicit sexual references,persistent and continuous allusions) are nottolerated;

• the privacy of individual employees is protectedby adopting policies that specify the information

required and the relative procedures for dataprocessing and conservation. Such policies alsoprohibit, without prejudice to the circumstancesprovided by the law, the disclosure/circulation ofpersonal data without the consent of the partyconcerned;

• the carrying out of surveys on the ideas,preferences, personal tastes and private life ingeneral of employees and associates isexcluded;

• Terna undertakes to remove physical barriersthat compromise the work opportunities orcapacities of disabled persons.


FAIR TREATMENT OF EMPLOYEES

• Employees are treated fairly and with respect fortheir rights in all phases of their working life.Personnel administration is performed withaccuracy, ensuring that personal data remainsconfidential and that obligations are punctuallyfulfilled. The parties concerned may have accessto the selection policies and criteria adopted, asfar as confidentiality considerations allow;

• no form of employment relationship that iscontrary to the provisions of the law or thecontract is tolerated;

• personnel selection is performed on the basis ofmatching the candidate’s skills and aptitudeswith corporate requirements and in accordancewith equal opportunity policies;

• the information requested during the selectionphase is strictly related to assessing the aspectsrequired by the professional andpsychological/aptitude profile, while respectingthe candidate’s privacy and opinions;

• at the beginning of the employment relationshipeach employee receives clear and accurateinformation on the function or the duties to beperformed, the legal and wage conditions, theregulations and procedures to be observed in orderto prevent and avoid work-related health risks;

• personnel management decisions are taken onthe basis of the professional characteristics,skills and aptitudes shown by the employeesand associates (for example, in the case ofpromotion to the higher roles and assignment ofoffices) and on considerations of merit (forexample in awarding bonuses and incentives), inaccordance with the criteria expressed in thepersonnel policies;

• training is provided for groups and individuals onthe basis of specific professional developmentobjectives, in accordance with the company’sneed to update know-how, maintain anddevelop adequate technical skills and re-qualifyhuman resources;

• the personnel management division adoptsappropriate measures to avoid favouritism,nepotism, or forms of patronage in personnelselection, recruitment and management phases.Within the limits of the information available andthe protection of privacy, relations involvinghierarchical subordination betweencollaborators linked by family ties are excluded.The recruitment of employees of externalcompanies responsible for performing theobligatory audit is specifically restricted;

• those in charge expect the work supplied by theirsubordinates to be consistent with their dutiesand the work organisation schedules. They planthe work according to the company’s requirementsand - without prejudice to technical/productionrequirements - support employee participation intraining initiatives and the enjoyment of holidays, inaccordance with the rules and regulations in force.They avoid the use of overtime as customarypractice in organisation of work. They stimulate andlisten to their collaborator’s opinions on workschedules and function objectives. They do notabuse their position in the hierarchy to expectpersonal favours. They oppose any failure toobserve corporate provisions, while respectingindividualdignity and fair treatment of personnel,with explicit reference to legislative sources in force;

• as far as general work efficiency allows, jobflexibility that facilitates the management ofmaternity and childcare is favoured.


RELATIONS WITH SUPPLIERS

• Terna’s relations with suppliers are founded onuniformity of treatment;

• in drawing up contracts Terna undertakes toprovide the contracting party with clear andcomprehensible specification of the conduct tobe observed in all circumstances envisaged. Itrespects contractual agreements andcommitments, including the terms andconditions of payment, in return for execution ofassignments and works according to theprocedures established by the parties;

• procurement processes place the emphasis on:

- seeking the maximum competitive advantagefor Terna;

- granting equal opportunities to each supplier;- fundamental, mutual loyalty, transparency and

collaboration in pre-contractual andcontractual conduct;

- technical up-to-date of new products andservices through constant dialogue with allpotential suppliers;

- giving each suitably qualified supplier thepossibility to compete for stipulation ofcontracts, avoiding preferential treatment;

- selecting suppliers by adopting objective anddocumentable criteria and ensuring sufficientcompetition in each tender;

• for the core goods categories, Terna adoptsasuppliers’ register for which qualification criteriaare based on specific technical and financialrequirements that do not therefore constitute abar to access. The main requisites includeavailability of resources - including financial -organisational structures, project capacities andresources, know-how, quality certification (e.g.ISO 9000) or safety certification;

• in order to ensure procurement activity iscompliant with the ethical principles adopted, anumber of social or environmental requirements(e.g. existence of an Environmental ManagementSystem) or specific external certification havebeen introduced for particular suppliers;

• maximum transparency and ethical efficiency inthe procurement process is obtained by strictlyfollowing the internal procurement procedures,which must provide for the following:

- lassessment of whether it is appropriate torotate staff in charge of procurement;

- limitation of the cases in which there is anoverlap of roles between the unit requestingthe supply and the unit stipulating the contract;

- traceability of the decisions taken;- conservation of information as well as of official

tender and contractual documentation for theperiods established by regulations in force;

- monitoring the ownership structures of suppliers;

SUPPLIERS

GENERAL GUIDELINES

IN ITS RELATIONS WITH SUPPLIERS, TERNA’S ATTENTION IS PRIMARILY FOCUSEDON TRANSPARENCY AND CORRECTNESS AND RELATIONS ARE BASED ON MUTUALADVANTAGE AND COSTEFFECTIVENESS. SUPPLIERS COMPETE ON EQUAL TERMSBASED ON THE QUALITATIVE AND ECONOMIC CONDITIONS OF THEIR OFFER, THEIRGUARANTEES OF PROFESSIONALISM AND NONINVOLVEMENT IN UNLAWFULACTIVIT IES, SAFETY STANDARDS AND LASTLY, WHERE NECESSARY,CERTIFICATION OF QUALITY, SOCIAL AND ENVIRONMENTAL RESPONSIBILITY.


• in individual contracts with suppliers, specificclauses are drawn up stating Terna’s adoption ofthe Ethical Code and of the Organisation andBusiness Model pursuant to Article 6 ofLegislative Decree 231/2001;

• with regard to standards of safety on theworkplace, Terna undertakes to provide asthorough a presentation as possible of the risksassociated with performance of works on behalfof the company and of the related preventivemeasures;

• with suppliers of countries defined as “at risk” byrecognised organisations, contractual clausesare introduced providing for: auto-certificationon the part of suppliers of compliance withspecific social obligations (e.g. measures thatguarantee workers respect for fundamental

rights, principles of equality of treatment andnon-discrimination, protection of child workers)and the possibility of monitoring activity at theproduction units and operating headquarters ofthe supplying company;

• Terna intends to enter into business relationsonly with subjects that carry on lawful activities,financed by legitimately funded capital. To thisend and where possible, it performs preventivecontrol by requiring – even where not legallyobliged – special anti-Mafia and anti-moneylaundering certifications and statements;

• should a supplier adopt conduct that does notcomply with the general principles of this Code,further opportunities to work with Terna may beprecluded.


RELATIONS WITH GRID USERS,CUSTOMERS AND BUSINESS PARTNERS

• Terna guarantees grid users and customers ahigh quality service, subject to constantimprovement;

• Terna’s relations with grid users are regulated.Terna recognises the value of regulation andrespects its content. It collaborates with the gridusers to define proposals for amendment toregulation intended to improve relations;

• with regard to grid users and the electricitysystem, attention to customers is apparent inthe commitment to maintain service efficiencyand in the careful consideration of the economicrepercussions of management decisions;

• relations with grid users are managed by Ternain a non-discriminatory manner: Terna does notallow arbitrary discrimination between sectoroperators, whether individually or by category,nor does it allow misuse of monopoly power. Asfar as possible decisions are based on criteriathat are and can be predetermined and Ternarespects their application. It ensures maximumtransparency and accountability of the decisions

taken in order that the decision-makingprinciples adopted remain consistent over time;

• in its relations with the other grid operators,Terna’s approach is characterised byprofessional best practices, cooperation andconstructive dialogue. It is willing to considertheir operating requirements, within the limits ofsystem safety, its own management interestsand the principle of impartiality;

• Terna employees who have contact with externalstakeholders, including grid users formanagement activities, are required toguarantee confidentiality of commercial,technical and any other important information,relating to the grid users, that they may come toacquire in performing their activities;

• with regard to market customers, Terna appliesfirst-rate professionalism in technical andcommercial relations and guaranteesexceptional attention to customer requests, witha view to establishing ongoing, long-termcommercial relations. The contracts and

GRID USERS, CUSTOMERS AND BUSINESS PARTNERS

PRIVATE CUSTOMERS, GRID USERS (PRODUCERS, DISTRIBUTORS,TRADERS, INTERRUPTIBLE CUSTOMERS), ELECTRICITY SYSTEMS USERS,GRID OWNERS, OTHER GRID OPERATORS, BUSINESS PARTNERS

GENERAL GUIDELINES

TERNA HAS TWO MAJOR “CUSTOMER” TYPES: GRID AND ELECTRICITY SYSTEMUSERS, WHERE IT OPERATES AS CONCESSION HOLDER AND THE TECHNICAL ANDCOMMERCIAL ASPECTS OF THE SERVICE ARE SUBJECT TO REGULATION, ANDCUSTOMERS IN THE STRICT SENSE, WHERE IT INSTEAD OPERATES ON THE FREEMARKET AND WITH A NON-PREDETERMINED CONTRACTUAL RELATIONSHIP. INBOTH CASES, TERNA’S CONDUCT IS CHARACTERISED BY RESPECT FOR THECUSTOMER, ATTENTION TO ITS NEEDS, FIRST-RATE SERVICE QUALITY ANDPROFESSIONALISM. WITH ITS BUSINESS PARTNERS, IN BOTH ALLIANCES ANDCOMPETITIVE SITUATIONS, TERNA ENSURES CORRECT AND FAIR CONDUCT.


communications to non-regulated marketcustomers are clear and straightforward. Thecontracts conform to legislation in force and donot contain practices that are easilymisinterpreted or otherwise deceptive;

• Terna keeps its market activities separate fromits regulated activities. It does not reservepreferential treatment for grid users who are alsomarket customers, nor does it let perceive this

possibility, generating false expectations inactive or potential customers;

• Terna ensures fair conduct in relations with itsbusiness partners and the subjects with which itcompetes on the market, for instance, ininternational tenders and auctions or inprocedures for award of contracts orconcessions.


REGULATORY BOARDS AND AUTHORITIES

AEEG THE ITALIAN AUTHORITY FOR ELECTRICITY AND GAS,OTHER SECTOR REGULATORS, GOVERNMENT BODIES WITHPOLICY-MAKING POWERS, ANTITRUST AUTHORITY, CONSOB,STOCK EXCHANGE ENTITIES, STRIKE GUARANTEE COMMISSION

GENERAL GUIDELINES

IN ITS RELATIONS WITH REGULATORY BOARDS AND AUTHORITIES, IN ITALY AND INCOUNTRIES IN WHICH IT OPERATES, TERNA INTENDS TO BE RECOGNISED FOR ITSLONG-STANDING RELIABILITY AND CONSTANT WILLINGNESS TO COMMUNICATE IN ATRANSPARENT MANNER AND TO PROVIDE ACCURATE AND TRUTHFUL DISCLOSURE.WITH THE MINISTERS INVOLVED IN DEFINING THE POLICIES OF TERNA’S ACTIVITY ANDTHE ELECTRICITY SECTOR REGULATORS, THIS INTENTION MEANS PROVIDING THEINFORMATION AND DATA REQUESTED IN A PRECISE AND PUNCTUAL MANNER.

RELATIONS WITH REGULATORYBOARDS AND AUTHORITIES

• Terna provides the regulatory boards andauthorities with the information and datarequested, ensuring that it is complete andreliable. It respects deadlines and providestimely responses, insofar as the technicalassessments involved in the requests allow;

• Terna’s approach to the sector regulatory boardsand authorities is one of fair collaboration. Itprovides all the relevant information and uses itstechnical know-how to facilitate the regulators’task, while safeguarding the third party data inits possession. All information must bedisclosed in compliance with corporate policiesand verified with those responsible;

• Terna provides assistance in defining sectorrules by researching, experimenting andproposing new solutions of interest to thecompany and also the general public;

• Terna undertakes - as far as it is aware - to avoidsituations of conflicts of interest with employeesof sector regulatory boards and authorities.


INSTITUTIONS AND ASSOCIATIONS

EUROPEAN COMMUNITY AND INTERNATIONAL BODIES, NATIONALINSTITUTIONS AND GOVERNMENT REPRESENTATIVES, CIVIL DEFENCESERVICE, NATIONAL SAFETY AUTHORITY AND POLICE FORCES, REGIONS,PROVINCES AND AUTONOMOUS PROVINCES, ECONOMIC CATEGORYASSOCIATIONS, ETSO, UCTE

GENERAL GUIDELINES

TERNA ADOPTS AN APPROACH BASED ON OPENNESS AND COOPERATION WITHINSTITUTIONAL STAKEHOLDERS, IN ITALY AND IN EUROPE, AS WELL AS IN COUNTRIESWHERE IT OPERATES DIRECTLY OR THROUGH ITS SUBSIDIARIES. IT COLLABORATES,MEASURES UP TO AND SUPPORTS THE WORK OF ASSOCIATIONS OF WHICH IT IS MEMBER,FOR THE PURPOSE OF GENERALLY IMPROVING THE SECTOR AND TECHNICALREGULATIONS AND STANDARDS. IN ALL CASES, RELATIONS ARE CHARACTERISED BYTRANSPARENCY, PURSUIT OF CONTINUITY AND RESPECT FOR MUTUAL AUTONOMIES.

RELATIONS WITH INSTITUTIONSAND ASSOCIATIONS

• Relations with the institutions are directed atrepresenting Terna’s activities, assessing theimplications of legislative and administrative acts,replying to requests made by institutions andadministrations, as well as to informal requestsand to acts pertaining to parliamentary questionsand commissions, or in general stating Terna’sposition on important issues.

• To this end, Terna undertakes to:- establish efficient communication channels with

institutional stakeholders at international, EU,national and local level;

- represent its own interests and positions in atransparent, accurate and consistent manner,avoiding collusive practices;

- coordinate relations with institutional stakeholdersso as to ensure maximum clarity in relations;

- adopt appropriate measures to preventperpetration of offences against publicadministration;

• Terna adopts conduct consistent with thepurposes and guidelines of the categoryassociations of which it is member.


MEDIA, OPINION GROUPS, SCIENTIFIC COMMUNITY

MEDIA, UNIVERSITIES AND SCIENTIFIC ASSOCIATIONS,ENVIRONMENTAL ASSOCIATIONS, CONSUMER ASSOCIATIONS,OPINION MAKERS, OPINION GROUPS, (NATIONAL AND INTERNATIONAL)TECHNICAL REGULATION ENTITIES, POLITICAL PARTIES

GENERAL GUIDELINES

TERNA INTENDS TO PROVIDE THE MASS MEDIA AND OPINION GROUPS IN GENERALWITH A CONSTANT, RELIABLE, ACCURATE AND NON-DISCRIMINATORY FLOW OFINFORMATION. HENCE IT ENSURES UNIFORM PUBLIC DISCLOSURE OF INFORMATION,IN TERMS OF ACCESSIBILITY, TIMELINESS AND SYNCHRONISED COMMUNICATIONOVER VARIOUS CHANNELS (TRADITIONAL AND WEB, FOR EXAMPLE). THE HIGHREGARD FOR TRANSPARENCY LEADS TERNA TO EXCLUDE EXPLOITATION,MANIPULATION OR DISTORTION OF INFORMATION FOR THE COMPANY’S BENEFIT.TERNA COMMITS TO CONSTRUCTIVE DIALOGUE WITH ASSOCIATIONS PROTECTINGTHE INTERESTS INFLUENCED BY ITS ACTIVITIES AND TO SEEKING AREAS OF POSSIBLECOOPERATION FOR THE COMMON GOOD.

RELATIONS WITH THE MEDIA,OPINION GROUPSAND THE SCIENTIFIC COMMUNITY

• Terna’s communications towards itsstakeholders (even when indirect, via the massmedia) are characterised by respect of the rightto be informed. Under no circumstances will itpermit disclosure of false or biased news orcomments.

• All communication activity complies with the lawand with professional rules and practices and isdistinguished by clarity, transparency andtimeliness. It safeguards privileged, pricesensitive or industrial information and avoids anyimproper form of pressure or attempts to curryfavour with the media. In order to ensure thatinformation is complete and consistent, Terna’srelations with the media comply with specialprocedures, authorised by the CEO:

• all press releases and other documents ofgeneral interest are available on Terna’s website(www.terna.it), which provides detailedinformation on issues related to Terna’s corebusiness as well as to its ethical commitment;

• Terna allows its employees to attendconferences, seminaries, workshops andencounters on publications of atechnical/scientific, social and economic nature,as appropriate to their specialisation, incompliance with corporate policies and with theauthorisation of their supervisor. Terna supportstechnical regulation entities by providingknowhow and assistance in developing sectorstandards. In all cases these activities mustensure that the confidentiality of corporate andthird party data is protected and must beapproved and coordinated by those in charge ofexternal communications;

• dialogue with the associations and organisationsrepresenting stakeholders’ interests is ofstrategic importance to the correct developmentof business. This is why Terna establishescommunication channels through which to putforward its position, prevent possible conflicts ofinterest and where possible cooperate for thecommon good.


• Specifically, Terna:- replies to the observations raised by the

associations, as quickly and as efficiently asthe performance of normal corporateactivities permits;

- when possible, it endeavours to inform the morequalified and representative associations of issuesof interest to specific categories of stakeholders;

• Terna not only establishes relations withinstitutions, but also with entities, institutes, andagencies in the environmental field, with which itpromotes, implements and coordinates policyprogrammes and agreements;

• Terna does not finance political parties, theirrepresentatives or candidates, in Italy or abroad,and does not sponsor events that serve a purelypolitical propaganda purpose. It also abstainsfrom exerting any form of direct or indirectpressure on politicians (e.g. by conceding Ternastructures, accepting recommendations forrecruitments, consultation contracts);

• sponsorships or donations, that may concernsocial or environmental issues, sport, shows andart, must in some way be associated withTerna’s activity and must comply with corporatepolicies on the matter. As a general rule, it ispreferable for Terna to be able to have a say inthe planning phase so as to ensure originalityand effectiveness;

• Terna does not dispense contributions toorganisations with which a conflict of interestmay arise (e.g. trade unions, environmental orconsumer protection associations). However itmay cooperate, even on a financial level, withthese organisations on specific projects,following certain criteria:- the purpose must in some way be associated

with Terna’s mission;- the allocation of resources must be clear and

documentable;- the project must be authorised by the functions

in charge of managing relations with theseorganisations.


GENERAL PUBLIC AND TERRITORY

GENERAL PUBLIC AND NATIONAL SYSTEM, TERRITORYAND ENVIRONMENT, FINAL USERS OF THE ELECTRICITY SYSTEM,LOCAL ENTITIES DIRECTLY AFFECTED BY TERNA’S ACTIVITY

GENERAL GUIDELINES

AS CONCESSION HOLDER, TERNA PROVIDES A SERVICE OF GENERAL INTEREST. HENCETHE GENERAL PUBLIC REPRESENTS ONE OF ITS MOST IMPORTANT STAKEHOLDERS, BEIT INDIRECTLY. IN IMPLEMENTING MANAGEMENT DECISIONS, TERNA THEREFOREPLACES EMPHASIS ON THE PRINCIPLE OF RESPONSIBILITY, ENSURING SERVICESAFETY, CONTINUITY, QUALITY AND COST EFFECTIVENESS OVER TIME, AS WELL ASASSESSING THE LONG-TERM EFFECTS OF ITS DECISIONS. TERNA RESPECTS THEENVIRONMENT AND THE SOCIETY IN WHICH IT OPERATES. IT LISTENS TO THE POINT OFVIEW AND THE REQUIREMENTS EXPRESSED BY THE LOCAL INSTITUTIONS OF THEAREAS IN WHICH GRID PLANT IS SITUATED OR UNDER CONSTRUCTION, SEEKINGSOLUTIONS THAT RESPECT THE ENVIRONMENT AND LOCAL INTEREST, INSOFAR ASGRID EFFICIENCY REQUIREMENTS AND GENERAL SERVICE OBLIGATIONS ALLOW.

RELATIONS WITH THE GENERALPUBLIC AND THE TERRITORY

As concession holder, Terna performs a service ofgeneral interest and owns one of the country’simportant infrastructures and is therefore aware ofthe influence, albeit indirect, that its activities mayhave on the wellbeing of the general public. This iswhy it interprets the service safety, continuity,quality and cost efficiency obligations arising fromthe concession as a responsibility towards thecountry, even in the long-term.

• It recognises the importance of socialacceptance from the communities in which itoperates and strives to achieve its objectives byaffording attention to the environment,landscape and interests of the local and nationalcommunities, assuring minimum possibleimpact on the territory;

• to ensure that electricity grid developmentneeds are complementary to rather than inconflict with the requests voiced by theinstitutional representatives of the localcommunities, Terna places great importance inpreventive dialogue with the local authorities.

Hence it is prepared to work to reach jointsolutions, taking territorial characteristics andelectricity system safety into consideration, aswell as the general public’s wider interest in gridefficiency and service cost effectiveness;

• through constant monitoring of theenvironmental impact, Terna strives to reducethe effects of its activity on the environment,taking advances in scientific research,technology and best experiences into account;

• Terna considers the defining and implementingof policies to support initiatives of social,humanitarian and cultural importance to be anintegral part of its activities and a means ofcontributing to the civil development of thecommunities in which it operates;

• Terna provides feedback on the implementationof its environmental and social policies and onthe consistency between the objectives and theresults achieved through regular ad hocpublications, such as the Sustainability Report.

04T E R N A A S K S A L L I T S S TA K E H O L D E R S , W I T H O U T D I S T I N C T I O N , T OTA K E N O T E O F T H E E T H I C A L C O D E A N D T O E N S U R E T H AT I NT H E I R D I R E C T R E L AT I O N S W I T H T E R N A , T H E Y A R E A W A R E O F I T SS C O P E O F A P P L I C AT I O N A N D O F A N Y R E S T R A I N T S .


COMMITMENTS FOR CODE COMPLIANCEAND REQUESTED CONDUCT


COMMITMENTS FOR CODECOMPLIANCEAND REQUESTED CONDUCT

In order to maximise effectiveness of its EthicalCode and to encourage compliance as consolidatedpractice within the company, Terna undertakes to:

• ensure timely circulation of the Ethical Code toboth internal and external stakeholders throughspecific communication activities, using thedifferent procedures appropriate to thestakeholders (e.g. providing all associates withcopy of the code, setting up special sections in thecorporate intranet, on the website or in documentswhere it is deemed necessary, or through otherspecific information or training initiatives);

• specifically ensure that all Terna employeesunderstand the Ethical Code, are provided withany necessary clarification and consider theCode an integral part of the employmentrelationship, by implementing a trainingprogramme aimed at heightening awareness ofethical principles and rules;

• explain the system for reporting breaches andspecify the reference figures who will clarityinterpretation of the Code;

• guarantee that the identity of the reporter willremain confidential as will the content of thereport, without prejudice to legal obligations;

• protect those who report breaches in good faith,showing loyalty to the company, from retaliation ornegative repercussions on their professional position;

• collect and assess reports according toprescribed procedures and, should breach beconfirmed, define sanctions commensurate withthe severity of the breach;

• integrate the Code, when required in order toclarify cases not envisaged by the currentversion, by releasing specific communications onthe intranet, or by revising and updating theCode in accordance with new corporate, ethical,environmental or social policies;

• regularly monitor Code compliance levels andkeep stakeholders informed on maintenance ofthe commitments undertaken through theEthical Code, as well as on the corporatepolicies related to the principles and guidelinesthat it promotes (e.g. with the annualSustainability Report);

• verify and if necessary review corporateguidelines and procedures, to ensure they are inline with the Ethical Code.

Terna asks all its stakeholders, without distinction,to take note of the Ethical Code and to ensure thatin their direct relations with Terna, they are aware ofits scope of application and of any restraints.

Specifically it asks:

• internal stakeholders – directors, employees,subsidiaries and those working in the name ofand on behalf of Terna to embrace the Code’sprinciples and guidelines within theirprofessional capacity. To imperatively complywith those prescriptions and requested conductthat directly concern the performance of theiractivity, and to work towards ensuring company-wide compliance with the Code;

• specific categories of stakeholders (suppliers,associates, etc.) to observe certain rules ofconduct provided by the Code (safety,confidentiality, etc.) in a binding manner in theirrelations with Terna. The stakeholdersconcerned will be informed of this request andconstraints will be underlined in contractualagreements.

Terna invites everyone to verify dubious orambiguous interpretations according to theprocedures set forth in Section 5 of this Code,applying to the reference figures indicated, and topromptly report any suspected breach.

Commitments for Code compliance and requested conduct | 41

05TERNA REQUIRES THAT ANY CONDUCT IN CONTRAST WITH THE ETHICALCODE IS REPORTED. THIS ALLOWS THE COMPANY TO PINPOINT CRITICALSITUATIONS, TO PUT THEM TO RIGHT AND TO STRENGTHEN STAKEHOLDERS’TRUST. TERNA HAS CHOSEN TO ADOPT AN ETHICAL CODE, TO COMPLY WITHITS MISSION AND ITS ETHICAL VALUES AND PRINCIPLES: SO APPLYING IT ISA DUTY THAT EVERYONE MUST FULFIL.


GENERAL RULES AND APPLICATION OF THE CODE


CLARIFICATION ON THE CODEAND REPORTING OF BREACH

For Terna employees the first figure of reference forclarification on the Code and its application is theirdirect superior, who may be able to answer thequery or may refer it to other corporate functions, tothe Ethical Committee or to the Audit function.Ethical queries must be treated seriously and thosefulfilling roles of responsibility must be able tofacilitate their solution. For reports of breach the first reference figure isagain the direct superior, who may implementcorrective measures and perform a mediating role,or may refer the report to the Ethical Committee orthe Audit function.However, the direct superior is not the only possiblereference figure. For clarification as well as for reports,employees may personally apply to the EthicalCommittee or to the Audit function. These channelsare also entrusted with collecting reports of breach ofthe Code from stakeholders outside the company. Terna considers reports made in good faith to be asign of loyalty towards the company. It guaranteesthose making reports maximum confidentiality; itdoes not tolerate acts of retaliation and will punishperpetrators. In the same spirit of loyalty, it asksthat reports are not submitted in anonymous form.

The contact addresses (postal address, email andtelephone) are provided or updated over theintranet and the website with special corporatenotices.

e-mail [email protected]@terna.it

address Ethical Committee Audit FunctionTerna Ethical CodeViale E. Galbani, 70 Viale E. Galbani, 7000156 Roma 00156 Roma

References figuresIn order to further guarantee confidentiality,employees may also contact the EthicalCommittee as a whole or its individual members byemail or through other dedicated channels, whichwill be communicated by the company when theyare activated and will be reported in the intranet inthe Ethical Code section. Individual members byemail or through other dedicated channels, whichwill be communicated by the company when theyare activated and will be reported in the intranet inthe Ethical Code section.

GENERAL RULES AND APPLICATION OF THE CODE

THE PRINCIPLES AND CONDUCT EXPRESSED IN TERNA’S ETHICAL CODE OFFER A GENERALREFERENCE FRAMEWORK. HOWEVER, EVERYDAY WORKING CONTEXTS CAN GIVE RISE TOQUERIES ON THE INTERPRETATION OF PRINCIPLES AND ON THE CORRECT CONDUCT TO BEOBSERVED IN VARIOUS SITUATIONS. FOR THIS REASON TERNA PROVIDES ITS STAKEHOLDERSWITH A NUMBER OF CHANNELS FOR DIRECT CONTACT WITH THOSE WHO CAN HELP CLARIFYDOUBTS AND EXPLAIN THE CODE’S SCOPE OF APPLICATION. THE SAME COMMUNICATIONCHANNELS ALSO COLLECT THE REPORTS OF BREACH OF THE CODE’S PRINCIPLES.

IT IS IMPORTANT FOR TERNA THAT ANY CONDUCT IN CONTRAST WITH THE ETHICAL CODE ISREPORTED. THIS ALLOWS THE COMPANY TO PINPOINT CRITICAL SITUATIONS, TO PUT THEMTO RIGHT AND TO STRENGTHEN STAKEHOLDERS’ TRUST. TERNA HAS CHOSEN TO ADOPT ANETHICAL CODE, TO COMPLY WITH ITS MISSION AND ITS ETHICAL VALUES AND PRINCIPLES: SOAPPLYING IT IS A DUTY THAT EVERYONE MUST FULFIL.

General rules and application of the Code | 45

CONTROLLING OF REPORTS,APPLICATION OF SANCTIONS

In Terna responsibility for collecting reports andfor providing clarification lies not only with thedirect superiors, but also with the EthicalCommittee and the Audit function.The Ethical Committee is a board made up of atleast three members, appointed by the CEO onbehalf of the various corporate divisions. Themembers remain in office for a limited period oftime and it is their duty to:

• answer requests for clarification on the EthicalCode;

• receive and examine reports of breach;• decide whether to open a report investigation

procedure;• provide those making the report with a reply on

this decision.

The Ethical Committee has been set up toprovide internal and external stakeholders witha specific communication channel on EthicalCode related issues.

The Audit function is Terna’s control functionentrusted with investing reports of breaches ofthe Code.Hence the Audit function carries out thepreliminary inquiry that follows the report and -in the case of confirmed breach - directlyprovides notice of the outcome to the Chairmanor the CEO, who decide on the sanctions to beapplied. In the case of more seriousinfringement, reports are submitted directly tothe Internal Audit Committee.

The Audit function is also responsible for periodiccontrol of compliance with the Ethical Code.

REVIEW OF THE ETHICAL CODE

Responsibility for integrating, reviewing andupdating the Ethical Code lies with the InternalAudit Committee, which may delegate the task to awork group. Proposed amendments are approvedby the Board of Directors.


HUMAN RIGHTS

PRINCIPLE I BUSINESSES SHOULD SUPPORT AND RESPECT THE PROTECTION OFINTERNATIONALLY PROCLAIMED HUMAN RIGHTS WITHIN THEIR SPHERE OFINFLUENCE; ANDPRINCIPLE IIMAKE SURE THAT THEY ARE NOT COMPLICIT, EVEN INDIRECTLY, IN HUMANRIGHTS ABUSES.

LABOUR STANDARDS

PRINCIPLE III BUSINESSES SHOULD UPHOLD THE FREEDOM OF ASSOCIATION AND THEEFFECTIVE RECOGNITION OF THE RIGHT TO COLLECTIVE BARGAINING;PRINCIPLE IV THE ELIMINATION OF ALL FORMS OF FORCED AND COMPULSORY LABOUR;PRINCIPLE VTHE EFFECTIVE ABOLITION OF CHILD LABOUR; ANDPRINCIPLE VITHE ELIMINATION OF DISCRIMINATION IN RESPECT OF EMPLOYMENT ANDOCCUPATION.

ENVIRONMENT

PRINCIPLE VII BUSINESSES SHOULD SUPPORT A PRECAUTIONARY APPROACH TOENVIRONMENTAL CHALLENGES;PRINCIPLE VIIIUNDERTAKE INITIATIVES TO PROMOTE GREATER ENVIRONMENTALRESPONSIBILITY; ANDPRINCIPLE IXENCOURAGE THE DEVELOPMENT AND DIFFUSION OF ENVIRONMENTALLYFRIENDLY TECHNOLOGIES.

COMBATING ANTI-CORRUPTION

PRINCIPLE XBUSINESSES SHOULD WORK AGAINST ALL FORMS OF CORRUPTION, INCLUDINGEXTORTION AND BRIBERY.

THE TEN GLOBAL COMPACT PRINCIPLES IN THE AREAS OF HUMAN RIGHTS, LABOUR,ENVIRONMENT AND ANTI-CORRUPTION ENJOY UNIVERSAL CONSENSUS AND ARE DERIVED FROM:

• THE UNIVERSAL DECLARATION OF HUMAN RIGHTS• THE INTERNATIONAL LABOUR ORGANISATION’S DECLARATION ON FUNDAMENTAL PRINCIPLES

AND RIGHTS AT WORK• THE RIO DECLARATION ON ENVIRONMENT AND DEVELOPMENT• THE UNITED NATIONS CONVENTION AGAINST CORRUPTION

1 0 U N G L O B A L C O M

10 UN Global Compact Principles | 47

P A C T P R I N C I P L E S

Coordination and Development by TERNA S.p.A.

External Relations and CSR Department

Editorial DesignInterno Otto, Rome

I l lustrationsChiara Attorre, Rome

Increasing the service’s efficiency and the company’s competitiveness.Providing services under concessions and planning the electricity grid’s development.Continuously enhancing the professional skills of collaborators. Working in respect of the environment.Developing a corporate Group identityboth nationally and internationally.

00156 Rome Viale Egidio Galbani, 70 Ph. +39 06 83138111

www.terna.it

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