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Meralco Sustainability Report 2019 Contents Meralco Sustainability Report 2019 Contents About the Report 4 Message from the Chairman and President & CEO 5 One Meralco and Sustainability 10 Understanding What Matters 15 Engaging Stakeholders 17 One Meralco’s Contribution to the UN Sustainable Development Goals 20 One Meralco Sustainability Agenda 23 Power 24 Planet 39 People 56 Prosperity 65 Corporate Governance 76 Moving Forward 79 1 List of Abbreviations ADMS Advanced Distribution Management System AMI Advanced Metering Infrastructure BCDA Bases Conversion and Development Authority BCM Business Continuity Management Program BESS Battery Energy Storage System BFP Bureau of Fire Protection CAIDI Customer Average Interruption Duration Index CDC Clark Development Corporation CEDC Clark Electric Distribution Corporation CEO Chief Executive Officer CFZ Clark Freeport Zone CSEZ Clark Special Economic Zone CSO Chief Sustainability Officer CSP Competitive Selection Process CSR Corporate Social Responsibility CxTP Customer Experience Transformation Program DENR Department of Environment and Natural Resources DER Distributed Energy Resources DOE Department of Energy DOTr Department of Transportation DLSAU De La Salle Araneta University DU Distribution Utility EE Energy Efficiency Services EIA Environmental Impact Assessments EPC Engineering, Procurement and Construction Services ERC Energy Regulatory Commission ESH Environment, Safety and Health EV Electric Vehicle FLISR Fault Location, Isolation and Service Restoration GHG Greenhouse Gases GRI Global Reporting Initiative HELE High Efficiency, Low Emission HEP Household Electrification Program HFP High Fire Point HVAC Heating, Ventilation, and Air-Conditioning ICT Information and Communication Technology IVVO Integrated Volt-VAR Optimization LPIP Lightning Protection Improvement Program LGU Local Government Unit MEP Meralco Electrification Program MERALCO Manila Electric Company MGen Meralco Powergen Corporation MGREEN MGen Renewable Energy, Inc. MIESCOR Meralco Industrial Engineering Services Corporation MMT Multipartite Monitoring Team MRF Materials Recovery Facilities MSERV Meralco Energy, Inc. 2 MWMS Mobile Work Management System NCC New Clark City NSED Nationwide Simultaneous Earthquake Drill NRDC Natural Resources Development Corporation OSRO Organizational Safety and Resiliency Office OFT One for Trees OMF One Meralco Foundation PCB Polychlorinated Biphenyl Oil PELCO II Pampanga Electric Cooperative II PFBSI Powersource First Bulacan Solar, Inc. PHP Philippine Peso PRES Prepaid Electricity Service PSA Power Supply Agreements PUV Public Utility Vehicle PUVMP Public Utility Vehicle Modernization Program PV Photovoltaic RE Renewable Energy RES Retail Electricity Supply RPS Renewable Portfolio Standards SAIDI System Average Interruption Duration Index SAIFI System Average Interruption Frequency Index SBPL San Buenaventura Power Ltd., Co. SCADA Supervisory Control and Data Acquisition SCPHI Shin Clark Power Holdings, Inc. SDG Sustainable Development Goals SO Sustainability Office SUP Single-Use Plastics UN United Nations Units of Measurement CO2 carbon dioxide CO2e carbon dioxide equivalent GW gigawatt mL megaliter MW megawatt MWac megawatt, alternating current MWdc megawatt, direct current MtCO2e megatonnes of carbon dioxide equivalent kW kilowatt kWh kilowatt-hour kWp kilowatt-peak kVA kilo-volt-amperes tCO2e tonnes of carbon dioxide equivalent 3 ABOUT THE REPORT The commitment of Meralco and its subsidiaries (One Meralco) towards a sustainable future is made evident through the publication of this first sustainability report, which contains the economic, social, and environmental issues most significant to its business and its stakeholders. This report should be read in conjunction with the Meralco 2019 Annual Report, which provides insights on the group’s financial and operational performance. With this sustainability report, One Meralco also illustrates how its sustainability principles are integrated into the management of enterprise risks and opportunities. Scope and Coverage The Meralco 2019 Sustainability Report covers the consolidated economic, social, and environmental performance across One Meralco. The data provided is from January 1, 2019 to December 31, 2019, unless otherwise stated. Available data from 2017 to 2018 are also shown for comparability. A number of initiatives of One Meralco Foundation (OMF) are also featured in this report. The reporting process analyzed One Meralco’s value chain, sustainability framework, and corporate governance structure and strategies. Reporting Standards This report has been prepared in accordance with the Global Reporting Initiative (GRI) Standards: Core Option. External Assurance DNV GL is an independent organization and global provider of certification, assurance assessment, and training services. The organization validated the data presented in this report through a two-week external assurance process which included interviews with pertinent data handlers across the group. Contact Information Your comments and insights matter to us. Feedback on this report and matters concerning the sustainability performance of Meralco may be addressed to: Meralco Sustainability Office Lopez Building, Meralco Center, Ortigas Avenue, Barangay Ugong, Pasig City 1605, Philippines Telephone: +632 1622 3552 Email: [email protected] 4 MESSAGE FROM THE CHAIRMAN AND THE PRESIDENT & CEO As we gear up for a new decade, we put sustainability at the heart of One Meralco. While it has played a role in the way we manage and expand our businesses, our new strategic focus on sustainability will allow us to better empower people, protect our environment, and foster inclusive growth for a prosperous nation. As the Philippines’ premier electric distribution utility, Meralco plays a vital role in nation- building. Our primary mandate is to ensure that electricity continually flows from our grid to our customers—to light up homes and offices, to power industries, and to energize our economy. But all this will be for naught, if the communities, cities, and the country we seek to uplift are not equipped to deal with the mounting challenges our world faces. The world we live in is unwell. Recent scientific studies have shown that human activity has contributed significantly to the increase of greenhouse gases (GHG) which drives adverse climate change. In 2019, the Philippines was found to be the country most at risk from the climate crisis, according to the Institute for Economics and Peace.1 Extreme weather conditions, such as typhoons and droughts, are increasing the pressure on our farmers and fisherfolk. Rising sea levels are threatening to submerge our major cities and economic hubs. Increasing sea temperatures are harming the marine ecosystems from which we derive food and income. Our forests are losing cover, reducing soil productivity and depleting our sources of drinkable water. Many lack access to basic services, like the 16 million Filipinos who still live without electricity, in addition to millions more without reliable 24x7 service. On top of all this, the gap between the rich and poor continues to widen, leaving about 17 million Filipinos below the poverty line. It is against this backdrop that we say: business as usual is no longer a viable option. We, in Meralco, believe we have a crucial role to play to shift these adverse realities going forward through the different companies we manage and operate. Indeed, this is the essence of sustainability. It is a commitment to not only build the nation, but also to sustain our future. Sustainability at our Core Sustainability is front and center for us in Meralco and is at the core of the Company’s strategy and operations. We, together with our Senior Management Team, take full ownership and accountability for this imperative. To embody our commitment, in 2019, we established a Sustainability Office, staffed with full-time professionals and experts tasked to help define, develop, and drive our sustainability agenda forward. 1 Institute for Economics & Peace (2019). The Institute for Economics & Peace, is a global think tank that develops global and national peace indices, calculating the economic cost of violence, analysing country level risk and understanding the conditions which underpin highly peaceful societies. Global Peace Index. 5 In support of this agenda, we have also identified specific metrics for monitoring and measuring our sustainability performance as a Company. Throughout our first Sustainability Report, you will find these indicators we track to manage and address sustainable development in our business operations—from greenhouse gas emissions, to diversity statistics and economic value generated. The intent is to set these current levels as baselines for us to chart our path towards contributing to the Philippines’ and global sustainability goals. What we have achieved so far is encouraging, but there is much more to do as we join the world in creating a better planet and a better life for all. Advancing Global Goals The latest report on the progress of countries towards the United Nations’ Sustainable Development Goals (SDGs) showed steps in the right direction, with almost all countries lowering their CO2 emissions while continuing to expand their economies. Guided by the SDGs, we have crafted our own sustainability agenda as One Meralco. As a leading player in the Philippine energy sector, Meralco is uniquely positioned to contribute to the attainment of the UN SDG 7: Affordable and Clean Energy. With the understanding
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