Aboitiz Sustainability_ Final.pdf

7/29/2019 Aboitiz Sustainability_ Final.pdf

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Passion for A Better World

SUSTAINABILITY REPORT 2009


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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 ProjectA Billion Trees for the Planet

The Business of Sustaining the Planet

Our Passion for a Better World

Self-declared GRI


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Before sustainability even became a buzzword, Aboitiz

companies have been implementing programs designed to make

their operations more cost-efficient, foster good relations with

host communities and protect the environment.

But knowledge of these programs then was merelycontained in internal reports and among concerned

communities. When these programs were conceptualized,

they were not even labeled sustainability.

Nowadays, initiatives that are aimed to support profit margins,

promote social development and strengthen environmental

stewardship are incorporated into the sustainability umbrella.

We saw the need to document the various sustainability

initiatives of our business operations not only to raise awareness

on the need to address environmental and social concerns, but

also to communicate to our stakeholders what we have been

doing toward becoming more sustainable in our businesses. This

is the motivation for coming up with this sustainability report,

the first of such for the Aboitiz Group.

The Aboitiz Group Sustainability Report contains snapshots

of the various sustainability programs and initiatives that have

been undertaken by our business operations in the power, food,

financial services, transport, construction and real estate sectors.

It covers our sustainability initiatives from January 1, 2009

to December 31, 2009 and was developed to conform to Global

Reporting Initiatives (GRI) G3 guidelines. It is also a self-declared

C-level report and contains indicators on economic, social and

environmental performance.

However, it does not tackle details of each and everysubsidiary in the Group, but features programs implemented by

our business operations in clusters.

This report covers initiatives and performance of the different

companies under the Aboitiz Group.

Aboitiz Equity Ventures, Inc. (AEV) includes:

Aboitiz Power Corporation a publicly owned holding

company listed with the Philippine Stock Exchange that includes

energy generation (hydroelectric, geothermal and thermal

power) and distribution utilities.

Pilmico AEV food subsidiary; includes Pilmico Foods

Corporation and Pilmico Animal Nutrition Corporation

Union Bank of the Philippines and City Savings Bank

Aboitiz Transport System, which includes the largest inter-

island movers of passengers and cargo in the Philippines and

supply chain solutions.

We will also mention some endeavors of Aboitiz-

affiliated companies in real estateAboitizLandand

construction, Metaphil.

A thorough discussion of AEV and all its business partners,

subsidiaries and affiliates can be found in the annual report and

the company website, www.aboitiz.com.

ABOUT THIS REPORT

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 w ww.aboit iz.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 andconsolidation 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

[email protected].

REJUVENATE NATURE REUSE / RECYCLE REDUCE RENEWABLE ENERGY RECHARGECOMMUNITIES


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This Sustainability Report puts a collective identity to the

variety of projects mobilized in many companies of the Aboitiz

Group. Yet, the fluid nature of sustainability compels us to look

deeper into our operations and find ways by which we can be

more efficient in our processes and systems, yet be mindful of

their environmental impact. We are fully supportive of this new

concept of capitalism, one that demands a sustainable way of

doing business that harnesses natural resources wisely.

Even before this global advocacy was coined as 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 prudent we consume resources.

Through this report, we hope to communicate to our

stakeholders our continuing efforts to become a more

sustainable business enterprise, learn from what others are

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.

MESSAGE FROM OUR

CHAIRMAN AND PRESIDENT

Even before this global

advocacy was coinedsustainability, 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.


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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 betweenPeople, 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 stewardshipis 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 sustainabilityefforts 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 needsmust 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.

& CEO

Jon Ramon AboitizCHAIRMAN

Erramon I. AboitizPRESIDENT & CEO


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The Aboitiz Group of Companies is made up of more than

60 companies with roughly 28,000 team members. The Groupincludes 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.

ABOUT THE

ABOITIZ GROUP

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MANILA

CEBU

DAVAO

POWER

BANKING

TRANSPORT

FOOD

REAL ESTATE

CONSTRUCTION

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In our vision to be the neighbor of

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

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 businessoperations unit has developed and implemented activities

that are aligned to this triple bottom line ideal.

OUR VISION OF A BETTER WORLD:

ABOITIZ SUSTAINABILITY


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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-sheddingprogram 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 greenhousegas 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.

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Business operations within the Aboitiz Group are based ona 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.

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; andachieve 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.

DISCLOSURE AND TRANSPARENCY

As part of the practice of good corporate governance, the

Group maintains transparency through the publication and

distribution of the Annual Report, which is also accessible

through its website.

GOVERNANCEDisclosure and transparency are also signified through

company information statement, disclosures to the Philippine

Stock Exchange and the Securities and Exchange Commission.

CODE OF ETHICSCompliance 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 theBoard 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.

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WHAT WECOMMIT

HOW WEENGAGE

STAKEHOLDERS

/ INVESTORS

STAKEHOLDERS

COMMUNITIES

EMPLOYEES

ENVIRONMENT

OUR

STAKEHOLDERS

Enhance shareholder value

Be the neighbor of choice where

the businesses operate

Develop talents and recognize

employees and business partners

Address climate change

issues through mitigation andadaptation measures

Investor relations

Analysts briefings

Investor conferences

One-on-one meetings and open line

communication with analysts

Stockholders meetingsand annual reports

Aboitiz Foundation programs for

education and skills development,

enterprise development, and

primary health and child care

Company-specific community

development programs

Financial and non-financial rewards

Life-long learning through the

Universal Training Program

Talent Management Program

Compliance with regulations and

legislationsEfficiency in operating

processes

Greenhouse gas inventory

Ecology enhancement programs

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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.

SUSTAINING BUSINESS

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 i ncome rise of 109% in 2009

at P4.3 bil lion. 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 baseof 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 inBraille 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 st ate-of-

the-art equipment to ensure the qualit y of i ts 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 br ief suspension. ATS manifested resiliency,

ably cared for survivors and assisted casualties after

the SuperFe rr y 9 incid ent.

Devastating typhoons also posed additional setback

to ATS operat ions. The global economic downturn

affected the international ship chartering business. In

spite of the setback, opportunities induced a 1 billion

topl ine expansion for the company.

In real estate, AboitizLand exerts efforts to heed

market needs and study trends to serve its present andprospective 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 businessgrowth is foremost among its goals, it also needs to be

accountable to carry this growth across generations.

Our mission is to make

Cleanergy available to every

Filipino. These were the words

of AboitizPower President andChief 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 andreliable 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.

CLEANERGY:

MORE THANA BRAND


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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, whichare 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

ENGAGING EMPLOYEES

2009 ABOITIZ GROUP

EMPLOYEES BREAKDOWN

Regular 7,870

Probationary 502

Temporary 2,857

Project 8,259

Apprenticeship 37

Subcontracted 8,985

DIRECT HIREES

NON-DIRECT HIREES

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 tothe value of shutting off lights for one hour.

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ABOITIZ FOUNDATIONPROJECTS IN 2009

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.

CARING FORCOMMUNITIES

Classrooms donated 16

Computer sets donated 123

Refurbished computer& science laboratories 2

Number of scholars assisted 1,172

Water systems donated 1

Total valueof loans extended

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

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 alife worthwhile.

9.84 million

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Nothing brings a nation together as effectively as tragedy,

one which also tested the efficiency of the Aboitiz Group to

work as a team.

Filipinos from different corners of the globe poured

assistance to victims of Typhoon Ondoy that submerged

many parts of Luzon in September 2009, claiming many

lives and leaving thousands of people homeless. Business

oranizations, including the Aboitiz Group, immediately

responded to calls for help amid the devastation.

Companies within the Group and Aboitiz family members

donated a total of 15 million to the relief operations released

through the Aboitiz Foundation.

Branches of 2GO and SuperFerry in different parts

of the country became drop-in centers for donations

and received assistance for Ondoy victims from other

GENEROSITY AMID TRAGEDY:

THE ONDOY ASSISTANCE NETWORKorganizations outside of Aboitiz. ATS vessels were used to

deliver the donations to Manila.

Warehouses of 2GO were also used for receiving, sorting

and releasing the donations that included food, blankets and

other relief goods. The network later expanded to offices of

AboitizPower, City Savings Bank (CSB), VECO, DLPC, Hedcor and

SNAP.

The Group had distributed more than 56,000 bags, containing

various items, for Ondoy victims through the Department of

Social Welfare and Development, Red Cross, Gawad Kalinga,

Ateneo de Manila and local government units in flooded areas

like Marikina, Pasig, Cainta, Taguig and Laguna.

In a show of generosity, Aboitiz employees volunteered to

receive, sort and pack relief goods for typhoon victims.

Ondoy underscored the urgency to address climate change.

It also showed the Aboitiz teams passion to serve.

CARING FORCOMMUNITIES

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For many farmers in Lagawe, Ifugao

Province, the Magat hydroelectric plant

is just another feature in the municipal

landscape. They go about their livelihood

while the plant conducts its operations.

This notion changed when the partnership of SN Power Invet

AS of Norway and AboitizPower, SN Aboitz Power (SNAP) took

over the facility.

SNAP, which acquired the plant under the governments

privatization program, has been implementing an

environmental protection and enterprise development

program in Lagawe.

Dubbed as the SNAP Partnership in Environment and

Enterprise Development for Unity and Progress (Speed Up) in

Lagawe, the program provides assistance in the area of coffee

enterprise, agro-forestry, solid waste management, reading

program and cultural promotion.

Under Speed Up, SNAP helped jumpstart the designation

of Arabica coffee production as the One-Town-One-Product

(Otop) venture of Lagawe. Through Otop, the Department of

Trade and Industry helps promote and markets the Arabica

coffee produced by the farmers.

SNAP also donated 50,000 seedlings for a window

nursery in the area and helped the initial dispersal of the

seedlings to farmers.

Coffee production is part of SNAPs strategy to protect the

watershed that supports the Magat hydropower plant. At the

same time, it provides livelihood opportunities to residents in

the area. Growing coffee is also a way to address soil erosion,

which causes sediment build-up in the Magat dam.

SNAPS BREW FOR SUSTAINABILITY

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.

VECO BILL

IN BRAILLE

SNAP also helps the community convert organic waste into

fertilizer, by addressing the garbage problem in the area and

promoting the use of environment-friendly fertilizer.

The company also implements a Green Swap program

where in families are encouraged to reforest an area within

the watershed and earn college scholarships for their children.

Acceptance of the Speed Up program shows that SNAP has

developed the right brew to make its operations sustainable.


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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

ADDRESSING

THE CLIMATE CHANGECHALLENGE

2008 2009 % changeDirect Emission

Vehicle / Equipment 1,764 1,733 -2%

Process Emission 5,489 4,296 -22%

Indirect Emission

Purchased Electricity 3,602 2,948 -18%

TOTAL 10,855 8,977 -17%

ABOITIZ POWERCARBON EMISSION (in tons CO2 (tCo2))

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Livestock production has

been identified by the Food and

Agriculture Organization of the

United Nations as one of the major

causes of the worlds environmental

problems, like global warming, air and water pollution.But Pilmico Animal Nutrition has found a way to

turn a problem into a solution. It established a biogas

system that converts wastes from swine operations

into energy for its farm facilities in Tarlac.

By using energy from the biogas system, Pilmico

has been able reduce its energy use by over 220,000

kilowatt hours per month.

The project has been lined up for validation with

the United Nations Framework Convention for

Climate Change, prior to being registered as a CleanDevelopment Mechanism.

WASTE TO ENERGY:THE PILMICOBIOGAS PROJECT

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 non-

potable 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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In the fight against climate

change, every tree counts. But

Hedcor has committed to make

a bigger contribution. In a span

of one year, it spearheaded the

planting of about 30,000 tree seedlings in Davao

del Sur. It also led the planting of 1,000 trees

within the Mt. Apo Natural Park. The company

completed all its commitment in August 2009.

Hedcor has joined the Billion Tree Campaign

spearheaded by the United Nations Environment

Programme. The campaign is a worldwide tree

planting initiative that is participated by peoples,

communities, civil society, industry and business

organizations.

Hedcor has enlisted the help of its employees,

people in the community, and the local

government. The participation of the community

is crucial to the success of the project as local

residents need to see the importance of ensuring

the survival of the trees.

A BILLIONTREES FOR

THE PLANETpower. 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.

Number of volunteers nationwide 1,300

Number of trees planted 30,000

Total carbon dioxide offset 681 tCO2

2009 ABOITIZ GROUP-WIDESIMULTANEOUS TREE PLANTING

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THE BUSINESS OF

SUSTAINING THE PLANET

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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.

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 businessoperationsdeserves nothing less.

Energy Sales(in GWh)

Hydroelectric 1,115

Geothermal 1,886

2009 ENERGY SALES FROMRENEWABLE ENERGY GENERATION

Estimated AnnualEmission Reduction

(in tCO2)

Hedcor Sibulan Hydroelectric Plant 95,000

Pilmico Animal Nutrition Biogas Facility 28,000

SNAP Binga Hydroelectric Plant 23,000

SNAP Ambuklao Hydroelectric Plant 155,000

CDM PROJECT

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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 strategythat 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 corporateinterests,we will intensify reforestation

efforts wherever possible. Tree planting,

OUR PASSION FOR

A BETTER WORLDwhich was once considered a relaxation and recreationactivity 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 toclimate 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 andenvironmental stewardship, which are just as important in the

sustainability of the Aboitiz Group as a corporate entity.

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GRI G3 LEVEL C DISCLOSURES


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APPLICATION LEVEL CRITERIA

Reports intendedto qualify for levelC, C+, B, B+, A or A+must contain each of

the criteria that arepresented in the columnfor the relevant level.


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BACK COVER

Passion for a Better World

Sustainability Report 2009

For online version of this report:http://www.aboitiz.com

For further informationon Aboitiz Sustainability, contact:

Mail to: [email protected] number: (6332) 4111839

Or write to:Aboitiz SustainabilityAboitiz Corporate CenterGov. Manuel A. Cuenco Ave.Cebu City, Philippines 6000Email: [email protected]

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 windcertificates. All virgin fiber content

in Beckett Expression is elemental

chlorine free (ECF) and all post

Documents

Aboitiz Sustainability_ Final.pdf