Draft Sustainability Reporting Guidelines and Reporting Template for Publicly-Listed Companies

July 12, 2018 SEC NOTICE SUBJECT : Draft Sustainability Reporting Guidelines and Reporting Template for Publicly-Listed Companies Please find attached the draft Sustainability Reporting Guidelines and Reporting Template for Publicly-Listed Companies. The public is invited to submit their comments, feedback and input on the Guidelines and Reporting Template on or before 27 July 2018 (Friday) . It is requested that comments/input be emailed to [emailprotected] using the template provided. Issued on July 12, 2018. ATTACHMENT Comments on the Draft Sustainability Reporting Guidelines and Template for Publicly-Listed Companies NAME: _________________________________ COMPANY: _____________________________ PORTION of the SUSTAINABILITY REPORTING GUIDELINES AND TEMPLATE COMMENTS PROPOSED CHANGE Please answer the following questions: 1. Should the Sustainability Reporting Guidelines and Template be made mandatory or on a "comply or explain" basis? Please explain your answer. ________________________________________________________ ________________________________________________________ 2. What are the estimated cost implications to comply with Sustainability Reporting Guidelines and Template? ________________________________________________________ ________________________________________________________ 3. If the Sustainability Reporting Guidelines and Template will be adopted on a "comply or explain" basis, in how many years should it be made mandatory? Please explain your answer. ________________________________________________________ ________________________________________________________ ANNEX A Sustainability Reporting Guidelines for Publicly-Listed Companies Introduction Sustainability reporting (also known as ESG (environmental, social and governance) reporting, non-financial reporting, or triple bottom line accounting) is an organization's practice of reporting publicly on its significant economic, environmental and/or social impacts, in accordance with globally accepted standards. Such disclosures enable and organization to measure and monitor its contributions towards achieving universal targets of sustainability, such as the United Nations Sustainable Development Goals as well as national policies and programs. Sustainability reporting also benefits stakeholders interested in an organization's ability to create value over time, including employees, customers, suppliers, business partners, local communities, legislators, regulators, and policy makers. This promotes transparency and accountability, empowering stakeholders to make informed decisions and helps the company manage its economic, environmental, and social impacts. Sustainability reporting is a central element of modern corporate reporting, which includes strategy, governance and performance. As provided in Principle 10 of the Code of Corporate Governance for Publicly-Listed Companies, a company "should ensure that the material and reportable non-financial and sustainability issues are disclosed." Globally Recognized Standards/Frameworks in Reporting Sustainability Recommendation 10.1 of the Code of Corporate Governance for Publicly-Listed Companies provides that "[c]ompanies should adopt a globally recognized standard/framework in reporting sustainability and non-financial issues." 1 ETHIDa This Guidance builds upon four of the globally accepted frameworks, which companies use to report on sustainability and non-financial information the Global Reporting Initiative (GRI) Sustainability Reporting Standards, the International Integrated Reported Council (IIRC) Integrated Reporting (IR) Framework, the Sustainability Accounting Standards Board (SASB) Sustainability Accounting Standards, and the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD). The GRI Standards has a comprehensive reporting requirement covering economic, environmental, and social topics. It is also aligned with international standards and normative frameworks such as the United Nations Global Compact (UNGC) and the International Labour Organization (ILO) Tripartite Declaration . The <IR> Framework defines six capitals, seven guiding principles, and eight content elements of an integrated report but does not specify topic disclosures and measurement methods. It aims to monitor how the capitals are used and created by the business model and discloses the companies' strategies in light of risks and outlook. The SASB Standards provides industry-based sustainability standards for more than 80 specific industries. It has five general sustainability themes including environment, social capital, human capital, business model and innovation, and leadership and governance. To address sustainability issues, a minimum set of topics for consideration in each industry are also provided, together with quantitative and comparable accounting metrics. 2 The TCFD a task force of the Financial Stability Board issued its final recommendations on climate-related financial disclosure in January 2018, focusing on climate-related risks, opportunities, and financial impacts, as well as scenario analysis. 3 In addition to these four frameworks, the International Finance Corporation, the private sector arm of the World Bank Group, has developed a Toolkit for Disclosure and Transparency with guidance for companies in emerging markets. This toolkit aims to help companies begin the process of sustainability reporting and move toward integrated reporting, with guidance on how to development disclosure over time. More information can be found in the full guidance documents for these reporting frameworks that can be accessed in their respective websites. It can also be noted that these standards and frameworks can complement each other and can be used in a single document. For example, a report can be published which uses the <IR> framework and discloses information in accordance with the GRI Standards. Sustainability Reporting Framework This sustainability reporting guidance is crafted for companies operating in the Philippines with a goal of making sustainability reporting relevant and value-adding for companies. Beyond purposes for transparency, it is designed to help companies assess their non-financial performance across environment, economic, social, governance aspects of their organization to optimize business operations, improve competitiveness, and long-term success. It builds on the principles and metrics provided by the GRI Standards, as well as the other internationally accepted standards for non-financial reporting. This framework has the following structure. OUR COMPANY is a Sustainable Business We conduct our businesses in an ETHICAL manner Corporate Governance We manage our KEY IMPACTS Economic Environmental Social Our products and services create VALUE TO SOCIETY Contribution to Sustainable Development Disclosures on Corporate Governance are made in the Integrated Annual Corporate Governance Report (I-ACGR). Disclosures contained in this sustainability reporting framework are those that contribute to describing and measuring the company's sustainability performance. Broadly, sustainability performance is measured in the way the corporation conducts its business, and how it manages its key economic, environmental and social impacts. Disclosure Topics Disclosures should reflect the organization's significant economic, environmental, and social impacts and should consider the reasonable expectations and interests of key stakeholders. 4 Whenever applicable, these disclosures should be quantifiable and measurable, effectively providing a snapshot of an organization's non-financial performance for the reporting period (See Annex: Reporting Templates). The quality and content of the disclosures should also be aligned with widely recognized reporting principles. Management Approach Disclosures should also be accompanied by a management approach which explains how the organization avoids, mitigates, or remediates negative impacts to the economy, environment, and society, and enhances positive ones. These approaches can be in the form of organization policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms as well as processes, projects, programs, and initiatives. See GRI 103 . Economic Economic disclosures relate to how the company directly increases the pool of economic resources that flows in the local and national economy. Direct Economic Value Generated and Distributed Measuring the direct economic value generated, measured as revenue and distributed (costs) shows that an organization does not just create economic value for itself but also ensures that this value flows back to its various stakeholders such as stockholders, suppliers, employees, government, and the community. This also discloses the remaining value that is retained in the company for liquidity and for future investments. Figures for this disclosure can be derived using the audited financial statement with the revenue as the economic value generated for the reporting period. This disclosure answers the questions: How much direct economic value (revenue) did you generate? How much of this flowed back to society (costs disaggregated according to stakeholders)? How much of this was retained in the company for liquidity and to fund future investments? See GRI 201-1 for more guidance on the disclosure. Environment Environmental disclosures relate to how the company manages the natural resources it needs for its business, as well as how it minimizes its negative impacts to the environment, including biodiversity. The company's ability to access materials needed for its operations is critical to company's long-term success. Resource Management Disclosures on resource management such as energy consumption, water consumption, and materials use show how efficiently an organization uses scarce natural resources, which has implications on reduction of environmental impacts from extraction and processing of these resources. The efficiency of managing resources relates to profitability of the organization. See GRI 301 , GRI 302 , GRI 303 for more guidance on the disclosures. Ecosystems and Biodiversity Disclosure on activities that show how an organization protects, conserves, or rehabilitates ecosystems and biodiversity therein such as in watersheds and coastal and marine areas gives an idea of how that organization appreciates the ecosystem and the services it gives that make business thrive. Ecosystems and Biodiversity is vital to human existence. Companies have the responsibility and clear business case for ensuring ecosystems and biodiversity around its sites are protected and restored. See GRI 303 and GRI 304 for more guidance on the disclosures. Environmental Impact Management Reporting on an organization's impact on air, soil, and water through emissions, wastes, and effluents provides basis for companies to manage these impacts. Responsible companies take an effort to minimize such impacts through cleaner production and pollution prevention measures. Companies should disclose on their performance on these topics including how well the organization mitigates, reduces, and/or prevents these impacts to the environment in compliance to Philippine Environmental Laws or on efforts beyond compliance. See GRI 305 and GRI 306 for more guidance on the disclosures. cSEDTC Social Disclosures on social topics relate to how the organization relates and manages its relationship with its stakeholders such as employees, communities, customers, and suppliers. Employee Management Disclosing on employee management indicates of how good an employer the organization is in engaging its employees. It also provides a sense on how the organization develops its employees and gives equal opportunity for all, such as indigenous people and those coming from vulnerable groups which include elderly, persons with disabilities, vulnerable women, refugees, migrants, internally displaced persons, people living with HIV and other diseases, solo parents, and the poor or the base of the pyramid (BOP; Class D and E). See GRI 401 , GRI 402 , GRI 404 , GRI 405 , GRI 406 , GRI 407 , GRI 102-8 , and GRI 102-41 for more guidance on the disclosures. Workplace Conditions and Labor Standards Disclosures on workplace conditions and labor standards show how an organization gives importance to occupational health and safety and how it upholds labor standards and human rights in the workplace. See GRI 403 , GRI 408 , GRI 409 , and GRI 412 for more guidance on the disclosures. Supply Chain Management Disclosures on supply chain management is most relevant for companies with a significant portion of value creation carried out by suppliers. Organizations can report on how the reporting company ensures that supplier upholds with sustainability standards and practices including compliance to Philippine laws. The reporting company may also disclose how it influences its suppliers to be sustainable through supplier accreditation processes, among other approaches. See GRI 308 and GRI 414 for more guidance on the disclosures. Relationship with Community These disclosures show how an organization meaningfully engages the community around their sites and how it aims to create a net positive impact to its host or neighbors. These also includes how the company contributes in addressing issues of indigenous people and those coming from vulnerable groups [youth, elderly, persons with disabilities, vulnerable women, refugees, migrants, internally displaced persons, people living with HIV and other diseases, solo parents, and the poor or the base of the pyramid (BOP; Class D and E)] in its business operations. See GRI 411 , GRI 412 , and GRI 413 for more guidance on the disclosures. Customer Management Disclosing on customer management shows how well an organization upholds the rights of its customers to privacy, safety, and security from probable negative impacts of its products and services. See GRI 416 , GRI 417 , and GRI 418 for more guidance on the disclosures. Reporting Principles The Reporting Principles for defining report quality guide choices on ensuring the quality of information in a sustainability report, including its proper presentation. The quality of information is important for enabling stakeholders to make sound and reasonable assessments of an organization, and to take appropriate actions. For more information read GRI 101: Foundation . Materiality An organization is faced with a wide range of topics on which it can report. Relevant topics, which potentially merit inclusion in the report, are those that can reasonably be considered important for reflecting the organization's economic, environmental, and social impacts, or influencing the decisions of stakeholders. In this context, 'impact' refers to the effect an organization has on the economy, the environment, and/or society (positive or negative). A topic can be relevant and so potentially material based on only one of these dimensions. In sustainability reporting, materiality is the principle that determines which relevant topics are sufficiently important that it is essential to report on them. Materiality assesses topics against the following two dimensions: Significance of an organization's economic, environmental and social impacts. Substantive influence on the assessments and decisions of stakeholders. A topic may be considered material if it falls into any of the following: 1. It is a KEY CAPITAL/RISK/OPPORTUNITY that impacts value creation 2. Your KEY BUSINESS ACTIVITIES impact the topic 3. Your SUBSIDIARIES/CONTRACTORS/SUPPLY CHAIN contribute significant impacts to this topic 4. Your PRODUCTS/SERVICES contribute impacts to this topic 5. There is a TREND that points to a future where this topic will become material to you The organization should disclose the process how it identified its material topics. In the event that this process is not disclosed, then the organization should EXPLAIN why this was not done. The same also goes for any topic that the organization deems NOT material. Balance Reporting must have no bias in the selection or presentation of information. The reported information shall reflect positive and negative aspects of the reporting organization's performance to enable a reasoned assessment of overall performance. Reliability, Accuracy and Completeness The report shall include accurate and complete information on material topics, sufficient to reflect significant economic, environmental, and social impacts, and to enable stakeholders to assess the reporting organization's performance in the reporting period. Consistency and Comparability The information in the report should be presented on a basis that is consistent over time and in a way that enables comparison with other organizations to the extent it is material to the organization's own ability to create value over time. Reporting Templates Contextual Information Company Details Name of Organization Location of Headquarters Location of Operations Report Boundary: Legal entities ( e.g. , subsidiaries) included in this report* Primary Activities, Brands, Products, and Services Reporting Period Highest Ranking Person responsible for this report * If you are a holding company, you could have an option whether to report on the holding company only or include the subsidiaries. However, please consider the principle of materiality when defining your report boundary. Materiality Process Explain how you applied the materiality principle (or the materiality process) in identifying your material topics. 5 (If this was not done, please fill up the table below). Explain why you did not go through a materiality process. Non-material topics List down topics considered not material to your company, based on the materiality principle discussed in this document. SDAaTC Topics Explain why it is not material Economic Direct Economic Value Generated and Distributed Disclosure Amount Units Direct economic value generated (revenue) PhP Direct economic value distributed: Employee wages and benefits PhP Payments to suppliers, other operating costs Dividends given to stockholders and interest payments to loan providers PhP Taxes given to government PhP Investments to community ( e.g ., donations, CSR) PhP Management Approach State your policies and management systems for ensuring that the value generate by the company is generated in a fair manner, including policies on anti-competitive behavior. State also policies and management systems to ensure that economic value flows to the right stakeholders including anti-corruption and procurement practices. Beyond policies state also, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives relevant to these disclosures. Environment Resource Management Energy consumption within the organization Disclosure Quantity Units Energy consumption (diesel) GJ Energy consumption (gasoline) GJ Energy consumption (LPG) GJ Energy consumption (electricity) kWh Which stakeholders are affected? Where does the impact occur? Management Approach (e.g., employees, community, suppliers, government, vulnerable groups) This may include where your primary business operations are and your supply chain. How do you manage energy consumption in the organization? What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives do you have to manage energy consumption? Water consumption within the organization Disclosure Quantity Units Water consumption Cubic meters Water recycled and reused Cubic meters Which stakeholders are affected? Where does the impact occur? Management Approach (e.g., employees, community, suppliers, government, vulnerable groups) This may include where your primary business operations are and your supply chain. How do you manage water consumption in the organization? What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives do you have to manage water consumption? Materials used by the organization Disclosure Quantity Units Materials used by weight or volume kg/liters Percentage of recycled input materials used to manufacture the organization's primary products and services % Which stakeholders are affected? Where does the impact occur? Management Approach (e.g., employees, community, suppliers, government, vulnerable groups) This may include where your primary business operations are and your supply chain. How do you manage materials consumption in the organization? What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives do you have to manage materials consumption? Ecosystems and biodiversity (whether in upland/watershed or coastal/marine) Disclosure Quantity Units Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas (identify all sites) Habitats protected or restored Ha IUCN Red List species and national conservation list species with habitats in areas affected by operations (list) Which stakeholders are affected? Where does the impact occur? Management Approach (e.g., employees, community, suppliers, government, vulnerable groups) This may include where your primary business operations are and your supply chain. How do you help preserve, conserve, and/or protect ecosystems and biodiversity? What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives do you have to help preserve, conserve, and/or protect ecosystems and biodiversity? Environmental impact management Air Emissions GHG Disclosure Quantity Units Direct (Scope 1) GHG Emissions Tonnes CO 2 e Energy indirect (Scope 2) GHG Emissions Tonnes CO 2 e Emissions of ozone-depleting substances (ODS) Tonnes Which stakeholders are affected? Where does the impact occur? Management Approach (e.g., employees, community, suppliers, government, vulnerable groups) This may include where your primary business operations are and your supply chain. How do you reduce your GHG emissions? What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives do you have to reduce them? Air pollutants Disclosure Quantity Units NO X kg SO X kg Persistent organic pollutants (POPs) kg Volatile organic compounds (VOCs) kg Hazardous air pollutants (HAPs) kg Particulate matter (PM) kg Which stakeholders are affected? Where does the impact occur? Management Approach (e.g., employees, community, suppliers, government, vulnerable groups) This may include where your primary business operations are and your supply chain. How do you reduce air pollution? What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives did you have to reduce them? Solid and Hazardous Wastes Solid Waste Disclosure Quantity Units Reusable kg Recyclable kg Composted kg Residuals/Landfilled kg Which stakeholders are affected? Where does the impact occur? Management Approach (e.g., employees, community, suppliers, government, vulnerable groups) This may include where your primary business operations are and your supply chain. How do you reduce solid waste? What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives did you have to reduce them? Hazardous Waste Disclosure Quantity Units Amount of hazardous waste transported kg Which stakeholders are affected? Where does the impact occur? Management Approach (e.g., employees, community, suppliers, government, vulnerable groups) This may include where your primary business operations are and your supply chain. How do you reduce hazardous waste? How do you transport and have them treated? What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives did you have to reduce them? Effluents Disclosure Quantity Units Total volume of water discharges Cubic meters Percent of wastewater recycled % Which stakeholders are affected? Where does the impact occur? Management Approach (e.g., employees, community, suppliers, government, vulnerable groups) This may include where your primary business operations are and your supply chain as well as the destination of the water discharges. How do you reduce effluents? How do you treat wastewater? What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives did you have to reduce effluents? Social Employee Management Employee Hiring and Benefits Employee data Disclosure Quantity Units Total number of employees 6 # Attrition rate 7 rate Monthly salary of the lowest-paid employee PhP Employee benefits List of Benefits Y/N % of Employees who availed for the year SSS PhilHealth Pag-IBIG Parental leaves Vacation leaves Sick leaves Medical benefits (aside from PhilHealth) Housing assistance (aside from Pag-IBIG) Retirement fund (aside from SSS) Further education support Company stock options Telecommuting Flexible-working Hours (Others) Management Approach How could you say that you treat your employees well? How do you treat wastewater? What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives did you have for your employees' well-being? Employee Training and Development Disclosure Quantity Units Total training hours provided to employees hours Average training hours provided to employees hours/employee Management Approach What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives do you have for training your employees? Labor-Management Relations Disclosure Quantity Units % of employees covered with Collective Bargaining Agreements % Number of consultations conducted with employees concerning employee-related policies # Management Approach What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives you have to establish healthy labor-management relations? Diversity and Equal Opportunity Disclosure Quantity Units Ratio of male to female employees ratio Number of employees from indigenous communities and/or vulnerable sector* # * Vulnerable sector includes, elderly, persons with disabilities, vulnerable women, refugees, migrants, internally displaced persons, people living with HIV and other diseases, solo parents, and the poor or the base of the pyramid (BOP; Class D and E) . Management Approach What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives you have to eliminate all forms of discrimination in the organization and promote equal opportunity? Workplace Conditions, Labor Standards, and Human Rights Occupational Health and Safety Disclosure Quantity Units Safe Man-Hours Man-hours Number of safety drills # Management Approach What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives you have to create a safe and healthy workplace? Labor Laws and Human Rights Do you have policies that explicitly disallows violations to labor laws and human rights ( e.g ., harassment, bullying) in the workplace? EcTCAD Topic Y/N If Yes, cite reference in the company policy Forced labor Child labor Human Rights Supply Chain Management Do you have a supplier accreditation policy? If yes, please attach the policy or link to the policy: Do you consider the following sustainability topics when accrediting suppliers? Topic Y/N If Yes, cite reference in the company policy Environmental performance Forced labor Child labor Human rights Bribery and corruption Relationship with Community Significant Impacts on Local Communities Operations with significant (positive or negative) impacts on local communities (exclude CSR projects; this has to be business operations) Location Vulnerable groups (if applicable)* Does the particular operation have impacts on indigenous people (Y/N)? Collective or individual rights that have been identified that or particular concern for the community Mitigating measures (if negative) or enhancement measures (if positive) * Vulnerable sector includes children and youth, elderly, persons with disabilities, vulnerable women, refugees, migrants, internally displaced persons, people living with HIV and other diseases, solo parents, and the poor or the base of the pyramid (BOP; Class D and E) For operations that are affecting IPs, indicate the total number of free and prior informed consent (FPIC) undergoing consultations and certification preconditions (CPs) secured and still operational and provide a copy or link to the certificates if available: _______________ Certificates Quantity Units FPIC process is still undergoing # CP secured # Customer Management Customer Satisfaction Disclosure Score Did a third party conduct the customer satisfaction study (Y/N)? Customer satisfaction Health and Safety Disclosure Quantity Units No. of substantiated complaints on product or service health and safety* # No. of complaints addressed # * Substantiated complaints include complaints from customers that went through the organization's formal communication channels and grievance mechanisms as well as complaints that were lodged to and acted upon by government agencies. Management Approach What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives you have to ensure that products and services are safe for customers? Marketing and labelling Disclosure Quantity Units No. of substantiated complaints on marketing and labelling* # No. of complaints addressed # * Substantiated complaints include complaints from customers that went through the organization's formal communication channels and grievance mechanisms as well as complaints that were lodged to and acted upon by government agencies. Management Approach What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives you have to ensure that product and service marketing and labelling ensure safe use and disposal? Customer privacy Disclosure Quantity Units No. of substantiated complaints on customer privacy* # No. of complaints addressed # * Substantiated complaints include complaints from customers that went through the organization's formal communication channels and grievance mechanisms as well as complaints that were lodged to and acted upon by government agencies. Management Approach What policies, commitments, goals and targets, responsibilities, resources, grievance mechanisms, and/or projects, programs, and initiatives you have to ensure that customer privacy is protected and upheld? Product or Service Value Disclosure Key products and services and its contribution to sustainable development. Key Products and Services Societal Value/Contribution to UN SDGs * None/Not Applicable is not an acceptable answer You may use the following framework to determine which area of sustainable development your company is contributing to improve people's quality of life. For more information on how private sector can contribute to sustainable development, you may view the guidance document on www.sdgsbiz.ph . HSAcaE Footnotes 1. Code of Corporate Governance, 2016. Principle 1, Recommendation 10.1. 2. Adopted from the Sustainability Accounting Standards Board (SASB, 2017). 3. Adopted by the Financial Stability Board (FSB) Task Force on Climate-related Financial Disclosure (FSB, 2018). 4. See GRI Standards 101: Foundation 2016 . 5. See GRI 102-46 (2016) for more guidance. 6. Employees are individuals who are in an employment relationship with the organization, according to national law or its application ( GRI Standards 2016 Glossary ). 7. Attrition are = (no. of new hires no. of turnover)/(average of total no. of employees of previous year and total no. of employees of current year).