Corporate Governance Message from EDC’s New Chairman and CEO Federico R. Lopez
Corporate governance has always been an intrinsic part of Energy Development Corporation’s (EDC) business operations. Corporate transparency, accountability and integrity – cornerstones in building a system of corporate governance – are ingrained in the day-to-day dealings of our officers and employees.
As I assume the helm of leadership as your chairman and CEO, we intend to continue and build upon what our predecessors have so inspiringly accomplished in its pursuit to comply with the globally accepted tenets of corporate governance.
Since the adoption of EDC’s Corporate Governance Manual in November 2006, there have been a number of significant accomplishments and improvements towards compliance to these tenets of corporate governance.
To date, we have established a well-structured and functioning Board. Composed of 11 directors, three are independent directors who are experts in the fields of energy, capital markets and investments, banking, accounting, finance and law. We, at EDC have decided to go beyond mere compliance to strict adherence and commitment to corporate governance principles.
In the creation of Board Committees, while the SEC’s Corporate Governance Code only required the formation of an Audit; Nominations; and Compensation committees, we have gone a step further by establishing five Board Committees to support the company’s various functions.
We have an Audit and Governance Committee to ensure the integrity of our financial reports and compliance with regulatory requirements; a Nominations and Compensation Committee to evaluate the qualifications of all persons nominated to the Board and to other positions requiring appointment by the Board; a Risk Management Committee to manage and mitigate possible risks; an Operations Committee which ensures transparency in its procurement process and business dealings; and a Corporate Social Responsibility Committee which oversees strategies and programs for stakeholders and sustainability initiatives.
Recognizing that sustainability is intrinsic in the continued viable operations of EDC, sustainability efforts by the company were highlighted in the Integrated Annual and Sustainability Report for 2009. This Sustainability Report was based on the stringent Global Reporting Initiative (GRI) Guidelines. As such, performance indicators used in the Integrated Annual and Sustainability Report were subjected to the principles of materiality, completeness and stakeholder inclusiveness.
Beyond these legal requirements, we have set up a Compliance Office which ensures the company is compliant with the provisions and requirements contained in the company’s Governance Manual. The Compliance Office is primarily tasked to represent the company before the Securities and Exchange Commission (SEC) and Philippine Stock Exchange (PSE).This office reports to the Chairman of the Board through the Audit and Governance Committee.
We are pro-active in protecting the rights of our shareholders, particularly our minority stockholders. As such, our Governance Manual recognizes the following stockholders’ rights: voting right, pre-emptive right, inspection right, right to information, right to dividends, and appraisal right.
In terms of disclosure, we have fully complied with the disclosure rules of the PSE and the SEC. In particular, our Governance Manual includes a commitment of the Board to fully disclose, at all times, material information and/or transactions that could potentially affect the market price of the Company’s shares and such other information.
It is heartwarming to note that our strict adherence to corporate governance did not go unnoticed and has earned for the company high scores of compliance with the score card set by the independent Institute of Corporate Directors (ICD).
In 2010, EDC earned a Gold Award from the ICD for obtaining an overall average of 95.4% The company earned excellent ratings in all categories- Rights of Shareholders, 100%, Equitable Treatment of Shareholders, 92%, Role of Stakeholders 91%, Disclosure and Transparency, 96% and Board Responsibility, 96%.
We have also embarked on a Corporate Governance Improvement Project in partnership with the Asian Institute of Management’s Center for Corporate Governance.
The project has resulted in several recommendations that have already been approved by the Board to further enhance and strengthen our corporate governance.
Among these are periodic training sessions on risk management for all supervisors and managers to ensure a continuing high level of competence and commitment; implementing an aggressive and continuing program to inculcate the principles underlying good corporate governance in EDC’s employees at all levels in all the sites. We have also done a restructuring of the organization at the sites to increase effectiveness of leadership and improve accountability. Along with this, an integrated and extensive skills and competence building program was launched. We have also implemented a comprehensive modern Enterprise Resource Planning (ERP) system across the company. A modern ERP system would integrate different data and systems into one platform making it more efficient. It would also allow for timely and accurate exchange of information among the sites and offices.
To empower Local Government Units and community organizations, EDC is entering into partnership arrangements with them to further support various community projects. With an outstanding record in corporate social responsibility (CSR), the company takes a holistic approach to community relations, with most of its CSR programs having been conceived, planned and implemented with inputs from the local communities. Our HELEN program covers health, education, livelihood, and environment development activities aimed at improving the condition and well-being of the communities and our stakeholders in the various sites of EDC.
Even with all these steps towards strict adherence to corporate governance principles, we will continue to review our policies and processes including our Governance Manual to address the dynamic changes in the industry, government legislation, administrative regulations and international best practices.Return to About CG