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Human Capital

Empowering an Agile Workforce

In line with our mission, vision, and values, EDC is committed not only to provide clean, renewable power, but also to contribute to national development. We hold ourselves to the highest standards for leadership and excellence in the social arena. We believe that doing good is good business.

In the course of our operations, we engage with a network of internal and external stakeholders and we commit to uplifting and improving their condition where we are able. We also recognize that we must work with others in order to broaden our reach and extend our positive impact. Our partners in social development include our employees, contractors, suppliers, host communities, energy industry alliances, media, the academe, non-government organizations, people’s organizations, local government units, government regulatory agencies, and our customers.

We seek to bring out the best in our people and our employment practices and workplace culture reflect this ambition. We seek to promote the development of our external stakeholders as well, through our corporate social responsibility programs. 

We operate in accordance with international best practices and respond to global investor expectations concerning sustainability. We seek to protect  human rights and to provide and enhance development opportunities for people, within our areas of influence.

To us, this is what it means for a company to be Powered by Good.

Employment

Our people are at the frontlines of our operations and they make it possible for us to achieve our goals. Their welfare and development is therefore of primary importance to us. 

To ensure that our people grow within the organization, we have established performance management systems in all our offices and sites, and implement individual development plans as well. Regular discussions and transparent feedback between managers and employers help guide career growth and ensure high levels of employee engagement and satisfaction. Where possible we hire locally to fill our vacancies.

With respect to compensation and benefits, we understand the need to stay competitive in the industry and market. EDC complies with minimum wage standards and updates its minimum hiring rates for rank and file employees in all our operation sites based on current wage orders. EDC also benchmarks its rates with energy industry standards. EDC aims to send the right message  and deliver the appropriate total value. At the same time, EDC strives to identify the optimal mix of rewards and recognition mix (monetary and non-monetary) to attract, retain, engage and effectively motivate all employees. EDC also provides retirement benefits for its regular employees. 

In all our operations, we demonstrate respect for human rights. EDC does not practice forced or compulsory labor, nor do we employ child labor.

Labor-Management Relations

Good management-employee relations help maintain industrial peace. We manage any risks of work stoppage by actively promoting harmony in the workplace through regular communication and dialogue, good faith and transparency, fairness and cooperation. 

EDC’s Policy Manual contains a specific labor-relations policy. This includes provisions for the creation of labor-management councils in all our collective bargaining agreements.

We respect freedom of association and establish strong and cooperative relationships with our labor unions. Regular dialogue helps EDC manage the needs and concerns of the workforce and allows us to assess and evaluate our performance in this regard.

Occupational Health and Safety

We seek to promote a positive safety culture across the organization. 

Our new Corporate Health and Safety Policy provides for a safe and healthy working environment for all employees, contractors, and various stakeholders. Our Health and Safety Center of Excellence translates this policy into health and safety strategies, programs, and standards, which are communicated and applied consistently across EDC. We also comply with international guidelines and standards on labor and occupational health and safety (OHS).

Our partner contractors share in this responsibility for health and safety. We conduct fleet-wide safety training with experts for employees and contractors to ensure safety management throughout operations. We have a Contractor Health and Safety Management Program, which requires them to attend and pass the Safety Passport Training before entry and work in EDC workplaces. Our third-party agreements also require compliance with the Independent Contractor Health, Safety, and Environment Requirement.

We measure our performance and the effectiveness of our Health and Safety Management System. We practice incident reporting and record management to collect, maintain, and monitor all necessary health and safety performance data. 

EDC exerts significant effort to improve on safety performance. To do this, we conduct regular assessments, as well as internal and external audits seek to ensure that we are meeting our goals and effectively managing OHS risks in our workplaces.  Our targets are zero fatality, zero lost-time incidents, and a total recordable incident rate of 0.1.

Training and Education

EDC provides our people with the training and development that will help them be the best in their chosen fields. Well-trained and motivated employees will strengthen our leadership in geothermal power and boost our global reputation. Therefore, it is our policy to support employee training and education, both in the Philippines and abroad, and to finance relevant postgraduate courses and training in specialized non-degree courses. 

EDC also implements a leadership development program to support succession planning and management. We monitor the career development of each person on our team to ensure their growth in the company. EDC also invests in upgrading skills and promotes lifelong learning programs to ensure their continued employability and to facilitate their transition to retirement.

Diversity and Equal Opportunity

EDC is an equal opportunity employer and we uphold this principle in our workplace and across all our sites. We do not discriminate against any persons seeking employment with the company and treat everyone with the respect and dignity that they deserve. EDC’s Wage and Salary Administration Policy guides our approach to promotions in the company. We evaluate, appraise, and compensate our employees based on their performance in the company. 

Local Communities

We remain cognizant of the direct and indirect impacts of our business operations to our host and neighboring communities within all our project sites.

Guided by our Corporate Social Responsibility (CSR) Policy, we strive to enhance the positive impacts we bring to our host communities and address development issues such as poverty and lack of access to basic services. We firmly believe that our presence helps catalyze our host communities towards positive and productive action.

Ultimately, our strategic CSR programs aim to empower our different stakeholders and partner communities towards becoming proactive agents of their own development to break the cycle of poverty and dependence.

We monitor and measure our impacts based on project objectives, quantitative targets, and simple cost-benefit analysis. We also monitor and evaluate each project through our bi-annual Social Acceptability Monitoring, Sustainability Assessment Tool, and Social Impact Assessment, all of which have been developed based on widely accepted local and international literature and methods. Our social development initiatives are guided by both local CSR regulations and international standards and best practices in community engagement.

Guided by a strategic framework, our approach to social responsibility supports not only the growth and profitability of our business, but also the continued protection and sustainability of the environment and its natural resources and the long-term improvement of the quality of life of all our host communities.

Our commitment to social responsibility is evident in how it is managed—it is an issue that is tackled at the highest level of our organization. Our board of directors has a CSR Committee, composed of at least three members of the board. As such, they provide leadership and oversight over the management of our strategic CSR programs, which, in turn, enable the company to deliver effective CSR initiatives that contribute greatly to our triple bottom line.

Our Corporate Social Responsibility Head Office Team (CSR-HO), on the other hand, oversees the systems and structures related to our strategic CSR portfolio and provides direction on policy implementation. As such, it provides technical assistance to our on-site CSR and Watershed Management Section (WMS), both of which form teams on the ground and at the national level which activate partnerships to help us achieve our strategic CSR goals.

Accordingly, EDC establishes a Community Partnerships Department (CPD) in each of its project sites across the country. At the community level, the CPD teams develop and operationalize our CSR agenda and serve as the company’s front-liners to implement its strategic CSR programs and activities.

Supplier Assessment for Labor Practices and Impacts on Human Rights

EDCs shares its commitment to protect our labor force and promote employee rights with our network of suppliers. We only engage with legal contractors that operate in compliance with labor laws and with no labor or human rights cases filed against them. The terms and conditions of our contracts require that our independent contractors strictly abide with all applicable laws governing labor, employment, and contracting. 

Our contractors must fulfill all legal obligations to their personnel. This includes the provision of compensation, wages and or fees, and all mandatory benefits related to labor, social security, health and taxes. We require our business partners to submit an affidavit of compliance with minimum wage and other government mandated benefits, such as SSS and PhilHelath. This submission comprises part of our vendors’ documentary requirements for payment.

Labor Practices and Human Rights Grievance Mechanisms

EDC operates in compliance with the labor laws and upholds human rights in all our sites and facilities.  We also engage our stakeholders –employees, customers, and shareholders—in this effort. 

EDC has a Whistleblower Policy, which encourages our stakeholders to raise serious concerns involving labor practices and human rights violations. This includes reporting illegal and questionable activities or omissions, unethical behavior, fraud, and other malpractices prior to seeking resolution outside the company. The policy also protects those who report on such matters from harassment, retaliation, reprisal, or any adverse consequences. Our Whistleblower Policy provides the procedures for whistleblowing, as well as the rights and responsibilities of the involved parties.

Our 2020 Integrated Report

 

Our Integrated Report tells the story of our efforts to achieve our business objectives, hand-in-hand with our sustainability aspirations.

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One of the most powerful cartoons I’ve come across in a while is one by To New Yorker
Magazine which shows a man in a tattered business suit and around a campfire amidst a
future wasteland telling three children, “Yes they destroyed but for a beautiful moment in
time we created a lot of value for. Funny, but tragically so true of how the world works today.

We urgently need to overhaul how we relate with the Earth
if we want to keep it habitable for humans in the decades
to come. We don't have a choice.

The way we measure progress and success in our world is severely broken. Countries are
judged by how fast gross domestic product (GDP) grows, and corporate stocks are deemed
good investments also by how fast they can advance their net incomes regardless of how
it’s achieved. Most successful business models are racing to spur consumption of their
products beyond what consumers really need. As a result, carbon emission trajectories are
leading us toward a catastrophic world that’s 3-6 degrees warmer. Human activity is warming
the Earth 5,000 times faster than the most rapid natural warming occurrence in our planet’s
past, and species are going extinct faster than at any period in geologic history. Microplastics
are already being found in dwelling in the deepest reaches of the Marianas trench as well as
the pristine Pyrenees mountains of France and Spain. These are but a few examples of the
widescale destruction humans are wreaking on our only home. The international no
organization (NGO) Global Footprint Network estimates that we already use up 1.5 Earths
each year just feeding our current level of wants and needs; that’s 50% more than our planet’s
ability to replenish 3the resources used up!

Dear Stakeholders,

Message from the EDC
Chairman and CEO

With every passing year, it becomes increasingly tougher to deny that our climate
is changing faster than previously imagined due to human activity. A large and growing
number of the world’s largest corporations participating in the Carbon Disclosure Project,
more than 75% as opposed to only 10% in 2010, now incorporate climate change into
their business strategies. I believe that today, we are living through one of history's great
paradigm shifts. An age wherein we’re only just beginning to realize the immense impact
we’ve had on the planet and that we urgently need to overhaul how we relate with the
Earth if we want to keep it habitable for humans in the decades to come. We don't have
a choice. There is no Plan B or planet B, as some would say.

Real and lasting shareholder value can only be had when we place the
interests of all our stakeholders, our customers, the planet, and humanity
at the center of everything we do.

Of course paradigm shifts are never easy. They never have been throughout history. But
as the environmentalist and author Bill McKibben rightly puts it: “the math is hard to
argue with; business as usual and growth as usual spell an end to the world as usual.
This is the one overwhelming fact of our lifetimes.” PricewaterhouseCoopers or PWC
quantifies what the world needs to do to keep global temperature rise to less than 2
degrees Celsius. They emphasize that we must reduce the carbon intensity of the
economy—the amount of carbon emitted per dollar of GDP—by 6% each year until 2100.
Although this number looks modest, it is nine times the current rate of important
being experienced in the world today; this only underscores the magnitude of the
transformation needed. At Energy Development Corporation and parent company,
First Gen Corportion, we believe our platform of businesses and our way-to-play are all
geared toward this goal.

Message from the EDC
Chairman and CEO

Our Geothermal plants are today the only large scale 24/7 sources of renewable energy
The relatively fixed pricing we are able to offer our electricity customers is a massive
advantage and gives them certainty at a time when our coal-based competitors cannot. In
addition, the massive transformation taking place in the company is exciting and promises
to transform us into a leaner but more robust and resilient player and competitor.
Our Natural Gas plants at First Gen are key to bringing down the carbon intensity
of the economy as they emit less than half of the carbon and only a fraction of the other
pollutants per kilowatt-hour relative to an equivalent-sized coal plant. This is key to
keeping the economy humming and our lights on, even as we transition to a decarbonized
world. Today, these plants run on the country’s only indigenous gas field
Camago-Malampaya, but we are currently preparing for the day these fields no longer
have indigenous gas through the development of what could be the country's first
Liquefied Natural Gas (LNG) import terminal. In December 2018, First Gen signed a joint
Development Agreement (JDA) with Tokyo Gas Co., Ltd. to push this forward. It's an
exciting time to be doing this as LNG suppliers worldwide are only just beginning to
innovate and show flexibility on gas contracts never before seen in the world of LNG
contracting. Just this April 2019, Shell and Tokyo Gas signed the world’s first coal-indexed
LNG contract. This signals that gas producers are now willing to fight head against
coal plants in competitive power markets, if they aren’t cheaper already. Our decision
several years ago to slam the door on developing any coal-fired power for ourselves
was prescient. Even as more coal- fired capacity comes on line globally, their utilization
and capacity factors are falling. International Energy Agency (IEA) figures for 2017 show
the average capacity factor of coal plants globally has fallen even more to 52.8%, down
from 59.3% in 2013. This is alarming for a technology whose economics only makes sense
when run at baseload rates of 70-80%. The implication is that many coal plants today are
being run sub-optimally and expensively. The fact that they are required to ramp up and
down frequently causes thermal fatigue of components, of materials, and corrosion that
negatively impact efficiency and emissions even more. Aside from the fact that coal-fired
power no longer has a place in a world that needs to decarbonize rapidly, its economics
are being rendered uncompetitive in grids increasingly being penetrated by more
intermittent renewable energy sources. Its days are numbered.

Message from the EDC
Chairman and CEO

Our world today teems with change and disruption. At EDC, we’re all incessantly
and purposefully “sensing the wind” and “reading the tea leaves”. And in such a
world marked by so much complexity, we must also keep our organizations alert,
as well as agile. But let me just say that real and lasting shareholder value can only
be had when we place the interests of all our stakeholders, our customers, the
planet, and humanity at the center of everything we do. The world’s paradigms are
shifting yet again and, as a company, we intend to help that shift in the best way
we can. It is amongst these great challenges where we intend to build the many
great opportunities that will foster true shareholder value.

Thank you for your continued trust and unwavering support.

Federico R. Lopez
Chairman and CEO

Message from the EDC
Chairman and CEO

Due to climate change, only hell is hotter than summer.

We now live in a world that has increased its temperature by 1.5°C from pre-industrial times
and at these levels 14% of the world’s population will experience intense heat waves at least
once in five years. Should things deteriorate further by half a degree, at a 2°C increase from
pre-industrial times, the effect will be 2.7 times worse: 37% of the world’s population will
experience severe heat waves at least once in five years. In 2018, Australia revised their
temperature charts and increased the upper limit to 55 degrees Celsius, or over 135 degrees
Fahrenheit, given what was experienced for a sustained period in the south-central part of
the country in 2018.

Hotter temperatures mean hotter oceans, because water absorbs an estimated 90% of the
heat in the atmosphere and radiant heat from the sun. The “hydrogen bond" between water
molecules is what allows water to absorb a significant amount of energy in the form of heat
before turning to vapor. However, once in vapor form, water rises into the atmosphere, and
the very same life-sustaining water becomes fuel for deadly typhoons and hurricanes that
bring with them torrential rains.

If the earth did not have water and was dry like Mars, our average temperature would be
negative 16°C. Because of the presence of water, the year-round average temparature of
the Earth is now 14°C. Averages have a way of lulling us into complacency until we are shaken
or impacted by terrible horrors, like Typhoon Yolanda in the Philippines, Hurricane Sandy in
New York, Hurricane Maria in Puerto Rico, Harvey in Houston (the costliest hurricane on
earth at USD125B in damage). The common thread among these events? They are all the
worst in either the history of those areas or the worst in centuries. And they all occurred in the
last 6 years.

The diametric opposite of typhoons, drought, is the other side of the same coin. From
California to Cape Town in South Africa, to Greece and Australia, drought has affected millions
of people. Closer to home, Manila is experiencing drought in this summer of 2019.

Dear Stakeholders,

Message from the EDC
President and COO

Our 2018 cover follows the expressive and visceral nature of the images we have chosen in
the past two years. It shows a striking image of what the future holds for us, if we do not
heed the call of the planet to pivot. The harsh reality of climate change is already felt, and
sadly, it is the most vulnerable members of society who bear the brunt of it.

We know the pivot will not be easy, especially in the face of significant vested interests.

The Intergovernmental Panel on Climate Change’s findings say that we may only have
until 2030 to avert “catastrophic climate change.” Despite the warnings however, action
has been slow. And in 2018, carbon emissions increased by another 2% from the previous
year. Scientists remain optimistic and cite the growth of renewable energy as a reason to
believe that the world can achieve the necessary reductions.

This continues to motivate us to do things better, to make a difference toward turning the
tide. Over the past five years, the Energy Development Corporation (EDC) and the rest of
the Lopez group of companies have decided to be the leaders in the business sector of
the Philippines in sounding the warning about the worsening effects of climate change
and the need for decisive action and enlightened choices. We know the pivot will not be
easy, especially in the face of significant vested interests.

Our Performance Report tells the story of EDC’s work-in-progress this year: our efforts to
achieve our business objectives, hand-in-hand with our sustainability aspirations. As
always, we keep track of the metrics that matter most to our stakeholders in alignment
with the framework of the Global Reporting Initiative (GRI) Standards.

Message from the EDC
President and COO

Bouncing back from a tough year

We tempered our expectations for 2018, given that we began the year with damage to
our facilities as a result of Typhoon Urduja, in December of 2017. Despite this setback, the
concerted efforts of our operational units, and inspired action from our employees,
helped us return our assets to service ahead of schedule. As a result of this, we ended
the year with a recurring income attributable (RNIA) of PhP9 billion, slightly ahead of our
2017 numbers.

We continued to execute our strategy with excellent results. We ended the year above our
target for generation. Our Nasulo and Palinpinon II power plants were also re-certified
for the 40 megawatt (MW) (+10MW) Ancillary Services Procurement Agreement (ASPA),
while our BacMan geothermal facility was fully contracted.

We adopted new ways of working and better practices in our operations with promising
results. For instance, majority of our planned maintenance activities were completed in
60% of the time, versus the previous 5-year averages. Fundamental changes have taken
place, such as the safety and medical clearances of contractors prepared a full month
ahead of the start of the activities, versus the old practice of doing this just prior to day
zero. We have also enhanced our reinjection management strategies to support our
efforts to reduce wasted heat and to ensure the recharge of our geothermal reservoirs.

Message from the EDC
President and COO

Taking the long view on sustainability and profitability

We are aware that challenges to the business will arise from time to time, such as natural
calamities or extreme weather. In response to these threats, we made smart investments
in resilience projects. Rather than implement risk reduction and resilience in potentially
hazardous areas, such as the steepest slopes most prone to landslides, we looked instead
at this through the necessary lens of high hazard against the potential value at risk from
the infrastructure in the area. From there, we have now prioritized those works which
mitigate the value at risk (VAR) of our assets relative to the hazard present. This way, we
are sure that we are investing in the right places where we can have the greatest risk
reduction. Using this VAR strategy, we completed 31 landslide mitigation projects in
BacMan, Negros, and Leyte in 2018. This crucial investment in resiliency is being
accelerated in 2019.

We are also investing in the growth and development of our people. People seek
opportunities to work for us because they appreciate EDC’s strategy. We have found that
EDC’s renewable energy focus has made us an employer of choice. Improvements in our
ways of working have given our employees greater flexibility to participate in and
contribute to over 100 simultaneous special projects, resulting in disperse decision-making
and improved accountability.

Our business also faces systemic and market-driven challenges. For example, the energy
sector will have to confront regulatory shifts and changes in tax regimes. This is par for
the course. We will also experience market shifts, which can be disruptive, both from
operational and pricing standpoints. An example would be the influx of non-
conventional, non-base load (intermittent) energy, like solor and wind. These energy
sources have significant impact on the grid, but do not have to shoulder the cost of
ancillary services.

EDC is prepared to face these changes by maximazing the cash generation of our assets.
We upgraded the capability of our plants in order to provide services that support grid
stability. These plans have been implemented, with investments in ancillary services
capability completed. Expanding our services offering has generated economic returns:
revenue from the sale of electricity as contingency and dispatchable reserves increased
143.5% from 2017, to P970 million in 2018.

Message from the EDC
President and COO

Making the shift to low carbon energy

While renewable energy is often seen as an alternative, EDC believes it is necessary and
timely to mainstream clean energy. Renewable energy is not only the environmentally-
responsible choice, but a wise business decision as well. EDC’s experience demonstrates
this, and we hope to convince even the doubters that the future of energy is in renewable
This commitment to clean energy is growing. In the United States, the mood on low-
carbon energy is changing. So much so, that one of the major US energy utilities has
pledged to go carbon free by 2050, and 80% carbon-free by 2030. This is only one utility,
in a wave of energy providers that have announced carbon-reduction goals.

A common theme across those committing to renewable energy is that their customers
are demanding low-carbon energy. And the energy providers, even mining companies are
listening. Renewable energy is not only the environmentally-responsible choice, but a
wise business decision as well. EDC’s experience demonstrates this, and we
hope to convince even the doubters that the future of energy is in
renewable.

In the capital markets, many large financial institutions have announced they will no
longer finance coal fired power plants. It is their belief that the assets will neither have the
capability to compete nor “the right to operate” based on the preferences of their
customers and other stakeholders such as local communities. For this reason, providing
financing for such assets are seen to be a poor medium- to long-term risk.

Increasingly, our customers are looking for cleaner energy choices, and we are happy to
oblige. Our role is not only to advocate for, but to convert consumers to, renewable
energy. More customers are signing up with EDC, with some choosing us because they
want to be powered by a pure RE company. Companies that have chosen to make the
switch believe it is a critical advantage: in fact, one customer that makes industrial
building materials told us that they want to be known as the first company in their
industry to be 100% powered by RE. We are encouraged by the small, but growing,
population of enlightened consumers that are demanding that the businesses and brands
they support show greater climate responsibility.

Message from the EDC
President and COO

EDC is proud and happy to partner with businesses that want to make positive
environmental change. Together, we will be part of a virtuous cycle that will contribute to
positive climate action.

Staying committed to our sustainability journey

In the last quarter of 2018, EDC completed the process of its voluntary delisting from the
Philippine Stock Exchange. Our delisting was a considered decision and part of an overall
strategy to support EDC’s long-term growth. The move to delist allows us greater flexibilty
over factors like leverage and dividend policies, without the need to excessively focus on
short-term results.
Our shareholders share this long-term focus with us. There is less attention given to
quarterly earnings, in favor of deliberate growth. This gives us the latitude and support to
explore investments in new Capital Expenditure, to test new technologies that alter our future
prospects, without the expectation of immediate results or instant returns.

While the Philippine Stock Exchange and the SEC have established guidelines for
mandatory sustainability reporting beginning in 2020, EDC voluntarily reported on
sustainability for the past nine years. We will continue this practice because we believe
that this is how we can best create and share value with society, and care for the
environment upon which we depend, and the we all share.

Message from the EDC
President and COO

Our clear path ahead

The strong beam from a beacon serves to shine a light on the way ahead, and while we
made some gains in 2018, our journey is far from over. One the business side, we are
confident in the path we are taking to grow and develop our portfolio, invest in our
facilities and our PEOPLE, and continue to support our host communities.

Strategy is fundamentally a choice that is executed well. EDC is committed to our choice
for renewable enrgy and we intend to deliver on our plans to optimuze our assets,
mitigate our risks and grow the business and our talent pool. It is our hope that we can
serve as a role model for the energy sector, our host communities, the local government,
energy are bright, and by all indications, are getting better with each passing day.

Richard B. Tantoco
President and COO

Message from the EDC
President and COO

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