I. Stakeholder Relationships
1. Does GOCC disclose a policy that:
|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?
|a. Customer health and safety|
The Company integrates in its policies and procedures all applicable health, safety, security, and environmental (HSSE) legislations and regulations to protect its employees, the environment, and the general public.
For 2020, the unprecedented threat of the COVID-19 pandemic was experienced in a global scale. This prompted the Company to implement the Business Continuity Plan (BCP) and organized an internal COVID-19 Task Force which acted as oversight and monitoring of the Company’s response on the health crisis. In addition to the BCP, the Company formulated internal health and safety guidelines to complement the enforcement of government’s mandatory health protocols which became part of the “PNOC EC Guideline on New Normal Work Arrangement”. The Company regularly complied with the Department of Energy (DOE) COVID-19 Response Protocol which was implemented in May 2020. PNOC EC received an outstanding citation from the Safety & Health Association of the Philippine Energy Sector (SHAPES) for the COVID-19 response efforts.
As part of the new normal work guidelines and to prevent the transmission of COVID-19 in the workplace, the Company implemented the following measures, among others: work-from-home arrangement, work permit and health clearance (WPHC) system to limit personnel reporting in the office, reduced face to face meetings and use of online platforms, teleconsultation with Company physician, reviewed office layout to ensure physical distancing, conducted daily health surveillance and monitoring of all personnel through the submission of online health questionnaire, personnel with no private vehicle were provided with shuttle service and sleeping quarters, quarantine for those who travelled locally and overseas, and provision of flu vaccines and health supplements.
PNOC EC conducted a series of health lectures and seminars to intensify the awareness of employees in managing the ever-increasing threat of COVID-19. Also, the Company organized a webinar on “Mental Health during COVID-19” which was facilitated by distinguished mental health professionals or experts in order to address the “quarantine stress” and mental health issues that most of the personnel are experiencing during Community Quarantine.
Whenever the Company recorded COVID-19 confirmed cases, contact tracing, intensive disinfection and swab testing of close contacts followed. For 2020, a total of 244 RT-PCR tests were conducted for identified close contacts and as requirement of personnel who travel to project sites. Other travel requirements such as medical certificates and Philippine National Police (PNP) travel authority were secured before any deployment of personnel to project sites.The Company updated its Security Management Manual and security risk assessment for its project sites.
On the development of Mine 3 in Zamboanga Sibugay, the contractor’s personnel were provided with the needed orientation of the HSSE policies and guidelines. Procedures for high risk activities including permit-to-work system and important guidelines were cascaded to ensure that processes will be observed and complied. The Company took preventive and mitigating measures to minimize if not eliminate the occurrence of accidents and employed regular safety inspections on operational safety. The Mine 3 Coal Project development was strictly and competently supervised by the dedicated COC41 HSSE unit which was composed of HSSE practitioners duly accredited by the DOE. The safety performance of the Mine 3 Coal Project was also recognized by SHAPES for its zero lost time incident for 2020.
See 2020 PNOC EC Annual Report, HSSE, page 22 and 23.
|b. Interaction with the communities||PNOC EC conducts regular interaction with communities within its areas of operation. See 2020 Annual Report pages 19-21.|
|c. Environmentally-friendly value chain|
In its exploration sites, PNOC EC is steadfast in its commitment towards preservation of ecological balance through the following:
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 inspections or audits, Multi-Partite Monitoring Team (MMT) meetings, compliance with the Environmental Management and Monitoring Plan (EMMP), and other improvements that include updates on best practices. The EMMP, which includes the continuous monitoring of waste water discharges, ambient air and noise, is in place to reduce to the lowest level the project’s impact to the environment. In addition, PNOC EC promotes good environmental practices to the Small-Scale Coal Mine (SSCM) permittees through the formulation of the environmental management guidelines specific for SSCM operations. The Company conducted periodic environmental inspections at each of SSCM permittees’ sites. Waste segregation and proper handling of hazardous wastes are also being practiced in the sites. In 2020, material recovery facilities (MRF) in the mine areas of COC41 were rehabilitated. Various recyclable materials were sorted in each MRF to promote waste reduction.
See 2020 PNOC EC Annual Report, HSSE, page 22 and 23.
3. Does the GOCC have a separate Corporate Social Responsibility (CSR) report/section or sustainability report/section?
There is a Sustainability Section in PNOC EC's website.
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.
|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?||A form is provided in the Contact Us Section of the website for issues and concerns of the stakeholders or they may contact MS. SHARON H. NER, External Relations Manager, at firstname.lastname@example.org, or at 8479-9400 local 420 or at 0917-1336164.|
5. Performance-enhancing mechanisms for employee participation should be permitted to develop.
|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 2020 PNOC EC Annual Report, HSSE, page 22 and 23.
|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 2020.|
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.
|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:
|a. Corporate objectives||PNOC EC has disclosed its Corporate Objectives. See Strategic Objectives and Measures in the 2020 Performance Scorecard included in PNOC EC's 2020 Annual Report, page 33.|
|b. Financial performance indicators||PNOC EC has disclosed its Financial Performance Indicators. See 2020 Financial Highlights included in PNOC EC's 2020 Annual Report, pages 26 to 27.|
|c. Non-financial performance indicators|
PNOC EC has disclosed its Non-Financial Performance Indicators.
|d. Details of whistle blowing policy||See Corporate Governance - Conflict of Interest included in PNOC EC's 2020 Annual Report, page 30.|
|e. Biographical details of directors||See Board of Directors included in PNOC EC's 2020 Annual Report, pages 34-37.|
|f. Training and/or continuing education programme attended by each director||See Corporate Governance - Collective Knowledge of Highest Governing Body included in PNOC EC's 2020 Annual Report, page 30.|
9. Corporate Governance Confirmation Statement
|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?|
PNOC EC’s 2020 Annual Report (page 28) includes a statement which reads: “PNOC EC affirms its full compliance with the provisions of the Code of Corporate Governance (GCG Memorandum Circular No. 2012-07 dated November 2012) and PNOC EC’s Manual of Corporate Governance dated January 2014. As a model GOCC, PNOC EC continuously lives up to such status through practice of good corporate governance towards active promotion and pursuit of corporate governance reforms and conscious observance of the principles of accountability and transparency."
See Annual Report 2020, page 28
10. Timely filing/release of annual/financial reports
|a. Are the audited annual financial report/statement released within 60 days upon receipt from COA?|
PNOC EC released its 2021 Annual Audit Report 25 days after receipt from COA.
|b. Is the annual report released within 90 days from release of audited financial report?|
PNOC EC released its 2021 Annual Report 63 days after release of its Annual Audit Report.
|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's Responsibility signed by the Chairman of the Board, the President and CEO and the Acting Treasurer
III. Responsibilities of the Board
11. Corporate Vision and Mission/ Strategy
|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, among others, during PNOC EC's 2020 Strategic Planning Session held from November 25-26, 2019
|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?
13. Code of ethics or conduct
|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:|
|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?
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 2020, said Committee was composed of the following:
Chairperson: Oscar H. Rabena
15. Did the Nomination and Compensation/Remuneration Committee meet at least twice during the year?
|The Nomination, Remuneration, Education and Employee Welfare Committee had four (4) meetings in 2020. The Committee met on February 19, April 29, May 22, and October 18, 2020.|
16. If yes, is the report of the Nomination and Compensation/Remuneration Committee publicly disclosed?
17. Does the Board appoint an Audit Committee?
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 2020, the PNOC EC Audit and Risk Management Committee was composed of the following:
Chairperson: Johnny L. Tuason
18. If yes, is the report of the Audit Committee publicly disclosed?
19. Does at least one member of the Audit Committee have an audit, accounting or finance background (qualification or experience)?
20. Did the Audit Committee meet at least four times during the year?
The Audit and Risk Management Committee had six (6) meetings in 2020. The Committee met on April 3, June 3, July 14, August 7, September 18, and September 21, 2020.
21. Does the Board appoint a Risk Management Committee?
“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 2020, the PNOC EC Audit and Risk Management Committee was composed of the following:
Chairperson: Johnny L. Tuason
22. If yes, is the report on Risk Management Committee publicly disclosed?
24. Board meetings and attendance
|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 schedules a Board meeting at least once every month, the date of which is subject to the availability of the Secretary of the Department of Energy – PNOC EC’s Ex Officio Chairman of the Board.
See PNOC EC Manual for Corporate Governance, page 8-9, Sec 3.4
|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 twenty-one (21) meetings in 2020.
|d. Has each of the directors attended at least 90% of all the board meetings held during the year?|
All the appointive Members of the Board attended all the duly-called Board meetings for 2020.
|e. Did the Board of Directors meet separately at least once during the year without the President/CEO present?|
25. Access to information
|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?|
Although the By-Laws and existing rules mandate that the Board must be provided the materials two (2 days) before a 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 Corporate Secretary and Assistant Corporate Secretaries, appointed by the Board of Directors as such, are members in good standing of the Philippine Bar.
26. Internal Audit
|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|
27. Risk Oversight
|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 is also disclosed in the PNOC EC 2021 Annual Audit Report, pages 84 to 90.
|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 oversee 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 2021 Annual Report, pages 26 to 31.
|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?|
The annual report contains a statement that the Board of Directors oversee 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.
28. Board Chairman
|Do different persons assume the roles of Chairman and CEO?|
For 2020, PNOC EC’s Ex-Officio Chairperson is Alfonso G. Cusi (Secretary, Department of Energy), while its Officer-in-Charge was Ms. Lourdes S. Gelacio until February 2020, and thereafter, the President and CEO is Lt Gen Rozzano D Briguez (Ret).
29. Board of Directors Development
|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?|
One of the functions of the Governance Committee is to recommend to the Board the continuing education of Directors.
Furthermore, 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.
See PNOC EC Manual for Corporate Governance, page 18, Sec 3.15 (c)(iii)
|c. Did all Appointive Directors attend at least 1 training for the calendar year?|
All Appointive Directors attended at least 1 training in 2020. They attended the following: “New Code of Corporate Governance for Public Companies and Registered Issuers” in July 2020; and “Technology Governance for Directors” in October 2020.
30. Board Appraisal
|a. Is an annual performance assessment conducted of the Board of Directors?|
The Board of Directors conducts an annual assessment of its performance for the year based on an appraisal system developed for the purpose. For its performance for the year 2019, the Board of Directors conducted its assessment during the first quarter of 2020.
|b. Does the GOCC disclose the process followed in conducting the Board assessment?|
The Board of Directors conducts an annual assesment of Its performance for the year based on an appraisal system developed for the purpose, which determines , among others, (a) the adequacy of the Boards 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 strenghts and weaknesses.
|c. Does the GOCC disclose the criteria used in the Board assessment?|
31. Committee Appraisal
|Is an annual performance assessment conducted of the Board of Directors Committees?|
The Board of Directors Committees conducts an annual 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 Committee's structure and composition; (b) whether the Committee 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.
For the performance of each Board Committees in the year 2019, the respective members of each Board Committee conducted the assessment of their respective Committees during the first quarter of 2020.
See Board Committee Assessment Questionnaire – Audit and Risk Management Committee, Board Committee Assessment Questionnaire – Nomination, Remuneration, Education, and Employee Welfare Committee, and Board Committee Assessment Questionnaire – Project Development and New Ventures Committee.
|1. Does the GOCC practice Global Reporting Initiative (GRI) on its annual reports?|
For the 2020 PNOC EC Annual Report, the following sections are referenced to the Global Reporting Initiative (GRI) standards: About the Report, About PNOC EC, Report from the President and CEO, Operational Highlights, Corporate Social Responsibility, HSSE, People Development, and Corporate Governance Section.
|2. Quality of Annual Report|
|Are the audited annual financial report/statement released within 30 days upon receipt from COA?|
PNOC EC released its 2021 Annual Audit Report 25 days
Responsibilities of the Board
| || |
|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.