Through the materiality process, Leonardo has identified the material issues that define the main areas of opportunity and the most significant areas of risk, capable of generating impacts in a short and medium-long term horizon.
The process developed on the basis of a multidimensional analysis that considered both the external context, taking into account the expectations of various stakeholders, and the internal one through the involvement of the Group's management.
With regard to the external context, sector benchmarks and specific documents of the Aerospace, Defense and Security, media analysis, questionnaires and reports on Leonardo's ESG performance carried out by third-party valuation companies were considered. The results have been analyzed during the interviews conducted with Leonardo's top management and the Divisions.
The consideration of internal and external significance has led to the identification of the priority areas for Leonardo; the main environmental, social and governance material aspects, all integrated in the business strategy, are represented in the materiality matrix.
KEY SECTOR TRENDS
Common European defence
The European defence creation process is accelerating. Following the regulatory measures on the Internal Market introduced in 2009, the European External Action Service’s EU Global Strategy was recently approved. In addition, financial and other initiatives to promote the competitiveness and innovation of the European industrial and technological framework for defence include:
- Preparatory Action on Defence Research (PADR) with the first calls for military research;
- launch of the European Defence Action Plan, aimed at strategic autonomy for Europe, which includes the European Defence Fund;
- the EU Council’s adoption of the Permanent Structured Cooperation (PESCO), which entails the convergence of national capabilities in collaboration with Europe, supported by European funding, for which the intention to prepare the first series of projects, four of which are under Italian leadership, has been expressed;
- proposal for a European Defence Industrial Development Programme (EDIDP) for the development of Europe’s military capabilities.
Digitalisation and cyber security
Digital technologies have become an integral part of daily life: in 2025 there will be 80 billion connected devices generating 3.3 zettabytes of internet traffic (source: IDC).
Digital acceleration will transform the Aerospace, Defence and Security sectors: organisation, business processes and relationships with the supply chain andwith business partners will all be affected. Products and solutions with new digital functionalities and innovative services based on big data analytics will penetrate all the markets.
The quality of the digital infrastructures and the ability to protect the cyber ecosystem will be some of the key factors for the protection of global economic and social prosperity. The impact of cyber threats is expected to cost USD8,000 billion over the next five years (source: Jupiter Networks) and 5 billion information files will be stolen in 2020.
Pursuit for the skills for the future
By 2025, Europe will see an 8% increase in demand for human resources with STEM skills, for a total of 7 million jobs in this field (source: 2016 DESI Report). At the same time, of the approximate 120,000 engineers who graduate every year in Europe, only 10,000 choose to work in the Aerospace, Defence and Security sectors (source: CSG).
Attracting young people to these fields is a strategic factor to train and develop future generations so they may provide the human capital necessary for these sectors and to sustain the technological development and economic growth.
Decarbonisation and circular economy
With the Paris COP 21 and subsequent meetings, the trajectory towards a sustainable, low environmental-impact economic system has been outlined, with the adoption of production and consumption models that are more focused on the recovery, reuse and recycling of materials.
It’s a global commitment to competitiveness and the creation of jobs. The principles of the transition towards a low carbon condition and a circular economy will be part of the research and development processes in the Aerospace, Defence and Security sectors, as reflected by the study promoted by the European Defence Agency, and will generate systematic and structural benefits for virtuous companies and for society.