Sustainability Report 20 10

1 2 2010

Sustainability Report 2010 Esval S.A.

3 About this Report

This is Esval’s third Sustainability Report, which outlines 1. Benchmark of sustainability reports of Chilean its economic, social and environmental performance in a water utilities. This concept identified the main issues balanced way, pursuant to the criteria and requirements laid and aspects reported by the industry and best reporting down by the G3/2006 guidelines of the Global Reporting practice. Initiative (GRI) on drawing up sustainability reports1.

The content of this report only considers Esval’s operations 2. Analysis of press articles. The aim was to find out the in the Region in the January 1 through December significant issues for the company and industry from a 31, 2010 period, unless expressly indicated otherwise. For public opinion perspective and in a context of a better understanding and provided comparable data sustainable development. Press articles in the January was available, the figures and data are shown compared 1 through December 31, 2010 period were reviewed to the years 2008 and 2009. and analyzed.

In regard to the data reported the previous year, there were no major changes in Esval’s size, structure or 3. Stakeholder consultation process. A structured ownership, and nor have the bases, preparation criteria stakeholder consultation process was developed in or the calculation methods used changed. If any indicator January 2010 to gain feedback on the 2009 report. has been modified, this will be expressly reported. A representative sample of company workers (online survey) was consulted, along with communal association (UNCO) leaders in the region. Compliance with the principles on reporting content All the stakeholders also had the opportunity of raising other issues of interest that were not reported on in the The content of this report was defined considering the 2009 report or about which they would like to have more principles of the GRI standard on relevance or materiality, information. sustainability context and stakeholder inclusiveness. The material issues and their priority were established To guarantee data materiality, the performance indicators in this exercise, which are reflected in the structure were selected based on the following three-phase of this report and the detail of the different issues structured concept: reported on.

1 2 3

Aspects identified Aspects identified in press Aspects raised by stakeholders by benchmark + analysis + (UNCO leaders and workers)

List of material issues to be included in Esval’s Sustainability Report 2010

1www.globalreporting.org 2 Stakeholder content priority matrix2

Biodiversity Investment and economic value Legislation Environmental investments Solid waste Customers Products and services

VERY HIGH VERY Employee relations Airborne emissions Discharges and overflows Contractors Raw materials

Community Energy

Customer information Suppliers

HIGH Trade unions IMPACT (average relevance) (average IMPACT

Occupational safety AVERAGE

AVERAGE HIGH VERY HIGH

Gap between groups surveyed

2 The X axis considers the dispersion between the opinions of the stakeholders consulted. The Y axis considers the average importance given to each of the issues analyzed by the stakeholders consulted. 3 In this report Esval also strived to meet the additional data expectations raised by the leaders of the communal organizations involved in the process of defining the content of Esval’s Sustainability Report 2010.

Response level in Issues/concerns this report Page

• Odor management and quantity of events 53 Environmental Performance • Management of sewage and drinking emergencies 57-59

Social Performance • Quality control 74-76 Product Responsibility • Water fluoridation

Social Performance • Contractor company relations and control Labor Practices 87

Economic Performance • Tariff establishment and service charge 36-40

Attained Partially attained Unattained

4 Compliance with the principles on reporting quality

To ensure the quality, accuracy, comparability and verifiability of the information contained in this report, Esval had the support of a specialized external consultant on the GRI-G3 guidelines. This support enabled the necessary precisions to be made and the targets for the next reporting period to be documented.

Each indicator concerning the company’s economic, social and environmental performance was drawn up in accordance with technical data and calculations based on procedures laid down in national regulations and aligned with the standards accepted by the international community.

Esval commissioned Bureau Veritas for an independent external review of this report, and it carried out limited verification and qualified the report as being Level A compliance of the GRI standard.

This year the report will only be disseminated digitally on 500 USB pen drives containing the complete version of the report in Spanish. Moreover, to guarantee access and wide distribution, a version was released in PDF format that is available on the corporate website www.esval.cl

Corporate contact Management: General Management Esval deems this report is a way of sharing its achievements Address: Cochrane 751, Valparaíso and challenges with its main stakeholders to promote greater engagement with them. To request further Telephone: (56 - 32) 2209341 information or make comments on the content of this report, interested people or institutions can contact: Email: [email protected]

5 Index

00 Foreword by the President 8

01 Our company 12

01.1 Who we are and what we do 01.2 Business vision and sustainability 01.3 Stakeholder dialogue and communication channels 01.4 Corporate governance and ethics 01.5 Commitments to external initiatives 01.6 Contribution to regional economic development 01.7 Sanitary regulation and tariff system Esval’s response to the earthquake on February 27 41

02 Controlling our environmental impact 48

02.1 Managing our impact 02.2 Water and biodiversity 02.3 Emissions 02.4 Waste 02.5 Discharges 02.6 Raw materials 02.7 Energy

6 03 Customer relations 62

03.1 Customer relations management 03.2 Customer service and satisfaction 03.3 Customer information and dialogue 03.4 Customer support 03.5 Product quality and safety 03.6 Supplier relations

04 Employee relations 78

04.1 Generating quality employment 04.2 Training, development and employability 04.3 Occupational health and safety 04.4 Labor relations 04.5 Contractors

05 Community relations in the region 88

05.1 Community relations management

06 2010 commitments and 2011 challenges 96

07 GRI index 100

7 00

Foreword by the President

8 00 Foreword by the President

We are pleased to present our third Sustainability Report, which meets the objective of making the company’s management and actions transparent and verifying the progress we have made with the continuous improvement of the activities we undertake.

This report covers Esval’s operations January 1 through December 31, 2010, and as in previous years provides a balanced account of the company’s economic, social and environmental performance, in accordance with the G3/2006 guidelines and requirements of the Global Reporting Initiative (GRI) on drawing up sustainability reports.

We also reiterate that sustainable development is part of the business model embraced by the company, which is evidenced by socially responsible behavior, respect for workers, the environment and the communities with whom we engage.

The main difficulty we faced in 2010 was the earthquake that hit the center and south of Chile. Although most of Esval’s facilities were not damaged and remained operative, in four days we were almost fully back to normal The support from communal and neighbors’ associations operations, with the exception of a sector in the San should be highlighted, which informed the community of Antonio , where it took three more days to get the location of tanks we made available to mitigate this the water supply back to normal. Once our customers had situation; and the support of hundreds of volunteers from all the services working normally, we scheduled the repair Un Techo para Chile (A Roof for Chile), who helped us of the 84-kilometer long Las Vegas aqueduct, which is the distribute water to neighbors. We also received support main source of drinking water for Greater Valparaíso that from the Army, Navy and Police. This very enriching was cracked by the earthquake. Most of this was resolved experience was also a lesson for us and we believe it is with no impact on customers, except two kilometers that possible to carry on improving the coordination with the compelled us to schedule temporary water cuts: one of authorities and social organizations in similar situations. about 60 hours, and the other of 18 hours. The water shortage, which particularly hit some agricultural Despite the problems caused by a situation like this, sectors, is one of the challenges of our business. As a both events gave us the chance to witness the good prevention measure, we brought investments forward spirit of collaboration there is between the company, the and carried out different interconnection works to assure authorities and social organizations. the water supply to high-risk sectors.

9 Our achievements in 2010 were due to long-term policies, different public services in the so-called “Government on which were put in place when the private administration site” initiatives. In this case, Esval provided information took over in April 1999 and are now part of the company and recommendations for problems people might have culture, and as such they will continue to be applied in with using the sanitary infrastructure. forthcoming years. One of these is our relationship of collaboration with the community, which helps to forge, At the same time, we held 155 roundtable meetings with drive and develop open, flowing, honest, harmonious and the communal associations, neighbors’ associations and cooperative relations. We developed a series of programs neighbor health councils. We conducted 250 guided visits and activities in 2010 as part of the “Healthy water, healthy to drinking water and wastewater treatment facilities by life” campaign and the “Up-To-Date with Esval” program. leaders of social organizations, students and customers. One example of this was the work we undertook with We also held 35 informative meetings on works to be schools, health centers and in public areas regarding the undertaken, especially related to network upgrades, sanitary infrastructure and involving regional, provincial and we worked closely with the social departments of and district programs and various social organizations. We municipalities to disseminate the need for people to also promoted healthy life campaigns with the regional renew drinking water subsidies that were about to expire. ministerial secretariats of education and health in schools and health centers by disseminating content to foster In the citizen collaboration area, Esval contributed by healthy and hygienic habits. Furthermore, we made a building the Bicentenary Plaza which, as its name indicates, contribution with design studies on high-risk sectors is one of the works that remained in the district of to diagnose the drinking water and sewage situation of Valparaíso on celebrating 200 years of independence. We poor families in the Valparaíso Region. Another example also sponsored the Short Story Competition, organized by of collaborative work was that undertaken with other the III Universal Forum of Cultures in Valparaíso in 2010.

10 00 Foreword by the President

Likewise, we supported sports activities that had a great Our priorities in 2011 are to carry on providing a response. One of these was the First Street Football quality customer service, adhering to environmental Championship for under 12-year-olds, which was played requirements, and occupational safety and risk prevention in all the in the region in coordination with the standards, to assure an operation that respects the football schools of the National Sports Institute (IND). We environment and protects our employees and contractors. also supported the National University Championships At the same time, we must generate economic value for held in Valparaíso, in which around 2,000 students from the company by continually optimizing costs, updating 25 universities belonging to the Headmasters’ Council the different processes and increasing our revenues by participated. means of new customers, who can gain access to our water service due to the investments made and those the When we assumed the administration of Esval, we set company will have to make in the short and mid term. the target of being the best water utility in the country and we have worked hard on this for many years. We are The main challenges in 2011 are to carry on enhancing therefore very pleased to report that the Superintendency the service quality, fully carrying out the investment plan, of Sanitary Services carried out a survey January through and supporting the imminent renewal of water subsidies March 2010 on the service quality appraisal, in which that expire in the year, to launch the strategic planning our company attained third place among 20 companies process defined by the company, and continue to grow in operating in the sector and that serve 99.74% ofthe the regulated and unregulated business by adding new customers in urban areas. Moreover, just considering the customers and services to our operations. large water utilities, we were in first place. We would like to express our satisfaction with the work We are also very proud about the award we received we are doing on sustainability, as we believe it is a vision from the Asociación de Industriales de Valparaíso (ASIVA) that makes companies more human. Progress is achieved during its 57th Members’ Meeting for the “environmental with the wellbeing of people and care of the environment performance improvement” program, which reflects the by means of the work with the authorities, the community environmental conservation commitment undertaken by and related public. the company.

Jorge Lesser García-Huidobro President of the Board

11 01

Our company

12 01 Our company 01.1 Who we are and what we do

With 541,800 drinking water and 489,914 sewage customers, Esval has the largest number of customers of mid-sized water utilities, providing drinking water to 99.3% of the people living in the Valparaíso Region.

Esval S.A. is a publicly-traded corporation that produces utilities provide services, the SISS classifies them into and distributes drinking water; collects, treats and three categories: small, mid-sized and large companies. disposes wastewater; and provides related services Esval is top of the mid-sized companies and in third place in the way and conditions laid down by law and other in the industry. applicable regulations3. Its operations are regulated by the Superintendency of Sanitary Services (SISS)4, As of December 2010, Esval provides a water service to which controls service quality and suitable wastewater 541,800 drinking water customers and 489,914 sewage treatment. customers, who account for 99.3% and 92.3%, respectively, of the population of the concession areas in the districts Based on the data of the 2009 SISS report, the urban where Esval S.A. operates in the Valparaíso Region. To sanitary sector comprises 58 companies, which serve provide its service, the company has a network of 4,465 exclusive concession areas in the country’s 15 regions. kilometers of drinking water mains and 3,297 kilometers Considering the number of customers to whom water of wastewater intercepting sewers5.

3 Esval has a 99% ownership stake of Aguas del Valle, an affiliate not considered in this report. 4 www.siss.cl 5 SISS sanitary sector management report, 2010. 13 Access to drinking water is a basic human right

Access to drinking water and suitable sanitary services was declared a basic human right by the United Nations (UN) in 2010. The Chilean water industry regulation is considered to be one of the most state-of-the-art by the international community, as it intrinsically includes access to water as a human right, with for example a direct subsidy system for those who cannot afford it, and the State gives municipalities funding so they can pay water utilities for part or the whole of the drinking water cost.

Chile has the highest sanitary service coverage of any country in Latin America. Based on the data of the Organization for Economic Co-operation and Development (OECD) and the Asociación de Empresas Sanitarias (ANDESS), Chile is one of the top 10 countries in the world for wastewater treatment.

The table below shows the wastewater treatment indicator in different countries in the region and Chile’s outstanding position.

90 80 83% 70 60 50 40 42% 30 36% 20 23% 20% 20% 10 13% 12% 8% 7% 4% 0 3% 3% 2% Chile Nicaragua Mexico Peru *Venezuela *Argentina *Bolivia **Brazil Ecuador Colombia Costa Rica Honduras Guatemala Salvador

Wastewater treatment coverage Estimate (less than 20%) ** Just Sao Paulo Source: LATINOSAN 2007/ANDESS

14 01 Our company

On making a worldwide comparison, Chile is one of the top 10 countries in the world, even beating the G7.

100 99% 97% 97% 93% 92% 89% 80 86% 83% 83% 80% 84% 76% 72% 72% 69% 69% 60

40 42% 36%

20

0 Holland Switzerland United Germany Spain Austria Sweden Chile Korea France Canada USA Italy Japan Turkey Mexico G7 EU Kingdom

Wastewater treatment coverage Source: OECD/ANDESS

Esval Operation Data 2010

Urban population supplied 1,518,407 Drinking water customers 541,800 Sewage customers 489,914 Drinking water coverage (%) 99.3% Sewage coverage (%) 92.3% Wastewater treatment coverage of water 100% collected (%) Drinking water billing (thousands of m3 a year)* 95,951 Sewage billing (thousands of m3 a year)** 84,766

Source: SISS coverage report 2010 (except the figures marked with an asterisk which are from Esval’s data)

15 Concession area

Article 53 of the General Sanitary Services Law defines and Juan Fernández Island). This territorial definition does a concession area as “the geographical area with an not consider those sectors that are concessions of private established land and height boundary, where there is or municipal services. a service obligation for drinking water distribution and wastewater collection concessionaires.” Esval complies with interconnection and service administration contracts outside its concession area to supply drinking water to Esval’s concession area includes the urban zones of all the the Algarrobo Norte, Mirasol and Brisas de Mirasol concessions districts in the Valparaíso Region, with the exception of the in the district of Algarrobo and it has an interconnection towns of , Olmué and Santo Domingo and the contract with Inmobiliaria Norte Mar, the concessionaire in the island territories that depend on this region ( Rodelillo sector of the district of Viña del Mar.

16 01 Our company

1

Map of the towns where Esval provides a water 2 service 4 3

1 2 San Felipe Cabildo Santa María 6 5 Llay Llay

3 Los Andes 4 7 San Esteban Nogales La Cruz La Calera

5 Marga Marga 6 Valparaíso 7 San Antonio Sectors outside the Puchuncaví Algarrobo concession area: Casablanca Quilpué Concón Sto. Domingo Viña del Mar Olmué Cartagena Panquehue San Antonio

17 Drinking water production Drinking water is that made fit for safe use and human consumption. It is produced from untreated water and wastewater treatment abstracted from surface or underground sources, which is put through various treatment processes at facilities specially designed for this. The outcome is a product that meets the national standard, NCh 409/1. Of 2005, Esval will implement a wastewater treatment pilot which sets forth the characteristics water must have to 3 plan with cutting-edge technology be drinkable. Esval produced 170,620,537 m of drinking water in 2010 to supply an urban population of 1,518,407 people.

Esval, the Jiao Tong University in Shanghai, and Wastewater treatment has a high social and environmental Fundación Chile signed a strategic partnership impact, as it helps to prevent the release of a host of in 2010 to drive the establishment of an contaminating germs and agents that can be harmful international network of collaboration by experts to the health of people and ecosystems. Wastewater of both countries to enhance the industrial and contains the waste from the daily activities of people domestic wastewater treatment infrastructure and related services, which is why it must be removed and scientific capacity. Doctors Zhu Shiyun and and treated safely to protect users and the environment He Sheng-bing traveled from China to find out from the contaminating agents and germs that build up about Esval’s wastewater treatment plants in the in drains. fifth region. In 2010, Esval treated 100% of the wastewater collected. “MING Jiao Tong: a partnership for innovation to develop and optimize wastewater treatment technology,” whose aim is to apply technology in Chile to greatly decrease the sludge generated in wastewater treatment by means of an oxidation process, which reduces the surface area required for disposal, increasing the life of landfills sevenfold. The first stage of the project, run by Fundación Chile, was co-financed by Innova Chile, Chile’s Economic Development Agency (CORFO), and Esval.

This initiative is part of Esval’s commitment to innovation and sustainable development and is part of the free trade agreement between China and Chile and is the first research and development (R&D) project between both countries.

18 01 Our company

The hydrological cycle

Water has no beginning or end. The hydrological cycle has enabled it to be constantly recycled since the beginning of the world. Stages of the hydrological cycle

1 Seawater evaporates due to heat. 2 Evaporation gives rise to clouds. 3 Water precipitates from the clouds in the form of rain or snow. 4 Snow builds up on high peaks and glaciers are formed. 5 Thawing causes the water to run off down ravines and into rivers and brooks. 6 A part of the water transported accumulates in lakes or dams.

19 20 01 Our company

Drinking water plants

Esval has 50 drinking water plants, which are distributed in four zonal operations departments.

Zonal Operations Department Nº of Plants

Valparaíso Operations Department 4

San Felipe-Los Andes Operations Department 14

Southern Coastline Operations Department 3

Quillota Operations Department 29

Wastewater treatment plants

There are 30 wastewater treatment plants.

Type of Plant Nº of Plants

Aerated lagoons 11

Marine outfalls 9

Activated sludge plants 10

21 Drinking water plants

28 Valparaíso Operations Department Río del Sobrante

Laguna Chepical 1 ‹ Las Vegas (Romeral) Río Petorca 2 ‹ Concón Estero Alicahue Río del Rocío 3 ‹ Peñuelas (Valparaíso) 24

4 ‹ Poza Azul (Quilpué) 25 27 6

Embalse 26 La Laguna

Colorado

Río

20 12 San Felipe-Los Andes Operations Department Embalse 8 10 23 El Melón 11 18 El Sauce (Los Andes) Laguna del Inca 5 Bellavista (Los Andes) 22 16 19 7 9 Sondaje Miraflores (Los Andes) Río Aconcagua 17 Canal La Compañía (Putaendo) 2 5 21 6 Sondaje 626 & Sondaje Granallas (Putaendo) Dren Putaendo (Putaendo) 1 3 Poza Azul 7 ‹ Llay Llay 4 8 ‹ Catemu Lago Peñuelas

Embalse 9 ‹ Rinconada (Calle Larga) Lo Ovalle 10 ‹ San Esteban 15 El Carmen (San Felipe) 14 11 El Tambo (San Felipe) Almendral - Chepical (San Felipe) 12 ‹ Santa María

Embalse Las Palmas

13 Southern Coastline Operations Department 13 ‹ San Juan (San Antonio) 14 ‹ San Jerónimo (Algarrobo) 15 ‹ Casablanca

Quillota Operations Department 16 La Cruz Panamericana (Nogales) ‹ 20 Sondaje Alfaro (Quillota) Pozo Liceo (Nogales) Sondaje Angamos (Quillota) 21 ‹ Pozo Andrés Bello (Limache) Sondaje Sargento Aldea (Quillota) 22 ‹ Quintero 17 Parrones (Quillota) 23 ‹ Puchuncaví El Cristo (Quillota) Aguas Claras (La Ligua) Sondaje San Isidro (Quillota) Goenechea (La Ligua) 24 San Pedro (Quillota) Quínquimo I (La Ligua) Oriente (La Calera) Quínquimo II (La Ligua) San Diego (La Calera) 25 ‹ Papudo El Melón (La Calera) 26 ‹ La Laguna (Zapallar) 18 Lautaro (La Calera) 27 ‹ Cabildo Pachacama (La Calera) Petorca 28 Artificio (La Calera) Chincolco 19 ‹ Hijuelas

22 01 Our company

Wastewater treatment plants

4 11 Aerated Lagoons Río del Sobrante

Laguna Chepical 1 ‹ Catemu Río Petorca 2 ‹ Puchuncaví Estero Alicahue Río del Rocío 3 ‹ Placilla de Peñuelas (Valparaíso) 20 8 4 ‹ Petorca 25 7 5 ‹ Santa María

6 ‹ San Esteban Embalse 26 La Laguna

Colorado

7 ‹ Cabildo Río 8 ‹ Putaendo 5 1 Embalse 6 9 ‹ Llay-Llay 2 El Melón 21 Casablanca 10 ‹ Laguna 6 14 del Inca 11 ‹ Chincolco 23 9 Río Aconcagua 19 24 13 22

3 Marine Outfalls Poza Azul 12 ‹ PTF7 _Emisario Dos Norte Lago Peñuelas Embalse PTF_Emisario Loma Larga Lo Ovalle 13 PTF_Emisario Higuerillas 18 10 PTF_Emisario Concón Oriente 14 ‹ PTF_Emisario Quintero 15 ‹ PTF_Emisario San Antonio 17 16 ‹ PTF_Emisario Cartagena 16 Embalse 17 ‹ PTF_Emisario El Tabo Las Palmas

18 ‹ PTF_Emisario Algarrobo 15

Activated Sludge Plants 19 ‹ El Molino (Quillota) 20 ‹ Los Maitenes (La Ligua) 21 ‹ Almendral (San Felipe) 22 ‹ Cordillera (Los Andes) 23 ‹ Rinconada (Calle Larga) 24 ‹ Curimón 25 ‹ Punta Puyai (Papudo) Zapallar 26 Cachagua La Laguna (Zapallar)

6 To date this is a facultative lagoon operating with 14 customers. 7 PTF: Physical treatment plant. 23 01.2 Business vision and sustainability

Esval aims to be a water utility of excellence, permanently taking care of and contributing to the economic, social and environmental development of the region, being an active agent for the sustainable development of its environment. This is embodied in its business strategy by means of the corporate vision, mission and values that guide its operations. Vision Mission The company’s service excellence and concern for the To provide the best service to all its customers, making a environment, along with its active contribution to the contribution to the community regarding health, quality development of people and the communities where it of life, conservation of the environment and regional operates, will make Esval valued and appreciated by its development, and generating value for investors. customers, employees and shareholders.

Esval’s success is related to the organized effort of all its members and the development of people comprising it. Management systems Good economic results are not the only expression of achievement that assure the company’s development To attain its mission of providing the best service to and the wellbeing of its employees. Service quality, all its customers and conserving the environment, environmental protection and safety in the workplace Esval has an integrated management system (SIG), are priority objectives for the company, which aims whose instruments are the international certification to be renowned as a player that is aware of its social of ISO 9001:2000 (quality management system), responsibility in the entire region. OHSAS 18001:2007 (occupational health and safety management system), and ISO 14001:2004 (environmental management system). It should be highlighted that the ISO 9001:2008 certification was Corporate Values upgraded in 2010. This system covers all its processes, from drinking water abstraction, production and distribution to wastewater • Cordiality and respect collection, treatment and disposal. It also includes customer service, administrative procedures, health • Excellence and safety in the workplace. Moreover, its laboratory • Proactivity has certification pursuant to the NCh 17.025 standard, • Transparency which regulates its operations pursuant to national • Austerity and international requirements. This certification was • Commitment to the community renewed for the next four years and the technical scope of its operations was extended.

24 01 Our company 01.3

A key objective of Esval’s mission is for its management to Stakeholder dialogue be renowned for being aware of its social responsibility throughout the region and in its main stakeholder and communication relations. channels The table below shows Esval’s principal stakeholders and the different information channels that allow for engagement with each of them:

Communication, dialogue and/or Stakeholder engagement mechanism

Annual financial report Shareholders and financial market Periodical financial statements Website www.esval.cl

Regulators and controllers Periodical management reports

Authorities Annual financial report Periodical publications Active participation with Governors, Mayors, councilors, UNCOs, etc.

Customers Satisfaction surveys Customer service hotline Commercial offices Website www.esval.cl

Community “Healthy water, healthy life” campaign Presentations in schools Educational workshops Activities at centers for children whose mothers are seasonal workers Door-to-door activities Public events Health program Website www.esval.cl

Political and trade association area Active participation in trade and regional organizations Periodical publications Website www.esval.cl

Suppliers Critical supplier selection and assessment procedure Website www.esval.cl

Workers Collective bargaining process (every two years) Performance evaluation Intranet Periodical publications Website www.esval.cl

Student and academic area Student practice programs, technical visits to facilities, thesis student programs, research projects Website www.esval.cl

25 01.4 Corporate governance and ethics

Esval’s corporate governance underwent large changes Directors’ Committee in 2010, mainly due to the need of adjusting to new legislation on corporate governance (Law 20.382). As the company does not meet the requirements laid down in subparagraph 1 of article 50 of the Law on Corporations, which was modified by Law Nº20.382, Esval’s Directors’ Committee stopped operating and ended on December Corporate Governance 31, 2009. All those issues that had to be analyzed by the Directors’ Committee up to December 31, 2009 were Esval’s Board of Directors comprised the following addressed by the company’s Board of Directors as of members for the year ended December 31, 2010: January 1, 2010, in accordance with the general rules.

President Vice President

1 Pedro Pablo Errázuriz Domínguez 2 Jorge Lesser García-Huidobro 7.051.188-6, Civil Engineer 6.443.633-3, Civil Industrial Engineer

Directors

3 Alexander Galetovic Pôstch 7.626.817-7, Economist

4 Stacey Purcell 48.121.218-9, Bachelor of Commerce, Dalhousie University

5 Nicolás Navarrete Hederra 11.947.222-9, Civil Industrial Engineer

6 Olivia Penélope Steedman 48.120.868-8, Civil Engineer

7 Carlos Williamson Benapres 6.065.778-5, Business Engineer, Catholic University

26 01 Our company

There are currently two internal committees on the Board Manual on handling information of market interest of Directors of Esval S.A. One of these is the Regulation and Related Operations Committee, which comprises at least three directors and operates based on the exclusive guidelines of the Board and is not governed by what is set To make the process of handling confidential forth in article 50 bis of Law N°18.046 on Corporations. company information more transparent and The functions of this Committee are to: provide suitable and timely information to the securities market, the Esval Board approved the 1. Analyze the proposed modifications to the regulations Manual on Handling Information of Market Interest on the sector. as an issuer of company securities.

2. Appraise the information on operations set forth in All company employees that have access to Title XVI of the Law on Corporations and report this to essential, reserved or confidential information the Board. about the company or its securities shall adhere to the principles of this manual, which considers 3. Study the external auditors’ report, the balance standards of conduct, the handling of information sheet and other financial statements submitted by the of market interest and sanctions for breaching the company’s management to shareholders and report regulations established. This manual is available on this to the Board. the company website at ( http://www.esval.cl/quienessomos/ 4. Propose the external auditors and private risk rating agencies to the Board. Informaciónainversionistas/ Manualdemanejodeinformación). 5. Analyze the remuneration systems and compensation plans for senior managers and executives and report this to the Board.

6. Analyze any other issue or matter requested by the Board. Members of the Regulation and Related Operations Committee are freely appointed by the Board.

The other committee is the Tender and Contracts Award Executive committees Committee, which currently comprises three Board members and whose function is to review and propose There is also an Economic Committee, whose responsibility the award of tenders and other contracts the Board is to approve, within certain limits, the disbursements requests. This Committee must, jointly with the general proposed by the different areas and whether they are in management and other managements involved in the keeping with the budget approved by the company. This respective tender, review the different bids submitted in Committee, which meets weekly, is made up of the COO, the tender processes held by Esval S.A. to then inform CFO, human resources and commercial and development and propose the award to the company Board. managers.

27 Organization Chart For the year ended December 31, 2010

Board

General Management

Public Corporate Internal Relations Management Auditing

Commercial & Operations Planning & Studies Development Management Management Management

Finance & Engineering Human Resources Administration Legal Management Management Management Management

28 01 Our company

Senior Executives Legal Counsel Chief Executive 6.645.077-5, Attorney 6.645.077-5, George Seal Comte George 8.018.789-0, Psychologist 8.018.789-0, 5.390.299-5, Civil Engineer Civil Engineer 5.390.299-5, Civil Engineer 4.899.487-3, Civil Engineer 7.523.281-0, Mauricio Coll Olivares Sergio Pinto Fernández Pinto Sergio Domingo Tapia Navarro Tapia Domingo Engineering Manager Leonel Fuentes Espinoza Leonel Fuentes Chief Financial Officer 7.067.713-k, Business Engineer Business 7.067.713-k, Chief Operating Officer Chief Operating Francisco Ottone Vigorena Ottone Francisco Gustavo González Doorman González Gustavo Human Resources Manager Manager Human Resources 7.098.884-4, Civil Electronic Engineer Civil Electronic 7.098.884-4, 11.471.960-9, Civil Industrial Engineer 11.471.960-9, Civil Industrial Planning and Studies Manager Planning and Studies Manager Agustín Benavente Font de la Vall de la Font Benavente Agustín Commercial and Development Manager and Development Commercial

29 01.5 Legal system and ownership Commitments to For the year ended December 31, 2010, Esval was controlled by the company Inversiones OTPPB Chile external initiatives Limitada with a 69.77% shareholding, and the Chilean Economic Development Agency (CORFO) had a 29.43% shareholding. Further information about the company 9 shareholding structure is available in the Annual Report In late 2010, Esval joined the Global Compact . This 20108. organization has over 6,200 participants worldwide and is one of the main international forums on social responsibility issues.

Upon signing its adherence to this network, the company Code of ethical conduct pledges to uphold the 10 Global Compact principles, which include respect for human and labor rights, the Esval S.A.’s code of ethical conduct was published in 2008 protection of the environment and anti-corruption and was disseminated to all employees in January 2009 measures, besides reporting each year on the social by means of different internal communication channels, responsibility activities it undertakes. mainly the intranet and internal newsletter. Adherence was signed at the company headquarters The aim of the code is to be a guide on the conduct of in Valparaíso and was attended by Steve Weitzman, the each of the company’s employees, in accordance with Global Compact Network coordinator in Chile; Patricio corporate policies and the value and ethical framework Camaño, the Global Compact Network Regional Council defined. coordinator; Esval CEO Gustavo González Doorman; and Francisco Ottone, the company planning and studies The code’s operation considers the presence of various manager. consultation and/or reporting channels, and employees can: The aim of signing this agreement is to learn and share experiences on corporate social responsibility with other • Address the audit head personally. regional, national and global companies. • Send an email to [email protected] • Call the “Integrity Help Line.” • Enter the Esval • Integro section in the intranet. This channel is also used to provide information on these issues.

When an employee files a complaint, he or she is assured of confidentiality and privacy and the information provided will be treated strictly confidentially. In 2010, there were two consultations, and one complaint was filed through the different channels.

8 www.esval.cl/quienessomos/informaciónainversionistas/memoriaesval 9 www.pactoglobal.cl 30 01 Our company

The Global Compact’s Principles

Human Rights 1. Businesses should support and respect the protection of internationally proclaimed human rights. 2. Make sure that they are not complicit in human rights abuses.

Labor 3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining. 4. The elimination of all forms of forced and compulsory labor. 5. The effective abolition of child labor. 6. The elimination of discrimination in respect of employment and occupation.

Environment 7. Businesses should support a precautionary approach to environmental challenges. 8. Undertake initiatives to promote greater environmental responsibility. 9. Encourage the development and diffusion of environmentally friendly technologies.

Anti-Corruption 10. Businesses should work against corruption in all its forms, including extortion and bribery.

Esval participates as a member of the following social Esval also participates in the following committees and corporations: entities:

• Consejo Asesor de un Techo para Chile. • Technical support to the government program of high- • Cámara Regional del Comercio (CRCP). risk sectors. • Cámara Chilena de la Construcción, Regional Valparaíso. • Corporate social responsibility (CSR) committee of the • Asociación Nacional de Empresas de Servicios Sanitarios CRCP. (ANDESS). • CSR committee of the ASIVA. • Asociación Interamericana de Ingeniería Sanitaria y • Labor study committee (ASIVA). Ambiental (AIDIS). • Tax study committee (ASIVA). • Asociación de Empresas y Profesionales para el Medio • Environmental committee (ASIVA). Ambiente (AEPA). • Emergency committee (ASIVA). • Asociación Latinoamericana de Hidrología Subterránea • Business committee Quintero, Concón and Puchuncaví para el Desarrollo (ALHSUD). (ASIVA). • Asociación de Industriales de la Región de Valparaíso • Real estate committee of the CCHC. (ASIVA). • ANDESS communications committee. • Cámara de Comercio y Turismo de Valparaíso. • ANDESS technical and regulatory committee. • Cámara de Turismo de la Región de Valparaíso.

31 01.6 Awards and recognition Contribution to Esval received the following awards and recognition in 2010: regional economic

• Environmental Improvement Award 2010, awarded by development the Asociación de Industriales de la V Región (ASIVA). This recognition was for the action taken by Esval to clean up beaches and rivers with the consequential Esval’s net earnings amounted to Ch$83.384 billion in contribution to improving the health and quality of life 2010, 0.2% down on earnings of Ch$83.525 billion in of people living in the Valparaíso Region. 2009. Net income was Ch$17.293 billion, 34.3% down on the Ch$26.333 billion of the previous year. • Recognition by the Municipality of Villa Alemana for its constant support of district development. Income was mainly driven by a 148.7% drop in non-operating income from Ch$7.513 billion in 2009 to Ch$18.684 billion • Award for the “Al día con Esval” (Up-To-Date with Esval) in 2010, on account of a higher revaluation of financial program for its community contribution, awarded by the debt. For the year ended December 2010, the Unidad de Cámara Regional de Comercio de Valparaíso (CRCP) in Fomento10 increased by 2.4% against a 2.4% decrease in the large company category. 2009.

All the managements are accountable for meeting Esval’s economic performance objectives. The finance and administration management is in charge of appraising the degree of compliance of each area and giving them periodical feedback on their progress and challenges.

10 Inflation index-linked unit of account 32 01 Our company

2010 investments and projects

In 2010, Esval continued to expand the drinking water treatment services, and to maintain assets. This entailed an production and distribution and wastewater collection and investment of Ch$18.640 billion in the Valparaíso Region.

Investments (expressed in millions of Chilean pesos) 2008 2009 2010

Drinking water production & distribution 13,581 9,866 12,347 Wastewater collection 3,402 3,152 4,292 Wastewater treatment 792 1,337 972 Other investments 3,256 2,099 1,030 Total investments 21,032 16,454 18,640

01 03

Drinking water treatment capacity increase of the Construction and start-up of the Cachagua Concón plant treatment plant expansion

The growth of the population and the shortage of water The Cachagua wastewater treatment plant expansion was in the region drove Esval to advance works planned in the built and started up at an investment of Ch$817 million. 2016 investment plan of Ch$675 million to increase the This entails an average water flow rate of 7.9 liters per drinking water treatment capacity of the Concón plant second and will benefit 5,100 inhabitants. by 250 liters/second, which means that in the summer this will increase from 1,300 to 1,550 liters/second. The The project was developed as part of Esval S.A.’s population is 108,000 inhabitants. The plant expansion environmental management system, which led to a series was operative in late December 2010. of guideline and logging controls of all those activities that have material environmental aspects, pursuant to ISO 14001. 02

Drinking water treatment capacity increase of the 04 San Juan de Llolleo plant Drinking water system modernization of the Viña Likewise, works envisaged in the 2011-2012 investment del Mar plan plan were advanced to increase the drinking water treatment capacity by 150 liters/second of the San The last stage of the project to “improve the drinking Juan de Llolleo plant, increasing it from 750 to 900 water system of the Viña del Mar plan” was carried out 2009 through 2010 by means of two contracts. The total liters/second. The investment amounted to Ch$742 investment was Ch$220 million. million.

33 The works entailed the supply and installation of 102 investment for this amounted to Ch$7.471 billion in division valves at different sectors of the Viña del Mar 2010, which included the enhancement of 54,000 meters plan with their corresponding chambers and special parts. of networks, along with a further 10,000 meters for the The immediate benefit of the project is that a drinking advance of investments. water network sectorization will be created to reduce the number of customers affected by water cuts for emergency repairs and/or network maintenance. 13,000 customers Economic value generation benefitted from this and the territory was therefore split into seven water sectors. The economic value generated by Esval in 2010 amounted to Ch$87.620 billion and the economic value distributed was Ch$88.816 billion, which was a Ch$1.195 billion 05 drop in economic value generation, mainly due to higher payments to shareholders because of the carry-forward Network enhancement of the payment of the dividend on profits in 2009 (which were higher than those in 2008) to 2010. A few years ago the company completed large works to increase the coverage of the services it provides, and That was a 31.1% improvement on the –Ch$1.734 billion in the networks continue to be enhanced. Based on the 2009, explained by lower operating costs, mainly electric development plan committed with the authorities, total power and services.

34 01 Our company

Economic value generated & distributed 2008-201011

Economic value generated (1) 2008 2009 2010

Earnings (2) 83,636,694 87,805,791 87,620,312 Less economic value distributed Operating costs 43,488,008 46,299,113 45,618,889 Purchase of goods 10,921,062 11,184,947 10,714,933 Payment of services hired 18,171,830 19,067,572 18,768,209 Other operating costs 14,395,115 16,046,594 16,135,747 Employee salaries 7,277,752 7,578,660 7,697,566 Payment to capital suppliers 35,978,987 34,095,774 34,656,209 Dividends 23,192,046 20,153,306 22,487,725 Debt interest 12,786,942 13,942,468 12,168,484 Payments to the treasury (3) 660,421 1,354,717 624,681 Investment in the community (4) 154,035 211,860 218,348 Economic value withheld -3,922,509 -1,734,333 -1,195,381

(1) Drawn up on an accrued basis. (2) Include operating earnings, financial income and other non-operating earnings. (3) Include 1st category income tax, tax on rejected expenses, commercial licenses, land tax, stamp duties and others. Exclude deferred taxes (4) Includes donations and the Healthy Water campaign expenses, stated in the item Corporate Image.

Regarding the economic value distributed, the graph on Economic value distributed by Esval 2008-2010 the right shows that the company’s operations generated value for its goods and services suppliers, the community and treasury, its contractors, employees, shareholders, 110% and financial creditors. 100% 90% 80% 52.0% 52.7% 52.1% 70% 60% 50%

Economic value withheld 40% 0.8% 1.5% 0.7% 15.3% 15.9% 13.9% Community investment 30% 0.2% 0.2% 0.2% 8.7% 8.6% 8.8% Operating costs 20% Employee salaries 27.7% 23.0% 25.7% 10% Dividends Debt interest 0% -4.7% -2.0% -1.4% Payments to the Treasury -10% 2008 2009 2010

11 The 2008 figures are stated according to generally accepted accounting principles in Chile in thousands of Chilean pesos as of December 2009. The 2009 and 2010 figures are stated according to the International Financial Reporting Standards (IFRS) in thousands of Chilean pesos of each year. 35 01.7 Sanitary regulation and tariff system

Sanitary regulation

As water utilities are the only service providers in their area, they have the nature of being a natural monopoly. There are therefore laws in Chile that regulate this service and the Superintendency of Sanitary Services (SISS) is the controlling body.

The main legal instruments that regulate the sector are as follows:

Decree/Law Document Enactment date

D.F.L.12 MOP13 Nº 382 General Sanitary Services Law (updated) 1988 D.S.14 MOP Nº 1199 Regulation of the General Sanitary Services Law 2004 D.F.L. MOP Nº 70 Law on Sanitary Service Tariffs 1988 D.S. MOP Nº 214 Regulation of article 67 of D.F.L. MOP Nº382/88 2005 D.S. MINECON15 Nº 453 Regulation of the Law on Sanitary Service Tariffs 1989

Tariff system

Water utilities have a monopoly nature as they are Pursuant to these laws, tariffs are calculated every five the only service providers in their concession area. To years by means of a process undertaken by the SISS and in safeguard that the prices charged are in keeping with the which the water utility participates. service provided, the SISS establishes tariffs for the sector in accordance with the Law on Sanitary Service Tariffs These tariffs are calculated based on a “model” water utility, (Statutory Decree Nº70, Ministry of Public Works of 1988) which provides optimal sanitary services, only recognizing and its Regulation (Supreme Decree Nº453, Ministry of the essential costs and expenses without including costs for Economy of 1989). customers due to the inefficiencies of the real company.

12 Statutory Decree 13 Ministry of Public Works 14 Supreme Decree 15 Ministry of Economy 36 01 Our company

Tariff establishment process

01 04

Preliminary bases of the Studies tariff study The SISS calculates the tariffs with this No later than one year before the tariff 03 data. At the same time, the water utility term expires, the SISS publishes the conducts its own tariff calculation preliminary bases of the tariff study to Delivery of data for the study and five months before the end be conducted. of the tariff period the SISS and the study water utility exchange their studies. Thirty days after publishing the final bases, the water utility shall deliver the Whoever has a committed interest may SISS all the data needed to conduct the make remarks about such bases within tariff study. a 60-day term.

05

Negotiation 02 If the water utility does not agree Final bases of the tariff with the results of the SISS study, it can file discrepancies within a 30- study 06 day term, after which the SISS shall have a legal 15-day term to review After receiving the remarks about the the discrepancies with the water preliminary bases, the SISS has a 45- Expert commission utility and reach a tariff agreement. day term to review and answer each Should this arise, this is the end of of them. At the end of this period, the Should no agreement be reached, the the process and the new tariffs are SISS publishes the final bases. discrepancies shall be resolved by a published. commission of 3 experts, one of whom is appointed by the SISS, another by the water utility and the third member by the SISS based on a list agreed on beforehand with the water utility. The verdict of this commission shall determine the final tariffs and there shall be no appeal.

07

Publication

The tariffs are published in the Official Gazette by means of a Decree of the Esval’s current tariffs will be maintained Ministry of Economy, Production and up to 2015. Tourism.

37 Tariff components

• Variable charges for drinking water consumed. These charges vary depending on the period in the year. They are divided into peak period, off-peak period and excess consumption.

• Variable charges for wastewater collected and treated. Depending on the tariff group, these charges are divided into peak period, off-peak period and excess consumption.

• Standing charge per customer (commercial costs).

• It also establishes a series of other charges that only the water utility can undertake, which include the following:

• Service suspension and reconnection charge for not paying the bill. • Meter verification charge. • Hydrant maintenance charge. • Charge for the direct control of liquid industrial waste discharged into the sewer system. • Project review charge. • Reimbursable financial contributions.

The tariff decree also includes the formulae for updating the tariffs according to the Consumer Price Index (CPI) variation and two other price indexes to compensate for the higher costs of the water utility in providing the service.

38 01 Our company

Esval’s concern for service charge transparency

Esval permanently strives to give its customers transparent, accurate and didactical information on the charges included in the water bill, like:

On the front page: On the back

• Customer identification. • Payment places, forms and alternatives; and service. • Consumption in the month for each service provided • Service responsibility limits. and historical information. • Identification of the service phone line. • Total value of the monthly water bill, the issuance date, • Description of the main charges. next water reading and expiry date.

The following are the most significant items:

Customer number: This is a unique number identifying the service provided to the property.

Current reading: This is the meter reading (m3) on the current meter reading date.

Previous reading: This is the meter reading (m3) on the previous meter reading date.

Period consumption: This is the quantity of water consumed (m3) in the period from the previous reading to the current reading.

39 Issuance date: This is the date when the water bill was issued.

Standing charge: This is a charge made irrespective of whether there is any water consumption or not and it is unique for all customers according to the tariff group. It is related to administrative and commercial services.

Drinking water: This is the charge for the drinking water service based on the consumption (m3) of the property in the period. It includes drinking water production and conveyance along the public networks to each property.

Sewage: This is the charge for the service of removing wastewater from the customer’s property and which is conveyed through public sewers to treatment plants. It also includes the cost of treating it and disposing of it in receiver channels.

Total owed: This is the total amount of all the standing, drinking water and sewage charges, and might include other charges like debts owed or services other than these, if applicable.

Expiry date: This is the date up to when the customer can pay the water bill without being charged interest.

Esval slip: This is where the company makes a record that the water bill has been paid and is for internal use.

Esval also has the “Up-To-Date with Esval” program and the “Healthy water, healthy life” campaign, whose objectives are to inform customers about other aspects related to its services like consumption measurement and control.

40 Esval’s response to the earthquake01 on Our February company 27

Esval’s response to the earthquake on February 27

The earthquake on February 27 had a major impact on the sanitary service infrastructure due to the intensity of the movement, which reached 8.8 degrees on the Richter scale.

The initial effects on Esval’s system

The earthquake in the Valparaíso Region hit Esval’s drinking water production and conveyance and wastewater treatment systems, which was mainly due to power cuts in most of the country.

41 Drinking water production

• The outage shut down the surface and ground water pumping systems. Gravitational systems continued to operate.

• Different stretches of the Las Vegas aqueduct had bursts, which did not affect the drinking water supply.

• The San Antonio-Algarrobo conveyance line was partially affected by various bursts.

Drinking water conveyance

• The drinking water networks continued to operate, despite the fact that the number of daily average bursts increased from 3.3 in 2009 to 11.2 and 7.5 in March and April 2010, respectively.

• Outages shut down the pumping systems leaving the respective tanks and network sectors without any water.

Wastewater collection

• There were no network bursts or obstructions.

• Outages did not stop the pumping systems as there were backup power generators.

• The Portales de Llolleo pumping station was affected by failures.

42 Esval’s response to the earthquake01 on Our February company 27

Wastewater treatment

• The systems continued to operate.

• The Almendral wastewater treatment plant in San Felipe was damaged by a burst of that plant’s input intercepting sewer.

Customers affected by the direct effects of the earthquake

• 45,000 customers were affected by drinking water cuts in the first few hours of the earthquake, which rose to 121,000 customers (24% of the total customers) the next day when the pumping system reserves were depleted.

• The supply was fully recovered on March 7.

43 Emergency plan

Esval’s emergency plan was implemented immediately after the earthquake occurred. The first action was to constitute the Emergency Committee with the main aim of attaining timely coordination to minimize the time people were without water.

This enabled a quick assessment of the infrastructure faults and damage throughout the region and a decision was made on the action to be taken to establish operating control, the drinking water supply status and handling of communications.

Central Emergency Committee

The area managers and communications head were in charge of the Central Emergency Committee (CCE), and in addition four zonal committees were established: the Valparaíso operations department committee, the Quillota operations department committee, the San Felipe-Los Andes operations department committee and the Southern Coastline operations department committee.

The CCE defined the initial guidelines to meet the obligation of restoring the water service and to implement the mitigation action. The operative committees of the operations departments made an initial diagnosis of the infrastructure affected, to then prioritize and undertake repairs. That was besides determining the supply priorities based on the type of customer (hospitals, homes, shelters, schools, etc.), planning the water conveyance to reduce the impact on the population and supporting public service institutions with water delivery

emergency

Immediate mitigation measures

All the physical and human resources were made available to implement the mitigation measures. They were focused on resolving situations related to drinking water supply problems, like various kinds of bursts of mains, valves and hydrants. The wastewater problems involved the plugging of intercepting sewers and the restoration of damaged stretches, sewer repairs, and obstructions of domestic water connections.

44 Esval’s response to the earthquake01 on Our February company 27

The operation of the interconnected systems of drinking water regulation tanks and conveyance was also modified to supply those sectors affected. Water was delivered by own and third-party water trucks in coordination with other bodies like municipalities, the fire department and Army. Stationary tanks were installed in the province of San Antonio at Algarrobo, El Quisco, Punta de Tralca, Isla Negra, El Tabo and Las Cruces.

To attain the best results, there was permanent contact and coordination withthe regional intendancy and its governors’ offices, along with the Regional Emergency Office and Health Department, with whom the company committed the mutual support of the resources available, giving priority to health centers.

Communication plan

The company worked on three levels of communication: 01 Right from the outset a close relationship was kept up with the political and technical Authorities authorities of the regional government. Likewise, there was fast communication with the mayors of the different districts and/or their representatives to keep them informed of events regarding the sanitary infrastructure.

After the emergency in the first few days, and due to the repair of the LasVegas 02 aqueduct, contact was made with different social organizations, especially with the communal associations and neighbors’ associations. They provided valuable collaboration Social by disseminating the nature of the water supply to be cut due to works to repair the organizations aqueduct and the location of the tanks to deliver drinking water to neighbors. Hundreds of volunteers from Un Techo para Chile (A Roof for Chile) and the Army also collaborated in the latter task and in protecting tanks.

03 The company CEO acted as the main spokesman in this segment, and he was supported by the customer assistant manager and operating heads. It should be highlighted that an Media open door policy was maintained.

All the media were also used to inform the community, and this was increased to the internet and Twitter. communication

45 Repair plan

The earthquake caused large damage to two of the company’s major water conveyance lines. They were the San Antonio-Algarrobo line on the southern coastline, and the Las Vegas aqueduct in Greater Valparaíso.

The damage was generally cracks in piping, which in most cases was quickly repaired and the supply resumed. Nevertheless, for the larger damage it was necessary to schedule water service cuts. repair Customers affected by the repair plan

• The repair of the Las Vegas aqueduct entailed a scheduled water cut that affected a maximum of 168,000 customers March 10 through March 11.

• The repair of a burst in the San Antonio-Algarrobo conveyance line affected 12,000 customers for a few hours on March 13.

The effect of the earthquake on Esval’s employees

Immediately after the earthquake, Esval made contact through its welfare department with heads and union leaders to appraise the personal and family situation of its employees and report possible material damage. Contact was also made with contractor companies.

In general terms, no employees of Esval or of contractor companies were injured. The effects of the earthquake were mainly broken household appliances, kitchenware and tableware, and minor damage to the structure of the houses of a small group of employees. The company gave them boxes of basic household goods and tableware. It later designed a system of soft loans so employees could make the necessary repairs to their houses.

A campaign was undertaken with employees to collect non-perishable food and clothing. Esval made a donation equivalent to that made by its employees. Those items were delivered directly to the Hogar de Cristo to be shared out among the victims of the earthquake.

46 Esval’s response to the earthquake01 on Our February company 27

The lessons learned

For any organization that provides an essential service to the population, an event on the scale of that of February 27 provides lessons to be learned and shows up those areas that need to be improved. The following were the main lessons Esval learned:

• Permanently keep the emergency plans updated, disseminated and exercised.

• Conduct studies to analyze the vulnerability of its infrastructure to have safer critical facilities and, wherever possible, backed up with replacement facilities.

• Establish partnerships with other water utilities so there is collaboration among them to have a larger number of elements needed in an emergency (power generating equipment, water trucks, piping, chemicals, among others).

• Establish formal and direct channels to coordinate supply priorities with electric companies and fuel providers to have a supply priority.

lessons • Make sure the maintenance plans include reports on the condition of the current infrastructure from the structural and seismic standpoint.

• In the case of disasters in which the network drinking water supply has been cut, the following should be considered: availability of own or external supplier water trucks and portable tanks that can be located on the street in an emergency and periodically be filled by water trucks.

47 02

Controlling our environmental impact

48 02 Controlling our environmental impact

02.1 Managing our impact

The management representative of the environmental management system (SGA) is accountable for the general coordination of all Esval’s environmental programs, who jointly with the operations, engineering, finance and administration, commercial and development, human resources, legal, planning and studies managements and the corporate operation must meet the environmental sustainability objectives.

Each management is accountable for the environmental sustainability results attained each year, controlling the execution of its specific activities and briefing the Quality and Environmental Committee on the progress attained Esval develops drinking water twice a year. production and distribution The environmental management system forms part of the and wastewater collection and integrated quality, environmental, occupational health and safety management system, implemented in 2008, treatment processes and its and its scope includes the production and distribution of drinking water and wastewater collection and treatment, operations include environmental including the marketing and service support processes. Its rationale is embodied in the integrated management protection and conservation. system (SIG) policy.

49 Quality, environmental, occupational health and safety policy

Esval S.A.’s operations include process quality, environmental protection and conservation, and occupational health and safety, and the company embraces the following commitments:

• PROVIDE the best service to all its customers, making a contribution to the community regarding health, quality of life and regional development. • ADHERE TO laws, regulations and voluntary commitments signed by the organization. • EMBRACE a continuous improvement strategy for the processes developed by the company. • PREVENT contamination, by reducing waste generation, recycling it or disposing of it properly. • PREVENT the occurrence of injuries and occupational diseases affecting its employees and interested parties. • CONTRIBUTE to the integrated management of watersheds, the coastline and sustainable development of the Valparaíso Region by active participation in the pertinent activities generated, thereby improving the quality of life of its inhabitants. • GIVE PRIORITY TO adopting the best environmental and safety practice with the technology available, related to the services provided to the organization.

The successful compliance with this policy entails the contribution of all the areas of the organization, and management is accountable for its dissemination and promotion.

Management focus in 2010

Work was done in 2010 to make improvements to all the The highlights in 2010 were the investments made and areas of the integrated management system, preparing projects planned in 2009 and which were successfully for recertification of all the processes pursuant to the ISO carried out in 2010, such as noise mitigation, 14001, ISO 9001 and OHSAS 18001 standards, which will containment of chemical spills and the regularization be undertaken in 2011. One of the work focuses was to of fuel tanks. enhance the management of internal audits and external follow-up audits.

50 02 Controlling our environmental impact

Environmental investment

All the investments made by Esval in infrastructure and maintenance have an environmental component, because they have a direct impact on drinking water production and must fully comply with the environmental regulations and improvements.

Specific investments were made in 2010 to improve fuel storage tanks, wastewater chlorination systems and their alarms, noise pollution mitigation works, chemical spill containment and SIG rectification works.

Environmental investment 2010

Investment Project total ThCh$

Drinking water chlorination system alarm improvements 29,182 Noise pollution mitigation works 29,140 Containment of chemical spills 42,038 Fuel storage tank improvements 52,953 Wastewater chlorination system improvements 47,973 Integrated management system rectification works 59,026 Total 260,312

Source: Esval’s operations management

02.2 Water and biodiversity Biodiversity and water consumption

To produce drinking water, Esval’s operations Esval produced 170,621,537 m3 of drinking water in involve channels, rivers, brooks, springs, 2010, which was equivalent to the total annual water groundwater, and dams, and the company therefore consumption, of which 94,152,360 m3 came from surface keeps a detailed record of the water production sources and 76,469,177 m3 from groundwater sources. by source. Nevertheless, to date the company has not conducted any specific studies to detect the The 5.6% increase on 2009 was mainly due to the potential impact on the biodiversity due to the earthquake in February 2010 and the effect of the water abstraction process. vegetative growth of the population.

51 To produce drinking water, in 2010 the company obtained this resource from 13 surface sources and 117 groundwater sources. The breakdown of sources was reported on in the 2009 Report16 and has had no changes to date.

Annual water production 2008-2010 (m3)

Surface Water Abstraction Groundwater Abstraction Total Production (m3) (m3) (m3)

2008 83,455,208 75,872,401 159,327,609 2009 87,825,138 73,659,139 161,484,277 2010 94,152,360 76,469,177 170,621,537

Source: Esval’s operations management

Biodiversity and wastewater treatment

The wastewater treatment process is an important part and issuing quarterly, half-yearly and annual reports of Esval’s operations. Special care is therefore taken to with assessment reports. The PVAs of previous years make sure surface water courses in the region are not were kept up in 2010 and from the results obtained affected by wastewater discharges, thereby assuring that it can be concluded that there were no unexpected the biodiversity is maintained. situations or values.

The procedure for water that has not been treated Details of the bodies involved in the PVAs and the biologically before entering the marine environment, monitoring areas were reported on in the 2009 as is the case of marine outfalls, is addressed by Sustainability Report17. the environmental monitoring programs (PVAs), which have proven that the impact is minimal and Due to the wastewater treatment processes undertaken marginal. The function of the PVAs is to take land with the highest standards and adhering to the Chilean and marine surface samples at different depths and regulation, 100% of the wastewater treated and disposed with sediment, producing and interpreting results of in rivers and brooks can be re-used for irrigation.

16 www.esval.cl/comunidadyrse/reportedesostenibilidad 17 www.esval.cl/comunidadyrse/reportedesostenibilidad 52 02 Controlling our environmental impact

Water that can be reused (m3/year*) 2008-2010

2008 2009 2010

35,946,212 35,883,069 36,364,563

*Meets Supreme Decree N°90 which lays down the irrigation standard. Source: Esval’s operations management

02.3 Emissions

Although Esval’s operative processes generate a low quantity of airborne emissions, drinking water and wastewater treatment plants and stations need diesel- powered generating equipment to operate. In the case of the latter and due to the process undertaken at the facilities, noise pollution and odors are generated, • The installation of a mitigation system to retain or reduce which are treated with special environmental mitigation odorous gases, such as gas scrubbing, essence dosage programs. and an activated carbon filter.

Odor management The main objective of these measures is to reduce the number of odor events. Esval has an open door policy Bad odors are one of the community concerns about Esval’s with the community and authorities on receiving requests operations, which are mainly related to the wastewater because of bad odors at facilities. This process entails treatment process. The company’s odor management logging complaints in the customer service system, mitigation measures entail: referring them to the operative areas involved, then proposing and implementing the corresponding solutions, • The measurement of methane, oxygen, hydrosulfuric and allowing the complainant to visit the facilities. acid, and mercaptan gas concentrations at wastewater pumping stations (EEAS). There were 29 bad odor complaints in 2010.

53 Noise management

To mitigate the impact of noise pollution, investment There were eight noise complaints in 2010. The established was made in 2010 to comply with D.S. 146/97 noise management procedure is to log the complaints in MINSEGPRES18. This Supreme Decree establishes the customer service system, refer them to the operative the regulation on the emission of aggravating noises areas involved, and then propose and implement the generated by fixed sources and lays down the peak corresponding solutions. permissible corrected sound pressure levels and the technical criteria to assess and qualify the emission of aggravating noises generated by fixed sources to the community, like industrial, commercial, recreational, Greenhouse gas and other artistic activities or others. The following were some of the actions taken: emissions

• Construction of a soundproof housing for generators The power generators needed by Esval to keep its services located at Esval’s laboratory which has a surrounding running if there is an outage run on diesel. The combustion population. of these generates the following contaminants: CO, NOx, SOx, volatile organic compounds (VOCs), NH3, total • The pump room of the Tranque Sur drinking water suspended particles (TSP) and particulate matter (PM-10). pumping station in Viña del Mar was soundproofed to provide a solution to customers affected and meet the The table below shows an estimate of the emissions of SISS requirements. these contaminants in 2010:

Total estimated emissions by Esval’s generators (t/year) 2009-2010

Estimated PM PM PM CO NO VOC SO NH CO Contaminant 10 25 X S X 3 2

2009 Emissions (t/year) 3.42 1.72 0.41 10.52 48.71 3.87 2.58 0.085 1,897.46 2010 Emissions (t/year) 3.16 1.64 0.39 10.06 46.56 3.70 2.47 0.081 1,813.59

Reference: estimated values using the formula indicated in the methodological guidelines for estimating airborne emissions of fixed and mobile sources in the Contaminant Transfer and Emissions Record, 2009, National Environmental Agency.

Source: Esval’s operations management.

The table shows that in 2010 there was a slight less diesel consumption in 2010, but in general it can decrease in estimated emissions of contaminants be concluded that there was no major difference compared to 2009. That was because there was slightly between both years.

18 Supreme Decree 146 of the Ministry General Secretariat of the Presidency. 54 02 Controlling our environmental impact 02.4 Waste

An estimated amount of 14,476 tons of solid waste was generated in 2010, which was a 35.9% increase due to the greater debris generated by works.

The control and logging of solid waste adhered to the guidelines of the SGA, as reported on in detail in the 2008 Sustainability Report19.

The table below shows the type and quantity of solid waste generated in 2010.

Solid waste generated by type and disposal 2008-2010

Tons Type of solid waste generated Final disposal 2008 2009 2010

Solid domestic waste 39.3 73.8 160 El Molle in Valparaíso, La Hormiga in Domestic-assimilable solid waste 2,683 2,846 2,309 San Felipe and Altos de Cartagena waste dumps. Recyclable solid waste 9.8 12.05 2.82 Paper is sent to SOREPA20 Computer equipment is sent to RECYCLA21. Hazardous waste 8.6 7.4 9.6 Used oils are sent to the recycling company Bravo Energy22 and Cemento Polpaico. Others (containers contaminated with fluoride, containers with chemicals or reagents, lead washers, fluorescent tubes, small batteries and batteries) are sent to specially implemented facilities that are authorized to destroy them.

Debris 3,265 7,713 11,995 This goes to the own waste dumps of each work site. Yearly Total 6,006 10,651 14,476

Source: Esval’s operations management

19 www.esval.cl/comunidadyrse/reportedesostenibilidad 20 www.sorepa.cl/ 21 www.recycla.cl/ 22 www.bravoenergy.com/htmlPages_Esp/chile.html 55 The table shows that there was a decrease in the domestic- operating process, which slightly reduced the volume of assimilable solid waste, mainly explained by the lower sludge compared to the previous year. The only plant that rainfall in 2010. The recyclable solid waste also dropped had a significant increase in dehydrated sludge generation as there were no major computer equipment changes in was El Molino in Quillota, because of changes to the air 2010. diffuser system at two of its three biological reactors. That made it necessary to empty it and the sludge volume to be dehydrated therefore increased.

Dehydrated sludge As of December 2008 and during 2009 and 2010, all the dehydrated sludge generated at the La Ligua, San Felipe, The dehydrated sludge volume generated in 2010 was Los Andes, and Quillota plants was disposed of at the KDM 27,732 m3, which was a 0.21% decrease on the 27,789 m3 Lomas Los Colorados sanitary landfill in Til-Til, and was generated in 2009. That was due to the optimization of the disposed with urban solid waste.

Dehydrated sludge generation by plant (m3) 2008-2010

Plant 2008 2009 2010

La Ligua 3,360 3,045 2,975 San Felipe 7,123 9,402 7,049 Los Andes 7,045 6,417 6,788 Quillota 8,476 8,925 10,920 Annual Total 26,004 27,789 27,732

Source: Esval’s operations management

56 02 Controlling our environmental impact 02.5 Discharges

Esval permanently strives to reduce discharges and therefore focused work in 2010 on increasing its safety Wastewater discharge policies on spill risks. The following were some of the emergencies actions taken:

• Boosting the management of the wastewater pumping As a result of the earthquake of February 2010, there was station (EEAS) maintenance plan. a widely known environmental emergency regarding the operation of wastewater treatment plants and pumping • Improvement of the alarm system of the EEAS-related stations. operating control center. The Benigno Caldera intercepting sewer, where wastewater • Preventive maintenance plan of intercepting sewers. enters to the San Felipe plant, had to be repaired for damage caused by the earthquake. Due to the intense • Construction of a by-pass in desanding wells. rainfall, groundwater, stones and gravel were washed into the initial pumping plant preventing the normal operation • Purchase of new television inspection equipment. of pumps and this led to the collapse of the system and wastewater had to be discharged into the river. • Purchase of additional septic tank cleaning trucks.

In response to this event, the wastewater discharge/ incident procedure was followed, which considers the following stages:

1. General clean-up of the intercepting sewer using water jet and combined trucks.

2. Clean-up and sanitization of the backyard of houses located in the sector.

3. Street clean-up and sanitization.

4. Removal of the wastewater-contaminated material and repair of the earth road by filling it with borrowed fill material.

5. A sample shall be taken of the water from the coastline affected to assess the impact of the wastewater spill.

57 Flow diagram of the process of dealing with wastewater discharge emergencies

WW Division Head Cleaning & Operations Network Dept. Head Quality Control Waste Water Outsourcing Disinfection Customers Legal Advice Management Zone Operations Dept. Department Network Service Supplier Operations Manager Supervisor

Frequent P-OPE-0039 Is it a street or Clean-up operational WW Networks Yes household Street with a water emergency? Preventive spill? truck-hydrant Maintenance Procedures No Household Assessment & definition of actions to Procedures for be taken corrective & preventive Will the Is Esval measures customer accept responsible? No No the charge?

Coordination with Yes bodies involved Yes

Preliminary Are you Execution of mitigation clean-up, Clean-up & satisfied with measures. Yes Removal of solid disinfection the work? Guidelines applied waste, flushing and drying

No

Monitoring plan is launched Requires Yes (guidelines applied) & monitoring samples are taken Damage assessment & compensation No No

Logging of emergency Monitoring administration report Work completion Yes Satisfactory FR-SIG-0003 results?

Service completion Inform the authority if applicable. Procedure for informing the authorities of environmental events P-OPE-0034

58 02 Controlling our environmental impact

Sewer overflows the operation of other drinking water production sources, along with the contribution of the reserve drinking water In 2010, there was an average of 530 intercepting sewer volumes contained in the distribution tanks. Untreated obstructions a month with overflows onto the highway water samples were sent to the laboratory for the and/or customers’ homes affected, which was an increase characteristics of the water in the Aconcagua river to on the 105 average obstructions a month in 2009. That be reviewed. Operation of the surface water source was increase was due to a change in the interpretation of the finally resumed. qualification criterion for obstructions, in accordance with the instructions of the SISS23 and not to a large increase Dehydrated sludge spills and other in them. environmental incidents

There were three emergencies regarding chemicals that • A metallic piece of equipment came off and was ejected were considered to be isolated cases, considering that from the Ramaditas 2 drinking water pumping station Esval used these raw materials a great deal at over 80 while routine maintenance works were being carried facilities throughout the year. out at the facility. The suppressor system that prevents water pressure surges failed, causing the part to come The first was in the chlorine gas cylinder room at the off. Due to this incident, the damaged system was Putaendo treatment plant. There was a chlorine gas leak replaced at Ramaditas 2, the system was improved and due to a faulty chlorine gas cylinder, and this fault was a general review was made of all the company’s’ water resolved by Oxiquim’s personnel. Nobody was injured. hammer anti-knocking systems, immediately improving those with any weaknesses. The second was also related to a chlorine gas leak in the cylinder room of the San Pedro drinking water plant. After • There was a dehydrated sludge spill inside the Cordillera reviewing the facilities, it was concluded that the cause de los Andes wastewater treatment plant. When a was due to the vacuum regulating valve not being fully truck driver was trying to lift the container with sludge closed because of impurities in the valve seat area, which and put it on the truck, the upper doors opened spilling started the leak in the vent lines. The residents closest to dehydrated sludge. The sludge was collected, the sector the plant were evacuated, the area was ventilated and was cleaned, the spilled sludge was disposed of then the cylinder was isolated by closing a valve with no correctly, the container affected was repaired and there mechanical damage. Nobody was injured. was a review and maintenance of all the containers used. Because of an accident involving a third-party vehicle that was transporting urea formaldehyde, this was spilled into • There was a dehydrated sludge spill on the 60 Ch the Aconcagua River, and due to this Esval took preventive road in the Panquehue sector. This incident arose action undertaking some extraordinary operations with because the trailer fastening system came loose on the the Fire Department in the sector, which stopped the spill. truck transporting the container full of sludge from the The surface water sources of the La Petaca channel and Cordillera de los Andes treatment plant and sludge in pumping from the Aconcagua river were stopped, which the container was spilled on to the road. The emergency were downstream of the mentioned spill. was due to material fatigue and the slippery road from the rain. The spill was removed from the area, which was The Los Andes, Calle Larga and Curimón drinking water washed and sanitized with aromatic substances. Rigorous service demand was absorbed without any problems by maintenance of the equipment was then requested.

23 www.siss.cl 59 02.6 Raw materials

Chemicals like chlorine gas, sodium hypochlorite, ferrous workers and prevent toxic emissions from being released chloride, aluminum sulfate and fluoride are the main raw into the environment. materials used by Esval in the drinking water production and wastewater treatment processes. Considering the Another major raw material is piping of different material risks of some of these elements, Esval has procedures and diameter used to convey drinking water and collect and guidelines for the operational handling of these wastewater. 102,873 meters of piping were added to substances during transportation, loading and unloading, Esval’s network in 2010 for new urbanization, with the storage and classification stages. It also has action drinking water network accounting for 51,511 meters and guidelines for emergencies like spills and leaks to protect the wastewater network for 51,362 meters.

Main raw materials 2008-2010

Drinking Water Wastewater Total Chemicals 2008 2009 2010 2008 2009 2010 2008 2009 2010

Chlorine Gas (kg) 489,049 666,452 711,989 168,078 194,893 164,304* 657,127 861,345 876,293 Fluoride (kg) 164,597 163,881 169,773 164,597 163,881 169,773 Ferrous chloride (kg) 423,178 379,261 179,134 120,708 96,682 178,970 543,886 475,943 358,104 Aluminum 1,319,577 1,112,680 1,646,804 1,319,577 1,112,680 1,646,804 sulfate (kg) Sodium 111,359 133,138 166,072 489,463 440,027 589,163 600,822 573,165 755,235 hypochlorite (l) Caustic soda (l) 216,805 196,326 115,679 64,205 104,889 219,873 281,010 301,215 335,552 Activated 59,466 48,122 60,340 8,650 68,116 48,122 60,340 carbon (kg) Lime (kg) 94,703 37,121 51,602 94,703 37,121 51,602 Potassium 7,945 5,636 4,698 7,945 5,636 4,698 permanganate (kg) Herbicide (l) Saltpeter (kg) Salt (kg) 46,462 52,097 47,400 46,462 52,097 47,400 Sulfuric acid (l) 4,370 4,370 Cationic 17,319 11,795 20,720 17,319 11,795 20,720 polyelectrolyte (kg) Sodium 1,611 997 424 1,611 997 424 carbonate (kg) Calcium hypochlorite (kg) Polymer (kg) 39,302 36,262 58,938 39,302 36,262 58,938 Copper sulfate 1,524 1,345 2,872 1,524 1,345 2,872

Source: Esval’s operations management *In March 2010, wastewater was not disinfected due to damage to the chlorine gas factory and priority was given to using the chlorine gas available for drinking water disinfection. 60 02 Controlling our environmental impact 02.7 Energy

There was a 4% decrease in the consumption of fuel used to operate generators in 2010. As a result of the energy efficiency plan launched in 2009, the company attained a 1.8% reduction in the consumption of electric energy.

The generators at the drinking water and wastewater treatment plants and stations consumed 692 m3 of diesel in 2010 to generate electricity, which was a 4% drop in fuel consumption on the 724 3m consumed in 2009. This was due to the lower use of this backup equipment during peak hours on account of a special contract entered into with electric power generating companies.

Direct energy consumption from secondary sources

The table below shows the total use of electric power in each of the drinking water production and distribution and wastewater collection and treatment processes.

Direct electric energy consumption (kWh) 2008-2010

2008 Energy consumption 2009 2010 kWh kWh kWh

Drinking water production & distribution 69,356,024 70,438,689 77,370,578 Wastewater collection & treatment 29,601,981 30,039,078 29,739,318 Offices & facilities outside the processes 1,035,197 1,198,850 1,177,492 Total kWh 99,993,202 101,676,617 108.287.388

Source: Esval’s operations management

61 03

Customer relations

62 03 Customer relations

Customer relations is a In regard to customer service, the commercial and development management team participated in a core aspect of Esval’s development program, whose aim was to acquire the tools and concepts, and apply new customer service strategy. The commitment techniques. This process is part of the continuous is to be increasingly closer improvement commitment. to customers, continually informing them, and above all providing them a specialized and quality service. 03.1

For the company it is essential to maintain flowing relations with neighbor association leaders, boosting Customer relations roundtables and making a contribution to informing the community on the importance of water and environmental management care. Community and stakeholder contact and relations, especially social organizations, were boosted in 2010 and a Community Ties area was established. This is focused on The commercial and development management is driving closeness to the organized community to inform it, in charge of establishing and implementing Esval’s and there is a special on-site presence. customer relations. This is done by processes defined in the company’s integrated management system, which cover all the interactions that can be established with the customer, categorized into the following areas:

• New customers.

• Commercial cycle (billing, collection and payment).

• Customer service (customer service and response).

• Community contact.

To optimally address each of these areas, the commercial and development management has customer service and new services assistant managements.

63 Customer classification

To provide customers with a service according to their needs, Esval’s commercial activities are split into four groups of users:

1. Household or residential customer This includes household connections to the drinking water network and/or public sewer network. These are continuous services 24 hours a day, 365 days a year. This group also includes customers from high-risk sectors. They are low-income customers, sometimes below the poverty line, who benefit from a drinking water consumption subsidy, and other programs like “Up-To- Date with Esval.”

2. Commercial customers This category includes all those customers who undertake commercial activities, such as supermarkets, hotels, restaurants, etc.

3. Industrial customers This group includes those customers who undertake productive activities.

4. Other customers This group includes customers like hospitals, schools, among others.

Customers by real estate purpose 2009-2010

Total customers Residential Commercial Industrial Other

2010 542,490 514,236 25,656 758 1,840 2009 529,951 502,167 25,037 783 1,964

Customers by type of service 2009-2010

Drinking water Just drinking Just sewage and sewage water

2010 489,224 52,576 690 2009 475,593 53,667 691

Source: 2009 & 2010 SISS coverage report

64 03 Customer relations 03.2 Customer service and satisfaction

The main reasons for customer requests are commercial The service requests received by these channels are situations, largely related to information on water bills, classified as: inquiries, complaints or requirements. consumption metering, the feasibility of receiving a water Commercial issues are classified and sent to the service, and other operational situations related to site commercial and development management for analysis, works. solution and reply. The latter is available in the company’s commercial system. The company added a new form of customer communication and relations in 2010, i.e., the use of Twitter by means of the Esvalchile account. This form of contact, in the context Operational issues are classified and sent to the operations of the growing use of social networks, was greatly used in management, and site action is also logged in the the aftermath of the earthquake of February 27. commercial system for subsequent customer consultation.

Esval also has its main customer service channels, which are the:

• Telephone service (call center). • Personal service (23 commercial offices). • Written communication service (letters and website).

2010 2009 2008

Commercial Operating Commercial Operating Commercial Operating Board complaints requirements 2010 complaints requirements 2009 complaints requirements 2008 total total total In favor None In favor None In favor None In favor None In favor None In favor None

Excessive consumption & readings 5,650 9,365 15,015 4,242 6,911 11,153 6,246 5,867 12,113 Debris & other issues in the street 149 90 285 630 1,154 150 76 450 687 1,363 117 71 308 970 1,466 Meters 2,113 610 2,723 2,118 564 2,682 1,604 265 1,869 Other commercial issues 3,218 7,154 10,372 3,707 7,045 10,752 2,222 6,597 8,819

Subtotal 11,130 17,219 285 630 29,264 10,217 14,596 450 687 25,950 10,189 12,800 308 970 24,267 Overall total 28,349 915 29,264 24,813 1,137 25,950 22,989 1,278 24,267 Rate 5.42 0.17 5.59 4.86 0.22 5.09 4.62 0.26 4.87 [(Complaints/Customers)*100]

Source: Esval, based on the record of complaints sent to the SISS monthly

65 An undue sewage charge was detected in 2010 in a sector where discharges are disposed of in sewers outside Esval’s wastewater networks. The company made a full review of this case and verified whether there were other similar cases. Once this stage had been completed, it updated commercial relations with these customers.

Service quality appraisal

It should be highlighted that the Superintendency of Sanitary Services (SISS) released the study “Water Utility Service Quality Appraisal” in the first half of 2010. This was undertaken late 2009 through early 2010 (before the earthquake of February 27) to assess the impressions and experiences of customers provided a service by the 20 largest water utilities operating in Chile.

The study envisaged a sample of 8,773 customers distributed throughout the country, considering customers living in the regional capitals and also in the main towns.

The following was the outcome of this appraisal survey for the sector:

Attribute Average score of the Esval’s score sector

2008 2009-2010 2008 2009-2010 Overall satisfaction with the service received 5.5 5.6 5.6 5.9 Drinking water service evaluation 5.3 5.3 5.3 5.6 Scheduled drinking water cuts 4.4 5.5 4.3 5.8 Sewage service evaluation 4.9 5.2 5.2 5.5 Telephone service 5.0 5.0 5.1 5.3 Site service 5.0 5.4 4.9 5.7 Street work 5.4 5.4 5.1 5.6 Commercial office service 5.3 5.4 5.5 5.8 Billing documents: water bill 5.8 6.0 5.9 6.1 Meter and meter reading 5.7 5.8 5.8 6.1 Payment of bills 5.9 6.0 6.2 6.2

66 03 Customer relations

Esval obtained a score of 5.9, which was an increase on the Customer 5.6 score in the 2008 survey. The score ranks Esval in third place in Chile, after Aguas del Valle (an affiliate of Esval in first satisfaction survey place, which provides services in the ). Esval conducts at least two customer service quality For the eleven variables analyzed, it can be seen that for surveys a year to appraise customer satisfaction with the all the customer contact channels (telephone service, site service. The results of these surveys are disseminated to service, commercial office service) the score was higher the different areas to strengthen the positive aspects and than in 2008, which reflects the work done last year on work on weaknesses by generating projects and action for policies, targets and community engagement strategies. improvement.

2008-2010 customer satisfaction survey result

6 & 7 score % 2008 2009 2010

Overall satisfaction with the service received 66 64 66 Drinking water service evaluation 66 67 68 Sewage service evaluation 62 64 62 Products 66 72 69 Price 38 42 38 Bills 63 60 58 Supply continuity 74 76 74 Offices 74 72 70 Problems and complaints 34 20 26 Emergencies and services 59 58 63 Telephone service 59 66 66 On-site personnel 58 55 56

Source: customer service assistant management, customer service center (CAC)

The tables shows a two-point increase 2009 through 2010 required. New self-help booths will also be installed with in customer appraisal of the overall service quality. more information that is easy to access and navigate.

Another issue of interest is that customers understand As part of the continuous improvement planning, in 2011 a the information provided by the company on the monthly plan will be drawn up to review, modify and add new work water bill that is sent to their homes. To improve this, there technologies and enhance the customer service. will be an explanation of the information breakdown it contains. The possibility of making design changes is being Some specific action can already be highlighted, which analyzed so the customer can clearly and quickly see the in addition to other action will address and focus work most important aspects of consumption and the cost. on aspects of particular interest. A modern line standing management system will therefore be implemented at Besides this, new aspects will be implemented in the customer 17 of the 23 commercial offices, which will optimize the telephone service to optimize the interactive voice response (IVR) customer service, giving priority to the type of consultation system for commercial service on the 600 600 6060 service line.

67 This will automatically and interactively resolve frequent customer queries. The installed capacity of telephone operator booths will also be increased to guarantee the standard service during peak demand.

In 2010, customers were surveyed after they had made calls to assess the service quality received. The satisfaction level exceeded 80 points throughout the assessment period, considered to be a level of telephone service excellence.

The graph below shows the overall telephone service level attained.

Scores of 1 to 4 Scores of 6 Telephone Service Survey Percentage Scores of 7

90 Level of excellence 80 70 59 61 58 59 60 60 61 59 62 62 61 61 60 59 50 40 30 20 26 10 25 28 26 26 27 26 26 26 25 25 24 0 -5 -5 -5 -5 -6 -4 -5 -5 -5 -4 -5 -6 -10 2010 jan feb mar apr may jun jul aug sep oct nov dec

Source: customer service assistant management, customer service center (CAC)

68 03 Customer relations 03.3 Customer information Meetings with neighbors’ and dialogue associations In 2010, 149 meetings were held, in which neighbors’ associations were given important information and their needs and concerns were addressed. In these meetings, To maintain a flowing and ongoing customer contact, in queries are answered and concerns about scheduled 2010 Esval carried out various activities, highlighting the water cuts, drinking water subsidies, tariffs, the proper roundtable meetings. These help the company generate use of sewers and hydrants, among other issues, are greater community engagement. addressed.

Roundtable meetings with Meetings with neighbors’ associations Meetings with communal association leaders Province and local authorities neighbors’ associations San Antonio 18 To address special and specific issues and meet the Quillota-Petorca 25 community needs optimally, in 2010 77 roundtable San Felipe-Los Andes 24 meetings were held with communal association leaders, Valparaíso-Marga Marga 82 local authorities and Esval’s professionals and technicians. Total 149

Source: customer service assistant management, community ties

2010 roundtable meetings by province

Province Roundtable

San Antonio 13 Quillota-Petorca 25 San Felipe-Los Andes 10 Valparaíso-Marga Marga 29 Total 77

Source: customer service assistant management, community ties

69 Guided visits to drinking water Informative meetings on works

and wastewater treatment Esval was particularly concerned in 2010 about systems informing the community about new investments and the consequential works to be undertaken in the year, To reinforce the information provided in talks and especially regarding network renewal. These meetings workshops, 250 neighbor association leaders and held on site were summoned through the neighbors’ customers interested in learning about the drinking water associations and enabled the communities to be informed production and wastewater treatment process were about the works to be carried out, their benefits, invited to visit the plants in 2010. They were guided by timescales, the amounts involved, and the mitigation professionals who answered all their questions. measures envisaged to minimize the impact of the works on the surroundings.

Scheduled water cuts

The company consolidated innovative measures Informative meetings on works implemented in 2009 to mitigate and control the impact of water cuts on customers. Province Meetings on works A mitigation plan is therefore established for any scheduled water cut, which considers providing customers San Antonio 10 with drinking water by means of water trucks, by installing Quillota-Petorca 12 stationary tanks and water pump and pressurization San Felipe-Los Andes 11 systems, especially at health centers. Valparaíso-Marga Marga 15 Total 48

Source: Esval’s operations management

2008 2009 2010

Scheduled water cuts 239 238 243 Unscheduled water cuts 2,695 2,237 1,935 Unscheduled water cuts due to force majeure (earthquake) 297 Customers affected 618,805 595,181 997,421

Source: Esval’s operations management

70 03 Customer relations 03.4 Customer Support

Most of the company’s activities are focused on supporting its low-income customers to facilitate their access to drinking water and wastewater treatment.

Training on the responsible use of sewers and water

The company has implemented the “Up-To-Date with Esval” (ADCE) program since 2003 to encourage low- income customers to pay the drinking water and wastewater treatment service each month. responsible use of sewers. This is undertaken at the This has been a valued tool repeated by the Planning commercial offices and is an essential requisite for Ministry (MIDEPLAN), as it directly helps the socially high- continuing in the process, which envisages entering risk customers. Complying with this benefit gives these into a debt repayment agreement with these customers customers the opportunity of regularizing their debt and and which they must pay in monthly installments. The being trained. third and final part consists of giving these customers a plumbing workshop to give them the tools needed A large part of the ADCE program entails an education so they can repair any faulty faucet or toilet in their workshop on drinking water consumption and the homes.

2008-2010 Up-To-Date with Esval workshops and agreements

2010 ADCE 2009 ADCE 2008 ADCE program summary program summary program summary

Provinces Nº of Nº of Agreements Nº of Nº of Agreements Nº of Nº of Agreements visits workshops signed visits workshops signed visits workshops signed Valparaíso-Marga Marga 5,573 230 2,178 5,440 225 2,273 5,433 222 2,241 Quillota-Petorca 1,050 72 533 1,103 72 591 1,034 55 370 San Felipe-Los Andes 1,071 48 902 1,056 51 883 1,072 75 285 San Antonio 1,279 77 361 1,289 83 304 1,287 54 742 Total 8,973 427 3,974 8,888 431 4,051 8,826 406 3,638

Source: customer service assistant management, ADCE program

71 Support for securing and Support for high-risk sectors

renewing drinking water Esval’s goal in 2010 was to conduct 15 conceptual studies subsidies on the current list of high-risk sectors and six studies related to seized sectors. Both were fully carried out. To help all the people who meet the requirements set forth in the regulation get their drinking water subsidies, It also developed the detailed engineering project for Esval coordinated a series of meetings with the community public drinking water and sewage and residential projects development departments (DIDECOS), which deal with for the high-risk sector called Parcela 15 where 195 relations of organizations with the social programs of each families live. municipality. The challenge in 2011 is to conduct 40 conceptual studies 24 October through December 2010, 58,000 drinking water for high-risk sectors and 18 studies for seized sectors . subsidies of the total in the region expired. Support agreements were entered into with municipalities who requested this to hire staff to undertake the surveys. Besides this, on-site talks were stepped up, especially in those districts with the largest number of subsidies, and a large communication campaign was launched in the media, particularly on the radio.

Subsidies assigned 2008-2010

2010 2009 2008

Subsidies assigned 92,997 91,693 89,117 % of subsidies assigned 98.05 97.91 95.72 % of customers with subsidies 17.57 17.89 17.81

Source: customer service assistant management

24 Group of neighbors who decide to seize waste land illegally, forming an urban settlement. 72 03 Customer relations

Rural drinking water

The services Esval provides to rural drinking water (APR) In the project management area, works and designs committees and cooperatives are pursuant to a technical were implemented at an investment of Ch$4.1 consultancy and assistance agreement with the department billion financed by the State. The works included of hydraulic works of the Ministry of Public Works. the construction of four elevated tanks and seven semi-buried tanks. 62,000 meters of network were Technical advice is provided on 147 rural drinking water built with over 600 new residential drinking water systems, benefitting an estimated population of 153,000 connections. inhabitants. In 2010, 263 scheduled visits were made to the services and whose aim was to improve and consolidate their management and make them technically, The technical unit’s action after the earthquake should administratively and financially sustainable by the people be especially mentioned, as it visited the worst hit managing them. 118 unscheduled visits were also made services to make a preliminary appraisal of the damage to deal with operational emergencies. and thereby inform the authorities so they could make decisions. In the works management area, Esval made One of the activities undertaken in 2010 was a training a contribution to the structural redesign of four tanks workshop in four provinces of the region, which about 450 in accordance with the current anti-seismic regulations people attended. in Chile.

73 03.5 Product quality and safety

To maintain the current service quality and continuity, there is a quality control system with technology applied to each of the processes.

a. Laboratory Esval has a nationally-renowned laboratory, which b. Process control makes approximately 180,000 analyses a year, mainly bacteriological, physical and chemical analyses. The Processes are controlled by means of samples that are laboratory has competent personnel and state-of-the- taken at different stages of the operation and from the art equipment to control the composition of the drinking final product. In the case of wastewater treatment, for water supplied, monitor correct wastewater treatment example, this is measured based on the water quality of and disposal, and the quality of the natural water bodies the receiver medium (rivers, brooks or the sea). that receive it. Samples to measure process efficiency, whose results are The laboratory works with a quality assurance system determined in the main laboratory, are obtained from: certified by the National Standards Bureau (INN), according to the criteria laid down by the SISS. Moreover, • Drinking water networks, to verify that the quality of it has been certified by the INN pursuant to the NCh ISO the water received in households is compliant with the 17.025 standard as of 2004, which regulates the operation current regulation. of national and international test laboratories.

Esval’s laboratory has a total surface area of 915 m2, distributed on two floors containing the biological and Type of analysis 2009 2010 chemical areas, and 25 test and analysis rooms. The large annual Nº annual Nº size of this building currently ranks it as one of the top laboratories in Chile as it has large facilities for optimal Drinking water network bacteriology 53,024 59,923 analytical work. Drinking water network turbidity 26,512 29,961 Drinking water network chemical 33,360 36,666 analyses Total drinking water analyses 112,896 126,550

74 03 Customer relations

• Drinking water plants (PTAP), to control and assess the • Marine outfalls and seawater, to verify that these purification process undertaken during the production systems do not generate fecal contamination of the process. coastline, mainly on the beaches of the entire coastline in the region from Llolleo to Papudo.

Type of analysis 2009 2010 annual Nº annual Nº Type of analysis 2009 2010 annual Nº annual Nº PTAP bacteriological analyses 1,008 2,013 PTAP chemical analyses 16,584 18,181 Marine outfall & coastline 2,676 2,835 Total PTAP analyses 17,592 20,194 bacteriological analyses Marine outfall & coastline 5,526 6,699 chemical analyses

• Wastewater treatment plants (PDAS), where checks are Total analyses 8,202 9,534 made that discharges of waste into surface water courses meet the requirements laid down for these systems. • Liquid industrial waste (RILES) discharged into Esval’s sewers, to assure they comply with Supreme Decree 609 and allow for the suitable operation of intercepting Type of analysis 2009 2010 sewers and wastewater treatment plants. annual Nº annual Nº

PDAS bacteriological analyses 1,488 3,476 PDAS chemical analyses 11,328 17,890 Type of analysis 2009 2010 annual Nº annual Nº Total PDAS analyses 12,816 21,366 Chemical analysis of RILES 1,128 1,245 Total analyses 1,128 1,245

75 All these analyses are part of the following approximately 15 control programs of different periodicity, which are controlled by bodies like the SISS, the Health Ministry and the General Directorate of Maritime Territory and Merchant Navy (DIRECTEMAR), among others.

1. Bacteriological control program and drinking water 9. Chemical control program of wastewater treatment systems. network disinfection. 10. Bacteriological control program of seawater - effluents, 2. Bacteriological control program of surface water and beaches, marine environment (PVA) - of the areas groundwater sources (pursuant to the Nch 409 where intercepting sewers that discharge into water standard and the SISS). bodies operate.

3. Chemical control program of drinking water networks. 11. Chemical control program of seawater – effluents, beaches, marine environment. 4. Chemical control program of surface water and groundwater sources. 12. Direct control program of discharges of liquid and solid industrial waste (RILES) at industries that 5. Bacteriological control program of distribution tanks. discharge into our sewer system.

6. Fluoridation control program of drinking water 13. Control program of solid waste of wastewater networks. treatment plants.

7. Fluoridation control program of production subsystems. 14. Physical and chemical follow-up programs of production systems. 8. Bacteriological control program of wastewater treatment systems. 15. Raw material quality control program.

c. Technology

The operating work of all the company’s processes • Data logger equipment programming and installation on is supported by new technologies that have been macro meters to measure the flow. incorporated to the processes, like: • Data logger equipment programming and installation in • Portable meter to assess the flow of wastewater in sewer the drinking water network to measure the pressure. drains, and it is also useful for open wastewater channels and unprocessed water courses. • Installation of portable electronic equipment and • Noise loggers, which indicate what stretches of the Doppler flow meters in wastewater piping. These drinking water network have leakages. are used to contrast fixed pressure main pump flow meters. • Metal piping finder to locate all the underground piping and identify the laying of other services (electricity, • Metal detector to detect metal sewer drain covers and telephony, gas, etc.), preventing unnecessary road valve rings underground. paving breakage. • Television inspection to review and diagnose the • Acoustic correlator to detect where there are drinking interior condition of intercepting sewers and household water network leakages. connections.

76 03 Customer relations 03.6 Supplier relations

Esval’s relationship with its suppliers is handled directly by 18001 certification or not. In addition, such suppliers are the finance and administration management through the subject to a monthly assessment process, which considers contracts area and procurement department. criteria like meeting deliveries, product quality and after- sales service. The company has implemented the form of relationship and way of working with its suppliers by means of the For the rest of the goods or services purchased by the structural procedure called “critical product supplier company, suppliers are only selected based on technical selection, assessment and re-assessment, and works and and financial assessments, on economic advantage and/ services contracts.” or the delivery conditions of the product or service.

From the environmental standpoint, all suppliers of 95% of the company’s suppliers were Chilean in 2010, critical products shall be governed by the guidelines in and purchases from foreign suppliers were only made force for their transport and unloading. Such guidelines in specific cases. Nevertheless, there is no explicit control correct product labeling and handling and suitable guideline giving priority to purchases from Chilean information on their composition to be able toact companies. efficiently in any emergency. One of the main challenges in 2011 is supplier development Compliance with these guidelines is controlled by and negotiations in keeping with the organization’s short- Esval’s partners by means of an environmental aspects and long-term objectives and strategies. Selection will verification log at the time of transporting and unloading therefore include all suppliers who are directly related to these kinds of products. the service provided to customers. Supplier performance evaluation feedback will also be implemented and the Suppliers of critical goods are recorded and classified according joint action to be taken for the continuous improvement to whether they have ISO 9001, ISO 14001 and/or OSHAS of the supply service.

77 04

Employee relations

78 04 Employee relations

Esval strives for each of its employees to attain high professional development in an environment of wellbeing and safety, complying with labor legislation and respecting the rights of all the people who work in the organization.

Esval’s employee relations are run and coordinated by the transmitting the values, standards and conduct required human resources management which, jointly with all the by the organization. organization’s managements, pursue good practice on employee and partner relations, meeting the objectives This management’s work in 2010 was focused on set by the company. improving the organizational climate, for which the results of the 2009 survey were disseminated early in the year The human resources policy considers a series of and the same survey was once again given to all company commitments focused on driving the personal and employees towards the end of the year. professional development of employees, improving their quality of life, providing incentives and promoting in- The challenges in 2011 will be to develop employee talent house employee hiring. The breakdown of the human and management to boost interpersonal and management resources policies was reported on in the 2009 Report25. skills, driving employee innovation and motivation.

Esval has established formal procedures for employee As part of these objectives, a postgraduate scholarship recruitment, and this work is mainly undertaken by own program was developed for professional specialization company staff. It also has induction processes focused on and enhancement of career development in the company.

25www.esval.cl/comunidadyrse/reportedesostenibilidad 79 04.1 Generating quality employment

Esval’s employees have attractive work conditions that are Women accounted for 16% of the people hired by in keeping with those of the labor market, and policies are Esval, and this percentage has remained stable in focused on getting employees to remain in the company, the last three years. The minimum salary paid by their professional development and remuneration and Esval in 2010 was 126% higher than the minimum legal incentive schemes. wage.

Esval’s workforce amounted to 355 employees for the year Esval generated approximately 1,337 indirect jobs ended December 31, 2010, 1.39% down on that in 2009. by hiring services, which was a 0.21% increase on That decrease was mainly due to job position vacancies 2009 and was mainly due to contract adjustments because of the retirement plan being undertaken by the whose effects cancelled themselves out. That was company. The average age of employees was 46.25 years. the outcome of adapting requirements to contractor companies, renewal, contract expiry and entering In regard to the type of contract entered into, 99.15% of into new contracts according to the company’s the company’s workforce has an indefinite work contract. needs.

Employee breakdown by level 2008-2010

Levels 2008 2009 2010

Administrative 26 25 22 Executive 8 8 8 Middle management 33 42 41 Workers 79 71 67 Professionals 125 118 118 Technicians 96 96 99 Total 367 360 355

Source: studies department, Esval’s human resources management

Employee breakdown by organizational level 2008-2010

Employee percentage by organizational level 2008 2009 2010

Senior managers and executives 2% 2% 2% Professionals and technicians 69% 71% 73% Administrative and workers 29% 27% 25%

Source: studies department, Esval’s human resources management

80 04 Employee relations

Job positions filled by men & women 2008-2010

Men Women

100% 17 17 16 90% 80% 70% 59 60% 50% 83 83 84 40% 30% Employee percentage Employee 20% 10% 0% Years 2008 2009 2010

Source: studies department, Esval’s human resources management

Total company workforce by type of contract 2008-2010

Type of contract 2008 2009 2010

Indefinite 360 356 352 Fixed-term 7 4 3 Total 367 360 355

Source: studies department, Esval’s human resources management

Initial company versus minimum legal wage ratio 2008-2010

Year Esval minimum wage Legal minimum wage Variation or ratio

2008 372,319 159,000 134% 2009 410,195 165,000 149% 2010 388,202 172,000 126%

Source: Esval’s remuneration ledgers and www.leychile.cl (Chilean National Congress Library)

81 Benefits for all employees

Esval gives its employees a series of benefits regarding climate was still in the normal range compared to the 2009 advice on collective health insurance company (ISAPRE) survey, there was an improvement of the safety and risk plans, on retirement, and voluntary pension saving prevention and human relations variables, which attained (APV). It promotes sports and recreational workshops, a good level. The lowest variables were remuneration and agreements with health and sports companies, and development opportunities. provides a professional service for health, housing, the family and education issues. The survey results were addressed by each management in discussion groups to attain improvements of the different The following are the monetary benefits given to Esval’s variables after analysis and incorporate them to the in- employees: house climate improvement plan launched by the human resources management. • Severance payment with no legal limits26.

• Half-yearly salary readjustment according to the The following were some of the improvement plans Consumer Price Index (CPI). implemented in 2010:

• Payment of nurseries and day-care centers for children • To hold workshops on effective communication. of up to 4 years old. • To undertake out-of-work cultural and social activities. • Salary complement due to medical certificates. • To increase communication via the intranet and other • Leave of absence without pay. informative media.

• To boost agreements with cultural and sports centers.

Labor climate • To encourage the continuous improvement circles.

An organizational climate survey was conducted for the • To create recreational and coffee areas in the workplace. second time in 2010 to assess the level of 10 working life variables which affect the quality of life in the workplace. The • To draw up succession plans and drive in-house variables considered in the survey were: communications, promotion. commitment, development opportunities, human relations, supervision, remuneration, safety and risk prevention, • To create scholarships for professional development. physical environment and motivation. • Workshops on participative leadership. The sample taken exceeded 90%, including staff at all localities. The results showed that although the general • Pause gymnastics program.

26This is a benefit for workers belonging to a union and for a percentage of non-union workers with a certain number of years of service. 82 04 Employee relations 04.2 Training, development and employability

The objectives Esval has set for the development of people Esval understands training as a wider element called in the company are aimed at optimizing the suitable education, which envisages class time and participative management of knowledge, performance excellence and activities, workshops, the e-learning and self-study the interaction skills of its employees. platform. This makes it essential to undertake performance evaluations, which is why all Esval’s employees were To achieve this goal, the human development project was evaluated in 2010. developed, which seeks to promote an organizational climate that allows for the growth of technical, The core training was focused on updating knowledge, professional, work and personal aspects, developing occupational health and safety and personal development teamwork and participation and driving creativity and and amounted to 20,464 hours, which was an 18% increase incentive for the continuous improvement of all the on 2009. In addition to formal training activities, there were organization’s areas. also workshops on pause gymnastics to improve poor posture.

Training hours and areas 2008-2010

Training area27 2008 2009 2010

Hours % Hours % Hours % Integrated management system (SIG) 1,611 10.09% SIG environment 33 0.21% 1,467 8.49% 3,054 15% SIG quality 443 2.77% SIG occupational health & safety 3,781 23.68% 2,156 12.48% 6,296 31% Update 4,959 31.06% 3,706 21.46% 5,055 25% Professional development 4,024 25.20% 4,298 24.88% 678 3% Personal development 1,117 7.00% 5,645 32.68% 5,381 26% Total 15,968 100.00% 17,272 100.00% 20,464 100%

Source: organizational development department, Esval’s human resources management

27The training area categories were changed in late 2008, and the data was adapted to make the best possible comparison of 2008 and 2009. 83 93% of the training leftover from 2009 was used for plant training and 7% for social scholarships, which are aimed at training social leaders in the Greater Valparaíso community by means of theater workshops.

Another major highlight was the creation of a talent development plan, whose main objective was to give employees the possibility of projecting their career in the company. Career plans will be designed according to professional profiles and considering the succession possibilities. These plans will start to be carried outin 2011, covering professional analysts in the first stage, and will end in 2015.

04.3 Occupational health and safety The work is always based on self-care and all employees are informed that, despite the fact the company takes all Esval’s objective in accordance with the integrated the protective action necessary, occupational health and quality, environmental and occupational health and safety safety is the responsibility of all of us. There were eight policy is to prevent injuries and occupational diseases to lost-time accidents in 2010, amounting to 61 days lost. employees and partners. The lost-time accident rate in 2010 was 5728.

Esval’s lost-time accident and accident rate 2008-2010

2008 2009 2010

Lost-time accident rate* 18.70 % 57.0 % 53.0% Accident rate** 2.4% 2.2% 2.2%

Source: safety & risk prevention department, Esval’s human resources management

*Lost-time accident rate (total): average lost-time accident rate due to temporary disability + lost-time accident rate due to disability and death (pursuant to Supreme Decree 67). **Accident rate: number of work accidents/average workers divided by 100 in 12 months.

28 Lost-time accident rate = (the number of days lost/average employees in the period) *100. Data sent by the Work Safety Institute (IST). 84 04 Employee relations

The following is a comparison between Esval’s 2010 occupational safety rates and those of the industry in 2009:

• The average lost-time accident rate in Chilean companies in 2009 was 5.329, but this rate increased to 5.6 for companies with 101 or more employees (as is the case of Esval). Esval had an accident rate of 2.2 in 2010, which was lower than that of the industry.

• The average days lost per work accident in Chile in 2009 were 14.130, whereas Esval had an average rate of 5.0831 days lost in 2010.

• The average days lost due to work accidents in Chilean companies in the electricity, gas and water sectors were 16 days32 in 2009, whereas Esval had an average of 5.08 days in 2010.

• The number of professional diseases in Chilean companies in the electricity, gas and water sectors was 833 in 2009, whereas Esval had no professional diseases in 2010.

In regard to Esval’s occupational health and safety training, this amounted to 16,536 hours of exclusive training in this area, and there was also the in-house training like that given to contractor companies.

Exclusive risk prevention training (man-hours) 2008-2010

2008 2009 2010

ESVAL S.A. 3,719 2,156 6,296 Contractors 19,263.7 11,558.3 10,240.8 Total 22,982.7 13,714.3 16,536.8

Source: studies department, Esval’s human resources management

29 Source: Social Security Superintendency (SUSESO) – final report of the Presidential Advisory Commission on workplace safety, November 2010. 30 Source: Social Security Superintendency (SUSESO) – final report of the Presidential Advisory Commission on workplace safety, November 2010. 31 Accident rate = (lost-time accidents/average workers in a period) * 100. 32 Source: Social Security Superintendency (SUSESO) – final report of the Presidential Advisory Commission on workplace safety, November 2010. 33 Source: Social Security Superintendency (SUSESO) – final report of the Presidential Advisory Commission on workplace safety, November 2010. 85 Parity committees 04.4 Esval has four parity committees: Southern Coastline Committee, Central Level Committee, Quillota-San Felipe/ Los Andes Committee and the Valparaíso Operations Labor relations Committee. The essential actions of these committees include monthly and extraordinary meetings, and specific work schedule activities like planned inspections, conduct observation, investigation of incidents, studies and design of products for prevention campaigns. There are three unions in the company to which 203 workers belong. Union relations are characterized by The activities of the four hygiene and safety parity committees cooperation and respect, and operate as part of the Labor in 2010 were focused on the normal holding of meetings Relations Commission, which holds periodic meetings and inspections of Esval’s plants and premises. Esval’s throughout the year. Headquarters-San Ignacio-Bustamante parity committee attended the regional hygiene and safety parity committee There was no collective bargaining process with Esval’s meeting in Valparaíso, which was held at the Club de Campo unions in 2010, as the current collective contracts are Las Salinas, and it received an award for its participation. effective until August 31, 2011.

Union membership 2008-2010

2008 2009 2010

Union Nº1 132 125 121 Union Nº2 40 51 46 Professionals & department head union 39 38 36 Total union membership 211 214 203 Union membership % 58% 59% 57% Non-unions 156 146 152

Source: studies department, Esval’s human resources management

86 04 Employee relations 04.5 Contractors

Esval’s commitment to its contractors is embodied in company supports different training and development the quality, environment, occupational health and programs. safety policy, which lays down the need of: “gradually committing its contractors and suppliers so their Esval had contractual relations with 51 contractor quality, environmental, occupational health and safety companies in 2010, through which it generated 1,337 performance is commensurate with the guidelines of indirect jobs. this policy in regard to the activities and services they provide to the organization.” Services and works are outsourced to various companies by means of public tenders, which lay down the bases and Aware of the importance of contractor company relations, control mechanisms. the company provides clear and timely information on issues like tender processes, requirements, compliance The contracts assistant management is in charge of carrying and performance evaluations. It requires all companies out the tender processes and undertakes the administrative that provide services to it to have processes that can proceedings needed to verify that those companies hired be measured in accordance with the quality standards, comply with the current labor and safety regulations. The establishing the terms of the services and requirements human resources management, through the outsourcing between the parties in a civil contract. control and risk prevention area, makes permanent on-site audits, by its own means or using an audit company. To assure the contractor work scheme operates well, Esval has a contract management system, which Lastly, the operational coordinators of each contract verify centralizes contract management and requires that the services and works are carried out in accordance contractors to comply with Esval’s occupational health with the standards established (quality, work safety, legal and safety standards by means of the Special Regulation compliance), and this is the task of managers, assistant for Contractor and Subcontractor Companies. The managers or department heads, as is the case.

87 05

Community relations in the region

88 05 Community relations in the region 05.1 Community relations management

Esval undertakes the commitment of working with the regional, provincial and district authorities and with social organizations, i.e., communal associations, neighbors’ associations, neighborhood committees, groups for the elderly and mothers’ centers, among others.

The company also collaborates with various public institutions to disseminate and develop activities of common interest.

It has various initiatives for this. One of these is the One of Esval’s key concerns and “Healthy water, healthy life” campaign,” whose slogan motivations is to forge open, in 2010 was “With you in each drop,” which reflects the importance of water in all the facets of mankind and the harmonious and cooperative environment. The campaign led to making direct contact with 258,873 people in most of the region by means of relations with the inhabitants various activities. and various social organizations One of Esval’s work focuses is to collaborate with public projects benefiting regional development. In 2010, the in the area. company collaborated with the regional government in the “high-risk sectors” program by providing design studies with data on developing the drinking water and sewage infrastructure. Meetings were held with the regional ministerial secretariats (SEREMI) of housing, the Community relations are a key factor for Esval because planning and national wealth ministry (MIDEPLAN) to of the vital importance of the sanitary service on the follow up on and coordinate the action to be undertaken. wellbeing, health, and quality of life of people, and in turn its contribution to the economic development and Agreements were also signed with the education and environmental sustainability of the Valparaíso Region. health SEREMI, whose objectives were to promote a healthy life and generate good hygiene and eating habits. The company thereby seeks to forge, drive and develop It also supported the “Clean hands” campaign launched open, flowing, honest, harmonious and cooperative by the health SEREMI to prevent the spreading of infecto- relations with the inhabitants of the area. contagious diseases like cholera.

General management is responsible for performing At provincial level, Esval participated with other this task with the direct collaboration of the corporate government departments in the “government on site” management, commercial management and operations programs, and in the social work of various public services management areas. to clarify community doubts and resolve their problems.

89 Overview of public-private collaboration in 2010

Level Government Program/ Type of support/ body Project Esval’s participation

Intendancy “High-risk sectors” government Technical support and meetings with program: design studies to develop government bodies. drinking water and sewage infrastructure.

Governor’s office “Government on site” program: its Participation in its various activities. objective is to inform, disseminate and communicate the regional government’s offering to the community.

National Women’s Service Activities in centers for children whose Playful educational presentation in (SERNAM) mothers are seasonal workers. centers which SERNAM opens every summer to look after the children of This educational work, coordinated mothers who are seasonal workers. with the directors of the community development departments of the municipalities in the region, helped children learn more about taking care of the environment and the importance of water in preserving it.

Regional Regional ministerial secretariat “Clean hands” campaign: the objective Support through the “Healthy water, of health is to prevent an outbreak of infecto- healthy life” team and campaign. contagious diseases.

Regional ministerial secretariat Environmental activities. Support of the various activities of education Playful educational presentation by undertaken. means of a short play in municipal, Messages were transmitted on subsidized and private schools. environmental care.

Sports (National Sports First Regional Street Football Sponsorship of this and other activities, Institute) Championship for under 12-year-olds. like the Bicentenary National University Short Story Competition, held during Championships. the Writers’ Meeting of the III Universal Sponsorship of the event. Forum of Cultures, Valparaíso.

“Taking care of water is up to you and Collaboration agreement to foster Environmental Ministry me” campaign. good habits regarding environmental conservation.

90 05 Community relations in the region

Level Government Program/ Type of support/ body Project Esval’s participation

Territorial delegates of Roundtable meetings (comprising Esval, Aimed at exchanging ideas and municipalities. territorial delegates of municipalities experiences to improve communication and community representatives). and make progress with resolving community representative concerns and/or problems.

Municipal Neighbors’ & communal Door-to-door activities are used to Queries and concerns are answered. associations inform customers and the general community beforehand about the Workshops and their corresponding benefits and impacts of different works content are held. the company undertakes.

Educational workshops especially aimed at the social organizations in the region. Some of the issues addressed were: “Use and importance of water for life,” and “Care of hydrants.”

91 “Healthy water, healthy life” campaign

The “Healthy water, healthy life” campaign was launched in a. Playful educational presentation: By means of a short 2002 with the aim of getting Esval and its operations closer play with music and motivating elements for children, to the community and acting as a bridge of assistance for Esval made presentations in municipal, subsidized and the neediest. It is currently striving to transmit messages private schools, aimed at transmitting a message of taking on taking care of the planet, water and its importance in care of the environment. life.

The main activities of this program are: Playful educational 92,788 a. Playful educational presentation in schools, day-care presentation centers and centers for the elderly. Nº of contacts 79,409 b. Activities at centers for children whose mothers are seasonal workers.

c. Educational workshops. 43,618 d. “Door-to-door” activities. e. Participation in public events related to the community. f. Health programs.

2010 2009 2008

Source: corporate management area

92 05 Community relations in the region

Esval also promoted activities to further artistic creativity seasonal workers, by making recreational and in schools: educational visits. This educational work, coordinated with the directors of the community development • Come to Valparaíso Competition: The company was departments of the municipalities in the region, helped one of the main sponsors of this children’s painting children learn more about taking care of the environment competition, organized by the Municipal Corporation of and the importance of water in preserving it. Valparaíso, with an invitation to all municipal schools.

c. Educational Workshops: Esval held educational • Christmas Competition: As is tradition, primary workshops, especially aimed at the social organizations education children at schools that received the “Healthy in the region. “Use and importance of water for life,” water, healthy life” campaign could participate in a “Care of hydrants,” “100% clean-up of the Valparaíso children’s painting competition organized by Esval. This Region” and “Care of sewage systems” were the main time the theme of the competition was “Taking care of issues addressed in 2010. the environment with Esval’s water drops.” The winning paintings in the competition were used on Christmas cards that Esval sent out to greet the community. d. Door-To-Door Activities: Door-to-door activities are used to inform customers and the general community beforehand about the benefits and impacts of different b. Activities at day-care centers for children whose works the company undertakes. This contact, which mothers are seasonal workers: For the fifth year also includes meetings with the respective neighbors’ running, Esval participated in centers, which the associations and communal associations, allows people National Women’s Service (SERNAM) opens every to find out about the main developments being carried summer to look after the children of mothers who are in their sector, and to get answers to their queries.

Door-To-Door Contacts

Year 2008 2009 2010

Nº of contacts 9,960 4,752 3,049

Source: corporate management area

93 e. Public events: Most of the campaign activities require f. Health Programs: Numerous shows were attended ongoing coordination with the regional and provincial with the education and nutrition departments of the government, municipal authorities and other services, walk-in clinics in the area where training was given on which channel efforts into the most important needs in health issues. The messages transmitted were related the region. to hygiene, healthy eating and information on the clean-up of beaches. The various activities in 2010 with Esval’s participation included:

• Collaboration with governors’ offices for the “Government on site” program. Summary of Site Activities • Coordination with the SEREMI of education and health (according to the number of contacts) to disseminate good hygiene and eating habits.

• Support of the Labor Fair, organized by the ministerial Offices secretariat of the government and the Honorable Education Municipality of Viña del Mar. Community • Coordination with the SEREMI of education.

300,000

250,000

200,000

150,000

100,000

50,000

0 2010 2009 2008

Source: corporate management area

94 05 Community relations in the region

Other activities in 2010

Esval participated in various activities to promote the • Sponsorship of the Regional School Congress of Science environment, culture, child protection, sports and and Technology, co-organized by the Explora program health, including: of Chile’s Science and Technology Council (CONICYT), and whose objective is to promote scientific research, • Launch of the first Regional Street Football Championship learning and use of scientific methods among students, in the under 12-year-old category, with participation connect science and technology professionals with from over 450 children from the football schools created the school world and drive the development of scientific by the National Sports Institute. It also collaborated competencies. with the Bicentenary National University Championships, in which around 2,000 students from the 25 universities • Participation in events, like “Let’s beat child labor” of the Chilean Headmasters’ Council, which competed (Valparaíso) and “No to child labor” (San Felipe). in the Valparaíso Region, participated. Support of the Communal Collaborators’ Meeting on global strategies to fight obesity (EGO) in the district of • Collaboration with the Short Story Competition, held Valparaíso. during the Writers’ Meeting of the III Universal Forum of Cultures, Valparaíso 2010. About 750 short stories • Attendance of the “clean Valparaíso” event, attended were received and the best 100 were published in a book by different schools and day-care centers in the district. distributed during the event.

• Support for the construction of the Bicentenary Plaza, In 2011, Esval hopes to strengthen and sharpen which was delivered for public use in a beautiful natural community awareness of the importance of protecting setting, whose protagonists are the sea and the hills of our environment, specifically natural water sources, Valparaíso in the Yolanda sector of Avenida España. undertaking this task as a shared commitment.

95 06

2010 commitments and 2011 challenges

96 06 2010 commitments and 2011 challenges

Environment

Area 2010 Commitment 2010 Performance 2011 Challenge

• No wastewater discharges TARGET PARTIALLY • No wastewater discharges into water into water bodies. ATTAINED bodies.

There was an emergency from a wastewater spillage into the Discharges Aconcagua river, due to repair works because of the earthquake to the Benigno Caldera interception sewer in San Felipe, and the heavy rainfall at the time

• Reduce energy TARGET PARTIALLY • Reduce energy consumption (KW) consumption (KW) in the ATTAINED in the company’s administrative and company’s administrative commercial buildings by 3%. and commercial buildings Energy consumption was reduced by 5%. by 1.78%. Energy The result was not what was expected, as although the action committed for 2010 was undertaken, the measures taken are effective in the long term.

• Secure sanitary TARGET PARTIALLY • Esval is waiting for the sanitary authorization for the three ATTAINED authority to approve the operation of remaining hazardous waste the three outstanding warehouses. storage plants Esval took all the action needed to secure authorization for the Waste operation of the three outstanding warehouses with empty sodium silicofluoride containers.

97 Customers (Products & Services)

Area 2010 Commitment 2010 Performance 2011 Challenge

• Add 500 new customers TARGET PARTIALLY • Add 850 new customers to the to the sewage system ATTAINED sewage system by developing the by developing the mass mass customer incorporation customer incorporation 257 customers added. program. program. Drinking 155 customers added by Esval. water and 142 customers made connections sewage service with third parties; coverage for they are currently incorporated as new customers new sewage customers. incorporated 203 customers not incorporated due to the (coordination is being made with installation the SEREMI of health to provide of essential incorporation timescales). public services and service • Undertake 15 conceptual connections to TARGET ATTAINED • Undertake 40 conceptual studies studies related to high-risk the network. 15 studies were undertaken related to high-risk sectors. sectors. • Undertake 18 conceptual studies • Undertake 6 conceptual TARGET ATTAINED related to seized sectors. studies related to seized 6 studies were undertaken sectors.

• Record a maximum of 20 TARGET ATTAINED • Record a maximum of 15 customer customer complaints about There were 8 complaints about complaints about noise. noise. noise.

• Record a maximum of 40 TARGET ATTAINED • Record a maximum of 35 customer customer complaints about There were 29 complaints about complaints about odors. odors. Customer bad odors. service • Undertake the noise requirements TARGET ATTAINED • Undertake the noise mitigation works mitigation works at the regarding noise The soundproofing measures at a maximum of 5 facilities. Los Maitenes wastewater and odors at established in the wastewater treatment plant. Esval’s facilities treatment plants (PDAS) meet the objective of reducing the noise impact, not exceeding the daily decibels laid down in Supreme Decree 146/97. Mitigation works were also undertaken at the Coraceros laboratory to mitigate the noise of generators and the Tranque Sur drinking water pump station for the noise of the pumping room.

98 06 2010 commitments and 2011 challenges

Suppliers and Contractors

Area 2010 Commitment 2010 Performance 2011 Challenge

Dissemination • Provide 100% induction to TARGET PARTIALLY • Provide 100% induction to all new activities of all new contractor company ATTAINED contractor company personnel on the the integrated personnel on the core core aspects of the SIG. management aspects of the SIG. Compliance of the induction system program was 89%. (SIG) on quality, the environment, occupational health and safety for contractors and suppliers.

99 07

Global Reporting Initiative (GRI) Index

100 07 GRI index

Profile

Number Compromiso 2010Indicator Page

01.1 Statement from the CEO or most senior decision maker of 9-11 the organization. 9-11 01.2 Description of key impacts, risks and opportunities.

Organizational profile

02.1 Name of the organization. 13

02.2 Primary brands, products and/or services. 13-23

02.3 Operational structure, including main divisions, operating companies, subsidiaries and joint ventures. 13

02.4 Location of the organization’s headquarters. 13 13 02.5 Number of countries in which the organization operates. Esval only has operations in Chile

02.6 Nature of ownership and legal form. Cover & 13

02.7 Markets served. 16-17

02.8 Scale of the reporting organization. 13, 15-17

02.9 Significant changes during the reporting period. 2

02.10 Awards received in the reporting period. 32

101 Number Compromiso 2010Indicator Page

Report parameters

Report profile

Reporting period for information provided. 03.1 2

03.2 Date of most recent previous report. 2

03.3 Reporting cycle. Annually

03.4 Contact point for questions related to the report or its 5 content.

Report scope and boundary

03.5 Process for defining report content. 2-4

03.6 Boundary of the report. 2

State specific limitations on the scope or boundary of the 03.7 Not applicable report.

03.8 Basis for reporting on joint ventures, subsidiaries, Not applicable leased facilities, outsourced operations and other entities.

03.9 Data measurement techniques and the bases for 2 & 5 calculations.

03.10 Explanation of the effect of any re-statements of There was no restatement of information provided in information provided in earlier reports. earlier reports

Significant changes from previous reporting periods in the 03.11 2 scope.

03.12 Table identifying the location of the standard disclosures in 101-110 the report.

03.13 Verification 112 & 113

102 07 GRI index

Number Compromiso 2010Indicator Page

Governance, commitments & stakeholder engagement

04.1 Governance structure of the organization. 26-30

04.2 Function of the highest executive officer. 26

04.3 State the number of members of the highest governance 26 & 27 body that are independent and/or non-executive members.

04.4 Mechanisms for shareholders and employees to provide Esval does not have these kinds of processes to date. recommendations or direction to the highest governance body.

04.5 Linkage between payment for members of the highest Esval does not have these kinds of agreements. governance body, senior managers, executives, and the organization’s performance.

04.6 Processes in place for the highest governance body to ensure Esval does not currently have these kinds of procedures. conflicts of interests are avoided.

04.7 Processes for determining the qualifications and expertise of Esval does not have these kinds of processes to date. the members of the highest governance body.

04.8 Statement of mission, vision and values. 24

04.9 Procedure of the highest governance body for overseeing the Esval does not have these kinds of processes to date. organization’s identification and management of economic, social and environmental performance.

04.10 Processes for evaluating the highest governance body’s own Esval does not have these kinds of processes to date. performance.

Commitments to external initiatives

04.11 Esval’s quality, environmental, and occupational health and Explanation of how the precautionary approach or principle safety policy includes the pollution prevention principle, which concerns anticipating and avoiding events that certainly might is addressed by the organization. cause pollution.

04.12 Externally developed economic, environmental and social 71-73, 90-91 charters to which the organization subscribes.

04.13 Memberships in associations. 30-31

Stakeholder engagement

04.14 List of stakeholder groups engaged by the organization. 2-4

04.15 Basis for identification and selection of stakeholders with 25 whom to engage.

04.16 Approaches to stakeholder engagement, including frequency 25 of engagement by type and by stakeholder group.

04.17 Key topics and concerns that have been raised through stakeholder engagement. 3 & 4

103 Environmental area

Number Compromiso 2010Indicator Page

DMA Management Approach. 49 & 50

Materials

EN1 Materials used other than water by weight or volume. 60

EN2 Percentage of materials used that are waste from other Esval does not use raw materials that are waste from other industries (valued). processes or industries.

Energy

Direct energy consumption by primary energy source. EN3 61

Indirect energy consumption by primary energy EN4 61 source.

EN5 Energy saved due to conservation and efficiency 61 improvements

Water

EN8 Total water withdrawal by source. 51 & 52

Water sources and habitats significantly affected by EN9* 51 withdrawal of water.

EN10* Percentage and total volume of water recycled and reused. 53

Biodiversity

EN11 Description of lands adjacent to, or located in natural protected areas or areas of high biodiversity outside 51 & 52 protected areas.

EN12 Description of the most significant impacts on protected areas or those of high unprotected biodiversity. 51 & 52

*Additional indicator

104 07 GRI index

Number Compromiso 2010Indicator Page

Emissions, discharges and waste

EN16 Total direct and indirect greenhouse gas emissions by 54 weight.

EN17 Other relevant indirect greenhouse gas emissions by weight. 54

Nitrous oxide (NOx), sulfur oxide (SOx) and other significant EN20 53 & 54 air emissions by type and weight.

EN21 Total water discharge by quality and destination 57-59

EN22 Total weight of waste by type and disposal method 55 & 56

EN23 Total number and volume of significant spills. 57 & 59

Products and services

EN27 Percentage of products sold and their packaging materials that are reclaimed by category. 53

Regulatory Compliance

EN28 Monetary value of significant fines and total number of non- During the reporting year there were no significant fines monetary sanctions for non-compliance with environmental or non-monetary sanctions for non-compliance with laws and regulations. environmental regulations.

General

EN30 Total environmental protection expenditures and 51 investments by type.

105 Social Area

Number Compromiso 2010Indicator Page

DMA Management approach. 79

Labor practices & work ethics Employment

LA1 Total workforce. 80 & 81

LA2 Total number and rate of employee turnover. 80

LA3* Social benefits provided to full-time employees. 82

Company/employee relationship

Percentage of union-represented LA4 86 employees.

LA5 Minimum notice period related to operational changes. 30 days’ notice

Workplace health & safety

LA6* Percentage of total workers represented in joint All Esval’s workers are represented in the 4 parity committees. management-worker health and safety committees. 86

LA7 Rates of absenteeism, work accidents and injuries, days lost and number of work-related fatalities. 84

LA8 Education programs in place for HIV or other serious Programs to prevent the Hanta virus, HIV and other contagious contagious diseases. diseases, every 2 years.

LA9* Health and safety issues covered by formal agreements with 86 unions.

Training & education

LA10 Average hours of training per year per employee. 83

LA11* Programs for skills management and lifelong learning that support the continued employability of employees, and 83 & 84 assist them in managing career endings.

LA12* Percentage of employees receiving regular performance and All Esval’s employees receive performance reviews. career development reviews.

*Additional indicator

106 07 GRI index

Number Compromiso 2010Indicator Page

Human rights Investment & procurement practices

HR1 Percentage of significant investment agreements that Immaterial include human rights clauses. Labor practices & work ethics HR2 Percentage of significant suppliers and contractors that have undergone screening on human rights. Immaterial

Non-discrimination

HR4 Total number of incidents of discrimination and action taken. Esval had no incidents in 2010.

Freedom of association & collective bargaining

HR5 Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant Esval had no incidents in 2010 risk, and actions taken to support these rights.

Child labor

HR6 Operations identified as having significant risk for incidents The company has no employees that breach what is laid of child labor and measures taken to contribute to the down in the legal labor regulations of chapter 11, articles elimination of child labor. 13-18 of the Labor Code,

Forced labor

HR7 Risks or incidents of forced labor and measures taken to The law in force in Chile envisages and is above the worldwide help eliminate them. average on human rights clauses. Esval complies with labor and civil laws. There were no incidents of forced labor in the reporting period.

107 Number Compromiso 2010Indicator Page

Product Responsibility

DMA Management approach. 63

Customer health & safety

PR1 Lifecycle stages in which health and safety impacts of products and services on customers are assessed, and the percentage of significant products and service categories 74-76 subject to such procedures.

PR2* Total number of incidents of non-compliance with Esval had no incidents regarding health and safety impacts on regulations and voluntary codes concerning health and the customer in 2010. safety impacts of products and services.

Product labeling & services

PR3 Type of product and service information required by procedures and percentage of significant products and Esval complies with the legal requirements and regulations on services subject to such information requirements. information of its services by means of its bills and invoices.

PR4* Total number of incidents of non-compliance with The company had no incidents of non-compliance with the regulations and voluntary codes concerning product and regulations and voluntary codes concerning product and service information and labeling, by type of outcomes. service information.

PR5* Practices related to customer satisfaction, including results 67 & 68 of surveys measuring customer satisfaction.

Marketing communications

PR6 Programs for adherence to laws, standards, and voluntary In regard to ethical standards and regulations on advertising, codes related to marketing communications, including communications and other promotion or sponsorship, Esval adheres to the Code of Conduct of the Chilean Association of advertising, promotion, and sponsorship. Advertising Agencies (ACHAP). Esval had no legal penalties, fines or reprimands by any PR8* Total number of substantiated complaints regarding stakeholder for breach of regulations on communications, breaches of customer privacy & losses of customer data. advertising and marketing.

Regulatory Compliance

PR9 Monetary value of significant fines for non-compliance with Due to the drinking water spillage from the mains on Avenida laws and regulations concerning the organization’s provision Alemania in Valparaíso on August 19, 2009, and the water cuts to repair this spill, the SISS, by means of Exempt Resolution and use of products and services. Nº281 of February 1, 2010, levied the company three fines of 51 UTM (monthly tax unit), 50 UTM and 50 UTM, deeming that Esval S.A. had breached letters b), c) and a) of subparagraph 1 of article 11 of Law Nº18.902. Significant fines are understood to be those over Ch$20 million.

*Additional indicator

108 07 GRI index

Number Compromiso 2010Indicator Page

Society

DMA Management approach. 89

Community

SO1 Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, 89-95 and exiting.

Corruption

SO4 Actions taken in response to incidents of corruption. 30

Public policy

SO5 Public policy positions and participation in public policy Pursuant to its Code of Ethics, Esval rejects any form of development and lobbying. influence to obtain benefits that are not based on applicable legality.

SO6* Total value of financial and in-kind contributions to political Pursuant to its Code of Ethics, Esval cannot make contributions parties, politicians, and related institutions by country. to political parties.

Regulatory Compliance

SO8 Monetary value of significant fines and total number of During the reporting period, there were no significant penalties non-monetary penalties for non-compliance with laws or fines for non-compliance with laws and regulations. and regulations, related to society dealings (government, community, institutions. academics, NGOs, etc.).

*Additional indicator

109 Economic Area

Number Compromiso 2010Indicator Page

DMA Management approach. 32

Economic performance

EC1 Economic value generated and distributed. 35

EC4 Financial assistance received from government. In 2010, Esval had access to a tax franchise for training amounting to Ch$39,586,404 that was 100% of the SENCE (National Training and Employment Department) franchise. EC5* Range of ratios of standard entry level wage compared to 81 local minimum wage.

Market presence

EC6 Practices and proportion of spending on locally-based suppliers. 77

EC7 Procedures for local hiring and proportion of senior All Esval’s senior management positions are filled by Chilean management. professionals.

Indirect economic impacts

EC8 Description of infrastructure investments and services provided for public benefit. 9-11, 33 & 34

*Additional indicator

110 INDEPENDENT VERIFICATION REPORT OF THE ANNUAL CORPORATE SUSTAINABILITY REPORT 2010 OF ESVAL S.A.

To the General Management of ESVAL S.A. sustainability report, workshops were held Remarks with community organizations and an on-line survey of company employees was conducted. For ESVAL S.A. to progress with continuous Pre-verification scope, bases and Nevertheless, this aspect can be improved by improvement of sustainability, we would like to objectives including other stakeholders. make the following remarks:

We have made a limited independent pre- 1) Extend the universe of stakeholders verification of the information contained in Materiality beyond those consulted in this report, the Sustainability Report 2010 of ESVAL S.A thereby enhancing the inclusiveness and pursuant to the ISAE 3000 and AA 1000 This report used the same criteria established materiality of some aspects to be reported standards, which is limited to asking those in the previous report to determine those on in the report. For example, local people who generated the data questions, aspects and data that might be relevant when authorities, commercial and industrial reviewing analytical procedures and analyzing drawing up the 2010 report. Materiality was customers, controlling and regulating the data sources, and checking the procedures, complied with by analyzing data from external bodies, shareholders, etc. systems and processes used to issue the report. sources like benchmarking sustainability reports of other water utilities, reviewing press 2) Improve the presentation of data tables The content of such report is the responsibility articles on significant issues to be developed by numbering them so it is easier to make of the management of ESVAL S.A.. Our in the sustainability report 2010 and about reference to them. responsibility entailed reviewing the report and which ESVAL S.A. had to provide information. making conclusions about the data furnished Other sources considered to lend materiality by ESVAL S.A. in its Sustainability Report to the report’s data were the workshops held Conclusions 2010, in accordance with the pre-verification with community representatives and the and scope outlined below. The content was analysis of the on-line surveys of company Considering the review of the report and appraised and approved. employees. the remarks made, the following are our conclusions: The review was carried out at the corporate offices where the data and information Response Capacity • There is no evidence of any aspect leading contained in the report was examined by us to believe that the information reported means of: Having analyzed and reviewed the information contains material errors. contained in the sustainability report 2010 of ESVAL S.A., it was suitably reported, generally • There is no evidence of any aspect leading • Reviewing the processes, procedures and with a degree of segregation and depth us to believe that the Sustainability Report systems for gathering, compiling and making it easy to read and comprehend. 2010 of ESVAL S.A. was not drawn up reporting the data. in accordance with the G3/2006 guidelines on issuing sustainability reports of the • Reviewing the pertinent information Balanced Information Global Reporting Initiative (GRI). according to its materiality. The data was presented in a balanced way, • There is no evidence of any aspect leading • Pre-verifying and consolidating the data providing the positive and negative aspects us to conclude that the self-assessment furnished by ESVAL S.A.. of ESVAL S.A.’s performance, thereby giving made by ESVAL S.A. does not correspond the readers of the 2010 report a suitable and to level A, in accordance with the standards • Reliability of the data and information in weighted vision of the company’s sustainability laid down in the G3/2006 guidelines on the report by means of the sources cited results. issuing sustainability reports of the GRI. and access to complementary information.

• Selective analysis of qualitative and Information Comparability quantitative information of the GRI indicators included in the report. The information provided in the report in many cases allows for a three-year comparison • Analyzing whether the structure and timescale (2008-2009-2010), showing the content of the Sustainability Report 2010 trends of the various aspects reported. Mercedes Vita H of Esval S.A. was in keeping with what is HSE Operational Manager set forth in the G3 guidelines of the GRI. Bureau Veritas Chile Our Independence

Inclusiveness As a way of assuring our independence in the pre-verification of the sustainability report, Santiago, Chile, June 1, 2011 In regard to this principle, it was evident that we adhered to the guidelines of the Code the 2010 report has made progress with of Ethics of the International Federation of the stakeholders consulted. To draw up this Accountants (IFAC).

Business Name Esval S.A.

Taxpayer Code Nº 89.900.400-0

Type of Company Publicly-Traded Corporation

Securities Registry Number Nº0348 of October 24, 1989

Address Cochrane 751, Valparaíso, Chile

Telephone (56-32) 2209000

Fax (56-32) 2209502

Post Code 2370020

Website http://www.esval.cl

Design & Production CyK Diseño Ltda.

Editing & Advice on the GRI Guidelines Beatriz Calderón Alzate and Sandra Bustos www.esval.cl