Professional Documents
Culture Documents
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CONTENTS
About this Report Message from Our Chairman and President & CEO About the Aboitiz Group Our Vision of a Better World: Sustainability in Aboitiz Governance Our Stakeholders SUSTAINING PROFITS Sustaining Business Cleanergy: More than a Brand SUSTAINING PEOPLE Employee Engagement Caring for Communities Generosity amid Tragedy: The Ondoy assistance network SNAPs Brew for Sustainability VECO Bill in Braille SUSTAINING PLANET Addressing the Climate Change Challenge Waste to Energy: The Pilmico Biogas Project A Billion Trees for the Planet The Business of Sustaining the Planet Our Passion for a Better World Self-declared GRI
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Our financial and economic performances are discussed in detail in the 2009 Annual Report of AEV while our different corporate social responsibility activities are listed in the annual report of Aboitiz Foundation. Both reports may be accessed at www.aboitiz.com. Undeniably, reports like this one may serve to enhance corporate image through compliance to global reporting standards. But to us, compiling this report and subsequent reports of this kind is part of our commitment to promote sustainability in the Group, to our stakeholders and in the environment, in which our existence is largely dependent on. By engaging in sustainability reporting, we reiterate our commitment and sincerity to protect the planet and its resources as well as our communities and our stakeholders. We consider the process involved in the preparation of this report a learning endeavor. The documentation and consolidation of the sustainability initiatives of various business operations of the Group will point out areas where more interventions can be done, as well as improvements that we need to implement for existing or ongoing activities. From this baseline report, we seek to enhance our data collection processes and report on more GRI indicators in the future as a means to improve our sustainability program. We acknowledge that creating this first report is a learning process for us. However, this endeavor allows us to measure ourselves against a global best practice standard. By releasing this report annually, we will be able to monitor and track our impacts on the triple bottom line objectives of sustainability. We owe our success to our markets, our public and our stakeholders. We will continue to update them where sustainability is concerned and continue to partner with them to realize our vision for a sustainable business. We find value in the feedback of our stakeholders as we seek to continuously improve the way we develop our future sustainability reports. Kindly convey feedback about this report through our Sustainability Team by sending an e-mail to sustainability@aboitiz.com.
REJUVENATE NATURE
REUSE / RECYCLE
REDUCe
RENEWABLE ENERGY
RECHARGE COMMUNITIES
Even before this global advocacy was coined sustainability, the Aboitiz Group already had sustainability practices implemented in many of its component businesses. We believe that our existence over the long term will depend on how well we manage our operations and how prudently we utilize resources.
doing and, hopefully, inspire others to go the same path. The tagline for the Groups sustainability effort, Passion for a Better World, infuses the Aboitiz trait of passion into this endeavor. In the 1980s, AboitizPower pioneered in the development of small hydroelectric plants and today leads in building or developing major hydro projects across the country. The company is driven by the bigger agenda to provide renewable energy options that are friendlier to the planet. Last year, we added geothermal energy to our renewable power portfolio. Our Sibulan hydro plant in Davao is a Clean Development Mechanism (CDM)-registered project, and we have pending registration applications for other projects in our hydropower business. Pilmico Animal Nutritions hog waste biogas facility in Tarlac is also a potential CDM project. CDM projects reduce greenhouse gas emissions, displacing energy that would have come from fossil fuel-fired power plants. These projects also earn carbon credits that can be traded in the worldwide market. In 2009, AboitizPower distribution utilities, if considered as one entity, ended the year with a systems loss well below the 9.5% cap established by regulator. In effect, they purchased less power than what the cap stipulates for the amount of power they sold. This saved them from having to purchase 83,000 megawatt hours (MWh) of power for the year and was achieved through proper network investment and maintenance.
& CEO
In 2008, a group of AboitizPower companies initiated to do a greenhouse gas inventory in their facilities. In 2009, these companies reported decreases in fuel-based and process-based emissions, as well as a reduction in emissions from purchased electricity. Awareness of emission volumes has inspired more prudent consumption practices for energy and fuel in our companies and has motivated us to scale up the greenhouse gas inventory to include more companies in the Aboitiz Group. We consider Cleanergy, the AboitizPower brand of clean and renewable energy, to be our biggest contribution to sustainability. We believe Cleanergy will help pave the way for our power consumers to reduce their carbon footprint while maintaining a certain lifestyle. We envision a world where business and people use clean and renewable power to energize their activities. In the transport sector, Aboitiz Transport System constantly explores ways to make its vessels more fuel efficient. Different initiatives include fleet re-tooling, speed reduction and fuel type changes. The Aboitiz Group continues to strive for a balance between People, the Planet and Profit or the 3P Balance. We are conscious that our capacity to carry a robust enterprise into the next generation will be determined by how well we can achieve the 3P Balance today. This triple bottom line challenge exhorts us to look beyond profitability and consider how we can mesh social development and environmental stewardship into our operations. Over the past 21 years, the Aboitiz Foundation has actively worked towards sustainable development through various CSR projects focusing on education, enterprise development, primary health and child care. While environmental stewardship is not new to Aboitiz, we have decided to include it as a specific focus area. By committing as a Group towards this end, we are confident we can go even further. In watershed management, waste generation and disposal and emissions generation lay opportunities to integrate sustainability into our operations. With this in place, we should be in a better position to work on creating a balance between economic growth, social development and environmental management. Despite our existing initiatives already in place, we know that there is still so much more we can do. Our goal moving forward is to better manage the Group sustainability efforts by measuring and tracking all our sustainability initiatives. We formed the Sustainability Team with the mandate to assess, conceptualize, implement and monitor sustainability programs that will cut across the boundaries among the business units. There is an ongoing Race-to-Reduce contest in the Aboitiz Group today that persuades our business units and employees to manage their consumption of energy, water and paper. We intend to expand the habit of prudent consumption to other resources as well. We are excited at the huge positive impact this groupwide campaign will have on our sustainability efforts in terms of raising awareness and inculcating an environment-conscious mentality in everyone. Our sustainability initiatives are inspired by three objectives: broaden the use of renewable energy, increase efficiency in our operations, and practice the habit of conserving resources whenever possible. This is how companies and individuals alike can make a positive impact on the environment. We call on our stakeholders, employees and partner communities to be our companions as we continue in our journey. We are the present generation whose current needs must be met but we must not deprive and compromise the ability of the future generation to do the same. This is the essence of sustainability that we in the Aboitiz Group together with our partners aim to fulfill.
Erramon I. Aboitiz
PRESIDENT & CEO
ABOUT THE
ABOITIZ GROUP
The Aboitiz Group of Companies is made up of more than 60 companies with roughly 28,000 team members. The Group includes Aboitiz Equity Ventures Inc. (AEV), the publicly listed holding and investment management company of the Aboitiz family with core investments in power, banking, food and transport. The Aboitiz Group also has investments in real estate, construction and shipbuilding. The Group proudly espouses Passion for Better Ways, which drives the organization to lead, excel and serve. Driven by such philosophy, the Aboitiz name has become synonymous with quality products and services as the Group focuses on strengthening its core competencies. The same passion motivated the Aboitiz Group to adopt sustainability in its business agenda. Encapsulated in its Passion for a Better World banner, it established
the Sustainability Team to conceptualize, implement and monitor sustainability related programs within the group. Sustainability adopts the agenda of creating a balance between profit, people and the planet. While any corporation is motivated by further growth, the Aboitiz drive to lead, serve and excel is coupled by social responsibility. Corporate social responsibility has been institutionalized into the organization through the Aboitiz Foundation, Inc., with particular focus on education, primary health and child care, and enterprise development. Growing concern on the effects of climate change and global warming has also prompted the various clusters within the Group to develop and implement own initiatives to reduce carbon dioxide emissions.
MANILA
CEBU
DAVAO
ABOITIZ SUSTAINABILITY
In our vision to be the neighbor of At Aboitiz, each of us shares the Groups passion to seek for better ways, the main force that propels us to strive for a better world. Thus, driven by our brand Passion for Better Ways, we developed the Passion for a Better World program, the embodiment of our vision of sustainability. The Passion for a Better World program revolves around what we have defined as the five pillars of sustainability: rejuvenate nature, renewable energy, reduce, re-use/recycle, and recharge communities. With these five pillars, we envision to establish a balance between people, planet and profit. We recognize that the Groups survival largely depends on the well-being of the people we serve and the state of the planet we all live in. Each of our business operations unit has developed and implemented activities that are aligned to this triple bottom line ideal. choice, the Aboitiz Foundation (Foundation) will continue to implement programs on education, health and infrastructure. Its goal is to build and uplift communities as we as a group grow in business. To attain its objective, the Foundation will continue to build schools, provide school equipment, extend training to teachers, and provide scholarships to deserving students, some of whom have been absorbed as employees in Aboitiz companies. The Foundation will also continue to implement a microfinance program to improve the livelihood of some marginalized communities. The Groups vision for the environment is to nurture a healthy ecosystem, especially in areas where our businesses are located. Business growth will always be a
We can find happiness in protecting the world around us, not only because we cherish it for its awesome beauty, power and mystery, but because we cherish our fellow humans, those who live today and those who will live tomorrow. Jacques-Yves Cousteau, ecologist and activist
priority agenda but for businesses to grow, we have to take good care of the resources we utilize. Our tree planting efforts continued through 2009. For the first time, we organized a simultaneous tree planting activity in different areas in the country for our companies and, as a group, planted 30,000 trees in one day. We took an inventory of the watersheds in areas where we operate and made the commitment to establish reforestation parks all over the country. In 2009, as part of our contribution to efforts to protect the planet, we continued to monitor our carbon emissions from our consumption of energy and implement ways to reduce. At the national level, our power utilities launched a campaign to encourage consumers to switch to energy-saving compact fluorescent lights (CFL). We also made substantial investments in the development of renewable energy, resulting in the launch of our clean energy brandCleanergy. Cleanergy is our biggest contribution, so far, to efforts to reduce global carbon dioxide emissions and slow down climate change. Our electric utility companies Visayan Electric Co. (VECO) in Cebu and Davao Light & Power Co., Inc. (DLPC) in Davao spearheaded a load-shedding program to alleviate the effects of power shortage in their franchise areas. In Davao, DLPC initiated a time-of-use assessment of air conditioning system usage in their offices to determine possibilities to reduce energy consumption. AboitizPowers Sibulan Clean Development Mechanism (CDM) Project is set to earn carbon credits. The project of our animal nutrition unit, Pilmico Animal Nutrition Corporation, which involves recycling animal wastes into energy, and the Binga Hydroelectric Plant rehabilitation under SN AboitizPower are among the CDM solutions that we have submitted to the executive board of the United Nations Framework Convention on Climate Change. In addition to these projects, the different business operation units of the Group continue to implement reforestation and wildlife conservation programs in the community. The Passion for a Better World program is a work in progress. We know we have barely scratched the surface of the countless opportunities that are open to us to make a bigger contribution to the sustainability of this planet. To tap these opportunities and optimize our potential, we are consolidating sustainability efforts of each business operations unit. We created the Aboitiz Sustainability Team to oversee group-wide sustainability-related initiatives. In line with this consolidation move, we will expand in 2010 the greenhouse gas emission inventory that began with AboitizPower to encompass all business units of the Group. This will help us manage the greenhouse gas emissions of the Groups operations. Like any endeavor, the success of our efforts to attain sustainability needs the active participation of everyone in the Group. We are raising awareness within the Group to promote understanding among employees on the need to lower the Groups greenhouse gas emissions and protect the planet. Each employee can do his share by doing something as simple as shutting off unnecessary lights, putting computers on sleep mode or recycling paper. We have made a commitment to make this sustainability program work, not only to make us look good and protect our bottom line, but to make sure that our children and their childrenthe future generationshave a place to live in, food to eat, water to drink and air to breathe. By making this planet sustainable, we are ensuring a healthy environment for our businesses to thrive in.
GOVERNANCE
Business operations within the Aboitiz Group are based on a set of core values that includes integrity, fairness, prudence, trust and social responsibility. These values coincide with the principles of good corporate governance, which guide the decisions of the Board of Directors. By adhering to good corporate governance principles, the Group is able to protect its business interests and ensure the sustainability of its services and programs. Disclosure and transparency are also signified through company information statement, disclosures to the Philippine Stock Exchange and the Securities and Exchange Commission.
CODE OF ETHICS
Compliance with good corporate governance is institutionalized within the Group with the establishment of the Code of Ethics and Amended Manual on Corporate Governance, which is observed from the level of Board of Directors to every member of the team. Committees within the Board of Directors have been formed to monitor and ensure compliance with these principles. The Board Corporate Governance Committee represents the Board in discharging its responsibility in relation to the Groups governance principles and guidelines, nomination of persons into Board, and Group senior leadership roles and compensation matters. The Board Strategy Committee represents the Board in discharging responsibilities related to the Groups business strategy and direction. The Board Risk Management Committee represents the Board in matters related to risk management. All the business dealings of the Group are also anchored on the Fair Dealing Policy, as stipulated in Code of Ethics and Business Conduct. The basis of the Fair Dealing Policy serves as the foundation of the Groups objective to outperform competition in a fair and honest manner, through superior performance. By believing in and observing these principles and policies, team leaders and members keep in mind the best interests of the Group and its stakeholders. Details regarding the Groups corporate governance can be found in the Annual Report, which can be accessed through www.aboitiz.com.
BOARD OF DIRECTORS
The direction of the Group is set by the Board of Directors, which ensures compliance with high standards and relevant laws and codes of business practices, as well as the adoption of best practices. The Board adheres to the Amended Manual on Corporate Governance of the Group, which defines the responsibilities and corporate governance policies of the Group. The manual is based on the Groups mission and vision, which is to provide Filipinos the basic goods and services necessary to meet the demands of a growing economy. The Boards primary objectives are: to improve shareholder returns; develop responsible, long-term investors; and achieve disciplined and sustainable growth. The Board of Directors is composed of nine members, two of which are independent. Each member of the Board is schooled in the principles of good corporate governance. The current Chairman of the Board is a non-executive director.
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WHAT WE COMMIT
Enhance shareholder value
HOW WE ENGAGE
Investor relations Analysts briefings Investor conferences One-on-one meetings and open line communication with analysts Stockholders meetings and annual reports
COMMUNITIES
Aboitiz Foundation programs for education and skills development, enterprise development, and primary health and child care Company-specific community development programs
EMPLOYEES
Financial and non-financial rewards Life-long learning through the Universal Training Program Talent Management Program
ENVIRONMENT
Compliance with regulations and legislations Efficiency in operating processes Greenhouse gas inventory Ecology enhancement programs
OUR
STAKEHOLDERS
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SUSTAINING BUSINESS
The health of a business organization is as good as the state of the market it serves, for the relationship between market and business is symbiotic: one cannot do without the other. A robust business performance is key to the Groups sustainability. However, to ensure that profitability lasts over generations, it is imperative for the Group to balance its growth with a strong social component and healthy environmental practices. The growth of the Group is testament to how well it has taken care of its markets and its environment. Despite the economic turmoil in 2009, businesses of the Aboitiz Group reflected growth. AEV President & CEO Erramon Aboitiz said: 2009 was a record year for AEV. It is very gratifying to see that all our businesses performed well last year despite the uncertain environment prevailing at the start of the year. To us, it confirms the validity of our business model and the resiliency of our businesses. In AboitizPower energy sales from generation grew by 167% from 1,728 GWh in 2008 to 4,619 GWh in 2009 with the inclusion of new generation assets which includes geothermal plants. Distribution utilities, on the other hand, increased their customer base by four percent. In 2009, distribution utilities served a total of 685,378 customers. The launching of Cleanergy, AboitizPowers brand of renewable energy, puts a strong identity on the renewable energy mix it generates. Cleanergy comes from hydroelectric and geothermal generation capacities. Growth in the banking sector is reflected in Union Bank of the Philippines net income rise of 109% in 2009 at P4.3 billion. City Savings Bank, a thrift bank, also saw its depositor base expand by 11%. The banking arm of the Group is in a position to attain further business growth through sound environmental practices. Opportunities exist in managing energy use, as well as water and paper consumption in offices and branches. These opportunities enable the banking sector to realize savings and contribute efforts to protect the environment. In the food sector, Pilmico reported an increase in its net income by 168% to P12 billion. Contributors to this significant growth are food, feeds and swine production. In 2009, ATS purchased one roro passenger vessel, two fast crafts and chartered two freighters. ATS performance for 2009 reflected a dip of 8% in revenues, partly attributed to the loss of one ship and a brief suspension of its vessels by the Maritime Industry Authority (Marina) Board after the SuperFerry 9 incident. AboitizPower serves a diverse market for it encompasses the generation and distribution aspects in the power sector. AboitizPower distribution companies serve a customer base of about 685,378 distributed among four basic types of markets: industrial, residential, commercial and other customers that include public and municipal services. Despite the lack of threat from competition, AboitizPower distribution utilities continue to innovate and find ways to improve their services. Some of these measures involve complex technical solutions like fully automated mapping and facilities management systems that allow the utility to detect malfunctions and abnormal usage by a customer, which could mean illegal tapping. Others may appear less complicated but are just as helpful, like billing statements in Braille for customers with impaired vision.
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In the financial services sector, UnionBank and City Savings Bank continue to implement ways to better serve their respective customers by using information technology and feedback mechanisms. Both banks cater to different market segments, operating in line with the Groups ideals to serve most, if not all, sectors of society. UnionBank is ranked the sixth biggest among private universal banks in the country. In food, Pilmico Foods Corp., one of the largest flour milling companies in the Philippines, obtained state-ofthe-art equipment to ensure the quality of its products. Pilmico also secured international certifications like the ISO 9001:2000, the International Organization of Standardization for quality management system, and Hazard Analysis Critical Control Points (HACCP), which ensure food safety. The Groups transport arm, Aboitiz Transport System Corp. (ATS) is the only integrated transport solutions provider in the Philippines. Aside from moving people (under brands like SuperFerry and SuperCat), ATS is also involved in moving cargo. Its brand, 2GO, offers supply chain solutions and provides ship management and manpower solutions worldwide under the Aboitiz Jebsen group. In 2009, all ATS vessels passed the Marinas audit and inspection and were cleared for sailing shortly after the brief suspension. ATS manifested resiliency, ably cared for survivors and assisted casualties after the SuperFerry 9 incident. Devastating typhoons also posed additional setback to ATS operations. The global economic downturn affected the international ship chartering business. In spite of the setback, opportunities induced a 1 billion topline expansion for the company. In real estate, AboitizLand exerts efforts to heed market needs and study trends to serve its present and prospective customers. The developer of residential, commercial and industrial properties in Cebu. AboitizLand recently developed a residential condominium community, The Persimmon, in Cebu City. In construction, Metaphil has adopted the Blue Ocean Strategy that enables it to create markets in an uncontested arena. The company serves domestic and international customers with construction and steel fabrication needs. While the Aboitiz Group acknowledges that business growth is foremost among its goals, it also needs to be accountable to carry this growth across generations.
CLEANERGY:
MORE THAN
A BRAND
Our mission is to make Cleanergy available to every Filipino. These were the words of AboitizPower President and Chief Executive Officer Erramon I. Aboitiz in describing the companys motive behind Cleanergythe brand of renewable energy produced by AboitizPowers geothermal and hydropower plants. Cleanergy represents the Groups commitment to sustainability and our strong desire to shape a better future for succeeding generations. Renewable energy makes use of renewable sources, like water, geothermal, wind, sun and waves. It is considered to be environment- and climate-friendly because the process of producing it does not emit carbon dioxide and other greenhouse gases that are blamed for accelerating climate change. AboitizPower has made significant investments in developing, acquiring and rehabilitating geothermal and hydropower plants to increase its green energy portfolio. In 2009, AboitizPower entered into an agreement to supply renewable energy to San Fernando Electric Light and Power Co. (SFELAPCO), a privately owned distribution utility in Pampanga. This agreement is a testament of how AboitizPower supports the Renewable Energy Law with Cleanergy. The agreement assures SFELAPCO of clean and reliable energy at a competitive rate. Since renewable energy is VAT exempt, SFELAPCO can offer lower average per kWh rate to consumers. AboitizPower hopes that consumers will make the green energy option and influence their distribution utilities to buy electricity from renewable sources. For the long-term, though, the Group wants more than to produce and sell green energy. It wants to be a catalyst of change. It aims to make consumers be aware that buying Cleanergy and patronizing companies that use green energy and sustainable production processes is the responsible thing to do for the benefit of the present and future inhabitants of this planet.
ENGAGING EMPLOYEES
The growth of the Aboitiz businesses is largely dependent on the human resource that is behind the day-to-day operations of the companies. Recognizing this, the Aboitiz Group considers its employees as business partners and stakeholders. As such, companies within the Group maintain a working environment that promotes respect for diversity among individuals and cultures, and safety in the work place. As of yearend 2009, the entire group had a workforce of 28,510. Each member of the workforce receives a healthy balance between financial and non-financial rewards, which are based on their meritorious performance. Aboitiz companies take advantage of every opportunity to promote the welfare of its employees and officers. The Group also wants to promote professional and personal growth among employees, that eventually bring benefits to the companies they serve. Thus, the Group extends many training opportunities for the continuing education of employees. Exemplary performers are developed through a
TOTAL
28,510
Talent Management Program, which is designed for the next generation of corporate leaders. In an organization as big as the Aboitiz Group, communication is of paramount concern. Thus, open lines of communication between management and employees have been established. These activities do not only allow management to cascade its visions to employees, but also strengthen teamwork, collaboration and cooperation in a highly diverse organization like the Aboitiz Group. This open and active interaction between management and employees is also a key to the success of the Groups sustainability program. For instance, its reforestation efforts made significant results because of the active participation of employees, who are instrumental in realizing our aim to reduce resource consumption of energy and water. In 2009, Aboitiz employees participated for the first time in Earth Hour. Some Aboitiz offices organized Earth Hour get-together sessions to celebrate and bring attention to the value of shutting off lights for one hour.
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COMMUNITIES
The Aboitiz Foundation, Inc. (Foundation) implements programs manifesting the Aboitiz Groups passion to serve and help marginal sectors in communities where its businesses operate. As the social development arm of the Aboitiz Group, the Foundation addresses the social development needs of less privileged communities in the country. Its key project areas include education, enterprise development, primary health and child care. The Foundation also implements projects in partnership with Aboitiz Group employees and companies. In 2009, the Foundation donated eight classrooms, benefiting thousands of public school students nationwide. It also facilitated the donation of 123 computers and refurbished two computer and science laboratories. It assists 1,172 scholars. In infrastructure, the Foundation donated a water system. For livelihood development, it extended loans totaling an estimated 10 million. In education, the Foundation and Davao Light & Power Co. helped build school buildings with science laboratories and library hubs in the community. They also donated computers to public schools and put up a scholarship program for underprivileged children in Davao. With Pilmico, the Foundation set in place a scholarship and educational enhancement program. Computers were also donated to public schools in Pilmico host-communities. Together with Metaphil, the Foundation established a vocational training facility for public high schools. In partnership with Hedcor, the Foundation donated computers and repaired public school facilities in Benguet. In Davao, it also donated computers, and built classrooms and comfort rooms. Hedcor also has a scholarship program for deserving and underprivileged students in Davao. The Foundation and AboitizLand donated library kits and e-skwela centers. They also established a culinary arts training program in a public high school. With Balamban EnerZone (BEZ), the Foundation gave computers to public high schools in Balamban and sponsored career orientation and environmental awareness seminars in the same town. Together with AboitizPower, the Foundation distributed books to public schools and conducted workshops to improve the quality of public education in local communities. Outside of education, Pilmico and the Foundation
CARING FOR
sponsored church repairs and the Gawad Kalinga housing program for the underprivileged. Also through the Foundation, Subic EnerZone donated an ambulance to the local government. UnionBank donated books on values to 2,543 schools that benefited 351,304 students and 8,334 teachers nationwide. The Aboitiz Group, through the Foundation, continues to find ways to contribute to the welfare of the communities where Group companies operate. Common projects that can be implemented by companies in the Group together with the Foundation are identified. As Albert Einstein had said, Only a life lived for others is a life worthwhile.
9.84 million
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COMMUNITIES
CARING FOR
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VECO BILL
IN BRAILLE
For visually impaired persons like Erik Santos, trust means the world to them. In financial transactions, they have to trust the other person will pay them right or give them the correct change. In the absence of trust, they use their senses. The Visayan Electric Co. (VECO) has realized that the market it serves has widely diverse needs, like those of the visually impaired. Despite the absence of competition, VECO has taken the meaning of service to another levelit incorporated the Braille system into its billing statements. Now, visually impaired customers of VECO, like Erik, can see for themselves how much electricity they consumed in the past month. Erik, who lives in Guadalupe, Cebu City, says the VECO bill in Braille is helpful to people like him who also shares in the households utility bill payments. Now, I am sure how much my share is, because technically speaking, I can read the bill. It has also helped us manage our bills and avoid being delinquent in our payments, he adds. Erik hopes that other utility companies will replicate what VECO has done.
ADDRESSING
Climate change threatens all forms of life on this planet: it causes global temperatures to rise, resulting in the bleaching of our coral reefs, the Filipinos main source of protein; and extreme weather disturbances, like El Nio that causes drought and stronger typhoons like Ondoy, which flooded many parts of Metro Manila last year. Although not immediately felt, sea levels are rising due to climate changethe result of the melting of ice caps in the polar regions caused by rising temperatures. This phenomenon threatens small islands and coastal communities, which can be found everywhere in the Philippine archipelago. Climate change is caused by high levels of greenhouse gases, like carbon dioxide, in the atmosphere. To slow down climate change, we have to reduce the amount of carbon dioxide in the atmosphere. One way is to plant more trees. Another strategy is to reduce emissions from the source, including industrial processes energy generation from fossil fuels like coal, and the use of transport vehicles that use traditional fuel. The climate change issue poses a challenge to people and entitieswhether they are in government, business or ABOITIZ POWER CARBON EMISSION (in tons CO2 (tCo2)) Direct Emission Vehicle / Equipment Process Emission Indirect Emission Purchased Electricity TOTAL 2008 1,764 5,489 3,602 10,855 2009 1,733 4,296 2,948 8,977 -18% -17% -2% -22% % change
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WASTE TO ENERGY:
communityto act for the sake of all living beings on the planet. Aboitiz Group companies have risen to the challenge. They have been implementing tree planting and watershed rehabilitation programs in their respective communities. Several companies like Metaphil have also conducted mangrove reforestation projects. Aside from replenishing fisheries, mangrove forests have been identified as a defense against huge waves. In 2008, Hedcor joined the Billion Tree Campaign of the United Nations Environmental Programme. Its commitment to plant 25,000 trees was completed in 2009. On October 10, 2009, some 30,000 seedlings were planted simultaneously in different areas in the country by 1,300 volunteers from 20 Aboitiz companies, together with partners in the communities.
The tree planting project is sustained by collaborating with partner institutions like the Ramon Aboitiz Foundation, Inc. (RAFI), which provides technical assistance and the seedlings as it has its own nursery of indigenous tree species. Planting tree species that are indigenous to the area helps protect the biodiversityplants and animal lifein the ecosystem. Also in 2009, several AboitizPower companies monitored their carbon emissions. They looked at company-owned vehicles, purchased energy and other indirect sources. AboitizPowers total carbon emissions reached 8,977 tons in 2009 . To bring down its total emission levels, the company has identified tree planting and company-wide efforts to minimize use of energy and fuel consumption.
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The plan is to expand this carbon assessment program to include all companies Group-wide. A carbon emission calculator is available to enable them to compute their individual carbon footprint. This will then serve as the basis for a carbon emissions management plan. Aboitiz Transport System (ATS) has reduced the fuel consumption of its seafaring vessels by implementing different initiatives that include fleet re-tooling, speed reduction and fuel type changes. ATS also implemented procedures in handling Oily Water Separator (OWS) overboard discharge and Emergency Bilge Suction valves to prevent pollution at sea, It is currently working to fully implement ISO 14001-Environmental Management System (EMS) requirements onboard all its managed vessels to further enhance its commitment to the protection and preservation of the marine environment. Distribution utilities (DUs) under AboitizPower also promote the shift to energy-saving lights like the compact fluorescent lamps (CFLs). DLPC and VECO distribute CFLs among their customers in exchange for incandescent bulbs. VECO distributed 47,500 CFLs in 2009. Group-wide, employees and officials are enjoined to reduce energy use, like turning off unused lights and computers, traveling less and using technology more, such as video conferencing, whenever possible. Employees are also required to re-use paper. UnionBank, for its part, uses recycled paper for its community programs like the students handbooks and teachers workbooks that
the Bank distributes. It has also replaced the lights used on its signage and offices with more energy-efficient types, like LED and CFL. It has installed drift eliminators for its cooling towers to reduce water consumption and lessen the need to clean windows. DLPC has engaged a time-of-use assessment on the use of its air conditioners to determine how to cut energy consumption. The company is also supporting the Balik Baterya program to ensure proper disposal of used-up car batteries as part of its pollution control measures. VECO, on the other hand, posts Save Power, Save Money, Save the Environment tips on its website to educate consumers. AP Renewables, Inc. (APRI) recycled a total of 10,000 cubic meters of water from its operations. It also maintains a storage facility inside the plant for temporary storage of industrial waste. Mactan Economic Zone 2, AboitizLands industrial development, recycles 30% of its waste water for nonpotable use. Pilmico Animal Nutrition Corporation (PANC) recycles about 70% of water in its swine farms. The company has initiated the Science of Plant Utilities Control program, which intends to develop a method of managing plant utility costs such as power, air handling systems, water, steam, and compressed air. Another way to reduce carbon emissions is to tap renewable sources of energy. One of the notable projects within the group is PANCs biogas system, which converts animal waste into energy. Since its business includes energy generation, AboitizPower is in a better position to look for renewable sources of
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2009 ABOITIZ GROUP-WIDE SIMULTANEOUS TREE PLANTING Number of volunteers nationwide Number of trees planted Total carbon dioxide offset 1,300 30,000 681 tCO2
power. With sustainability as ultimate goal, AboitizPower is strengthening its renewable energy portfolio with the development of more hydropower and geothermal capacity. The company launched Cleanergy, its brand of clean and renewable energy, with this in mind. The distribution utilities are also tapping into more renewable energy sources. As it is, 62% of VECOs power already comes from renewable sources. AboitizPowers venture into renewable energy puts a bigger emphasis on the need to address climate change. Droughts could jeopardize the capacity of hydropower plants. The biogas facility at PANC in Tarlac results in a savings of over 220,000 kWh per month. These initiatives to protect the environment are guided by the same principle that helps companies come up with programs to help the communitythat of achieving a sustainable balance between people, planet and profit. AEV President & CEO Erramon I. Aboitiz, has stated this goal clearly: As we pursue our goals, let us be cognizant of our commitment to achieve a sustainable balance between profit, people and the planet.
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THE BUSINESS OF
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While climate change is bad news for the planet and every living being on it, addressing the problem has opened new business opportunities for the Aboitiz Group. Despite many challenges, renewable energy development makes good business sense to the Group. By growing its renewable energy portfolio, the Groupthrough AboitizPoweris able to sell green energy and earn carbon credits under the Clean Development Mechanism (CDM) while caring for the planet and the communities it serves. By nature, renewable energy is sustainable because it comes from sources that are not finite, unlike fossil fuels like coal and oil. Water is a renewable resource that is used by hydropower electric plants owned and operated by a number of AboitizPower hydro generation companies. In 2009, AboitizPowers hydro generation facilities registered energy sales of 1,115 gigawatt hours (GWh), an 18% increase from 2008 sales. Another renewable source is steam. The Philippines is recognized as the second largest producer of geothermal energy worldwide. To further strengthen its renewable energy portfolio, AboitizPower acquired two geothermal power assets from the Power Sector Assets and Liabilities Management Corporation (PSALM) in 2009. This further boosted sales from renewable sources by an additional 1,886 GWh coming from its geothermal assets. The generation of hydroelectric and geothermal energy has bolstered AboitizPowers Cleanergy brand offering. Cleanergy, which is now a commodity on the Luzon Wholesale Electricity Spot Market, is the green alternative to energy that is generated by fossil fuel-based power plants. It is considered the energy option for consumers who care for the planet and the next generations.
CDM PROJECT
Estimated Annual Emission Reduction (in tCO2)
Hedcor Sibulan Hydroelectric Plant Pilmico Animal Nutrition Biogas Facility SNAP Binga Hydroelectric Plant SNAP Ambuklao Hydroelectric Plant
Under the carbon emission trading system devised by the United Nations Framework Convention for Climate Change (UNFCCC), the Aboitiz Groups initiatives in renewable energy development and greenhouse gas reduction have the potential of earning additional revenue from sales of carbon credits. Under the CDM, industrialized countries with greenhouse gas (GHG) emission commitments can invest in GHG reduction projects in developing countries, instead of setting in place more costly solutions in their own areas. Hedcor Inc., a company under AboitizPower, has registered its Sibulan (Davao) hydroelectric operation as a CDM project. It is estimated to generate 95,000 in carbon credits annually, starting 2010. SN Aboitiz Powers (SNAP) Ambuklao hydropower plant is in the process of registering as a CDM project and has the potential to earn 155,000 credits a year. SNAP has secured a letter of approval from the Department of Energy for the CDM enlistment of Ambuklao. Its Binga plant, on the other hand, has the potential to earn 23,000 credits annually. Pilmico Animal Nutritions anaerobic digester project at its hog farm in Tarlac has also applied as a CDM project. The project, which converts hog waste to energy, was lined up for validation with the UNFCCC in 2009, prior to registration. Although renewable energy development is still a relatively costly venture in the Philippines, the Group believes that the future of the planetand, therefore, all its business operationsdeserves nothing less.
2009 ENERGY SALES FROM RENEWABLE ENERGY GENERATION Hydroelectric Geothermal Energy Sales
(in GWh)
1,115 1,886
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A BETTER WORLD
Sustainability is more than a corporate image builder for the Aboitiz Group. It is a cause, one that is driven by our resolve to have a better place for all inhabitantspresent and futureof this planet. Passion for a Better World is our battle cry, the fuel that drives each and every member of our corporate organization to stay committed to our sustainability agenda. With this agenda in mind, we in the Aboitiz Group will continue to find ways and implement programs that will slow down climate change and mitigate its effects on communities and our resources. The challenges we will face will be daunting but we also realize that inaction will have more dire consequences for the planet, the people we serve and our profits. Thus, moving forward, we will craft an integrated sustainability program for the Group. The program will include a wider greenhouse gas (GHG) inventory strategy that will enroll a bigger number of companies in the Group. The GHG inventory is a key step in creating a GHG management program that will involve bigger reductions in Group-wide emissions. We believe our existence as a corporate entity is tied to the integrity of our natural resources, as depletion of these resources will mean the end of our businesses and our markets. Efforts to sustain ecosystems will be developed. To protect nature and our corporate interests,we will intensify reforestation efforts wherever possible. Tree planting, which was once considered a relaxation and recreation activity for employees, will be strengthened and multiplied. Together with our partners, we will establish more reforestation parks all over the country. The Race-to-Reduce Challenge will encourage different companies within the Group to manage their energy use, and water and paper consumption. The objective is to reduce and make prudent use of resources. The ultimate goal for this program is to minimize GHG emission and cut down resource consumption. By doing so, we will be able to reduce the Groups overall carbon footprint and help address the effects of climate change. The Group will continue to tap opportunities under the Clean Development Mechanism (CDM) principle beyond 2012. Opportunities in this area will not only allow us to help efforts related to climate change but also enable us to tap revenue potentials. As we express commitment to the sustainability agenda, we remain focused on our stakeholders: our shareholders, employees, customers and communities. In every endeavor, including the pursuit of the sustainability agenda, we always have the interests of our stakeholders in mind. We will continue to expand in different dimensions where we see potentials for our businesses, as we consider profit and shareholder value as primary responsibility. On the other hand, we will further strengthen our capacity in social and environmental stewardship, which are just as important in the sustainability of the Aboitiz Group as a corporate entity.
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25
About this report About this report About this report Not applicable Not applicable GRI G3 Level C Disclosures
3 3 3
26
10 10 10 11
11
ECONOMIC PERFORMANCE INDICATORS EC1 EC2 Direct economic value generated Financial implications and other risks and opportunities for the organization's activities due to climate change Sustaining Business The Business Of Sustaining The Planet 12 22
ENVIRONMENTAL PERFORMANCE INDICATORS EN5 EN6 Energy saved due to conservation and efficiency improvements Initiatives to provide energy efficient or renewable energy based products and services, and reduction in energy requirements as a result of these initiatives Initiatives to reduce indirect energy consumption and reductions achieved. Strategies, current actions, and future plans for managing impacts on biodiversity Total direct and indirect greenhouse gas emissions by weight Initiatives to reduce greenhouse gas emissions and reductions achieved. Addressing Climate Change Challenge 18
20
EN7
21
EN14
Passion for a Better World Addressing Climate Change Challenge Addressing Climate Change Challenge
24 18 18
EN16 EN18
EN26 Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation SOCIAL PERFORMANCE INDICATORS LA1 LA3 Total workforce by employment type, employment contract Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations Programs for skills management and lifelong learning that support the continued employability of employees Nature, scope and effectiveness of any programs and practices that assess and manage impacts on communities
20
14 14
LA11
Employee Engagement
14
SO1
15
Passion for a Better World Sustainability Report 2009 For online version of this report: http://www.aboitiz.com For further information on Aboitiz Sustainability, contact: Mail to: marge.gravador@aboitiz.com Telephone number: (6332) 4111839 Or write to: Aboitiz Sustainability Aboitiz Corporate Center Gov. Manuel A. Cuenco Ave. Cebu City, Philippines 6000 Email: sustainability@aboitiz.com
BACK COVER
The cover and inside pages of the 2009 Aboitiz Sustainability Report is printed on FSC- certified Beckette Expression recycled papers that contain at least 30% post-consumer waste recycled fiber. It is made carbon-neutral by neutralizing its thermal energy emissions with Verified Emissions Reduction credits (VERs). In addition, 100% of the electricity used in manufacturing this grade is entirely offset by Green e-certified wind certificates. All virgin fiber content in Beckett Expression is elemental chlorine-free (ECF) and all postconsumer recycled fiber content is process chlorine free (PCF).