Lopez Holdings

Annex A: Reporting Template

Contextual Information

Materiality Process

Sustainability is a major consideration in the company’s risk management process, in which all employees participate to identify risks, opportunities and corresponding action plans with guidance from its board of directors. Feedback received from stakeholders serve as inputs for service improvement.

Lopez Holdings identified the following as stakeholders in its mission statement adopted in 2003 and reviewed annually since: shareholders, affiliates, regulators, creditors, employees and communities in which it operates. Although Lopez Holdings parent has been debt-free since mid-2017, creditors remain as stakeholders at the level of investees, as well as represent short-term creditors, most of whom are suppliers of goods and services that help the company achieve current and future objectives. Chosen material indicators reflect the company’s significant economic, environmental, and social impacts or substantively influence the assessments and decisions of stakeholders.

The material indicators of its major investees are reported in their respective sustainability reports, which are available online along with and as part of their annual reports. Refer to https://fphc.com/investor-relations/annual-reports for FPH and https://www.abs-cbn.com/investors/annual-reports for ABS-CBN. Their respective sustainability frameworks are among the inputs to the risk management process of Lopez Holdings that direct the Parent’s sustainability practices.

ECONOMIC

ECONOMIC PERFORMANCE
Direct Economic Value Generated and Distributed
LPZ (parent only)

Amounts in Php Millions

LPZ, having invested heavily in FPH and ABS-CBN, relies on dividends declared by these investees to cover parent company commitments to stakeholders. Well-established values and control systems, participation in the boards of its investees, lifelong learning for officers and staff, and adoption of internationally accepted standards allow LPZ to continuously operate in a dynamic business environment.

It regularly evaluates risks and opportunities associated with its objectives of providing shareholders with reasonable returns, affiliates with any needed support, regulators and government authorities with timely and full compliance, suppliers with payments, employees with wages and benefits, and beneficiary communities with contributions in cash, kind and volunteer time.

Climate-related risks and opportunities

Climate-related risks and opportunities affect all organizations. Through the Board Risk Oversight Committee (BROC), LPZ recognizes that the greatest impact of climate change is on the power and energy group under FPH. The strategic decision of the FPH Group to use clean fuel and not build any coal-fired power plants (since 2016) is a conscious effort to reduce its carbon footprint and address the challenge. Targets and metrics are discussed in the sustainability report of FPH and presented to the BROC as part of its annual risk review. Committee members provide comments and insights on climate-related and other risks as part of the process.

For the Parent company, climate-related risks and opportunities are covered by its regular risk management process. These are part of environmental hazards and relate to the increased frequency and severity of extreme weather events, which affect employees when they occur. Mitigation measures in the office setting include raising sustainability awareness through talks, emergency response training and provision of go-bags, among others.

PROCUREMENT PRACTICES

Proportion of spending on local suppliers

The objective of the company’s purchasing process is to obtain products and services needed at the best price and quality at the time needed, to support the company’s commitments to stakeholders. Process owners are responsible for the determination and review of requirements related to the provision of service/s including applicable statutory and regulatory requirements.

The company depends largely on suppliers who are located in Metro Manila, where its principal office is located.

ANTI-CORRUPTION

Training on Anti-corruption Policies and Procedures

After the company adopted its Anti-Bribery and Corruption Policy in December 2019, it was posted on the website primarily to reach investors. The company's vendor accreditation form was also revised in February 2020 to reflect said policy and agreement of vendors to abide by it. Communication of said policy to existing and news suppliers commenced in 2020 and will continue until all vendors are apprised and agree to the same.

Consistent with the Lopez Value of integrity, the policy aims to ensure that no act of bribery or corruption is committed by the company, its employees, officers, directors and consultants in gift-giving.

Incidents of Corruption

The Anti-Bribery and Corruption Policy is supported by an earlier adopted Whistleblower Policy, revised in October 2019, which lays the mechanism for reporting of complaints or acts and omissions that are contrary to laws, rules, regulations or policies; unreasonable, unjust, unfair, oppressive or discriminatory; or represent undue or improper  exercise of powers and prerogatives.

ENVIRONMENT

RESOURCE MANAGEMENT

Energy consumption within the organization

Reduction of energy consumption

The company endeavors to use resources efficiently. All employees are expected to use only what is necessary to deliver on company commitments. Deliberate wastage of company resources is a serious offense under the company’s Code of Conduct. Electricity consumption at the Parent headquarters relies on the sourcing of its distribution utility (DU), Manila Electric Company. Office energy consumption was practically flat, increasing by only 1% as all employees continued with the Telecommuting Work Arrangement (TWA) as a safety and wellness precaution during the pandemic.

Water consumption within the organization

Water consumption at the Parent headquarters relies on the sourcing of its water utility, Manila Water Company, Inc. Office water consumption remained at the same level as in 2020.

Materials used by the organization

The Parent provides management services as a publicly listed holding company. It does not use materials for the manufacture of services, other than office supplies, mostly paper for submission of mandatory reports or disclosures.

Ecosystems and biodiversity (whether in upland/watershed or coastal/marine)

The Parent operates in an office setting and is not actively involved in ecosystems and biodiversity, other than through its investees, where employees may participate in a volunteer capacity.

ENVIRONMENTAL IMPACT MANAGEMENT

AIR EMISSIONS – Not Applicable

GHG

The Parent operates in an office setting with air emissions limited to the daily transportation requirements of 12 employees. As employees worked from home under a TWA all year, this has further lessened the need for transport services.

Air pollutants

The Parent is not involved in any processes that directly generate air pollutants.

SOLID AND HAZARDOUS WASTES – Not Applicable

Solid Waste

The Parent operates in an office setting and solid waste generated is limited to office supplies and their packaging used in regulatory compliance.

Hazardous Waste

The Parent is not involved in any processes that directly generate hazardous waste.

Effluents

The Parent is not involved in any processes that directly generate effluents.

ENVIRONMENTAL COMPLIANCE

Non-compliance with Environmental Laws and Regulations

As a publicly listed holding company that provides management services in Finance and Accounting, Public Relations, Human Resources and Legal Services, the office operations of LPZ adhere to Occupational Safety and Health standards, as well as to environmental, safety and health (ESH) regulations enforced by the local government unit of Mandaluyong City, where the office is located.

An ESH Committee leads compliance with applicable OSH/ESH standards through policy recommendations, training, and information dissemination. Officers and staff annually review hazards and risks faced by the organization and act to mitigate or eliminate them, whenever possible. ESH risks were covered in the risk review on February 4, 2021, and re-assessed during the Quality Management System Planning on February 11, 2021. Such risks included those faced by employees as they worked from home.

SOCIAL

EMPLOYEE MANAGEMENT

EMPLOYEE HIRING AND BENEFITS 

Employee data

Employee benefits

Lopez Holdings treats employees as partners in the success of the company. Their health and well-being are of prime importance in sustaining productivity and company growth. Health benefits, including a generous hospitalization plan, constitute a significant component of the company’s employment package. Regular employees undergo annual medical examinations, flu vaccinations and virtual seminars or webinars on physical, emotional, financial and spiritual wellness. Flu vaccinations in 2021 were done in employees’ homes through a mobile vaccination arrangement with a qualified nurse. Annual physical examinations (APEs) are conducted at the employee’s option in HMO clinics of their choice. Majority of employees (58%) availed their APE benefit for 2021, compared to only 7% in 2020 when most were afraid of venturing into clinics or hospitals. All employees and their dependents were also fully vaccinated against COVID-19, either through the Lopez Group vaccination program or through the local governments for those who qualified in the priority groups of their respective home cities.

In 2021, out of 240 sick leave (SL) days (20 days x 12 employees), 2 employees used their SL for a total of 29.5 days or 12.29% utilization. This compares with 6.78% utilization in 2020 and 8.67% utilization in 2019.

It is the policy of the company to look after the general welfare of its employees. The company provides a wide range of benefits to meet employee needs, including life insurance; health care and other medical benefits that extend to immediate family members; vacation and sick leave entitlement; rest and recreation programs; and financial assistance in the form of loan facilities.

Employee Training and Development

Lopez Holdings is committed to lifelong learning. It has an established process for identifying the learning and development needs of employees at every level. It provides resources for necessary and appropriate learning solutions, consistent with corporate goals. The corporate learning and development plan is reviewed and updated on an annual basis. The plan includes leadership, behavioral and technical skills trainings.

The company aims to have each employee undergo at least three training man-days per year. Employees underwent mostly virtual learning sessions with an average of 4.5 training man-days in 2021, 3.4 training man-days in 2020 and 5.2 training man-days in 2019.

Labor-Management Relations

As partners in the success of the company, Lopez Holdings employees enjoy merit-based compensation and benefits. The company’s performance management system provides for needs-based learning and active feedback on individual and team performance. Its Code of Conduct and Discipline clearly communicates desired behavior consistent with the Lopez Values, as well as lists sanctions for unacceptable behavior.

Diversity and Equal Opportunity

Employees from vulnerable sectors comprise 24% of the Parent’s workforce. They enjoy mandatory benefits such as additional leave credits for solo parents and an accessible workplace for the disabled should they need to go to the office for any reason.

WORKPLACE CONDITIONS, LABOR STANDARDS, AND HUMAN RIGHTS

Occupational Health and Safety

Employee safety is important to the company. The company ensures that employees are regularly trained in maintaining safety in the workplace and in preparing for and dealing with emergencies. They undergo building exit drills at least once a year, and in 2021, they participated in a virtual exit drill to ensure they know how to evacuate the premises while they are working from home. The company’s ESH committee leads the enforcement of emergency protocols and provides regular ESH updates.  During the period of quarantine, all employees worked from home and received regular health bulletins from the ESH committee.

Labor Laws and Human Rights

Do you have policies that explicitly disallows violations of labor laws and human rights (e.g., harassment, bullying) in the workplace?

The Code of Conduct sanctions offenses against conduct and decorum. Among serious offenses are using disrespectful, profane, contemptuous, obscene and/or abusive language uttered verbally or by written or printed means, or by means of body signs or gestures, in dealing with, or relating to an immediate superior, subordinate employee, co-employee regardless of rank, title, position, customers, visitors and/or any other person doing or transacting business with the company, within company premises; while violating the Anti-Sexual Harassment Act is a grave offense.

SUPPLY CHAIN MANAGEMENT

Do you have a supplier accreditation policy? If yes, please attach the policy or link to the policy:
__________Yes (Attached: uncontrolled copy of Operation Policy, Annex A)_____________________

Do you consider the following sustainability topics when accrediting suppliers?

Lopez Holdings accredits suppliers who agree to its policy on Operation Planning and Control, which lists as part of criteria for the process and acceptance of services the vendor’s agreement to comply with all pertinent laws and standards. These include those that prohibit forced labor, child labor, human rights and environmental violations, bribery and corruption, among others.

RELATIONSHIP WITH COMMUNITY

Significant Impacts on Local Communities

For operations that are affecting IPs, indicate the total number of Free and Prior Informed Consent (FPIC) undergoing consultations and Certification Preconditions (CPs) secured and still operational and provide a copy or link to the certificates if available: _________

The Parent operates in an office setting with minimal impact on the local community. Its investees with significant impacts on their local communities report on these in their respective sustainability reports.

CUSTOMER MANAGEMENT

Customer Satisfaction

Lopez Holdings aims to deliver on its commitments to stakeholders satisfactorily. It provides services to affiliates, complete compliance with regulators, timely payment to suppliers, above industry compensation and benefits to employees and meaningful support to communities in which its investees and corporate foundations operate. It also provided dividends to shareholders from 2011-2020. Its customer satisfaction score relates to the regular survey conducted at its annual stockholders’ meeting (ASM), held virtually in 2021, that rates both the meeting and the annual report and other financial information posted on the company’s website. In addition to any surveys so conducted, a post-event meeting of relevant parties is conducted specifically to find opportunities for improvement and review the performance of all those involved, employees and suppliers alike.

Health and Safety

The Parent ensures the health and safety of stakeholders in the conduct of events, including its ASM and social responsibility projects. The employment of reputable third party service providers helps the company address stakeholder issues satisfactorily. Health and safety risks form part of the risk register reviewed prior to and post-event. In 2021, stakeholder safety and health was particularly ensured with the conduct of virtual meetings (including the ASM) through applicable online platforms.

Marketing and labelling – Not Applicable

The Parent is not involved in services that require marketing and labelling.

Customer privacy

The Parent controls stakeholder information in compliance with its Data Privacy Policy, downloadable from this page on the company website: https://lopez-holdings.ph/corporate-governance/policies.

Data Security

The Parent employs third party service providers to ensure the security of its data.

Annex A: Operation Policy

Annex B: Vendor Accreditation Form