I. Stakeholder Relationships
1. Does GOCC disclose a policy that:
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| a. Stipulates the existence and scope of its effort to address customer’s welfare? | See PNOC EC Manual for Corporate Governance, Section 8.3 (f), CORPORATE SOCIAL RESPONSIBILITY AND RELATIONS WITH STAKEHOLDERS (CUSTOMERS), page 31. |
| b. Elaborates its efforts to interact with the communities in which they operate? | See PNOC EC Manual for Corporate Governance, Section 8.3 (e), CORPORATE SOCIAL RESPONSIBILITY AND RELATIONS WITH STAKEHOLDERS (COMMUNITIES), pages 30-31. |
| c. Ensure that its value chain is environmentally friendly or is consistent with promoting sustainable development? | See PNOC EC Manual for Corporate Governance, Sections 8.4, HEALTH AND SAFETY and 8.5, ENVIRONMENT, page 33. |
2. Does the GOCC disclose the activities that it has undertaken to implement the abovementioned policies?
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| a. Customer health and safety | The Company integrates in its policies and procedures all applicable health, safety, security, and environmental (HSSE) rules and regulation to protect its employees, the environment, and the general public. For 2017, PNOC EC conducted the required safety audits in the Head Office and field operations to check and review operational compliance. The Company took preventive actions to minimize the occurrence of incidents and employed regular safety audits on operational safety and environmental compliance. The decommissioning of Mine- 1 was safely and successfully completed without any recordable incidents. The ESB successfully received the Hall of Fame Award from the SHAPES after maintaining three (3) consecutive years with outstanding safety performance. See 2017 PNOC EC Annual Report, HSSE, page 16 and 17. |
| b. Interaction with the communities | PNOC EC conducts regular interaction with communities within its areas of operation. See 2017 PNOC EC Annual Report, Corporate Social Responsibility Section, pages 14 to 15. |
| c. Environmentally-friendly value chain | In its exploration sites, PNOC EC is steadfast in its commitment towards preservation of ecological balance through the following:
For 2017, the Company adheres to all environmental commitments by strictly complying with the ECC conditions of the Malangas Coal Operations through the conduct of periodic environmental audits, Multi-Partite Monitoring Team (MMT) meetings, and improvements in the environmental management plan that include updates on the best practices. In addition, PNOC EC promotes good environmental practices to the SSCM permittees through the discussion of environmental management plans that are formulated specifically for their operations and conducts regular environmental inspections at their sites. |
3. Does the GOCC have a separate Corporate Social Responsibility (CSR) report/section or sustainability report/section?
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There is a CSR Section in the 2017 PNOC EC Annual Report on pages 14 to 15. See PNOC EC Manual for Corporate Governance under Section 8, CORPORATE SOCIAL RESPONSIBILITY AND RELATIONS WITH STAKEHOLDERS, pages 26 to 33. Refer to PNOC EC Website under GCG Requirements. |
4. Where stakeholder interests are protected by law, stakeholders should have the opportunity to obtain effective redress for violation of their rights.
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| Does the GOCC provide contact details via the Company’s website or Annual Report which stakeholders (e.g. customers, suppliers, general public, etc.) can use to voice their concerns and/or complaints for possible violation of their rights? | Stakeholders may contact MS. MYRANNOR B. HANDIG, Social Performance Specialist, at mbhandig@pnoc-ec.com.ph, or at 479-9400 local 444. See 2017 PNOC EC Annual Report, About the Report, page 4. Stakeholders may also use the Contact Us function of the Website. |
5. Performance-enhancing mechanisms for employee participation should be permitted to develop.
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| a. Does the GOCC explicitly mention the health, safety and welfare policy for its employees? | See 2007 EHS Policy and Revised 2018 HSSE Policy Statement. |
| b. Does the GOCC publish data relating to health, safety and welfare of its employees? | See 2017 PNOC EC Annual Report on Safety Performance, page 16. |
| c. Does the GOCC have training and development programmes for its employees | See Competency Development Framework. |
| d. Does the GOCC publish data on training and development programmes for its employees? | See Training and Development Programs Participated by Employees 2017. |
6. Stakeholders including individual employee and their representative bodies, should be able to freely communicate their concerns about illegal or unethical practices to the board and their rights should not be compromised for doing this.
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| a. Does the GOCC have procedures for complaints by employees concerning illegal (including corruption) and unethical behavior? | PNOC EC has a Whistle Blowing Policy in accordance with GCG Memorandum Circular No. 2014-04, or the Whistle Blowing Policy on the GOCC Sector, among other relevant regulations, and approved by GCG. See PNOC EC Whistle Blowing Policy. |
| b. Does the GOCC have procedures to protect an employee/person who reveals illegal/unethical behavior from retaliation? | PNOC EC has a Whistle Blowing Policy in accordance with GCG Memorandum Circular No. 2014-04, or the Whistle Blowing Policy on the GOCC Sector, among other relevant regulations, and approved by GCG. See PNOC EC Whistle Blowing Policy. |
II. Disclosure and Transparency
7.Quality of Annual Report. Does the GOCC’s annual report disclose the following items:
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| a. Corporate objectives | PNOC EC has disclosed its Corporate Objectives. See 2017 PNOC EC Annual Report, Strategic Objectives and Measures, Page 28. |
| b. Financial performance indicators | PNOC EC has disclosed its Financial Performance Indicators. See 2017 PNOC EC Annual Report, Financial Highlights, pages 20 to 22. |
| c. Non-financial performance indicators | PNOC EC has disclosed its Non-Financial Performance Indicators. See 2017 PNOC EC Annual Report, Strategic Objectives and Measures, Page 28. |
| d. Details of whistle blowing policy | PNOC EC adopted its internal whistle blowing policy in May 2017 in compliance with GCG MC 2016-02. See 2017 PNOC EC Annual Report Corporate Governance, Conflicts of Interest, Page 25. |
| e. Biographical details of directors | PNOC EC included the biographical details of its Board of Directors. See 2017 PNOC EC Annual Report, BOD Profile, pages 30 to 31. |
| f. Training and/or continuing education programme attended by each director | PNOC EC Directors underwent some training in 2017. See 2017 PNOC EC Annual Report, Collective Knowledge of Highest Governing Body, Page 26. |
8. Are the Annual Reports downloadable from the GOCC’s website?
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9. Corporate Governance Confirmation Statement
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| Does the Annual Report contain a statement confirming the company’s full compliance with the code of corporate governance and where there is non-compliance, identify and explain reasons for each such issue? | See 2017 PNOC EC Annual Report, Corporate Governance Statement, Page 23. |
10. Timely filing/release of annual/financial reports
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| a. Are the audited annual financial report/statement released within 60 days upon receipt from COA? |
PNOC EC released its 2017 Annual Audit Report 11 days after receipt from COA.
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| b. Is the annual report released within 90 days from release of audited financial report? |
PNOC EC released its 2017 Annual Report 31 days after release of its Annual Audit Report.
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| c. Is the true and fairness/fair representation of the annual financial statement/reports affirmed by the board of directors and/or the relevant officers of the company? | The true and fair representation of the annual financial statements/reports is affirmed in the Statement of Management Responsibility signed by the Chairman of the Board, President and CEO and the VP for Management Services/CFO.
See 2017 PNOC EC Annual Report , page 37. |
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III. Responsibilities of the Board
11. Corporate Vision and Mission/ Strategy
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| a. Has the Board of Directors reviewed the vision and mission/ strategy in the last financial year? | The Board of Directors reviewed the Company’s Strategy Map and Performance Scorecard during the Board meeting held on January 30, 2017. |
| b. Does the Board of Directors monitor/oversee the implementation of the corporate strategy? | PNOC EC regularly holds an Annual Planning Session attended by members of the Board of Directors and Management, where the Company’s Vision and Mission are deliberated on. The Board of Directors and Management also discuss the implementation of the Company’s plans and programs aligned with its corporate strategies. |
12. Did the GOCC achieve 90% in the PES?
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PNOC EC achieved 91.44% in its 2017 Peformance Scorecard, as validated by the GCG |
13. Code of ethics or conduct
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| a. Are the details of the code of ethics or conduct disclosed? | The PNOC EC Board of Directors, Management, and employees are covered by and are required to comply with the following:
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| b. Does the GOCC disclose that all Directors, senior management and employees are required to comply with the code? | |
| c. Does the company disclose how it implements and monitors compliance with the code of ethics or conduct? |
14. Does the Board appoint a Nomination and Compensation / Remuneration Committee?
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| PNOC EC Board of Directors created a Nomination and Remunerations Committee, whose functions were merged with the existing Compensation, Education and Employee Welfare Committee, and renamed to Nomination, Remuneration, Education, and Employee Welfare Committee.
In 2017, said Committee was composed of the following: Chairman: Oscar H. Rabena Members: Pedro A. Aquino, Jr. Carlo Magno D. Aldevera Karl Ignatius P. Young Johnny L. Tuason Alejandro A. Cobol vice Joseph L. Emnas Farah C. Cañezal-Lumbatan vice Fernando V. Barreiro See Secretary’s Certificate for PNOC EC Board Resolution No. 7-9, Series of 2017 and Secretary’s Certificate for PNOC EC Board Resolution No. 11-1, Series of 2017. |
15. Did the Nomination and Compensation/Remuneration Committee meet at least twice during the year?
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| The Nomination, Remuneration, Education, and Employee Welfare Committee held five (5) meetings in 2017. The Committee met on July 13, August 16, August 30, September 26, and December 5, 2017.
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16. If yes, is the report of the Nomination and Compensation/Remuneration Committee publicly disclosed?
17. Does the Board appoint an Audit Committee?
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| PNOC EC formally combined the Audit Committee and Risk Management Committee into the Audit and Risk Management Committee pursuant to Section 16.6 of the GCG Code of Corporate Governance, as well as Section 3.15(f) of the PNOC EC Manual of Corporate Governance.
In 2017, the PNOC EC Audit and Risk Management Committee was composed of the following: Chairman: Johnny L. Tuason Members: Carlo Magno D. Aldevera Karl Ignatius P. Young Oscar H. Rabena Alejandro A. Cobol vice Joseph L. Emnas Farah C. Cañezal-Lumbatan vice Fernando V. Barreiro See Secretary’s Certificate for PNOC EC Board Resolution No. 7-9, Series of 2017 and Secretary’s Certificate for PNOC EC Board Resolution No. 11-1, Series of 2017. |
18. If yes, is the report of the Audit Committee publicly disclosed?
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| See 2017 Audit and Risk Management Committee Report. |
19. Does at least one member of the Audit Committee have an audit, accounting or finance background (qualification or experience)?
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| See Resumé of Director Johnny L. Tuason. |
20. Did the Audit Committee meet at least four times during the year?
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| The Audit and Risk Management Committee held fifteen (15) meetings in 2017.
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21. Does the Board appoint a Risk Management Committee?
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| PNOC EC formally combined the Audit Committee and Risk Management Committee into the Audit and Risk Management Committee pursuant to Section 16.6 of the GCG Code of Corporate Governance, as well as Section 3.15(f) of the PNOC EC Manual of Corporate Governance.
In 2017, the PNOC EC Audit and Risk Management Committee was composed of the following: Chairman: Johnny L. Tuason Members: Carlo Magno D. Aldevera Karl Ignatius P. Young Oscar H. Rabena Alejandro A. Cobol vice Joseph L. Emnas Farah C. Cañezal-Lumbatan vice Fernando V. Barreiro See Secretary’s Certificate for PNOC EC Board Resolution No. 7-9, Series of 2017 and Secretary’s Certificate for PNOC EC Board Resolution No. 11-1, Series of 2017. |
22. If yes, is the report on Risk Management Committee publicly disclosed?
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| See 2017 Audit and Risk Management Committee Report. |
23. Does at least one member of the Risk Management Committee have a background in finance and investments?
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| See Resumé of Director Carlo Magno D. Aldevera, and Resumé of Director Johnny L. Tuason. |
24. Board meetings and attendance
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| a. Are the Board of Directors meetings scheduled at the beginning of the year?(end of Q1) | As a practice, the PNOC EC Board of Directors holds Board meetings at least once every month, usually on a Tuesday. |
| b. Does the Board of Directors meet at least monthly? | The Board of Directors hold at least one (1) meeting every month. |
| c. Did the Board of Directors meet on at least 75% on their scheduled meetings? | The Board of Directors held fourteen (14) meetings in 2017. |
| d. Has each of the directors attended at least 90% of all the board meetings held during the year? | Each of the eleven (11) Directors which sat in the PNOC EC Board of Directors in 2017 have attended at least 90% of all the board meetings held during the year, with (ten) 10 directors having complete attendance, and one director having two (2) absences. |
| e. Did the Board of Directors meet separately atleast once during the year without the President/CEO present? | PNOC EC’s Chairperson of the Board was the late Gemiliano C. Lopez, Jr., who passed away in January 1, 2017. The President/CEO Atty. Pedro A. Aquino, Jr. presided over the meetings of the Board of Directors in the interim before the Secretary of Energy was appointed as Ex-Officio Chairperson pursuant to Executive Order No. 39, dated September 5, 2017. |
25. Access to information
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| a. Does the GOCC have a policy that stipulates board papers for Board of Directors meetings be provided to the Board at least three (3) working days in advance of the board meeting? | As a practice, materials for Board Meetings are provided to the Board at least three (3) working days in advance of all Board Meetings. |
| b. Is the Board Secretary trained in legal, accountancy or company secretarial practices? | PNOC EC’s Legal Manager, and two (2) Legal Counsels have been appointed by the Board of Directors as Assistant Corporate Secretaries. |
26. Internal Audit
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| a. Does the company have a separate internal audit function? | PNOC EC has a separate internal audit function. See PNOC EC Table of Organization. |
| b. Does the appointment and removal of the internal auditor require the approval of the Audit Committee? | See PNOC EC Manual for Corporate Governance,
Section 3.15 (b) (vi). |
27. Risk Oversight
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| a. Does the company disclose the internal control procedures/risk management systems it has in place? | PNOC EC discloses its internal control procedures/risk management systems in the existing Risk Management Manual that is in place since 1993. Included in the Manual is the Risk Management System/Process which provides for the identification of risks, risk management/analysis, risk selection techniques, implementation of risk management techniques and monitoring and improving the risk management system. Financial Risk and Capital Management are also disclosed in the 2017 PNOC EC Annual Report, pages 75-78. |
| b. Does the Annual Report disclose that the Board of Directors has overseen a review of the company’s material controls (including operational, financial and compliance controls) and risk management systems? | As disclosed in the Company’s Annual Report, the Board of Directors oversees the risk management functions, particularly in the areas of managing credit, market liquidity, operational, legal, reputational, and other risks of PNOC EC. The Company’s Management regularly reports to the Audit and Risk Management Committee and to the Board of Directors all matters concerning PNOC EC’s material controls and risk management system.
Refer to Corporate Governance section, of the 2017 PNOC EC Annual Report, pages 23 to 27. |
| c. Does the company disclose how key risks are managed? | Management of key risks affecting PNOC EC are disclosed in the existing Risk Management Manual that is in place since 1993. PNOC EC also has an existing Guidelines on Risk Assessment. See also Risks and Strategies. |
| d. Does the Annual Report contain a statement from the Board of Directors or Audit Committee commenting on the adequacy of the GOCC’s internal controls/risk management systems? | As disclosed in the Company’s Annual Report, the Board of Directors oversees the risk management functions, particularly in the areas of managing credit, market liquidity, operational, legal, reputational, and other risks of PNOC EC. The Company’s Management regularly reports to the Audit and Risk Management Committee and to the Board of Directors all matters concerning PNOC EC’s material controls and risk management system.
Refer to Corporate Governance section, of the 2017 PNOC EC Annual Report, pages 23 to 27. |
28. Board Chairman
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| Do different persons assume the roles of Chairman and CEO? | For 2017, PNOC EC’s President and CEO is Pedro A. Aquino, Jr.; while the Ex-Officio Chairperson is Alfonso G. Cusi (Secretary, Department of Energy). |
29. Board of Directors Development
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| a. Does the GOCC have orientation programs for new Directors? | The Office of the Corporate Secretary holds an orientation session for new directors, covering the following topics: (1) Company overview; (2) Role of PNOC EC Board of Directors; and (3) PNOC EC Operations. |
| b. Does the GOCC have a policy that encourages Directors to attend on-going or continuous professional education programmes? | The Annual Work Program and Budget of PNOC EC contains provision for the attendance of all members of the Board of Directors to training programmes and seminars as part of the continuous professional educational programme. |
| c. Did all Appointive Directors attend at least 1 training for the calendar year? | The Appointive Directors attended two (2) trainings for 2017, namely: the “Corporate Governance Orientation Program for Government-Owned or -Controlled Corporations (GOCC)” organized by the Institute of Corporate Directors (ICD), and the “Corporate Governance – Board Effectiveness Best Practices” organized by the Center for Global Best Practices. |
30. Board Appraisal
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| a. Is an annual performance assessment conducted of the Board of Directors? | The Board of Directors conducts an assessment of its performance for the year based on an appraisal system developed for the purpose which determines, among others, (a) the adequacy of the Board’s structure and composition; (b) whether the Board has fulfilled its responsibilities for PNOC EC’s performance; (c) whether the members of the Board work well as a team and communicate properly; and (d) their strengths and weaknesses.
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| b. Does the GOCC disclose the process followed in conducting the Board assessment? | The Board of Directors conducts an assessment of its performance for the year based on an appraisal system developed for the purpose which determines, among others, (a) the adequacy of the Board’s structure and composition; (b) whether the Board has fulfilled its responsibilities for PNOC EC’s performance; (c) whether the members of the Board work well as a team and communicate properly; and (d) their strengths and weaknesses.
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| c. Does the GOCC disclose the criteria used in the Board assessment? | The Board of Directors conducts an assessment of its performance for the year based on an appraisal system developed for the purpose which determines, among others, (a) the adequacy of the Board’s structure and composition; (b) whether the Board has fulfilled its responsibilities for PNOC EC’s performance; (c) whether the members of the Board work well as a team and communicate properly; and (d) their strengths and weaknesses.
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31. Committee Appraisal
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| Is an annual performance assessment conducted of the Board of Directors Committees? | The Board of Directors Committees conducts an assessment of its performance for the year based on an appraisal system developed for the purpose. |
BONUS
Stakeholder Relationships
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| 1. Does the GOCC practice Global Reporting Initiative (GRI) on its annual reports? | 2017 PNOC EC Annual Report’s About the Report, About PNOC EC, Report from the President and CEO, Operational Highlights, Areas of Interest, Corporate Social Responsibility, Health, Safety, Security, and the Environment, Training and Development, and Corporate Governance Sections are all referenced to the Global Reporting Initiative (GRI) standards. |
Disclosure Transparency
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| 2. Quality of Annual Report | |||||||
| Are the audited annual financial report/statement released within 30 days upon receipt from COA? |
PNOC EC released its 2017 Annual Audit Report 11 days after receipt from COA.
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PENALTY
Responsibilities of the Board
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| 1. Are there members of the Board of Directors who hold more than five (5) positions in GOCCs and PLCs? | No PNOC EC Board Member holds more than five (5) positions in GOCCs and PLCs. |
| 2. Is there non-compliance with Good Governance Conditions? | PNOC EC is fully compliant with all Good Governance Conditions. |
