ENRICHING our COMMUNITIES - Petron. A long-time fisherman and resident of Bataan province, Mang Rogelio is also the chairman of the fisherfolk federation PANGMAMALI or Panguluhan ng

E N R I C H I N Go u r C O M M U N I T I E S

2009 Sustainability Report

Under clear blue skies, Mang Rogelio Guinto casts his net into the waters of Limay. A long-time fisherman and resident of Bataan province, Mang Rogelio is also the chairman of the fisherfolk federation PANGMAMALI or Panguluhan ng Maliliit na Mangingisda ng Limay. Together with Petron and the municipal government, PANGMAMALI has established a fish sanctuary in Limay to actively promote the responsible and sustainable use of marine resources.

In every city and municipality in the Philippines where Petron has a refinery, depots, and service stations, we rely on our local partners like Mang Rogelio, as well as our various stakeholders, to improve the quality of life of our communities.

We always strive to continue building our business in the way we know best: translate our commitment into concrete results and transform passion into action economically, environmentally, and socially.

This theme runs through our 2009 Sustainability Report, which presents our renewed focus on pursuing the sustainability agenda we have set in our system, and in the ways we engage our stakeholders on issues such as greenhouse gas emissions and in our use of energy and water, health and safety, workplace rights, product responsibility, employee engagement, and community development.

By leading the way – in our business, industry, corporate citizenship, and sustainability reporting – we not just create shareholder value; we enrich our communities in return.

E N R I C H I N Go u r C O M M U N I T I E S

2009 Sustainability Report

Fuel Success.

About the Cover

About Our Report

Message from the Chairman and the President

Sustainability at Petron

2009 Petron Report Card

About Petron

From Philanthropy to Sustainability: Leadership is Key

Stakeholder Engagement

2009 Awards and Recognition

Goals and 2009 Milestones

Economic Performance• Petron Risk Management Framework• Market Presence• Direct and Indirect Economic Impact

Environmental Performance• Managing our Carbon Footprint• Minding our Water Footprint• Responsibly Treating Wastewater• Making our Products Eco-Friendly• Greening Our Supply Chain• Protecting Habitats

Social Performance• Nurturing our Communities• Engaging our People• Ensuring a Safe and Healthy Environment• Promoting Product Responsibility

View Forward

Petron Foundation Board of Trustees and Officers

List of Memberships in Organizations

Sustainability Steering Committee and Technical Working Group

Seals of Excellence

Assurance Statement of the External Review Committee

GRI Content Index

Contents2

4

7

8

10

16

20

22

23

24

30

42

65

66

68

69

70

73

76

1Enriching Our Communities

Scope of ReportPetron Corporation’s Sustainability Report covers our performance from January to December 2009 and includes initiatives for 2010.

We take pride in this Sustainability Report. Only our second publication, this report earns the distinction of being the first by a Philippine company to attain a B+ level under the Global Reporting Initiative (GRI) G3 Guidelines. This underscores the seriousness of our commitment to sustainability and raised our efforts to yet another level as we underwent the rigors and challenges of an external review by a group of independent experts. This builds on the success of our 2008 Sustainability Report, which garnered the recognition for Petron of being the top Philippine company in the 1st Asian sustainability Ratings, placing 26th among 200 of the largest Asian companies.

Our 2009 Sustainability Report covers the performance of our corporate office; the Petron Bataan Refinery (PBR); our 32 depots and terminals; our company-owned and company-operated service stations; and Petron Foundation, Inc., our corporate social responsibility arm.

From 31 GRI indicators, we are now reporting our performance based on 36 indicators.

Our sustainability management and reporting system is still evolving. Thus, we are working to employ improved metrics.

About Our Report

We take pride in this

Sustainability Report. Only our

second publication, this report

earns the distinction of being the

first by a Philippine company to

attain a B+ level under the Global

Reporting Initiative (GRI) G3

Guidelines.

This underscores the seriousness

of our commitment to

sustainability and raised our

efforts to yet another level as

we underwent the rigors and

challenges of an external review

by a group of independent

experts.

This builds on the success of

our 2008 Sustainability Report,

which garnered the recognition

for Petron of being the top

Philippine company in the 1st

Asian Sustainability Ratings,

placing 26th among 200 of the

largest Asian companies.

Petron Corporation 2009 Sustainability Report2

AssuranceThe content of this report has been assured through a rigorous internal compliance check done by the Sustainability Steering Committee. Pertinent environment and health and safety data, specifically greenhouse gas and air emissions, were reviewed by the Philippine Business for the Environment and the Clean Air Initiative - Asian Cities Center Inc.

This report was also externally assured. Petron entered into a partnership with the University of Asia and the Pacific (UAandP), through its Center for Social Responsibility, which served as the lead agency for conducting an external assurance, done by a panel of independent experts.

Other ReportsA description of our corporate operations and financial performance is provided in our 2009 Annual Report. Both our Annual and Sustainability Reports are available for downloading on our website www.petron.com.

Reporting ProcessInspired by the global recognition we earned for our first Sustainability Report, we embarked on our 2009 sustainability journey with much vigor.

We organized several workshops on measuring GHG and carbon footprint and came up with an Inventory Management Plan.

Our Sustainability Team met to discuss and agree on a core set of performance indicators. We formed working groups to collect and consolidate economic, environmental, and social data. We continue to develop these metrics and

analyze new data and collection methods to add rigor to the process. A Glossary of Terms and Definitions is available on our website, www.petron.com.

EngagementOur contribution to sustainable development and the benefits to our business are greatly magnified when we work together with our internal stakeholders (employees), customers, partners, and other stakeholders.

Since publishing our first report, we have conducted several feedback sessions with internal and external stakeholders. We have also shared the report with the League of Corporate Foundations (LCF), the umbrella organization of 74 companies and corporate foundations in the Philippines. The report was also presented at the LCF’s CSR Expo in July 2009, and in several fora and learning sessions on Corporate Social Responsibility and Sustainability. We have compiled and used the feedback we received to help shape this report, including our level of transparency and the variety of issues we seek to address.

Feedback is a valuable tool for us to understand the thoughts and concerns of our stakeholders. We invite you to send your comments, suggestions, or critiques on our sustainability practices or the content of this report to [email protected].


Many companies temporarily shelved their sustainability efforts in the face of economic difficulty. At Petron, however, leadership in sustainability is non-negotiable. Our company remains committed to sustainability in good times and in bad. The values that define Petron are enduring and have never been more important than in today’s economic climate. As chronicled in our 2009 Sustainability Report, Petron even expanded its efforts in this field with the aim of creating long-term value for society, for the environment, and for our shareholders.

Broadening our impactAn increasing number of partners from our external stakeholders have joined us to tackle some of the more pressing socio-economic problems in the country. Key to the success of our initiatives over the long term is our ability to create an organization that is focused on delivering on our commitments to these stakeholders. Sustainability at Petron is not a stand-alone issue that’s separate from our business. It is completely aligned with our business model, our mission, and our corporate culture. Sustainability is built into our business because it’s good for the communities we serve and for our business.

This is why we continued to invest in the well-being of our communities. Last year, we increased our social investment. As a result, we were able to make an impact on the lives of Filipinos in almost all of the 17 regions throughout the country, with 70% of all our employees contributing their time, treasure, or talent. Over 6,000 grade school children continue to enjoy the gift of education from our Tulong Aral ng Petron scholarship program. Tens of thousands more—especially those in conflict-afflicted areas of Muslim Mindanao—are able to have a venue for learning in over 500 classrooms built or refurbished under our Petron School program.

In the aftermath of storm Ondoy, we were one of the first companies to mobilize support to flood victims. After nearly three months of relief operations in Rizal, Marikina, Pasig, and Laguna, our soup kitchens, medical missions, and product donations were able to provide assistance to almost 50,000 individuals. We also served as a catalyst for other donors, in particular our motorists who dropped off their donations in 126 Petron service stations in Metro Manila and other major cities.

Environmental stewardship for us meant initiating a program to measure our carbon and water footprints. We pioneered a greenhouse gas (GHG) and air emissions inventory management program in our Bataan Refinery which will lead the way to its implementation in all of our facilities by end 2010. This, and other initiatives, should further enhance our environmental performance and significantly reduce our environmental signature.

Creating shared value Using our core business strategies and operations, we endeavored to create long-term value for our shareholders. Petron continues to manage its operations in a way that adheres to the highest standards of good corporate governance and environmental sustainability. Our Refinery and operations facilities are a testament to this commitment. The Triple International Standard Certification given to Petron Bataan Refinery’s Integrated Management System (IMS) and the Quality Management Systems ISO 9001:2000, 14001-2004, and OHSAS ISO-18001:2007 certifications given to over half of our depots and terminals guide our operations under the highest international quality, environmental, and health and safety standards.

Time seemed to have gathered speed since we published our 2008 Sustainability Report.

The global economic turmoil in 2009 brought about a most profound shift in the way

companies do business. Greater creativity, efficiency, and effectiveness were critical

to business success last year. This also held true for the millions of working Filipinos

nationwide who comprise the bulk of our customers.

Message from theand the

ChairmanPresident


Parallel to this, we further developed and made available more fuel efficient and eco-friendly products to our consumers. At the same time, we exerted every effort to improve the economic and social conditions of the people and communities across our entire value chain. In 2009, we embarked on an aggressive retail network expansion program anchored on the Micro Filling Station concept or “Bulilit” stations. Easy to build and can be operated with a minimum of 2-3 product pumps, these stations make Petron’s quality products readily accessible even in the remotest areas of the country. They also open new avenues for business and employment for many enterprising Filipinos. In so doing, we did not just create value for society; we also met shareholder expectations.

Engaging our stakeholdersWe highlighted Bataan in this year’s report because the province best showcases Petron’s relationship with our stakeholders. The Bataan Integrated Coastal Management Program (BICMP), organized and led by Petron in 2000 together with the Provincial Government, is regarded as the most successful private-public partnership in the Philippines with regard to integrated coastal management. In the span of a decade, we have engaged the various stakeholders of the province to clean the coastline, plant mangroves and trees, rehabilitate coral reefs, and establish fish sanctuaries. This same kind of commitment to sustainable development can also be found in all our facilities and offices nationwide. Sustainability, after all, is integral to our corporate DNA.

At Petron, however, leadership in

sustainability is non-negotiable.

Our company remains

committed to sustainability

in good times and in bad. The

values that define Petron are

enduring and have never been

more important than in today’s

economic climate.

RAMON S. ANG


Everything that we have accomplished in 2009 as a corporate citizen was fueled out of the dynamic partnerships with our stakeholders, whom we continue to engage. We are grateful for the roles they all played and we will work hard to continue to broaden and deepen these relationships as we set out to become a more sustainable company.

Our first Sustainability Report in 2008 was recognized in the international community. Petron was named as the top Philippine company in the 1st Asian Sustainability Ratings, placing 26th among 200 of the largest Asian companies.

Even as the accomplishments of 2009 are enumerated, this report is still a “work in progress.” Our journey has just begun and we welcome your feedback along the way.

We hope this report sparks dialogue and encourages action from our stakeholders so that together we can act, inspire, and make a difference as we pursue our commitment to ENRICHING OUR COMMUNITIES.

RAMON S. ANGChairman and Chief Executive Officer

ERIC O. RECTOPresident

Sustainability at Petron is

not a stand-alone issue that’s

separate from our business.

It is completely aligned with

our business model, our

mission and our corporate

culture. Sustainability is built

into our business because it’s

good for the communities we

serve and for our business.

ERIC O. RECTO


Our sustainability priorities represent Petron’s integrated approach to deliver on its Vision, Mission, and Values with the most value to and in the best interest of its stakeholders. The harmonious interplay of these priorities gives forward motion to our company even as it shows our dynamism in addressing the evolving needs of our stakeholders.

Economic Responsibility. We commit to the creation of long-term economic value and mutual advantage for our company and its shareholders

Environmental Stewardship. We commit to business practices that help protect the environment knowing that this accordingly safeguards the interests of our company and its stakeholders over the long term.

Operational Efficiency. We commit to the continuous improvement of our operations and in our supply chain, guided by global efficiency standards.

Health and Safety. We commit to fully abiding by laws and regulations that ensure the health and safety of personnel, contractors, and surrounding communities, with the ultimate aim of going beyond compliance.

Petron’s sustainability continues to be represented by a propeller in motion.

Sustainability at Petron

People Management. We commit to the implementation of personnel development programs and practices that, ensure the success of our company is reflected in the lives of the people that work hard for it.

Strategic Partnerships. We commit to building on shared strengths with business partners and other stakeholders in our quest to serve customers better while creating more value for our investors.

Product and Service Innovation. We commit to investing in research and development for the continuous enhancement of our products, services, and processes in order to delight our customers, achieve competitive advantage, help shape the industry, and fuel environmental protection.

Advocacy and Social Responsibility. We commit to ensuring our company’s positive contribution to the economic and social needs of our surrounding communities through education, entrepreneurship, health, and livelihood programs. We likewise commit to support the UN Millennium Development Goals (MDG) and the national government’s poverty alleviation agenda.

Economic Value

Environmental Stewardship

MISSION VISION VALUES

Product and Service Innovation

Advocacy and Social

Responsibility

Strategic Partnerships People

Management

Health and Safety

Operational Efficiency


1

3217

558

3302236

Refinery with TUV-SUD Group Triple International Standard Certification for

Integrated Management System (IMS)

Depots that were ISO 9001:2000-certified



Personnel from depots, refinery, and Petron Marketing Corporation accredited by

DENR-EMB and Laguna Lake Development Authority (LLDA) as Pollution Control

Officers

Hectares covered by reforestation program in Bataan

Number of tree-planting activities conducted

Number of coastal clean-up activities held nationwide

Management Systems

Biodiversity

ENVIRONMENT PERFORMANCE

2009 Petron Report Card

6,054293798

266651

1652,448

17

Elementary school scholars

High school scholars

Outstanding elementary students

First honor Tulong Aral scholars in elementary

Outstanding high school students

Classrooms built (USAID-Petron School)

Classrooms repaired (including Brigada Eskwela)

Teachers, mentors, and administrators trained

Sponsored schools with Internet connectivity

A strategic response to supporting: a) the UN Millennium Development Goal #2: Universal access to basic education; b) the Philippines’ Basic Education Sector Reform Agenda, or BESRA; c) the peace and development program in Mindanao; d) the business sector and the League of Corporate Foundation’s 57-75 education campaign; and e) Petron’s community-based social development program.

SOCIAL PERFORMANCE: EDUCATION

176.534.26

106.60

Revenues in billion Philippine pesos

Net Income in billion Philippine pesos

Total amount of social investments in million Philippine pesos

ECONOMIC PERFORMANCE


24

19

Depots received Safety Milestone (SMile) Award for operating without Lost Time

Accident (LTA).

Accredited occupational safety and health (OSH) consultant and practitioners for their

significant contribution to the attainment of zero LTA in several company facilities.

SOCIAL PERFORMANCE: HEALTH AND SAFETY

3,000600

151,282

Fisherfolk who benefited from the fish sanctuary in Limay, Bataan

Beneficiaries of the mariculture livelihood program in Nueva Valencia, Guimaras

“Kapihan” sessions in Bataan

Number of households covered in socio-economic survey in Limay, Bataan

LIVELIHOOD PROGRAM

STAKEHOLDER ENGAGEMENT

45768,603

7,497

Beneficiaries of the four- to six-month feeding program in Pandacan and Bataan

Beneficiaries of soup kitchens for storm Ondoy victims and in Pandacan

Beneficiaries of medical missions in Bataan, Cebu, Pandacan, Pasig, and Laguna

SOCIAL SERVICES

70%12,195

5,27933,260

129,999

Percentage of Petron workforce who volunteered to participate in CSR programs

Employee volunteer hours

Non-employee volunteers

Non-employee volunteer hours

Total training hours of employees

VOLUNTEERISM

HUMAN RESOURCES


PETRON CORPORATION is the largest oil refining and marketing company in the Philippines. Supplying nearly 40% of the country’s oil requirements, our world-class products and quality services fuel the lives of millions of Filipinos. We are dedicated and passionate about our vision to be the leading provider of total customer solutions in the energy sector and its derivative businesses.

Our CompanyWe operate an oil refinery in Limay, Bataan, with a rated capacity of 180,000 barrels a day. It is an International Standards Organization (ISO) 14001-certified refinery. It processes crude oil into a full range of petroleum products including liquefied petroleum gas (LPG), gasoline, diesel, jet fuel, kerosene, industrial fuel oil, and petrochemical feedstocks benzene, toluene, mixed xylene, and propylene.

From the refinery, Petron moves its products mainly by sea to Petron’s 32 depots and terminals situated all over the country. Through this nationwide network, Petron supplies fuel oil, diesel, and LPG to various industrial customers. Petron also supplies jet fuel at key airports to international and domestic carriers.

Through 1,432 service stations, Petron retails gasoline, diesel, and kerosene to motorists and public transport operators. Petron also sells its LPG brand “Gasul” and “Fiesta Gas” to households and other consumers through an extensive dealership network.

Petron operates a lube oil blending plant at Pandacan Oil Terminals, where it manufactures lubes and greases. These are also sold through Petron’s service stations and sales centers. Petron also operates a fuel additives blending facility at the Subic Bay Freeport.

In April 2008, Petron inaugurated its 19,000 barrels per day (bpd) Petro Fluidized Catalytic Cracking (PetroFCC) unit which enables

About PetronFor 2009, Petron was again

adjudged as among the top

20 publicly listed companies

in good corporate

governance. The corporate

governance rating was

undertaken by the Institute

of Corporate Directors (ICD)

in collaboration with the

Securities and Exchange

Commission (SEC),

Philippine Stock Exchange,

and the Ateneo Law School.


Vision, Mission, and Values

We will achieve this by:• Being an integral part of our customers’ lives, delivering consistent customer experience through innovative products and services;

• Developing strategic partnerships in pursuit of growth and opportunity;

• Leveraging our refining assets to achieve competitive advantage; • Fostering an entrepreneurial culture that encourages teamwork, innovation, and excellence;

• Caring for community and the environment;

• Conducting ourselves with professionalism, integrity, and fairness;

• Promoting the best interest of all our stakeholders.

To be the leading provider of total customer solutions in the energy sector and its derivative businesses.

Petron to convert fuel oil into more high value products namely gasoline, diesel, and LPG. The PetroFCC also produces the petrochemical feedstock propylene.

Petron started operating its Benzene and Toluene Extraction (BTX) Unit in mid-2009. The BTX unit expanded Petron’s capability to produce petrochem feedstock on top of its Propylene and Mixed Xylene production.

It exports various petroleum products and petrochemical feedstocks to Asia-Pacific countries such as Cambodia, South Korea, China, and Australia.

Petron is expanding its non-fuel businesses which include its convenience store brand “Treats.” Petron has partnered with major fast-food chains, coffee shops, and other consumer services to give its customers a one-stop full service experience.

Petron is also putting up additional company-owned and company-operated (COCO) service stations in strategic locations. In 2009, Petron launched the Micro Filling Station (MFS) program to reach out to far-flung rural areas and ensure nationwide presence.

Operational Structure and Major DivisionsOur business is structured along three main divisions: Petron Bataan Refinery, Marketing, and Supply, Depot and Plant Operations. These are ably supported by the following: Corporate Planning, Procurement, Controllers, Treasurers, Human Resources, Public Affairs, and Petron Foundation


OwnershipPetron’s shares are listed on the Philippine Stock Exchange (PSE).

Prior to the entry of the Ashmore Group in July, 2008, the Philippine National Oil Company (PNOC) and the Aramco Overseas Company B.V. (AOC) each owned a 40% stake in Petron. More than 180,000 stockholders held the remaining 20%.

On March 13, 2008, AOC entered into a share purchase agreement with Ashmore Investment Management Limited and subsequently issued a Transfer Notice to PNOC to signify its intent to sell its 40% equity in Petron. PNOC eventually waived its right of first offer to purchase AOC’s interest. A total of 990,979,040 common shares were tendered, representing 10.57% of the total outstanding common shares of Petron.

Together with the private sale of AOC’s 40% interest in Petron, the Ashmore Group, thru its corporate nominee SEA Refinery Holdings B.V. (SEA BV), a company incorporated in The Netherlands, acquired 50.57% of the outstanding common shares in Petron in July, 2008. SEA BV is a company owned by funds managed by the Ashmore Group.

On October 6, 2008, PNOC informed SEA BV and Petron of its intent to dispose of its 40% stake in Petron. In December, 2008, PNOC’s 40% interest was finally purchased by SEA Refinery Corporation (SRC), a domestic corporation wholly-owned by SEA BV. SEA BV sold a portion of its interest in Petron, equivalent to 10.1% of the issued shares, to SRC.

This transfer of ownership resulted in the following organizational structure of Petron as of yearend 2009: SRC – 50.1%; SEA BV – 40.47%; General Public – 9.43%

Governance StructurePetron’s Board of Directors is composed of ten members, two of whom are Independent Directors. Currently, only two of the members are Executive Directors, occupying the positions of the Chairman and the President of the company.

The Board is responsible for overseeing the management of the company. The members of the Board are carefully selected to ensure Petron’s continued competitiveness in a manner consistent with its fiduciary responsibilities.

The Board is further composed of the following committees, namely: the Nomination Committee, which handles the selection and pre-screening of nominations for directors; the Compensation Committee, which reviews and modifies, among others, the salary structures of officers holding positions of Vice President or higher; the Audit Committee, which is in charge of reviewing the company’s internal reports, rules and regulations that may impact on Petron’s financial statements; and the Executive Committee, which allows its members to act on matters that otherwise require the immediate action of the Board.

In compliance with SEC Memo Circular No. 2, Series of 2002, Petron established its Corporate Governance Manual which took effect on January 1, 2003. The Manual recognizes and upholds the rights of every stockholder and reflects the key internal control features necessary for good corporate governance, such as the duties and responsibilities of the Board of Directors and Committees; active participation of Management in the operation of the company; organizational and procedural controls that are supported by an effective management information and risk management reporting systems; and independent audit measures to monitor the Corporation’s governance, operations, and information systems.


Stockholders’ RightsThe company recognizes the rights of stockholders to elect and replace directors. A director cannot be removed without cause and only with the affirmative vote of 70% of the total issued and outstanding stock. Minority shareholders are not deprived of representation in the Board and may propose agenda items for legitimate purposes and/or call a special meeting at the written request of one or more stockholders holding at least 20% of the total issued and outstanding shares of the Corporation. Stockholders are likewise entitled to pre-emptive, appraisal and dividend rights as well as the right to inspection and information. The company sees to it that shareholder concerns, queries or requests are immediately attended to and that written communications, including notices of stockholders meetings, are promptly sent. Queries/requests may also be coursed thru the company’s website. Board of DirectorsUpon election, Petron Directors, including the Officers and employees, are made to sign Conflict-of-Interest and Undertaking Statements, disclosing their respective business interests, to ensure that these are not in competition with the business of Petron. To further strengthen their understanding and appreciation, they are also given the company’s Code of Conduct and

CRUDE IMPORT CRUDE REFINING PRIMARY DISTRIBUTION

PRODUCT RECEIVING and STORAGE IN DEPOTS and

TERMINALS

SECONDARY DISTRIBUTION INDUSTRIAL CUSTOMERS

RETAIL OUTLETS

1

23

4 5 6

7

SUPPLY CHAIN FLOW CHART


Ethical Business Policy at the start of their occupancy. Per By-Laws, the Corporate Secretary informs the Directors and Officers of the schedule of board meetings beforehand and board materials are released and distributed within a reasonable time before every meeting. All Directors, Officers, and senior managers are required to attend the basic corporate governance seminar at SEC-accredited providers immediately upon assuming office.

Disclosure and TransparencyTo instill a stable and transparent process of conducting its business and at the same time identify accountability at all times, a system of approvals is in place whereby only authorized officer(s) may approve a particular business transaction and only up to the authorized amount. Transactions with amounts exceeding the joint approval limit of the Chairman and the President are elevated to the Board for approval.

The company also enforces a policy on conflict of interest, which requires all officers and employees to avoid any situation that involves their personal interest and dealing with suppliers, customers and other individuals doing or seeking to do business with Petron or any of its affiliate.

Aside from the Corporate Governance Manual, several other manuals have been instituted by Management to establish company policies and guide employees in carrying out their respective functions and duties, to address business operations and set contracting and bidding procedures, and to instill business ethics, office decorum, and employee discipline.

Management continuously conducts periodic assessment and performance reviews of all employees, from senior management down to the rank and file, through quarterly management and safety reviews.

Management continuously conducts periodic assessment and performance reviews through quarterly management and safety reviews. Thus, business performance (actuals vis-à-vis targets), compliance with business hurdle rates and financial parameters/ratios, as well as health, safety, and environmental requirements are evaluated periodically.

Reports required to be given to the stockholders pursuant to its By-Laws and the Securities and Regulation Code and submissions to the SEC/PSE, including quarterly financial reports, annual report and disclosures, General Information Sheet (GIS), requests for explanation or information on news items are complied with. These disclosures may be accessed by the public at the company’s website. Pursuant to the requirements of the Securities and Exchange Commission, the Corporate Secretary and Compliance Officer submitted in November, 2009 the Corporate Governance (CG) Scorecard Survey for publicly listed companies, a project of the Institute of Corporate Directors (ICD) in collaboration with PSE, SEC, and the Ateneo School of Law; in December, 2009, the record of attendance of Directors at Board/Stockholders Meetings for 2009; and in January, 2010, the required yearly certification to the SEC/PSE on the compliance by the company with its Corporate Governance Manual.

For 2009, Petron was again adjudged as among the top 20 publicly-listed companies in good corporate governance. The corporate governance rating was undertaken by the ICD in collaboration with the Securities and Exchange Commission, Philippine Stock Exchange, and the Ateneo Law School. In January, 2009, the company was cited by the Management Association of the Philippines as one of the top 20 companies with the best annual report.

With the election of Mr. Angelico T. Salud and Reynaldo G. David as Independent Directors to the Petron Board; the election of members and alternate members, in proper cases, of


the Audit, Compensation, Nomination, and Executive Committees; the conduct of regular quarterly board meetings, special board meetings and board committee meetings and the faithful attendance of and proper discharge of duties and responsibilities of Directors at such meetings; the conduct of training/seminar for Corporate Governance for incoming Directors and Officers; and strict adherence to national and local laws pertaining to its business operations, including applicable accounting standards and disclosure requirements, the company is in compliance with its Corporate Governance Manual.

To further instill corporate governance in the company, it will continue to coordinate with accredited providers for the attendance of Directors/Officers in more extensive corporate governance programs to keep them abreast with the latest developments and best practices. StakeholdersWe value highly the inputs of our shareholders. Recommendations and feedback from the public are encouraged and may be sent directly to Petron through our company website, www.petron.com.

Our annual stockholders’ meeting also provides a venue where shareholders are able to dialogue with Petron officials. Management shares information about the company with employees and generate feedback. Petron employees from other parts of the country are able to participate through real-time video streaming.

We regularly publish an online and print version of our corporate newsletter, PETRONews. Other Petron units periodically issue their own online newsletters: Petron Foundation publishes the CSR e-Xpress to keep both internal and external stakeholders abreast of the company’s efforts to do good, including opportunities for volunteer action; HR introduced the HR Notes to bridge the geographical distance of Petron employees through regular updates on the company and its people.

Every year, we publish our financial report, and in 2008, we published our first Sustainability Report that integrates both the Health, Safety, and Environment Annual Report and the Corporate Social Responsibility Achievement Report. All documents are accessible online through the corporate portal www.petron.com.

Public PolicyMembership in local and international petroleum organizations, public hearings, and public stakeholders’ meetings on various issues affecting the energy sector provide Petron opportunities and venues to participate in public policy development.

We submit position papers, attend forums, and conduct regular engagements with various interest groups and stakeholders which include the national and local government agencies, transport groups, business groups and industry associations, international agencies, student groups; and non-government organizations.

We take interest in energy sector issues such as: oil prices; oil deregulation; the Biofuels Law; Oil Pollution Compensation Fund; product and facility standards; stability of liquefied petroleum gas (LPG) supply and strengthening of government’s powers over illegal activities in the LPG industry; Clean Air Act; and emergency response capabilities and road safety.


How long have you gotten to know the province?I have stayed in Bataan longer than in my province, Pampanga. I’ve been working in the Bataan Refinery for 28 years now. Could you describe the early beginnings of Petron’s Corporate Social Responsibility (CSR) programs?For several years, Petron’s CSR basically responded to specific needs like giving a deep-well pump, improving their drainage or providing financial support to barangay projects. Admittedly, we didn’t have ‘big picture’ programs, something that should tie all of what we were doing to the communities. Why did the Bataeños go to Petron for their communities’ needs?In Bataan, when you say you work at the Petron Bataan Refinery, people would look up to you. But more than that, they think the company is in a position to help and that’s a good reputation to have. So how did Petron graduate from doing ComRel to bringing CSR to the boardroom?The creation of Petron Foundation Inc. (PFI) as the company’s CSR arm was key. PFI gave us the philosophy, the overall direction, and the imprimatur to engage in CSR. It became the anchor of where we need to focus on. Consequently, the PFI Board made CSR, and then sustainable development, a boardroom agenda.

From Philanthropy to Sustainability:

QandA with Freddie YumangVice President, Petron Bataan Refinery

Leadership is Key

How did you ‘sell’ the idea of getting more involved in communities to your internal stakeholders, the people in the Refinery?Our CSR was not created overnight. I am taking the cue from our top Management who is giving us all the support to succeed. One time that I presented the Refinery CSR budget to our Chairman, Mr. Ramon Ang, instead of reducing our budget or merely approving the request, he went beyond our expectation – he even increased it. This manifestation of support from our Chairman, to the SVP-GM and employees are critical in our drive to inculcate this CSR culture at the Refinery. So we developed our “CSR Calendar” and we made our Managers, as a start, commit their support and physical presence in these activities. The process is cascaded to every employee. We also sought the support of the Ladies Club, which is composed of around 30 spouses of our managers who live in our housing compound in the Refinery, to join Petron’s CSR programs so that our communities would feel their presence. They readily responded to this challenge.

The key is leadership. If you don’t experience personally participating in a CSR program or activity and just read about it in our newsletter, then there’s no emotional engagement. We want to make it our shared responsibility.

The Province of Bataan has been home for Petron in the last 50 years. This peninsula hosts

the Philippines’ biggest oil refinery. Mr. Freddie P. Yumang, Vice President of the Petron

Bataan Refinery (PBR), talks about Petron’s contributions to keeping Bataan’s economic

engine humming while preserving its environment and enriching its communities.


How does engaging stakeholders benefit both the company and the communities?Since seriously embarking on a CSR journey, our relations with the Bataan LGUs, the private sector and the various communities have improved a lot. Our long corporate history in Bataan is in itself a solid testament to our ability to effectively engage our stakeholders there. We have been constantly expanding our Refinery’s operations and this makes it more and more important to be a good corporate neighbor. Last year, we held a total of 15 “Kapihan” sessions where local officials and people’s organizations freely engaged in dialogue with Refinery and Petron Foundation officials in a “coffee shop” atmosphere. Through these sessions, we gained insights into the various needs of our stakeholders. The Kapihan became their sounding board and a common venue in addressing the issues together as a community.

We brought our Christmas gift-giving program, Project JOY, with 120 poor families as beneficiaries and held the program inside the housing compound. Through this activity, these families were able to see the ‘human face’ of Petron. In return, our employees were able to share their blessings directly with the community. Another example is the use of our golf course, which was built exclusively for employee golfers. We revived our regular games with leaders in the community whom we admitted as members. It became an effective tool to re-establish our community relations.

These may be simple activities but you cannot put a price tag on the personal relations we are able to forge with the community because of these. What has Petron done province-wide?Bataan has seen the deterioration of its precious coastal and marine environment due to a host of concerns. Petron joined hands with the provincial government in a landmark activity that cleaned up its coastline and catalyzed the establishment of the Bataan Integrated Coastal Management Program (BICMP). Through Petron Foundation, the company forged partnerships with other business groups in the province to create the Bataan Coastal Care Foundation (BCCF) as the private sector support to the BICMP. I know that the BCCF

has successfully led the formulation of the Bataan Coastal Strategy and the Bataan Coastal Land and Sea Use Zoning Plan (CLSUZP).

Addressing the education of the children and youth, Petron Foundation put up and continues to maintain a two-storey, 12-classroom Petron School in Barangay St. Francis II that benefits some 600 students in all elementary levels. The Refinery also provides full scholarships annually to mechanical engineering students. We also accept students regularly for apprenticeship and on-the-job training. To date, almost 300 apprentices have been trained at the Refinery, about half of which have been eventually hired.

Looking at the health concerns of the community, we partnered with the Limay Municipal Nutrition Council, barangay officials, and school administrators to undertake three feeding programs in 2009, which benefited a total of 257 undernourished children. We are also about to put up the Petron Community Health Center as part of our long-term contributions. When established, this facility will offer specialized health services to residents from Limay and neighboring towns, and will complement the barangay health centers in the immediate vicinity.

We have also taken the lead in establishing the Sulong KaBataan movement to address the chronic problems of the youth in the province by catalyzing the different stakeholders in creating opportunities to secure a better future for Bataan’s out-of-school youth and communities. How does the Refinery contribute to Bataan’s economy?The Refinery is a major employer in the province. Of our total employees of close to 500, around 70% are either from Bataan and one out of every three Bataan employees is from Limay. Add to these the contractual workers who are mostly residents of Bataan. We are also providing Bataeños with other opportunities to do business. This includes the Petron-Limay Skills Training and Technology Resource Center, which we established with the Limay municipal government and the Technical Education and Skills Development Authority (TESDA) to develop residents’ trade skills. The training center also

The key is leadership. If you don’t experience personally participating

in a CSR program or activity and just read about it in our newsletter,

then there’s no emotional engagement. We want to make it our shared

responsibility.


Parallel to this, we embarked on the reforestation of 300 hectares of land within the 457-hectare Limay Integrated Forestry Establishment project of the municipality and eventually transform it into an agro-forestry park.

Along the coast of Limay, we established a 7.5-hectare fish sanctuary together with a federation of fisherfolk and the Limay municipal government. This is expected to help raise productivity in the fishing grounds of 11 barangays in Limay that heavily depend on fishing for economic survival.

On a regular basis, our volunteers join local governments in Bataan to plant mangroves and rehabilitate mangrove areas, plant trees in upland areas, and to clean up coastlines. We likewise provide support to their advocacy campaigns for the environment, such as the establishment of the Bird Sanctuary in Balanga City and the annual holding of the Pawikan Festival in Morong.

serves as venue for livelihood training for the women of Limay.

We are also training a number of our indigenous people or IP to be construction helpers, teach them instrumentation or shopwork that are valuable skills in our Refinery.

We also engaged the non-profit organization PinoyME to help the people of Limay get into microenterprise. Through PinoyME, Petron is able to extend financial advice, help gain access to capital, and create a market for business.

How is Petron able to demonstrate environmental stewardship through the Refinery?One of our goals is to ensure that we are not depriving the community of water. We studied the total profile of our water use; by just reducing our usage of deep well pumps, we actually saved and reduced as much as 15% of our water usage.

Multi-Stakeholder Engagement Information, Education and Communications

Employee Volunteer Program Participation in Sulong KaBataan

Economic Environmental Social

Reduction in Carbon and Water FootprintIntegrated Coastal Resource Management (province-wide)PANGMAMALI-Limay-Petron Fish Sanctuary and Artificial Coral Reef ProgramPetron Reforestation ProgramMangrove Planting/RehabilitationSupport to LGU’s Environmental CampaignsContinual improvement of the Environmental Management Systems.Commitment to comply with environmental laws and regulations.

Employment of local residentsLimay-Petron Skills Training and Resource CenterMicroenterprise Development ProgramIncrease community investments

Community Socio-Economic Survey Commitment to Education • Petron School • PBR Engineering • Scholarship Programs On-the-Job Training Health and Nutrition Programs • Medical Mission • 6-Month Feeding Programs • Soup Kitchen

Employees Safe and Healthy Workplace Employee Development Labor Management Relations

Sustainable Development Program For Bataan


Were there specific instances when you can say Petron’s active engagement with the communities proved valuable?In May, 2009, we had a foul odor problem in the Refinery. The situation became a real challenge to us at the Refinery. As we resolved the problem, we also heightened our vigilance in monitoring complaints from the community. We established a hotline where residents can call us to report the foul odor and our people regularly conduct external monitoring and went out to the barrios to ask about such occurences. We closely tracked all these until the number of complaints tapered off to zero.

Through this experience, we have learned a valuable lesson: the importance of having a good relationship with our communities where common concerns are addressed in a more cooperative stance.

It is critical for us to listen to our stakeholders. We don’t have a monopoly of knowing what is best for the province and its people. We will synergize our technical and business competencies with what the Bataeños need and how best to go about it. That’s why we commissioned a socio-economic survey for Limay on how we can tailor-fit our initiatives to address what they need. Knowing this and having the opportunity to meet the people in the community also gives us that ability to engage them in a participatory process of project management.

We also make our communities aware that we are running a world-class Refinery here. Our Integrated Management System (IMS) achieved Triple International Standard Certification from the TÜV-SÜD Group, which means that the Refinery’s quality management, occupational health and safety management, and environmental management systems strictly adhere to world-class standards and assure all stakeholders that we are at par with the best in the world.

How do you envision the Refinery in the future? What is the key to its sustainability?The key is attaining operational excellence – to be a “Best in Class Refinery.” We will be highly efficient and at the same time develop a highly technical workforce supported by modern equipment and facilities. We will have the best safety and environment record. We will achieve operational excellence not at the expense of the environment and society.

If you look at the successful refineries in the world, you’ll find that they don’t only excel in their technical expertise, they also do well in their communities. To be a “Best in Class Refinery,” we will make sure that we are also able to create that opportunity and the means to improve our communities. We can only sustain our existence if our communities are happy. We will lift them up with us as we grow.

To read the full transcript of the Q&A, log on to www.petron.com

The Refinery is a major

employer in the province. Of

our total employees of close

to 500, around 70% are either

from Bataan and one out of

every three Bataan employee

is from Limay. Add to these

the contractual workers

who are mostly residents of

Bataan. We are also providing

Bataeños with other

opportunities to do business.

Our commitment in giving you the best is recognized as world standard by TUV SUD.

The world standard is the Petron standard.

There are no shortcuts and compromise at our Bataan refinery because we aim to give you excellence. That’s why the German accredited group, TUV SUD, recognized our operations to be at far with the world’s best.

The Integrated Management System (IMS) in the company maintains global standards ISO 9001:2009, ISO 14001:2004 and BS OHSAS 18001:2007. Meaning, we practice environmental friendliness, secure people’s health and safety, and maximize our efficiency.

We give you only world standard product and services from our world standard work.

TUV SUD is a Germany-based consulting, testing, certification and training organization with presence in over 600 locations worldwide.Its local arm is TUV SUD PSB Philippines, inc.


For our sustainability efforts to be successful, they must respond to the needs of our

various stakeholders. Stakeholder engagement remains a cornerstone of our program

implementation. It is only through this that Petron can effectively serve as a catalyst in

advocating sustainability.

In 2009, a time of major change — politically, economically, socially, and with environmental issues coming to fore — we wanted to inform some of our key stakeholders about how we are helping local communities face the challenges and listening to their feedback. We broadened our internal and external engagements on issues important to our stakeholders.

In 2009, we also achieved another corporate milestone when we embarked on a Greenhouse Gases and Air Emissions Inventory Development Project. Using the Bataan Refinery as a pilot, the project aims to identify measures on reducing emissions in our operations that will help enhance our environment and financial performance. This activity was undertaken in partnership with the Philippine Business for the Environment and Clean Air Initiative-Asia. The program will later be rolled out in our depots, plant operations, and our company-owned and company-operated (COCO) stations.

We continue to collaborate with our stakeholders to maximize our sustainability efforts and scale up our initiatives.

• Shareholders. As a publicly listed company, we conduct an annual meeting which serves as a forum for our Chairman and our President to report our performance to all our stockholders. This is also an opportunity to engage the stockholders in a dialogue on their concerns about the company. This meeting also involves the media, who are able to report on Petron’s annual performance to the public at large. Prior to this meeting, stockholders are provided printed copies of the Annual Report. During the meeting proper, the company also distributes limited copies of the Petron Sustainability Report. Both reports are also uploaded at the corporate website (www.petron.com). We also submit regular reports and disclosures to regulatory agencies such as the Securities and Exchange Commission and the Philippine Stock Exchange.

•Government and Regulatory Bodies. We recognize our role in contributing to national development through public-private partnerships. We believe in working closely with government to provide business solutions to social and environmental concerns. Specifically, we recognize our important role in helping craft legislations, policies, and voluntary agreements

particularly those that relate to the oil industry and how economic and social growth can be advanced through our sector.

• Employees. We ensure engagement of and alignment with our vision by all our employees through strategic human resource interventions, including capability building for our people. Workforce concerns are constantly addressed. Details on these may be found in the company profile and the performance discussions on labor and human resources which are found throughout this report.

• BusinessGroups.We work closely with other business groups to learn and share best practices, develop opportunities for collaboration, and joint exercises, share resources and expand our ability to make an impact, and serve as a catalyst for promoting sustainable changes.

• NGOs and Communities. We believe that we are part of every community where we are present and have a responsibility to contribute to their economic, social, and environmental well-being.

Stakeholder Engagement


For the Bataan community, we have undertaken a full blown socioeconomic survey, an initiative that will drive towards a community-based approach to project planning, implementation, monitoring, and evaluation.

• Academe. The children and youth are a principal driver of our efforts. Through the academe, we are able to provide programs that allow the young Filipinos to enjoy the gift of education; at the same time, we are able to achieve economic empowerment by serving as a catalyst for entrepreneurship education among the youth and a champion in creating a new breed of entrepreneurs.

• ContractorsandServiceProviders.We are committed to continuously improve business alliances and build productive relationships with contractors and service providers based on integrity, legal, ethical and mutual trust. Petron ensures that we will not maintain business relationships with those who will violate the company standards and policies that will also include environmental protection.

• Media. We work closely with the media to encourage a mutual understanding between Petron and its many publics. This also serves as an important venue to communicate what we stand for. Through our Public Affairs department, we are able to regularly provide the media with information critical to the oil industry and the public, as well as highlight our contributions to improving social well-being and care for the environment.

• International Agencies/Donor Organizations. We build partnerships by combining resources, technical expertise, and experiences with International Donor Agencies to increase the effectiveness of assistance for development in target areas as well as create access to technology and education that will sustain the program. We also continuously network with International Organizations to reduce costs, maximize capital productivity, streamline supply chain, resource conservation and recovery, and product innovation, among others.

A full discussion on stakeholder engagement is available at www.petron.com

We constantly engage our stakeholders in partnerships such as the Sulong KaBataan multi-sectoral movement, to strengthen our relationship with our communities.


Petron senior executives receive the TUV-SUD Triple International Standard Certification recognition for the Bataan Refinery’s Integrated Management Systems; the Silver Awardee trophy given by the Institute of Corporate Directors to Petron for excellence in corporate governance.

• CSRAsia1stAsianSustainabilityRatings(ASR)TopPhilippine Firm and 26th among 200 largest listed Asia Pacific companies

• Namedoneofthebest-governedpubliclylistedcompanies by the Institute of Corporate Directors (ICD)

• TUV-SUDGroupTripleInternationalStandardCertification for Petron Bataan Refinery’s Integrated Management System (IMS)

• QualityManagementSystemsISO9001:2000-certified for 32 Petron facilities

• 17PetronfacilitiescertifiedISO14001:2004tomeet or exceed local and international environmental management standards

• 5PetronfacilitiesachievedtheOccupationalHealthand Safety Management System ISO 18001:2007 standard

• AmongTopSevenPhilippinesCompaniesgivenprestigious citation of Best Corporate Social Responsibility based on annual poll by FinanceAsia

• BangkoSentralngPilipinasBestRespondentforService Sector

• DepartmentofLaborandEmploymentBureauofWorking Conditions (DOLE-BWC) Safety Milestone Recognition Award

2009 Awards and RecognitionThe awards received by Petron Corporation, including the numerous international

quality, environmental, health and safety, third-party certifications received by

our refinery and facilities, showcase our unrelenting determination to succeed in

sustainability management and reporting. The list below is a compilation of the many

awards we received for 2009.

• SpecialAwardofRecognitionto19accreditedOccupational Safety and Health (OSH) Consultant and Practitioners

• IMCEABronzeTambuliAward •BestIntegratedInternalMarketingProgramfor

Rewarding Excellence through Alternative Pay (REAP)

•SilverTambuliAwardMostEffectiveTeensBrandCampaign Art Petron

• Reader’sDigestTrustedBrandgoldwinnerinthe‘Petrol Station’ category

• PhilippineAssociationofNationalAdvertisersTruth

in Advertising (PANATA) for Petron’s Microvideos

• FourPhilippineQuillAwardsofExcellenceforArtPetron

• ThreeAnvilAwardsofExcellenceforArtPetron

• ThreeAnvilAwardsofMeritforArtPetron

• AnvilAwardofRecognitionforArtPetronWebsite

• AnvilAwardofExcellenceforTulongAralngPetron


Goals and 2009 Milestones

To ensure the long-term viability of our business so we can continue to enhance shareholder value, increase our contribution to the domestic economy, and make a positive impact in communities where we operate in.

Economic Performance

Goals

Environmental Performance

Social Performance

To ensure a sustainable future for our business and for the country by managing the environmental footprints of our company-owned facilities and our supply chain

To serve as a catalyst for positive change by fostering a safe, healthy, and harmonious work environment for our employees and improving the quality of life of our communities

Milestones

Undertook for the first time the enhanced Greenhouse Gas Accounting and Air Pollutants Inventory Management Project for the Petron Bataan Refinery Initiated the measurement of our carbon footprint in the Bataan Refinery, depots, company-owned and company-operated stations through facilities and programs which result to the reduction of our carbon footprint.Initiated the measurement of our water footprint in our Bataan Refinery, depots, and company-owned service stationsContinuously managed solid and hazardous waste generation in our Bataan Refinery through DENR- accredited Treatment, Storage, and Disposal (TSD) contractors Continuously implemented immediate- and long-term measures to reduce energy consumption and attain energy efficiency Expanded the scope of our integrated coastal management programVoluntarily initiated the reduction of hazardous components in our product lines Intensified environmental awareness among our stakeholdersWidened engagement with regulators, policymakers, industry associations, non-government organizations, academe, business, communities, and multipartite monitoring teams in our operations Achieved relevant international quality, environmental, health and safety, third-party certifications for the Bataan Refinery and other Petron facilities

Economic Performance


Social Performance

Ensured steady supply of critical technical and leadership skills in the organization and fostered greater employee commitmentEnsured capability of all facilities to address occupational health and safety issues and incident management and preventionEnsured that the quality of Petron products meet the stringent requirements of national and international bodies that regulate petroleum and allied productsSustained programs on education, health, nutrition, and livelihood programs in accordance with meeting the UN Millennium Development Goals and the national government’s reform agenda, with communities, business partners, and employees actively engaged

Rolled out several strategic business initiatives and major projects that led to a financial and operating turnaround from a record loss in 2008Maintained our market leadership by offering competitively priced and quality products and servicesFurther diversified from our core business by increasing the production of petrochemical feedstocksStrengthened our presence in the domestic market by embarking on an unprecedented retail network expansion program across the country anchored on the construction of Micro Filling Stations (MFS) and company-owned outletsFully utilized risk management tools to protect the values of the company and support operational profitability.Maintained a fully-funded and well-defined benefit pension plan and competitive remuneration packages for employeesIncreased the amount and scope of our social investments


A jeepney driver stops to load up at a Micro Filling Station (MFS) in Pagaspas, Tanauan City, Batangas Province. Petron is expanding its nationwide presence and providing business opportunities for Filipinos with hundreds of MFS being put up all across the country.


In 2009, we embarked on the biggest retail network expansion program in the company’s history as we opened 200 new service stations in just a year. Anchored on the “Bulilit station” concept, an easy-to-build gasoline station that can start with 2-3 product pumps, these stations provide business opportunities for small entrepreneurs looking for viable investments with a company that they trust.

Many of these new stations are located in rural areas, providing much needed employment in rural Philippines. The commissioning of our Benzene and Toluene Extraction (BTX) Unit at the Bataan Refinery underscored our commitment to diversification by allowing us to expand our product streams to include high-value petrochemical feedstocks.

Internally, we continued to pursue the attainment of Key Performance Indices (KPIs) to measure the most relevant aspects of performance in alignment with corporate goals. To keep us focused on our goals, we conducted regular management reviews and executive sessions.

We likewise held annual socio-economic briefings with various investment houses, government agencies, and other financial institutions to gain a comprehensive understanding of the global/regional/ Philippine economy and the energy industry in particular. These are incorporated into our annual business plan exercises to adapt to the changing needs of the organization and for the organization to attain robust growth.

Economic PerformanceWe are dedicated and passionate about sustaining our growth as a business.

Guided by our corporate Vision, Mission, and Values, we exerted every effort

to expanding our leadership in the oil industry, moving towards high-value

products and markets, and enhanced operational efficiency. These initiatives

have allowed us to attain our economic bottomline and consequently

enabled us to better serve our publics.

176.532009 Revenues

4.26Net Income

Billion PhP

106.6Social Investments

Million PhP

Billion PhP

ECONOMIC REPORT CARD


2009

176,5314,257

5,7510

2,14715,595

101

2008

267,676(3,920)

5,222938

1,89427,179

94

Amounts in Millions

GeneratedRevenuesNet Income (Loss)DistributedOperating CostsDistribution to Stakeholders (Dividends)Distribution to Employees (Compensation)Distribution to Government (Taxes)Distribution to CSR Programs/Projects (Donations)

Amid the global economic turbulence that marked 2009, our commitment to sustainability and Corporate Social Responsibility has never been stronger.

We are proud of the progress we have made so far. We have evolved from setting aspirational goals in each of our focus areas to establishing aggressive, measurable goals with metrics, and targets.

In 2009, Petron posted a net income of PhP4.3 billion, a significant improvement from its record loss of PhP3.9 billion in 2008. The strong performance was driven mainly by more stable crude and fuel prices in 2009 relative to 2008.

To ensure the long-term viability of our business so we can continue to enhance shareholder value, increase our contribution to the domestic economy, and make a positive impact in communities where we operate in.

• Rolled out several strategic business initiatives andmajor projects that led to a financial andoperating turnaround from a record loss in 2008

• Maintained ourmarket leadership by offering competitively priced and quality products andservices

• Further diversified from our core business by increasing the production of petrochemicalfeedstocks

• Strengthened our presence in the domesticmarket by embarking on an unprecedented retailnetwork expansion program across the country anchored on the construction of Micro Filling Stations (MFS) and company-owned outlets

• Fullyutilizedriskmanagementtoolstoprotectthevaluesofthecompanyandsupportoperationalprofitability.

• Maintainedafullyfundedandwell-definedbenefitpensionplanandcompetitiveremunerationpackages for employees

• Increasedtheamountandscopeofoursocialinvestments

GOALS

2009 MILESTONES

PROGRESS


However, our consolidated revenues fell 34% to PhP176.5 billion from PhP267.7 billion in 2008 due to the lower selling prices of petroleum products. Net operating income reached PhP9.2 billion, a complete turnaround from PhP1.9 billion in losses in the previous year. There were no dividends declared in 2009.

Petron Risk Management Framework and ProcessPetron Corporation follows an enterprise-wide risk management framework for identifying, mapping, and addressing the risk factors that affect or may affect its businesses. The company’s risk management process is a bottom-up approach, with each risk owner mandated to conduct regular assessment of its risk profile and formulate action plans for managing identified risks. As the company’s operation is an integrated value chain, risks emanate from every process, while some could cut across groups. The results of these activities flow up to the Management Committee and, eventually, the BOD through the company’s annual business planning process. Oversight and technical assistance is provided by corporate units. The BOD also created separate board-level entities with explicit authority and responsibility in managing and monitoring risks, such as the Audit Committee which ensures the integrity of internal control of the company’s activities; and the Compliance Officer who monitors compliance of the Corporate Governance Manual, determines possible violations and recommends corresponding penalties subject to review and approval of the Board. The Compliance Officer also identifies and monitors compliance risks and submits pertinent reports to the SEC.

Management of Major RisksThe company classifies a risk as a major risk if it assesses the risk event to both have a relatively high probability of occurring and a substantial adverse impact on the company if the risk would occur. The major risks that the company managed in 2009 were substantially the same as those in the previous year since there were no fundamental changes in the nature of the company’s operations. These risks were the following:

Foreign exchange risk emanates from the difference in the US dollar denominated assets and liabilities upon conversion to Philippine peso, the Company’s functional currency.

Interest rate risk exposure is mainly related to its cash and cash equivalent and short and long term debt instruments with variable interest rates.

Credit Risk exposure of financial assets is the total carrying amount of the financial assets as shown on the face of the consolidated statement of financial position.

Liquidity Risk assumes the possibility that adverse changes in the business environment and/or internal operations could result

Changes in the foreign exchange rate would result in the revaluation of assets and liabilities, and could subsequently lead to financial losses for the company. The Company hedges its dollar-denominated liabilities by offsetting these with dollar-denominated sales and using financial derivatives. Petron avoids the creation of risk from derivative speculation by limiting the use of these instruments up to 100% of the value of the underlying dollar-denominated liabilities net of dollar-denominated assets. The Company has achieved a balanced mix of cash balances with various deposit rates and fixed and floating rates on its various debts. Future hedging decisions for floating deposit and loan interest rates will continue to be guided by an assessment of the overall deposit and interest rate risk profiles of the Company considering the net effect of possible deposit and loan interest rate movements. Credit is regulated and extended only to qualified and credit-worthy customers and counterparties, consistent with established Company credit policies, guidelines and credit verification procedures. Requests for credit facilities from trade customers undergo stages of review by Marketing and Finance Divisions. A quarterly and an annual accreditation process determine the credit limits to be extended to financial counterparties. The Company monitors its cash position and maintains a pool of credit lines from financial institutions that exceeds projected financing requirements for working capital. The Company,

RISKS IDENTIFIED ACTIONS TAKEN


Petron supports the Precautionary Principle, which involves risk assessment, including hazard identification. Product safety and all the inherent processes and materials used in our operations are subject to an ongoing review.

We also recognize the need to include climate change in our business plan as this poses a significant risk to the continuity of our operations. This was proven during storm Ondoy when a number of our service stations were forced to temporarily suspend operations in September, 2009 due to heavy flooding in their areas.

Market DominancePetron supplies nearly 40% of the country’s total oil requirements. We provide fuel oil, diesel, and liquefied petroleum gas (LPG) to various industrial customers. The power sector is our largest customer. We also supply jet fuel to international and domestic carriers at key airports all over the country.

In 2009, we unveiled a plan to spend about PhP450 million to put up Micro Filling Stations (MFS) or small retail stations over one year. The plan calls for the establishment of 1,000 MFS in three years, which would expand Petron’s nationwide presence.

Indirect Economic ImpactNotwithstanding the contraction in our revenues in 2009, Petron continued to make social investments through Petron Foundation, our corporate social responsibility (CSR) arm.

We spent a total of PhP106.6 million on CSR programs in 2009, 13% higher than the previous year. Of the amount, 64% went to initiatives on education and 36% on efforts for the environment and community relations. The Foundation is also involved in projects funded by the United States Agency for International Development (USAID), specifically the building of Petron Schools in Mindanao.

For our employees – our internal stakeholders -- we paid PhP2.2 billion in salaries and benefits to our employees in 2009, higher than the level in 2008, partly due to the increase in number of employees brought about by certain expansions/additional projects. We pay competitive salaries and benefits and take pride in the fact that our standard entry-level wage in 2009 was 1.95 times above the local minimum wage requirement, regardless of geographic locations. This was an improvement from the average ratio of 1.83 in 2008.

The company also has a tax qualified and fully funded defined benefit pension plan covering all permanent, regular, full-time employees administered by trustee banks. The cost of providing benefits under the defined benefit plans is determined using the projected unit credit actuarial valuation method. Based on our actuarial report in 2009, the accrual of monthly pension expense stood at PhP26.6 million, which translates to annual pension cost of PhP319.2 million. A full discussion of Petron’s economic performance is published in our 2009 Corporate Annual Report, which can also be downloaded from our website www.petron.com.

to substantially higher working capital requirements and consequently, a difficulty in financing additional working capital. Commodity price risk is obtained as a result of potential losses due to volatility of international crude and product prices.

Other market price risk arises from its investments carried at fair value (FVPL and AFS financial assets).

likewise, regularly evaluates other financing instruments and arrangements to broaden the Company’s range of financing sources. Commodity hedging for petroleum products has been implemented to protect margins of Mean of Platts of Singapore (MOPS) based sales and protect product inventories from downward price risks. Hedging policy developed by the Commodity Risk Management Committee is in place. Decisions are guided by the conditions set and approved by Management. The Company manages its risk arising from changes in market prices by monitoring the changes in the market price of investments and eventually executing various measures that would mitigate risks arising such exposures.

RISKS IDENTIFIED ACTIONS TAKEN


But like many others in his hometown in Daan Bantayan, 130 kilometers from Mandaue City in Cebu, Mang Jun had to abandon his simple life as a fisherman and cast his net wider on possible opportunities abroad. After selling off his fishpond for placement fees, he has not looked back since. More than half of his lifetime had been spent in backbreaking work, drilling the oilfields of Saudi Arabia, Qatar and West Africa.

Now 49 years old, Mang Jun realized that someday he has to lay down the drill and go home for good, where he could finally enjoy the grace of being a husband and a father to his three children.

“One day, my bones would start to ache and I know soon I would have to stop working as an OFW. My dream is to start a business I can call my own,” says Mang Jun.

A simple mouse click became the answer to his prayers.

While browsing over the Internet in search of small-scale business opportunities, Mang Jun saw an opportunity in an advertisement on Petron’s Micro Filling Stations (also called Bulilit Stations). He summoned the courage to inquire from Petron’s Regional Office in Mandaue City on how he can invest in a Bulilit Station. His fighting spirit finally paid off.

What used to be an OFW’s dream turned into reality when he became a full-pledged entrepreneur and proud dealer of a Petron Bulilit Station in Maya, Daan Bantayan in Cebu. Mang Jun admitted he did not embark on an exhaustive business plan before plunking down PhP4 million of his

Fueling entrepreneurial spiritsLike many of the country’s nearly 11 million overseas Filipinos, Sulpicio “Jun” Pino, Jr. one day dreamed of a life well lived in a nation he calls his own.

lifetime savings when he acquired the 2,000-square meter lot and invested in the Bulilit Station.

“What’s important to me is that my hard-earned money is now working hard for me, and that I have something I can pass on to my three children when I’m no longer able to work,” the business newbie says.

While his early attempts in business failed when he sold his fishpond and a sari-sari store, Mang Jun was not disheartened to engage in a Bulilit Station despite having no background in the petroleum retailing business.

“It’s Petron after all. Just to be called an owner of a Petron fuel station in our town is already a feat in itself,” he says.

With the support of his loving wife Mae and his three children, Mang Jun is already excited about the prospect of expanding his business to maximize the lot he bought. He plans to put up other businesses inside the station such as selling hardware or fishing supplies and grocery items. He is also bullish that business will pick up once the new Ro-Ro port in his town opens in the coming months.

To drive the growth, Mang Jun says he still plans to work on another oil drilling project abroad. “I have to earn more abroad then plow back my earnings to my business,” he says.

This time, he knows his dream is starting to unfold. “There is comfort in seeing the fruit of your hard labor – no matter how small, like my Bulilit Station.”

S P O T L I G H T

Mr. Sulpicio Pino Jr. and his wife proudly pose before their Micro Filling Station (MFS) in Daan Bantayan, Cebu Province. The former OFW is among the many Filipino entrepreneurs who have become new Petron dealers.


30

Bataan Refiners Union President Eric Pangilinan joins hands with Petron Bataan Refinery Vice President Freddie Yumang, Petron Corporation Senior Vice President and General Manager Lubin Nepomuceno and Vice President for Procurement Susan Yu in reforesting the Lamao Watershed in Limay, Bataan Province.



We believe that climate change constitutes a real and serious threat to the planet, its people, and our way of life. Despite the continued lack of consensus in the scientific community regarding its impact, we recognize the need to take concrete action.

Our commitment to environmental stewardship reflects on the way we conduct our business beyond compliance to various policies, strategies, and business practices, as well as to national and local environmental laws. We undertake efforts for our facilities and operations to operate under strict international quality, environmental, and health and safety management systems and standards -- TUV-SUD Group Triple International Standard Certification for Petron Bataan Refinery’s Integrated Management System (IMS), Quality Management Systems ISO certifications (9001:2000, 14001:2004, OHSAS ISO-18001:2007) also as a means to identify risks and develop appropriate programs to address them.

Recognizing that we cannot manage what we cannot measure, we initiated an inventory management program for our Greenhouse Gases and Air Emissions, which paves the way for improved environmental performance and the considerable reduction of our environmental footprint.

The management has enhanced the Health, Safety and Environment initiatives of the company through the creation of the Corporate Technical Services Group (CTSG) focused on the areas of environment, safety, and engineering. This group, which is directly reporting to the SVP and General Manager, coordinates with the Environment Group of the different operating units (Refinery, Operations, and Marketing) to ensure effective implementation of program and policies.

Our environmental stewardship is extended beyond our physical borders by contributing to the protection of habitats in communities where we operate and by providing our customers with more environment-friendly products and services.

Environmental PerformanceWe understand that the environment is a fundamental issue to everyone. Specific to our

business, we recognize that the stewardship of our finite natural resources is an equally

fundamental task in mitigating the impact of our operations over the long term.

REFINERY

DEPOTSDEPOTSDEPOTS

3217

5

1Management Systems

Biodiversity330 HECTARESAreas with ongoing reforestation program in Bataan

ISO 9001:2000-certifiedISO 14001:2004-certifiedISO 18001:2007-certified

ENVIRONMENT REPORT CARD

58 PETRON PERSONNELCertification

accredited by DENR-EMB and LLDA as Pollution Control Officers

with IMS certification


To ensure a sustainable future for our business and for the country by managing the environmental footprints of our company-owned facilities and our supply chain

• Undertook for the first time the enhanced Greenhouse Gas Accounting and Air PollutantsInventory Management Project for the Petron Bataan Refinery.

• InitiatedthemeasurementofourcarbonfootprintinthePetronBataanRefinery(PBR),depots,and company-owned service stations through facilities and programs which result to the reduction of our carbon footprint.

• InitiatedthemeasurementofourwaterfootprintinourPBR,depots,andcompany-ownedservicestations

• Continuouslymanaged solid andhazardouswaste generation inourBataanRefinery throughDENR- accredited Treatment, Storage and Disposal contractors

• Continuouslyimplementedimmediate-andlong-termmeasurestoreduceenergyconsumptionand attain energy efficiency

• Expandedthescopeofourintegratedcoastalmanagementprogram

• Voluntarily initiated the reduction ofhazardous components in our product lines

• Intensified environmental awarenessamong our stakeholders

• Widened engagement with regulators,policymakers, industry associations, non-government organizations, academe, business, communities, and multipartite monitoring teams in our operations

• Achieved relevant international quality,environmental, health and safety, third-party certifications for the PBR and other Petron facilities

GOALS

2009 MILESTONES


*The GRI defines ‘Significant Spill’ as “All spills that are included in the reporting organization’s financial statement (e.g., due to resulting liabilities) or recorded as a spill by the reporting organization.) In this case, there was no significant oil spill recorded during the reporting period.

Materials• Crude Oil (MB)• Industrial Gases (m3)• Catalyst (kg)• Chemicals (kg)• Other Chemicals (m3)

Energy • Total power consumption (GJ)• Total fuel consumption (GJ)Water• Total consumption (cu. m.)Wastewater effluent• Total Wastewater Discharged (m3)• Percentage discharged to coastal surface water• Quality of wastewater discharged

Air Emission (tons CO2 )eTotal GHG Emission • Direct Emissions • Indirect EmissionsOther significant emissions • SOx (tons)• NOx (tons)Major Hazardous Waste• Spent Caustic (L)• Oil Sludge (L)• Oil Contaminated Material (kg)• Busted Flourescent Lamps (pcs)• Method of Disposal

Significant Oil Spill Incidents*• Number of oil spill incidents• Volume of oil spilled (L)Total environmental protection expenditures and investments by type (PhP/MB of crude)

2009

32,668432,233

6,614,46412,243,659

1,216

364,28013,429,195

4,878,869

3,843,494

97.53%Compliant to

DENR Effluent Standards for

Class ‘SC’ Water

1,019,182975,579

43,603

10,1681,697

1,055,0501,812,000

35,2804,845

Through DENR Accredited

Treaters

00

1,488

2008

40,588Not covered in

reporting

396,94513,863,876

4,994,607

3,879,650

96.43%Compliant to

DENR Effluent Standards for

Class ‘SC’ Water

1,073,1421,025,244

47,899

5,6691,728

No data reported

Through DENR Accredited

Treaters

00

N/A

PROGRESS



Managing our carbon footprintIn 2009, we embarked on a groundbreaking initiative to calculate our carbon footprint. A pioneering program on “Greenhouse Gas Accounting and Air Pollutants Inventory Development,” was piloted in our Bataan Refinery. We engaged the services of the Philippine Business for the Environment (PBE) and Clean Air Initiatives-Asia to perform the inventory.

The objectives of the project are to develop and implement a system to measure baseline emission data, and identify ways to reduce emission by exploring potential energy reduction initiatives.

Similar process was also implemented in the head office, operations, and company-operated service stations. Our overall carbon footprint was measured at 1,019,182 tons of CO2 emissions in 2009 versus 1,073,142 tons in 2008. This represents a 5.3% reduction for 2009. The main focus for GHG emission reduction initiatives would be for the Refinery, which accounts for 99% of the total emissions.

To help offset our GHG emission, we entered into a Memorandum of Agreement (MOA) with the Municipality of Limay, Bataan and the Department of Environment and Natural Resources (DENR) in which Petron will provide funding for the development of a 300-hectare forestland to help restore and preserve the watershed and provide alternative livelihood for upland farmers. We also participated in a tree-planting activity in the 300-hectare Lamao Forest Reserve during the International Earth Day Celebration.

In Petron, we believe that as business thrives, environment thrives. Thus we initiated

efforts to optimize the use of resources (i.e. water, fuel, power, and materials), by

measuring and eventually managing our environmental footprints. These initiatives will

provide competitive advantage for Petron through reduced operating cost and improved

company image without sacrificing compliance to legal requirements. There were no

significant fines for non-compliance in 2009.

2008 2009

1,073,142 Tons

1,019,182 Tons

2,146 Hectares of Trees

2,038 Hectares of Trees

CO2

CO2

GHG Emission (Direct and Indirect) and Equivalent Area of Tree Plantation Needed to Offset Emissions


Petron’s MOA with the Municipality of Limay, DENR, and the Samahang Magsasaka sa Kagubatan (SAMASAKA) for the development of a 30-hectare farmland will also provide alternative livelihood to upland farmers. We view these stakeholder engagements as mutually beneficial to Petron and the communities where we operate.

In 2009, the total emission of our Bataan Refinery for sulfur oxides (SOx) amounted to 10,168 tons, and for nitrogen oxides (NOx), 1,697 tons. Other pollutants were also measured in 2009, such as particulate matter (PM), carbon monoxide (CO), and volatile organic compound (VOC). Except for SOx, other pollutants were lower due to reduced fuel consumption as a result of lower crude run in 2009. The increase in SOx is due to increase in use of Industrial Fuel Oil. Despite this, the concentration of SO2 in our surrounding air is still within regulatory standards.

Beyond our direct emissions, we recognize that we have a much broader footprint through our value chain. We stepped up efforts to reduce our fuel, energy and water consumption in our main areas of impact.

In 2009, we processed 32,668 thousand barrels (MB) of crude oil, 19 per cent lower than the 2008 level of 40,588 MB. On the other hand, finished products imported in 2009 amounted to 10,253 MB versus 7,658 MB in 2008. This resulted from importing some finished products that were more economical. We also implemented scheduled shutdowns in January and February 2009.

As a result of the lower crude run, the fuel used in our Bataan Refinery was slightly down by 2.8% to 2,157 MB

2009 GHG Emission by Source (tons CO2e)

.14%

.25%

.57%5,850.3

2,595.2

1,457.6

Operations

COCO’s

Head Office

2009 Indirect Energy Consumption (GJ)

9%34,568

Operations

6%20,344COCO’s

3%12,156

Head Office

Measured Concentration of Air Pollutants in Ambient Air vs DENR Standards

100

80

60

40

20

0

TSPNCM SO2

*Based on 1yr Averaging time

Measured Concentration

DENR Standard

13.9 7.5

82%297,212

Refinery

1,009,279.0

Refinery

99.03%


in 2009 from 2,218 MB the previous year. This also reduced the amount of electricity we purchased for our Refinery by 13.9% to 82,558,960 kwh in 2009 from 95,883,902 kwh, previously.

Minding our water footprintIn 2009, our Bataan Refinery embarked on a project called Project CODy/Venice (Water Footprint). Through the initiatives of Petron’s Corporate Technical Services Group (CTSG), the goal of this project is to minimize our water use so as not to deprive the local communities where we operate.

The project involves identifying and segregating the various types of wastewater to unlock opportunities for possible reuse and recycling before water treatment and disposal. In the near future, we also hope to improve the drainage system of the Refinery.

In 2009, our total water consumption slightly fell to 4,878,869 cubic meters from 4,994,607 cu.m. The Refinery, which accounted for 91% of our total water consumption, was able to bring down its water use to 4,456,231 cu.m. in 2009 from 4,537,469 cu.m., previously. This came as an offshoot of lower crude run in 2009.

As a consequence of lower water consumption, the total water discharged from our operations decreased from 3,879,650.46 cu.m. in 2008 to 3,843,494 cu.m. in 2009. Of the total, the Refinery accounted for 97% while our depots and company-operated gasoline stations made up for the balance. All our company facilities continue to comply with the discharge standards of DENR on Class SC (Class II recreational and fishery water, i.e. boating, commercial fishing).

We expect a significant reduction in our water use and wastewater discharge after we implement Project CODy in 2010.

Managing our Water ResourcesGroundwater is the major source of water used in the Petron’s Operation. In 2009, 92.4% of water used came from deep wells. The major user of groundwater is the Refinery. Being a heavy user of groundwater, the Refinery acknowledges the importance of managing its water sources to sustain its operation.

In 2008, we commissioned a water resources study to determine the aquifer system within the Refinery compound, housing and surrounding areas, and estimate the safe yields and assess the ability of the Refinery aquifer system to supply the projected volume of water required to meet its needs as well as residents’ water demand.

The study also sought to estimate and evaluate the average annual recharge rate, identify other potential well sites and/or alternative source/s of water, and develop a groundwater management plan.

The groundwater management plan being implemented includes reduction of water use through Project CODy, prevention of contamination of groundwater due to oil spills, and reforestation projects to increase recharge rate of aquifiers.

Making our products eco-friendly Petron recognizes the importance of making environment-friendly products, not just for sustainability but also for corporate competitiveness. In May, 2009, we launched two new products that meet the stringent requirements of Republic Act 9637, also known as the Biofuels Act of 2006.

To develop and utilize indigenous renewable energy sources, RA 9637 mandates all oil companies to use 10% ethanol-gasoline blends in all their gasoline fuels for motors and engines sold in the Philippines.

Purchased0.30

0.07 0.07

4.51

0.33

4.59

Surface

Deepwell

Water Consumption by Source

m3 water (x106)

2009

2008



Leading the way for less flaring Every year, around 400 million tons of greenhouse gases (GHG) are produced through gas flaring, the World Bank estimated. This is equivalent to over 150 billion cubic meters of natural gas, which represents a quarter of the United States’ gas consumption every year. In absolute amounts, this is worth US$30.6 billion, enough to pay for a quarter of the Philippines’ total outstanding debts.

The gas flare system in the refinery is an installation which safely and environmentally treats waste gas released during unplanned over-pressurizing of plant equipment. It converts methane in the waste gas into carbon dioxide. Methane is 21 times more potent as a greenhouse gas than carbon dioxide.

Petron has invested PhP253M to revamp the Recontacting Facility (RCF) to recover usable fuel and reduce the need for gas flaring. This resulted to lower fuel consumption and minimized GHG emissions in our operations.

GHG emissions were nearly halved to 61,326 tons CO2 equivalent in 2009 from 117,927 tons the previous year. This translates to a reduction of 2.9 tons CO2 per thousand barrels (MB) of crude from to 1.9 ton CO2/MB crude due to flaring.

While we have made significant progress in reducing gas flaring from our operations, we still face many challenges. We continue to be committed to reduce flaring in our operations wherever technically and commercially feasible.


Related to this, Petron partnered with a motorcycle manufacturer to embark on a study on the materials compatibility of ethanol with the engines and fuel delivery systems. The study is expected to guide us in the future development of more green products.

In compliance with environmental regulations, we launched the new Petron Diesel Max, a premium quality fuel that contains 2% coconut methyl ester (CME) and a multifunctional additive system to provide unsurpassed detergency characteristics. This helps achieve cleaner engine and better smoke control, more efficient combustion for maximum acceleration and smooth power, and an improved burning quality and fuel economy.

We also launched the new Petron Industrial Diesel Fuel, a “dual purpose” fuel that contains 2% biodiesel. It is recommended as a boiler fuel in domestic or light industrial installation with pressure jet burners and as a diesel fuel for off-the-highway equipment such as stationary diesel engines, farm tractors, construction equipment, railway, and marine engines.

We likewise voluntarily initiated efforts to significantly reduce hazardous components in our product lines through our Research and Development group. We are now using non-aromatic materials, which are more eco-friendly since it is relatively easier to biodegrade.

In our laboratory, we continue to replace the laboratory methods we are using to new ones that minimize or prevent the generation of laboratory wastes.

Greening our supply chainOur environmental stewardship is not only limited to producing eco-friendly products, but also covers the entire life cycle of our products – from production, transportation, and distribution to waste management.

Throughout this life cycle, we strive to improve our resource efficiency, increase energy efficiency, and minimize environmental hazards. Resource efficiency entails using minimum resources and recycling the resources used; energy efficiency translates into reducing power consumption; and minimizing environmental hazards means proper disposal of the harmful substances during production, use, and waste processing.

In 2009, our depots and plants contributed a total of 31,159 tons CO2 equivalent. Of this amount, transportation remains a major contributor, accounting for 82% of total GHG emissions from our operations.

Nearly 99% of the GHG emissions from transportation came from tank trucks that bring our products to our customers. As this is an essential element of our petroleum distribution business, we have undertaken measures to properly manage resources and mitigate the adverse impact on the environment.

In 2009, we delivered a total of 3,354,380,675 liters of products using tank trucks of various sizes. This contributed a total of 24,993 equivalent tons of CO2. To help improve air quality and reduce GHG emissions, we aggressively pursued our Tank Truck Modernization program which calls for the use of more efficient trucks. In 2009, we deployed 17 brand new trucks in Pandacan and continuously replacing old trucks with newer units in the outports. This initiative translated to lower fuel consumption per distance traveled. Aside from fleet modernization, Petron is also rationalizing its transport fleet by upgrading the delivery capacities of the tank trucks. By merging two smaller trucks into one truck with bigger capacity, we were able to reduce the number of trucks we utilize and consequently cut our fuel consumption and GHG emissions.

The move also translates to lower consumption of tires and batteries, which also benefits the environment. Using less number of trucks also lowers the probability of road accidents. However, we continue to implement this program selectively due to variable factors such as road conditions and customers’ requirements.

We also recognized that our contractors have a pivotal role in greening our supply chain. We require them to adhere to our Contractor Safety Management (CSM) program by having a Department of Labor and Employment/Bureau of Working Conditions (DOLE/BWC)-certified Safety Practitioner/Consultant in their respective organizations before we engage them.


In our company-owned and company-operated (COCO) stations, we are also facilitating the accreditation of Pollution Control Officers (PCO) by conducting trainings on environmental management as required by the Environmental Management Bureau (EMB) of DENR.

Petron has likewise formulated an environmental management plan (EMP) to address all the environmental impacts and permit requirements of our service stations. The EMP is being distributed to the service stations for implementation.

At the community level, we are providing barangay tanods in our neighboring communities. These village patrols acquire fire-fighting and other safety skills through regular trainings to help them better prepare for untoward incidents.

Protecting HabitatsWe recognize that the sustainability of our business also rests on the protection and sustainable management of habitats that nurture biodiversity. Our strategy is to partner with same-purposed organizations in the communities where we operate. In Bataan, we helped establish a 7.5-hectare fish sanctuary in the town of Limay together with a federation of fisherfolk associations called Panguluhan ng Maliliit na Mangingisda ng Limay (PANGMAMALI) and the Municipal Government, where residents of its 11 barangays are predominantly engaged in fishing as a livelihood. The No-Take Zone policy is expected to strengthen the habitat and enhance the spawning grounds of fish, together with the establishment of artificial reefs within the sanctuary. At the same time, Petron will assist PANGMAMALI in creating a mussel culture program to augment the livelihood of fisherfolk. We are also reforesting 30 hectares of land within the 457-hectare Limay Integrated Forestry Establishment (L.I.F.E.) project of the municipality. Petron is working with the DENR and the Samahan ng Magsasaka sa Kagubatan (SAMASAKA) in transforming the area into an agro-forestry park that will help restore and preserve the watershed supplying the fresh water of Barangays Alangan and Lamao, as well as providing alternative livelihood to the SAMASAKA members. This expands the partnership forged in 2008 for the development of 300 hectares of forestland in the mountains of Limay.

Environmental Management Plan for the Service Stations

Proper Maintenance of Gen Sets, Gen Set

Emission Testing

Segregation of Waste: “Nabubulok,” Hindi Nabubulok,”

Hazardous Waste

Wastewater Treatment, Compliance to water

quality effluent standards

Proper Storage and transport/treatment of hazardous waste through

Department of Environment and Natural ResourcesDENR accredited firms

Regular Submission of Self-Monitoring Reports and Compliance Monitoring

Reports (SMR/CMR) Secure Discharge Permit, Permit to Operate, Hazwaste Generator’s ID

GHG Accounting and Reduction Programs

Securing of Environmental Compliance Certificate (ECC) and

Compliance to its Conditions

Designation/ Accreditation of Pollution Control

Officers (PCO)

CLEAN AIR ACT

CLEAN WATER ACT

CLIMATE CHANGE

PD 1586/EIS

SOLID WASTE MANAGEMENT

ACT

HAZ WASTE ACT

REPORT/PERMIT REQUIREMENTS

DAO 26


These two major initiatives complement the Bataan Integrated Coastal Management Program (BICMP), in which Petron is taking a leading role, alongside the provincial government.

Through Petron Foundation, the company forged partnerships with other business groups based in or doing business in the province to create the Bataan Coastal Care Foundation (BCCF) as the private sector support to the ICM program. The ICM program is a long-term endeavor that is part of the Regional Partnership in Environmental Management for the Sea of East Asia (PEMSEA) under the United Nations Development Programme (UNDP). With the assistance of BCCF and PEMSEA, the province formulated the Bataan Sustainable Development Strategy (BSDS) and the Bataan Coastal Land and Sea Use Zoning Plan (CLZSUP), key documents that provide the Province with the roadmap and tools to effectively resolve Bataan’s environmental concerns.

Our employee volunteers regularly join local governments in Bataan to plant mangroves and rehabilitate mangrove areas, plant trees in the Lamao Watershed, and clean up coastlines. We likewise provide support to environmental advocacy campaigns such as the establishment of the Bird Sanctuary in Balanga City and the annual holding of the Pawikan Festival in Morong. Beyond Bataan, our Operations personnel have made caring for the environment both a culture and a commitment within their ranks. This continues to be manifested in the regular conduct of environmental programs in all our depots and terminals nationwide. In 2009, the Operations-led activities resulted in 19,410 seedlings and mangrove propagules planted within a total of 21,640 m2. Various coastal cleanup campaigns also helped rid nearly 3,500 kilometers of shoreline of over 44 metric tons of garbage.

We have made caring

for the environment

both a culture and

a commitment

within our ranks.

This continues to

be manifested in

the regular conduct

of environmental

programs in all our

facilities and offices

nationwide.Tagbilaran

Bataan Mactan


S P O T L I G H T

In recent years, however, the island is slowly being known for something else: its oversized milkfish.

A mariculture program driven by a multi-stakeholder partnership has transformed Guimaras into a showcase for successfully turning a crisis into an opportunity.

In 2006, an oil spill 15 miles off the island’s coast affected 220 kilometers of shoreline and displaced Guimaras fisherfolk. In response, Petron collaborated with the Southeast Asian Fisheries and Development Center (SEAFDEC), Citi Foundation/Citi Philippines and the Guimaras provincial government to provide alternative livelihood for the fisherfolk in the municipality of Nueva Valencia who were the hardest hit by the oil spill.

A pilot program was launched in 2007 that involved a core group of 30 fisherfolk in Barangay Igang, Nueva Valencia. This was replicated in three other barangays – San Antonio, Magamay, and Sto. Domingo – where 120 fisherfolk participated in sessions on aquaculture production systems, stock sampling, feeding practices, cage maintenance, fish health management, business planning, financial analysis, cooperatives development and management, and marketing of milkfish. Female members of the communities were taught milkfish deboning and smoked fish processing.

At the end of the first phase, the community harvested over 26,000 kilograms of milkfish, translating into gross sales of nearly P2.5 million. They were able to sell the milkfish at prices much higher than the farm gate prices in Luzon.

From mangoes to milkfishGuimaras island has always been known for its mangoes, reputed to be the sweetest in the world. It is the

province’s top export and has conquered major markets as well reached the tables of the world’s royalty,

Who’s Who, and A-listers.

After six months of operations, more than 4,500 kilograms of milkfish were harvested from June to July, 2009 valued at over P400,000. Equally impressive, the bangus catch from these fish cages have become a prized commodity in the neighboring province of Iloilo, where they are ultimately sold.

Guimaras fisherfolk are slowly gaining a reputation for producing good quality and heavier milkfish. In fact, Taytay sa Kauswagan, a local non-profit organization, has partnered with Petron to help organize and institute a community-based enterprise, one of which is to brand the Guimaras milkfish.

“The project not only addressed the need for alternative livelihood for coastal communities affected by the oil spill. It also demonstrated the social responsibility of Petron and Citi and highlighted the important roles of the local government, community-based organization, NGOs, and academe in building the capacities at the local levels,” said Dr. Joebert Toledo, Chief of SEAFDEC-Aquaculture Department.

In addition to the mariculture program, Petron is also helping fuel life in Guimaras through the establishment of a mangrove nursery in Nueva Valencia, and extending assistance to community associations on seaweed farming. It is also fueling hope by supporting basic education through putting up a four-classroom Petron School, constructing a Library Hub, and providing internet connectivity to all of the province’s 17 public high schools.

The mariculture program in Guimaras Province led by Petron together with Citi Foundation and Southeast Asian Fisheries Development Center is allowing fisherfolk from the town of Nueva Valencia to enjoy stable livelihood through the regular harvest of bangus (milkfish).


John Adrian Santos of Tangos 1 Elementary School in Valenzuela beams during the recognition program for the second batch of Tulong Aral ng Petron graduates, which numbered 852. John Adrian completed his elementary education as class valedictorian and scholar of the company’s send-a-child to school program.


Through the Petron Foundation, we are able to bring CSR into the mainstream of our operations by integrating the social agenda into our business plans and programs. We are able to achieve this through the responsive delivery of relevant and effective programs and services, active employee engagement, strategic partnerships, organization effectiveness, and communications programs. All of these are under Fuel H.O.P.E. (Helping the Filipino children and youth Overcome Poverty through Education).

Through our Human Resources Management Department, we are able to attract, retain, and reward a professional workforce committed to excellence and capable of sustaining and furthering the company’s business growth. This is underlined by our strict adherence to established management-labor practices, continuous development of our people, and the active engagement of our employees.

We are also unceasing in our commitment to ensure that all aspects of our operations practice the highest standards of safety and responsibility, and that the products and services we provide meet not only most stringent quality mandate of both local and international standards, but are also shaped by the needs of our consumers.

To be effective catalysts in society, we broaden our reach by aligning our social agenda with our business objectives, as well as with the bigger goal of building our nation. We believe in a bottom-up approach to decision-making, with the line developing plans and programs that take into consideration our stakeholders’ perceived needs as part of developing our strategic priorities. Thus, we put great value in engaging our stakeholders through regular dialogue and the organization of multi-partite groups.

Social PerformanceOur contract with society is anchored on the belief that we have an equal stake in and

responsibility to ensuring the well being of those whose lives are touched by our business.

Simply put: as we grow, so do our communities. Our company’s Vision, Mission, and Values

serve as our guidepost in “caring for the community and environment.” At the same time,

we align our efforts with the United Nations Millennium Development Goals, as well as

with the national government’s poverty alleviation agenda.

6,054293798

266651

247

EducationElementary school scholars

High school scholars

Outstanding elementary students

First honor scholars in elementary

Outstanding high school students

Classrooms built (USAID-Petron

School)

Classrooms repaired

3,000Livelihood Program

Fisherfolk who benefited from

the fish sanctuary in Limay,

Bataan

COMMUNITY REPORT CARD


To serve as a catalyst for positive change by fostering a safe, healthy and harmonious work environment for our employees and improving the quality of life of our communities

• NurturingourCommunity• EngagingourPeople• EnsuringaSafeandHealthyEnvironment• PromotingProductResponsibility

NURTURING OUR COMMUNITY• SustainedsupporttotheUNMillenniumDevelopmentGoalsandthenationalgovernment’s

reform agenda.• ImprovedaccesstobasiceducationthroughanincreaseinthenumberofTulongAral

beneficiaries, as well as an increase in the number of classrooms constructed and repaired.• Increasedthenumberofbeneficiariesinlivelihood,health,andnutritionprograms.• Helpedimprovethequalityofbasiceducationthroughanincreaseinthenumberofteachers

trained in teaching English, Math, Science, Reading, and Digital Literacy • Sustainedon-job-trainingandapprenticeshipprograminservicestationandrefineryoperation

• Sustainedinitiativestohelpupliftthequalityoflifeofpeoplelivingnearourrefineryand depots through our education, health, nutrition, and livelihood programs.• Conductedacomprehensivesocio-economicsurveyinBataan,acommunitythatplayshosttoa

major Petron facility • Undertookprogramsandpracticesthatassessandmanagetheimpactsofoperationson

communities

• ActivelyengagedouremployeestobecomeCSRpartnersthroughincreasedparticipationin social development programs

• Widenedourengagementwithgovernmentandnon-governmentorganizations,theacademe,

the private sector, and communities

•IncreasedtheamountandscopeofsocialinvestmentsinPetroncommunities

ENGAGING OUR PEOPLE• Ensuredthesteadysupplyofcriticaltechnicalandleadershipskillsintheorganizationaligned

with overall business directions • Widenedpoolofqualifiedtalentsthroughmoreinnovativehiringandplacementschemes • Increasednumberofemployeesattendingtraininganddevelopmentprograms • Designedandconductedmoretrainingprogramsthatwillenhanceleadershipskills

• FosteredgreateremployeecommitmentbyfurtheraligningHRinitiativeswithourworkforce’sneeds and company goals• Increasedwork-lifebalanceprogramstopromotecamaraderieandcontinuemotivatingour

employees • Intensifiedinformationsharingtobetteranticipatetheneedsofemployeesinstepwiththefast-

changing business environment • ContinuousupdatingandenhancementofexistingHRprogramstomakethemrelevantand

valued by employees

GOALS

AREAS OF FOCUS

2009 MILESTONES


ENSURINGASAFEANDHEALTHYENVIRONMENT• Maintained100%representationoftotalworkforceinformaljointmanagement-workerhealthand

safety committees that help monitor and advise on occupational health and safety programs

• Reduced2009incident/accidentlevelsbyandmaintainingzerolevelworkrelatedfatalitiesandlosttime injuries by continuing to: • Identifyunsafeactsandconditionsandinstitutingprogramsorcontrolstoeliminatethem.• Conductsafetytrainingfornewandexistingemployees• CollaboratewiththeDOLE-BWCinimplementingtheOccupationalSafetyandHealth

Standards of the bureau in the work place • Benchmarksafetypracticeswithcounterpartsandsafetypractitionersintheindustryby

maintaining membership and direct involvement in safety organizations • Increasededucation,training,counseling,prevention,andrisk-controlledprogramsinplacetoassist

workforce members, their families, or community members regarding serious diseases

• ContinuedtostrengthencapabilityofallfacilitiestoaddressTier1oilspillsandensureIndustry,Government, and International assistance for Tier 2 and 3 oil spills through: • Regulartrainingofresponsepersonnelandmanagement• Upgradingofoilspillequipment• Propermaintenanceofexistingoilspillequipment• Continuousreviewofallianceswithoilspillresponseorganizations

• Constantpreparednessoffireemergencyresponsepersonnelandequipmentthroughthe:• Regularconductoftraininganddrills• Propermaintenanceofexistingfirefighting/protectionequipment

PROMOTINGPRODUCTRESPONSIBILITY• EnsuredthatthequalityofPetronproductsmeetthestringentrequirementsofnationaland

international bodies that regulate petroleum and allied products

• Intensifiedresearchanddevelopmentto:• Enhancecurrentproductlinesandmeetconstantlychangingmarketandgovernment• Innovateproductsthataretechnicallyexcellentandenvironmentallysound• Customizeproductstomeetthespecificrequirementsofcustomers

• Providedtechnicaltrainingtocustomerstoensurethattheyareinformedofthebestfeatures

and application of Petron products

• Fullysupportedanytechnicalandqualityissuesandconcernsofourcustomers

• Providedastructurewhereincustomerfeedbackcanbeefficientlymanagedandarrangeforprocessesthrough which customer satisfaction is properly measured and monitored.

• Ensuredthatallmarketingcommunications,includingadvertisingandproductpromotions,adhere

to the highest standards in the industry.


2002-2007

5,211--

3.861,484

191

--

218122

482/197*

257

887*

26 hectares

– 112,800/22,000

9

32,766

16,544

71

154 teachers71 ES

43,429 students

2008

6,06878.90

1.47389

36

300 (yr.1)

71473

1,254

291/253*

170

1,140*

326 hectares

–149,100/22,000

12

22

1,451–

30150

1,727

116all 17 HS

99 ES17 HS

21,769 students11,039 HS students

30 teachers

KEY RESULT AREA/ KEY PERFORMANCE INDICATOR

I. EDUCATION A. Tulong Aral ng Petron, Elementary Scholarship ProgramScholars to date (started in 2002)Completion rate (from Year 1)Dropout rate (in percent)Outstanding studentsFirst honor scholarsScholars who benefitted from the mentoring sessions B. Tulong Aral ng Petron, High School Scholarship Program Number of high school scholarsNumber of outstanding and honor studentsC. Classroom Construction and Repair USAID-Petron Schools constructedClassrooms builtClassrooms repairedD. Teachers Training Teachers/mentors/trainers/administrators trained in English/Math/ Science and in school managementTeachers trained in Petron Programang Kaakbay High school teachers trained in Entrepreneurship (nationwide)F. Youth in Entrepreneurship ProgramStudents who benefitted from the Summer on-job-training in service stationsStudents who benefitted from the mentoring by Petron employees II. COMMUNITY-BASED ENVIRONMENT/ LIVELIHOOD/HEALTH PROGRAMS A. Bataan Refinery Areas covered by the reforestation programFisherfolk beneficiaries of PANGMAMALI-Petron-Limay fish sanctuaryPropagules / seedlings plantedPBR Engineering scholarsBeneficiaries of Medical MissionBeneficiaries of the 4-month Feeding Program/Soup KitchenB. Depots and TerminalsNumber of depots with a community development programTulong Aral scholars, elementary, Pandacan, and Mindanao Beneficiaries of 46 Soup Kitchens6-month feeding program (number of undernourished children benefited)Beneficiaries of medical mission, Cebu, Laguna, Pasig, and Pandacan C. Guimaras Mariculture Livelihood (Milkfish Cage Culture) in Guimaras Fisherfolk who completed season-long training program Household beneficiaries Fisherfolk assistedEducation Programs: Schools assisted High schools with Internet connectivity Beneficiaries of education programs Student beneficiaries of education programs Teachers trained in digital literacy*Service count

PROGRESS

2009

6,054--

3.9798

26267

29366

1734

247

1,596

602*

62100

148*

330 hectares

3,0007,360/10,500

82,112

257/3,500

251,553

35,753

200

5,6851,277

120600

1,044

116all 17 HS

99 ES17 HS

21,545 students11,459 HS students

42 teachers


Points of HopeMaking A Difference in 276 Cities and Municipalities in 68 Provinces Nationwide

CAR Apayao Benguet Kalinga

REGION II Cagayan Isabela Nueva Vizcaya

REGION I La Union Ilocos Sur Pangasinan

REGION III Aurora Bataan Bulacan Nueva Ecija Pampanga Zambales

NCR Caloocan Las Piñas Makati Malabon Mandaluyong Manila Marikina Muntinlupa Navotas Parañaque Pasay Pasig Pateros Quezon City Taguig Valenzuela

REGION IV - A Batangas Cavite Laguna Quezon Rizal

REGION IV - B Marinduque Occidental Mindoro Oriental Mindoro Palawan Romblon

REGION V Albay Camarines Sur Catanduanes Masbate Sorsogon

REGION VII Bohol Cebu Negros Oriental Siquijor

REGION VIII Biliran Eastern Samar Leyte Southern Leyte

REGION XII Cotabato Sarangani South Cotabato Sultan Kudarat

REGION XI Davao del Norte Davao Oriental Davao del Sur

REGION IX Zamboanga del Norte Zamboanga del Sur ZamboangaSibugay

REGION X Bukidnon Camiguin Lanao del Norte Misamis Occidental Misamis Oriental

REGION XIII Agusan del Norte Agusan del Sur Surigao del Norte Surigao del Sur

ARMM Basilan Lanao del Sur Maguindanao Sulu Tawi-Tawi

REGION VI Aklan Antique Capiz Guimaras Iloilo Negros Occidental


Social Performance

We are committed to

improve the quality

of life of people in our

communities and in

our workforce.

Together with our

partners, we are able

to fuel hope within

and outside of our

business everywhere

in the country.


Nurturing our communitiesFueling hope through educationFor more than 10 years now, Petron Foundation has invested in education programs based on a fundamental premise: a quality education ushers in a lifetime of opportunity and a way out of the clutches of poverty.

Under our banner program called Fueling H.O.P.E. (Helping Filipino children and youth Overcome Poverty through Education), Petron achieved milestones in sustaining and scaling up initiatives on basic education for Filipino children and youth borne in poor families.

TULONG ARAL ELEMENTARY SCHOLARSHIP PROGRAM. Our Tulong Aral ng Petron program, which is now on its eighth year, focuses on a long-term and holistic program that sends poor children to primary and secondary schools. Its scope also extends to the professional development of teachers and school administrators, and the collaborative engagement of various parent and community stakeholders. By sending a batch of 1,000 scholars to public elementary schools each year since 2002, Tulong Aral tries to address some sobering statistics on the country’s education system by improving completion and participation rates.

As of end-2009, we have sponsored a total of 6,054 Tulong Aral ng Petron scholars who receive benefits, including books, school supplies, uniforms, and daily meal allowances, as well as capability building and livelihood programs for their parents. Our scholars, in turn, have responded positively to the scholarship. At the end of school year 2008-2009, 389 scholars out of the total 5,979 or 6.5% were rated “outstanding” and 36 were awarded first honors. Of the 1,137 scholars who graduated, 128 or 11% were outstanding and 19 students were recognized as valedictorians, salutatorians, and first to third honorable mention. A key component of Tulong Aral is the Mentoring Program. In 2009, we had a total of 183 mentors: 113 second-year students of the Ateneo de Manila High School, and 70 first year college students from UP Manila.

TULONG ARAL HIGH SCHOOL SCHOLARSHIP PROGRAM. Petron continues to send top Tulong Aral graduates to secondary school under the Tulong Aral High School Scholarship Program. This partnership among Land Bank, DepEd, and the Philippine Business for Social Progress (PBSP) currently provides high

Tulong Aral high school scholars gather for a leadership training program. Together with Land Bank of the Philippines, Petron supports the continued education of 293 youths in 21 public high schools in Metro Manila.


school scholarships to 293 youths in 21 public schools in Metro Manila. We shall continue to provide high school scholarships to Tulong Aral honor graduates from the elementary level.

USAID-PETRON SCHOOLS. Petron entered into a partnership with the United States Agency for International Development (USAID) for the period 2007-2011 for the construction and repair of classrooms in 39 municipalities in Region 9, Region 12 and the Autonomous Region of Muslim Mindanao (ARMM). The partnership commits to construct 120 classrooms and repair 480. To achieve this objective, we partnered with Habitat for Humanity, and in 2009, we constructed 34 classrooms in 17 schools and repaired 150 classrooms in 61 schools. This brings to date the number of classrooms constructed to 48 and repaired to 192 under this cooperative agreement. Petron’s participation in providing access to education has a significant contribution to the peace and development program for Mindanao, especially in areas most affected by conflict and poverty.

TEACHER TRAINING. Petron is also in the second phase of its cooperative agreement with the USAID for the International Youth Foundation–Education and Livelihood Skills Alliance (IYF-ELSA).

Through our partnership with the Notre Dame of Marbel University, we have trained 1,596 teachers, trainers and mentors in strengthening their capabilities in teaching English, Math, and Science. The program

likewise included capability training of 127 school administrators in the areas of finance, management, and governance. Petron Foundation also continues to partner with Sa Aklat Sisikat Foundation (SAS) to help build a nation of readers. SAS works with public schools all over the country, enabling teachers to serve as advocates and change agents, thereby motivating students to make reading a part of their daily lives. The fifth annual Petron Gurong Kaakbay Conference was held in October, 2009. This was attended by 167 educators representing 53 schools from 13 regions in the country. SAS also held six enrichment workshops, attended for 465 teachers and principals nationwide.

ENTREPRENEURSHIP EDUCATION. Petron’s contributions to sharing the gift of education extend to the secondary and tertiary levels, with entrepreneurial education as its focus. Together with the Muntinlupa Business High School (MBHS) and Petron Marketing Corporation (PMC), PFI implemented the Youth in Entrepreneurship and Leadership Development Program (YIELD) for the fourth year. A total of 100 3rd-year MBHS students underwent the 240-hour on-job-training on forecourt operations and food service in five Petron COCO stations. This brings to date a total of 267 student beneficiaries of the YIELD program. PFI held mentoring sessions for senior students of MBHS, with the participation of Petron employee volunteers and notable entrepreneurs.

Petron’s youth entrepreneurship program provides avenues for the youth to develop their business and entrepreneurial skills, such as on-the-job training in forecourt operations, food service and back office operations in Petron service stations.


PFI also collaborated with San Beda College Manila (SBC-Manila) and the Department of Education-National Capitol Region (DepEd-NCR) in conducting the first Skills Enhancement Training Workshop for Teachers of Entrepreneurship in Public Technical/Vocational (Tech/Voc) Secondary Schools. This was attended by 62 technical and vocational teachers from public schools in Luzon. This new curriculum, which was patterned after the Competency-Based Curriculum developed by Petron for the Muntinlupa Business High School (MBHS), piloted in 282 public secondary schools nationwide. Petron employees served as advisers to the Junior Achievement Philippines Inc.’s (JAPI) mini-company program on enterprise education, where participating university students undergo training on business management. The eight-month program has the equivalent of six units in the schools’ curriculum. INTERNET CONNECTIvITY AND THE LIbRARY HUb. Through a partnership among Petron Foundation, PLDT-Smart and the Philippine Business for Social Progress, 42 elementary and high school teachers and principals from Guimaras completed the training on “Building Classrooms Without Walls: Maximizing the Internet and Creating Online Resources.” The Petron Library Hub houses 43,691 donated storybooks and textbooks. The Hub follows the DepEd Library Hub concept of providing books and resources to teachers, librarians and administrators of several schools from a centrally located warehouse setup.

GAwAD KALINGA-ENERGY vILLAGE II. Petron also continues to be a leading partner in the Gawad Kalinga (GK)-Energy Village 2 in Albay, with 25 duplex units (50 houses) completed. The Village is located in Manumbalay, Manito, Albay and will have 100 units. This project was a response by an 18-member consortium led by Petron and the Energy Development Corporation (EDC) to the crisis in Bicol brought about by Typhoon Reming in 2006.

Fueling life Petron is also engaged in health and nutrition programs that benefit the immediate communities of the Petron Bataan Refinery, depots, and terminals. These programs include putting up health centers and conducting medical missions and medicine donations to barangay health centers.

The Petron Community Health Center in the Pandacan Terminal compound provides specialized health services to augment the health care program and services of barangay health centers for indigent families in Pandacan, Manila. Petron Foundation and Depot and Plant Operations also conducted a total of 46 soup kitchens, benefiting 35,753 children and adults, mainly from barangays near our terminals and depots.

As a parallel effort, PFI supported Caritas Manila in its Hapag-Asa feeding program undertaking a six-month feeding program (from August 2009 to February 2010) for 200 undernourished children from Barangays 835 and 836 beside our Pandacan Terminal.

We contributed a total of PhP106.6 million to various community-based programs and organizations nationwide. This was 13% higher than the previous year’s Ph94.1 million despite the difficult economic situation when most companies cut back on their economic and social investments.

Of the total amount, our CSR programs on education accounted for 64% while those for health and environment-related programs composed 36%.

In terms of funding sources, donations from employees and partners in support of our Tulong Aral program amounted to PhP1.36 million while funds raised from employees, partners and friends for disaster relief operations reached PhP1.18 million. Petron also received a grant of PhP21.268 million from the United States Agency for International Development (USAID) and the International Youth Foundation for the classroom construction and repair program in Mindanao and for the capability training of teachers in Region 12.

2,448

17

116

Education

Teachers, mentors and

administrators trained

Sponsored schools with Internet

connectivity

Number of municipalities/cities

served

COMMUNITY REPORT CARD


Engaging our people

As of 2009, Petron employs 1,347 people covering our corporate office, Refinery, depots, and terminals. Full-time permanent employees represent 93% of our workforce while probationary employees make up the balance.

Males account for 75% of our workforce, while the remaining 25% is composed of females. Being a highly technical organization (i.e., Refinery and Operations require engineering graduates, who are usually males) means that the job requirements in Petron fit males more than females. We view this as a challenge in enhancing diversity in our workplace.

WORKFORCE BY GENDER

Senior Management

Middle Management

Rank and File2008484

2009507

200895

200997

2008383

2009408

Senior Management

Middle Management

Rank and File2008245

2009259

200817

200922

200861

200954

PERFORMANCE DATA

KEY PERFORMANCE INDICATOR

PEOPLE Employment Total workforce By employment type Permanent Probationary Contractual Total number of employee turnover Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation Management-Labor Relations Percentage of employees covered by CBA Education and Training Average hours of training per year per employee Total training hours for all Petron employees Percentage of employees receiving regular performance and career development reviews

2009

1,347

1,25592

N/A51

1.95

34

96129,999

100%

2008

1,285

1,25035

N/A51

1.83

35

52.567,486

100%

Our employees are the heart of our business. We depend on their drive, passion,

knowledge, and talents to make Petron a sustainable business entity. We place

significant importance in creating working environments where our employees can

professionally flourish, where their well-being and skills are nurtured, and where

teamwork can thrive. We also ensure that our workforce mirrors “The Petron Way” in

the communities where we operate.


Being a recognized leader in CSR, Petron ensures that it engages its internal stakeholders – its employees – in programs that make a difference in society. Of our workforce of 1,347, 70% actively volunteer in our CSR programs.

Managing performanceTo help develop our employees to their full potential, we provide regular performance evaluation of all our employees. Our Human Resource Department leads initiatives in managing responsibilities, expectations, and performance. Every member of our workforce understands the importance of meeting key performance indicators and is duly rewarded for exemplary job performance. Thirty-four percent of our total workforce is covered by collective bargaining agreements. The company has always maintained open communication lines and dialogues with its employees. Proof that employees are provided freedom and autonomy to collective bargaining, Petron has three labor unions with membership from all our locations in the Philippines.

WORKFORCE BY AGE

20-29 28%

2009

19%

30%

23%

0%

30-39

40-49

50-59

60-69

39

37

12

14

2009

2008

TURNOVER BY GENDER

23%

2008

21%

34%

22%

0%

20-29

30-39

40-49

50-59

60-69

WORKFORCE BY CATEGORY (PERMANENT VS. PROBATIONARY)

Full-time permanent Employees

93% 7%Probationary Employees

Employee volunteers Employee volunteer hoursNon-employee volunteersNon-employee volunteer hours

*Service count

654*7,1974,546*

20,796

948*12,195

5,279*33,260

5,914*90,96623,986*

175,580

2002-2007 2008 2009

Employee Volunteerism Table


RetentionWe were able to keep our total employee turnover at 51 in 2009, representing 4% of our total workforce. This figure was unchanged from the previous year. In terms of age group, we were able to improve our retention level on employees with ages 30 years and below, which accounted for 59% of the total turnover rate in 2009 from 72% in 2008. Nearly a third of the employees who left the company in 2009 belonged to the 31-40 age bracket compared to just 16% in 2008.

Nurturing talent and skillsPetron believes in developing our human resource through programs designed to give in-depth experience and build skills that are crucial to our long-term success. Ensuring that we have a winning culture requires investment in our people so that they can grow and develop professionally within our organization. In 2009, the company logged a total of 129,999 training hours, which translates to an average of 96 hours of training per employee. This was 83% higher than our 2008 data. As part of our training program, Petron administers the Educational Reimbursement Program for employees who desire to pursue undergraduate and graduate studies in accredited colleges and universities, with priority to employees who demonstrate potential for growth in our organization. This is necessary to develop our employees’ knowledge and skills and improve their business productivity. An employee must also have at least three years of continuous service to qualify for this program.

Work-life balance programsFor 2009, we continuously promoted work life balance through three company-wide sports tournaments, two inter-industry sports tournaments and 15 Brown Bag sessions in four locations. To foster harmonious relationships in the workplace and promote work-life balance, we encourage bonding activities. In recognition of the varied interests of our employees, we allow those with common interests to form their respective groups, such as the Photography Club, Painting Club, Tenpinners Club (bowling), Himig Petron (choir), Racquet Club (badminton), Blossom Buddies (ikebana), and Fitness Club (gym). The company supports these clubs with a modest subsidy to undertake their activities.

Workplace policiesWe have implemented policies and systems that aim to meet and go beyond legislation to make Petron a rewarding, fair, and safe place to work for all our employees: As a matter of policy, a college degree is required for employment in the Company. The company does not employ child labor in any of its full-time, contractual or sub-contracted operations.

Renowned Filipino educator Onofre Pagsanghan discusses a point with Petron employees in one of the regular training programs available for them. Employees get to enhance their business acumen and enrich personal values through such activities.


Ensuring a Safe and Healthy Environment

Managing individual safety and health in the workplace is every employee’s

responsibility. This responsibility is backed by our company policy to provide a safe

working environment in all our operations—from our corporate offices, refinery,

depots, terminals, as well as our distribution facilities and vehicles.

We have a formal safety committee that covers all our production and retail facilities nationwide. This committee represents 100% of our workforce in all levels, from management down to rank and file.

As a means to minimize incidents at the workplace, we conducted oversight facility audits in the Refinery as well as in depots and terminals and 48 service stations. We have initiated the standardization of corporate policies and procedures, including the coordination of the availability and updating of standard personal protective and fire protection equipments, and the regular review of corporate HSE manuals.

We also continued to undertake advocacy campaigns in health and safety through the conduct of a company-wide Fire Fighting Olympics. Employees throughout the company are likewise encouraged to participate in the poster-making and slogan contests as a way of promoting the importance of health and safety.

Specific to addressing the threat of an oil spill incident, we conducted regular drills throughout the year on various levels: throughout the Refinery and all our facilities, as well as within the oil and energy industries as part of the WISE (Waterborne Industry Spill Equipment) cooperative, a collective effort to provide immediate response to Tier 1 oil spills. We also join the Philippine Coast Guard in the regular updates of Oil Spill Contingency Plans, and coordinate regularly with national agencies such as the Department of Energy, Philippine Coast Guard, Bureau

PERFORMANCE DATA


HEALTH AND SAFETY Percentage of total workforce represented in formal joint management-worker health and safety committees Rates of injury, occupational diseases, lost days, absenteeism and work-related fatalities

2009

17

0

2008

17

0

Firefighting is among the safety exercises practiced religiously in Petron facilities nationwide. The company also engages community members in the same training to develop their skills and strengthen relations with them.


of Fire Prevention, as well as business groups such as the Association of Safety Practitioners of the Philippines, Inc.(ASPPI) among others. Petron remains an active member of the Oil Spill Response Limited (OSRL), the world’s largest global oil spill response organization.

We are proud to say that we have no significant oil spills in 2009.

In response to the concern of the spread of A(H1N1) and other contagious diseases, our Health and Safety group took the lead in preparing Petron’s Pandemic Business Continuity Plan, which was approved by Petron management and adopted.

Petron also makes a significant investment on safety trainings. Common activities include fire fighting and oil spill response trainings for our colleagues and industry partners. In the Refinery alone, a total of 19,214 man hours were devoted to training of refinery personnel, with the bulk of exercises focused on hazardous material management and emergency response, Benzene handling, and basic fire control training in preparation for the full operation of the new Benzene and Toluene Extraction (BTX) Unit. In addition, 1,484 man hours for contractors were conducted to provide awareness and continuously improve safe working condition for all employees. Our Safety and Environment section and contractors safety officers conduct a regular meeting once a month to continuously update contractors for safety concerns and new requirements, also to monitor and discuss unsafe act and conditions in various work areas of the Refinery.

Internal Safety Audits were also conducted to ensure compliance to safety standards.

Minor InjuryDisabling InjuryDeathVehicular AccidentNear MissFire, FlashFire, MinorFire, MajorOil SpillProperty DamagePilferageRobberyTheftProduct Contamination

Note: Figures in () denotes contract personnel or contractor- related incident

Corplan Exec HR

00000000000000

Marketing

0 (1)0 (1)

00

0 (3)000

(1)0

0 (2)0 (3)

00

Petron Bataan Refinery

5 (7)00

6 (1)74 11)

620 (1)0 (1)2 (1)

00000

Finance

00000000000000

Depot and Plant Operations

1(5)00

1(28)3(8)

01(1)

04(20)3(0)0(6)0(3)

00

TOTAL

5 (8)0 (1)

06 (1)

76 (14)6

21 (1)0 (1)2 (2)

20 (2)0 (3)

00

2009 INCIDENT STATISTICS


Keeping Depot and Plant Operations SafeDepots and Terminals receive, store and distribute finished petroleum products. Keeping our depots and plant operations safe is paramount.

Efforts by the Division in 2009 resulted in zero Lost Time Incident (LTI) and a record high of 32,962,813 man-hours covering the whole Division. This achievement represented the total combined regular and contractual man-hours as of the end of 2009.

2009 DEPOT anD PLanT OPERaTIOnS SaFETY Man-HOURS WITHOUT LOST TIME aCCIDEnT

Location

AparriBatangas Calapan San JoseLimayPasacaoPalawanPoroRosarioNavotasPandacan

JocaspSub Total - LuzonAmlanTaclobanBacolodIloiloIsabelOrmocRoxasTagbilaranMandaueMactanSub Total - VisayasTagoloanIliganJimenez NasipitZamboangaBawing

DavaoSub Total -Mindanao

Makati Opns. Pasig Terminal

San Fernando DepotLegaspi DepotSub-Total Gasul Operations

2008 YTD

237,212866,680

43,92844,231

1,195,088139,858607,890

1,147,4651,616,124

406,6464,681,321

908,15511,894,598

193,644555,652980,190

1,051,740157,002434,879279,815105,571

2,250,552433,210

6,442,255903,259304,130409,276400,826908,188918,326

1,275,283

5,119,288

92,576

2,735,504z

1,131,369127,675

3,994,548

2009 YTD

34,104155,424

11,32111,745

175,90525,70191,378

157,412201,670

28,111323,570

242,8001,459,140

29,396142,810128,636143,812

29,00858,35047,87316,124

509,60552,199

1,157,813125,014697,330

79,132100,967177,466203,372

171,055

1,554,336

4,224

401,325

64,73651,466

517,527

Total Todate

271,3161,022,104

55,24955,976

1,370,993165,559699,268

1,304,8771,817,794

434,7575,004,891

1,150,95513,353,738

223,040698,462

1,108,8261,195,552

186,010493,229327,688121,695

2,760,157485,409

7,600,0681,028,273

358,547488,408501,793

1,085,6541,121,698

1,446,338

6,030,711

532,768

3,136,829

1,196,105179,141

4,512,075

No Lost Time Accident Since

199319952004200419921998

Sept. 19771967198219931990

2004

1996199419851980198219811994199419921993

197019961987198319862003

1976

1996

19802007

Regular:

Regular

3,000,000 as of Aug., 2009

100,000 as of June, 2009

100,000 as of December 2009

Regular + Contractual

1,000,000 as of Nov., 2009

5,000,000 as of Dec., 2009

1,000,000 as of May, 2009

200,000 as of Mar.,2009

1,000,000 as of Feb., 2009

300,000 as of June, 2009

2,500,000 as of June, 2009

1,000,0000 as of Oct., 2009

500,000 as of Dec., 20091,000,000 as of July, 20091,000,000 as of May, 2009

500,000 as of April 2009

3,000,000 as of August 2009

500,000 as of Feb 2009

COMBINED MAN-HOURS ATTAINED SAFETY MILESTONE FOR 2009(SAFE-MANHOURS WITHOUT LOST TIME ACCIDENT)


Location

Makati Opns. Pasig Terminal

San Fernando DepotLegaspi DepotSub-Total Gasul Operations

LOW/Grease and Blending Plants - Pandacan

Subic Additives Plant

Manufacturing Operations

Total

2008 YTD

92,576

2,735,504

1,131,369127,675

3,994,548

468,772

38,496

507,268

28,050,533

2009 YTD

4,224

401,325

64,73651,466

517,527

354,833

71,353

426,186

5,119,226

Total Todate

532,768

3,136,829

1,196,105179,141

4,512,075

823,605

109,849

933,454

32,962,813

No Lost Time Accident Since

1996

19802007

Regular: 7/6/2006 /

Contractual: January 1, 2005

Start of Operation:

June 1, 2008

Regular

100,000 as of Dec.,2009

Regular + Contractual

3,000,000 as of Aug., 2009

500,000 as of Feb., 2009

100,000 as of Nov., 2009

COMBINED MAN-HOURS ATTAINED SAFETY MILESTONE FOR 2009(SAFE-MANHOURS WITHOUT LOST TIME ACCIDENT)

The ISO 14001:2004 and 9001:2000 certified Petron terminal in Cebu Province’s Mandaue City typifies the company’s commitment to excellence in all of its facilities nationwide.


We have policies, quality standards, and procedures on proper receiving, loading, and transporting, including checking on the integrity of our haulers’ hoses to ensure that our products reach our consumers safely and without causing harm to people and the environment.

We also conduct regular training sessions on safety to make defensive driving a habit among our truck drivers. These training programs, coupled with standard preventive maintenance of equipment, ensure the reliability and continuous supply of products to our customers.

Ensuring the Highest Standards of Safety in the RefineryThe Refinery’s Integrated (Refinery Organic Personnel and Contractors) Safety Performance Index (ISPI) is the measure of the safety performance based on the Refinery incidence rate. It considers the combined rates of Industrial Disabling Injuries, Restricted Duty Injuries, and Motor Vehicular Accidents within the Refinery.

In spite of increased number of activities in the Refinery during the year due to major turnaround and construction of BTX project in the 1st quarter, the actual ISPI is 0.23, which is better than the set maximum ISPI of 0.30. Further, a severity rate of zero was achieved.

The reporting of Unsafe Acts and Conditions as part of the refinery incidents were incorporated in 2009 statistics. Hazards and unsafe behaviors as identified were addressed immediately to prevent it from escalating to an incident/accident. With this, coupled with the trainings provided to its contractors and personnel, safety audits and drills, the Refinery attained 486 days work or equivalent to 7,899,368 man-hours without Lost Time Accident (LTA) since September 1, 2008.

During the year, there were 85 near-misses, 21 minor and one major fire incidents, two incidents of property damages and three minor oil spills that occurred. There was no fatal/ disabling/restricted injury incident occurred in 2009. A total of 271 unsafe conditions and 114 unsafe acts were also reported for the year.

Incident and safety data are systematically collected and incident statistics are regularly evaluated and analyzed. We have created a facility for online and automatic reporting of accidents to promptly provide management the details of any incident.

In every aspect of our operations, we adhere to sets of procedures and standards to ensure that our activities do not pose significant hazards to our employees, the environment, and the general public.

SOCIAL PERFORMANCE: HEALTH AND SAFETY

24

19

depots - received Safety

Milestone (SMile) Award from

the Department of Labor and

Employment/Bureau of Working

(DOLE-BWC) for operating

without Lost Time Accident (LTA).

accredited occupational safety

and health (OSH) consultant

and practitioners - awarded by

the Department of Labor and

Employment/Bureau of Working

(DOLE-BWC) for their significant

contribution to the attainment

of zero LTA in several company

facilities.



Incidents, Investigations, and Actions TakenWe are fully committed to our responsibility of conducting our operational activities in

a manner that preserves the environment and protects the health and safety of all our

employees, customers, suppliers, contractors, and the general public. We believe that

safe, healthy, and environment-friendly operations are keys to the long-term success of

our business.

Despite exerting efforts to live up this commitment, we occasionally encounter incidents on our health and safety practices. In 2009, an odor problem in our Bataan Refinery was brought to the company’s attention by concerned residents of Limay and employees of the refinery. To address this problem, refinery management created an odor survey team “Sniff Patrol” to conduct a survey with the surrounding community, its personnel, as well as to establish a monitoring system inside and outside Refinery premises.

Hence, as a result of the survey, the refinery was able to identify the types of odor from the refinery. An Odor Awareness seminar was conducted for all refinery personnel, the local government, the Multipartite Monitoring Team (MMT) which included representatives from DENR, CENRO, PENRO, and ENRO, and members of the affected communities – barangays Alangan and Lamao – for them to correctly report the type of odor and the times of occurrence. The feedback generated allowed the refinery to properly institute necessary corrective actions.

At the same time, several initiatives were carried out to immediately mitigate sources of odor problem in the refinery. These include ex-situ treatment of spent caustic, addressing the limitations of Sour Facility SWF-2, the revamp of existing SWF-1, SRU restoration, sludge hauling, addressing the high liquid carry-over in acid gas flare seal drum, among others.

With the implementation of strategies for odor management, there was a significant drop of complaints from 53 in July to zero complaints by December, 2009. The chart below shows the reduction of odor complaints received by the refinery.

We appreciate the efforts of the community to bring the matter to our knowledge, which allowed us to trace the roots of the problem and institute corrective actions, as well as develop long-term strategies to further improve our health, safety, and operational performance. We also continue to keep the lines of communication open with our community so that we are able to prevent the recurrence of this and other unfortunate events in the future.

60

50

40

30

20

10

0JUN JUL AUG SEP OCT NOV DEC

PBRCOMMUNITYTOTAL


S P O T L I G H T

For several weeks in September 2009, this became the stark reality for nearly 30,000 victims of tropical storm Ondoy who trooped to the 24 soup kitchens ran by Petron employee volunteers in the flood-submerged areas of Marikina City, Pasig City, and Laguna.

In some soup kitchen sites where electricity had yet been restored, only gas-fed lamps called Gasulites were the source of light. Emergency relief goods had to be distributed from on top of dump trucks or in the middle of the road.

While many lost their belongings in what became one of the worst-ever natural disasters that hit the country, many also gained something from the experience.

For Jo Pojol, Luzon Retail Manager of Petron’s Gasul (LPG) trade, personally cooking arroz caldo on a number of occasions and mobilizing his Team Gasul for the soup kitchens was an opportunity to live up to the Petron way of caring beyond bounds and service beyond duty.

Jo and his team were among the 464 Petron employees from every division and service station dealers who volunteered their time to Petron’s typhoon Ondoy relief operations, which lasted for two months. Going to schools and other relocation centers, Petron employee volunteers tirelessly handed out soup, water, medicines, and other basic necessities to the typhoon victims.

Overcoming OndoyImagine eating a bowl of hot porridge under pouring rain. It might have been a delightful experience were

it not for the absence of a roof under your head or the comfort of eating it on your own dining table. Worse,

try eating it while your feet are soaked in mud, or while standing in pitch darkness.

Senior Vice President and General Manager Lubin Nepomuceno mobilized all senior executives from the company’s business units, as well as officers of Petron’s Employee Volunteer Council. Petron Foundation managed the company’s swift response to Ondoy and ensured Petron’s readiness for future calamities.

As in previous relief operations, Petron opened its network of service stations throughout the country for motorists to drop off relief items and donations. A total of 126 service stations collected donations that were turned over to Petron. The company also made critical fuel products readily available to government agencies for rescue and relief operations.

In her report on the company’s relief operations, Petron Foundation Executive Director Marilou Erni aptly summed up the experience: “In spite of the challenges we had to face in every soup kitchen and/or relief operations, we were deeply heartened by the generosity of our motorists, the willingness of our employees to volunteer and most of all, the smiles on the faces of those people who we have touched even in a small way. Indeed the spirit of generosity and volunteerism was overwhelming, the response was heartwarming!”

In the midst of tragedy, Petron raised the banner of hope for thousands of Filipinos and once again gained respect as a good corporate citizen.

With light coming only from gas lamps, Petron employee volunteers gamely distribute food and relief items to flood-stricken victims in Barangay Sta. Lucia, Pasig City.


Promoting Product ResponsibilityPetron operates in the context of a broader value cycle. We work with others to source

materials; package, transport and sell our products; recover and reprocess blend

components; collect and recycle the water we use. With our complex business cycle,

managing sustainability in our daily operations poses great challenge.

By collaborating closely with our business partners, communities, and consumers, we aim to ensure environmental and social responsibility in every product that bears our name. We are working to close the loop associated with our products – from product innovation during the research and development stage, to efficient use of energy and materials during production and transport, to responsible product marketing and promotion.

Introducing product innovationsAs part of our continuing efforts to improve our existing product lines, we enhanced the quality level of our fully synthetic gasoline engine lubricant Ultron Race. The enhanced product now meets API SM—the highest and latest quality standard for gasoline engines licensed by the American Petroleum Institute. This suits high-performance engines, especially those fitted with turbochargers or operated under the most severe conditions. The enhanced technology is capable of extending the service life of Ultron Race by more than ten times of the current practice using conventional product. Thus, directionally used oil generation is significantly reduced.

We also re-launched Petron DieselMax with 2% coconut methyl ester (CME) to comply with the Biofuels Act of 2006. DieselMax is a premium quality fuel which also contains a multifunctional additive system for a cleaner engine, more efficient combustion, and fuel economy.

PERFORMANCE DATA


PRODUCT RESPONSIBILITY Number of new products that meet stringent regulatory requirements Research and development initiatives made to enhance product lines and meet market demands Product innovations that are technically excellent and environmentally sound Customer satisfaction and training initiatives made

2009

15

1

112 topics/ 58 sessions/

1,261 participants

2008

2

1

012 topics/ 48 sessions/

964 participants

Products such as the gasoline engine lubricant Ultron serve to provide motorists with more efficient vehicle performance, cleaner engines and better fuel economy.


Expanding our customer reachFrom January 2009 to January 2010, we opened 200 new Petron stations across the country. This brings our retail network count to 1,463, which remains the largest in the country.

At the heart of our expansion program is the Micro Filling Station (MFS). In addition to offering small- and medium-scale entrepreneurs the opportunity to ride on the emerging growth of their local economies, the MFS also enables Petron to enrich communities touched by our business. By making this quality product accessible to rural areas, it helps in promoting livelihood and improving the quality of living standards.

As part of our efforts to reach more Filipino households, we also significantly increased the number of our Gasul branch stores by nearly 30% nationwide. This enables us to drive more branch store-to-home deliveries and makes our various LPG products more accessible to consumers. We also saw the continued success of our Tawag Lang Center, which is the main contact point of consumers for timely home deliveries in Metro Manila.

To service the ever-growing number of autoLPG users, especially those with taxi fleets, we nearly doubled our outlet count offering our own Xtend brand. Our Xtend sales volumes recorded a 28% growth and we remain the leader in this niche segment with an estimated 31% of the total market. Over the past few years, autoLPG has become a favored alternative automotive fuel since it is cheaper relative to gasoline and produces lower emissions.

We also acquired several new industrial LPG accounts and installed additional LPG facilities in malls across the country. Overall, our Gasul brand remains the most preferred LPG product, with nearly 35% of the total market in 2009.

Broadening consumer knowledgeThe technical support that our Marketing and Research and Development people have continuously provided helped strengthen customer loyalty and continue to build business for the company. One of these activities is the conduct of technical training programs aimed at informing these customers of the products that the company offers, as well as assist them in optimizing the use of these products in their chosen applications. These training programs are provided free to all our product

users. Petron’s after-sales support is also unparalleled in the local petroleum industry. We provide after-sales customer visits to our industrial and commercial clients and offer varied technical services to address technical difficulties, operational concerns, compliance to environmental regulations, efficiency enhancements, among others.

Ensuring customer satisfactionTo support the growth of our non-fuels business (NFBs), we continued to partner with companies to ensure customer delight at our service stations. There are now over 100 food and service locators at Petron service stations, which include Jollibee, Chowking, National Bookstore, Starbucks, Pancake House, Goldilocks, McDonalds, Kentucky Fried Chicken, among others.

We also established more Treats stores to cater to the growing needs of our customers. Treats is our own brand of convenience stores which offers a comprehensive product assortment ranging from packaged goods, beverages, fresh food and other products.

We rolled out several localized promotional activities to increase service station traffic and strengthen customer loyalty. As a result, revenues from our non-fuels businesses remained robust, increasing by 16% in 2009 from 2008 levels.

We also continued to encourage the use of our Petron e-Fuel Card, a prepaid card that can be conveniently used to purchase our products and services. The card also provides a practical way to monitor fuel expenditures and enables cashless transactions in hundreds of Petron service stations.

Building customer service infrastructureTo further improve customer interaction, we launched our Petron Customer Interaction Center (PCIC) towards the end of 2009. As one of the initiatives under a comprehensive Customer Relationship Management (CRM) Master Plan, the PCIC will serve as the needed structure to deliver positive customer experience consistently.

PCIC will initially cater to the needs of our customers in Pandacan, Navotas and Pasig. However, we will expand PCIC to handle inquiries, feedback, and sales orders for the rest of Luzon and the Visayas and Mindanao regions. At present, customers can send their feedback via


SMS, which are handled immediately by our Customer Interaction Specialists. Through our corporate website, customers can also touch base with Petron.

Building on market research In 2009, Petron commissioned various studies depending on the specific requirements per trade. As an example, an LPG Home Panel Study was conducted from June to December 2009 to monitor household LPG purchases nationwide and determine salient measures of our brand such as penetration and loyalty.

The study revealed that while nationwide LPG sales remained stagnant compared to the previous year, our own brand Gasul maintained dominance over the market. In addition, Petron as a whole (combined Gasul and Fiesta) still enjoys strong loyalty among its users, with a minimal number of buyers buying other brands. A duplication analysis for the entire Philippines showed Petron enjoying a 78% loyalty score from its customers, slightly higher than the 2008 score.

We will continue to track these trends through conducting several studies in 2010, including a corporate-wide Brand Health Track; Usage, Attitude, and Imagery Studies for Fuels (Reseller), Lubes, and LPG; and exploratory studies on Loyalty Cards.

We continue to be guided by the results of a 2006 Customer Loyalty Study was commissioned to see how Petron and its competitors are perceived and patronized by the customers. In the study, Petron had an overall score of 81% and was rated highly in the following norms: Customer Loyalty in Philippines for the industry (74%),

global for Petrochemical (78%) and retailing (74%). However, these results were still short of attaining the Best in Class index in the Philippines (90%); in Global Petrochemical (92%) and in Retailing (88%). A similar Customer Loyalty Study will be conducted in 2010 but this will be focused on our Industrial accounts.

Promoting products and corporate initiativesPetron also adheres to the highest standards of product advertising.

The company mounts the annual Petron Lakbay Alalay, which is now on its 24th year and holds the record for being the longest-running motorist assistance program conducted during the Holy Week. For this enduring program, we developed and produced communications materials (TV, radio, and print advertising) to promote responsible driving and road safety.

To ensure the continued protection of the consumer rights of our customers, all our advertising campaigns and communications programs subscribe to the standards set by governing bodies such as the Advertising Board of the Philippines Ad Standards Council, and the Philippine Association of National Advertisers. These groups harness the various sectors of the industry to achieve professional excellence through effective self-regulation; and promulgate self-regulatory rules, standards, and procedures of the advertising industry such as a Code of Ethics. These bodies also establish, maintain, and implement programs aimed at maximizing the growth potential of the advertising industry and promote public responsibility among advertising practitioners thereby protecting the interest of the customers.

Members of the Petron Customer Interaction Center (PCIC) get ready to provide clients with an avenue for inquiries and feedback and facilitate business concerns.


We remain cognizant of our role in making a contribution to the U.N. Millennium Development Goals and the Global Compact, so that our initiatives to enrich our communities are perfectly aligned with endeavors that benefit the global community. Moving forward, we commit to further our sustainability journey. We aim to make sustainability management and reporting an integral part of how we run our business, engaging our internal and external stakeholders in the process and guided by more specific measures of performance.

To this end, we acknowledge the observations made by our External Review Committee and resolve to maintain initiatives where we are successful, simultaneous with instituting measures for improvement.

We will strive to attain greater financial success while at the same time effectively managing our risks. As we do so, we will be mindful of our environmental responsibility and consciously exert greater efforts to minimize our carbon and water footprints in all aspects of our operations.

We will likewise continue to reach out to our stakeholders through strategic, community-driven social development programs and enhance improvement of our workforce.

We will ensure that sustainability is embraced and lived by everyone in Petron, knowing fully well that our continued growth as a business is inextricably linked to the well-being of our community and the environment.

View ForwardOver the last few years, we have attained significant successes in our efforts to make our

social and environmental agenda as robust and as comparable to our economic goals. To

this end, we have actively engaged all our stakeholders – employees, business partners,

government agencies, international and academic institutions, non-government and

people’s organizations – in collaborative efforts. We have likewise shared our experiences

with members of the academe and the business community to further broaden our reach

and expand our impact.


from left

JOEL ANGELO C. CRUZCorporate Secretary & Compliance Officer

SUSAN Y. YUTrustee

CAMILLE B. BUENAVENTURATrustee

JOHN B. ENCARNACIONAssistant Corporate Secretary

LUBIN B. NEPOMUCENOTrustee

ERIC O. RECTOChairman and CEO

CRISTINA M. MENORCAController

MARILOU G. ERNIExecutive Director

ALBERT S. SARTETreasurer

EMMANUEL E. ERAÑAPresident

FREDDIE P. YUMANGTrustee

Petron Foundation

Board of Trustees and Officers


67Enriching Our Communities 67Enriching Our Communities

List of Membership in Organizations

57-75 MovementAd Standards CouncilAdvertising Board of the PhilippinesAmerican Society for Testing and MaterialsAmerican Society of Safety EngineersAsia Society Philippine Foundation, Inc.Association of Safety Practitioners of the Philippines, Inc.Association of Securities Analysts of the PhilippinesBataan Coastal Care Foundation, Inc.Boston College Center for Corporate CitizenshipCorporate Network for Disaster ResponseEconomic Journalists Association of the PhilippinesEducation and Livelihood Skills AllianceEmployers Confederation of the PhilippinesEnergy Council of the Philippines, Inc.FEATI Alumni AssociationGlobal Reporting InitiativeInformation Systems and Control AssociationInstitute of Certified Management AccountantsInstitute of Corporate DirectorsInstitute of Electronics and Communications Engineers of the PhilippinesInstitute of Integrated Electrical EngineersInstitute of Internal Auditors – PhilippinesIntegrated Bar of the PhilippinesInternational Association of Business CommunicatorsInternational Bar AssociationJunior Achievement of the Philippines, Inc.Knights of ColumbusLeague of Corporate FoundationsMakati Business ClubManagement Association of the PhilippinesNational Association of Convenience Stores (USA)National Association of Corrosion EngineersOil and Gas in the Asia PacificOil Spill Response Limited (OSRL)People Management Association of the PhilippinesPhilippine Society of Mechanical EngineersPhilippine Association of National AdvertisersPhilippine Association of SupermarketsPhilippine Business for Social Progress

Philippine Business for the EnvironmentPhilippine Chamber of Commerce and IndustryPhilippine Council for NGO CertificationPhilippine Council of Deans and Educators in BusinessPhilippine Institute for Supply ManagementPhilippine Institute of Certified Public AccountantsPhilippine Institute of Chemical EngineersPhilippine Institute of PetroleumPhilippine Malaysian Business CouncilPhilippine Records Management AssociationPhilippine Retailers AssociationPhilippine Singapore Business CouncilPhilippine Society for Training and DevelopmentPhilippine Society of Nondestructive TestingPollution Control Association of the Philippines, Inc.Pollution Control Officers’ AssociationPort Facility Security Officers AssociationPublic Relations Society of the PhilippinesRotary ClubSamahan sa Pilipinas ng mga Industriyang KimikaSubic Bay Freeport Chamber of CommerceSynergos InstituteTax Management Association of the PhilippinesUAP – Business Economics ClubUnited Architects of the PhilippinesUnited Way PhilippinesUser of SAP in the Philippines


Sustainability Steering Committee and Technical Working Group, 2009

Champion Lubin B. Nepomuceno Senior Vice President and General Manager

STEERING COMMITTEE Chairman Peter Paul V. ShotwellVice-Chair Cristina M. Menorca (economic) Edith G. Cabrera (environment) Marilou G. Erni (social) Members Lucio C. Batugal (BSSD) Tom S. Cadiz (Marketing) Charmaine V. Canillas (Public Affairs) Joselito G. de Jesus (Marketing Reseller) Wilfredo A. Galoyo (Human Resources) Andrew S. Fortuno (Operations) Robert E. Luz (Corplan) Nathaniel R. Orillos (Refinery) Antonio S. Santos (Marketing Industrial) Wilfredo S. Toledo (Research and Development) TECHNICAL wORKING GROUP (TwG)

Corporate Planning Jocelyn L. Agustin Melvin O. Alfonso Salvador F. Ureta Lorna M. Ojeda

Finance and Subsidiaries Dennis S. Janson Florence M. Villareal Michael L. Ordinanza

Marketing Renato G. Abundo Cristina C. Banogon Rolando D. Sante Gilbert B. Manlangit Rodolfo R. Estrella Kristine Marie N. Pil

DepotandPlantOperations Roland P. Rueda Norberto A. Quiñones Joseph V. Nolla Adelaido A. Ros

Bataan Refinery Alfonso B. Alvero Mel O. Villar Alvin C. Gaspar Francis F. Reotutar

Human Resources Muriel Q. Surbano

Corporate Technical Services Group (CTSG) Edwin G. Francisco Nestor S. Evaristo Gerard James L. Alan Manuel Michael R. Pasiona

Public Affairs Rafael R. Ledesma Mia S. delos Reyes

Petron Foundation Ronald Allan S. Victorino


Seals of ExcellenceCertifications from both local and international agencies and partner organizations serve as testament to Petron’s commitment to sustainable development.




General DisclosuresPetron issued its first Sustainability Report (SR) in 2008, a self-declared document categorized as a B level report under the Global Reporting Initiative (GRI) G3 Guidelines. Aiming to raise the bar higher, the company decided the following year to engage a panel of independent experts as an External Review Committee (ERC) to review its 2009 Sustainability Report.

Petron also entered into a partnership with the University of Asia and the Pacific (UA&P), through its Center for Social Responsibility, which agreed to serve as the lead agency for coordinating the ERC’s work of conducting an external assurance of Petron’s 2009 Sustainability Report.

The ERC is composed of three independent experts selected jointly by UA&P and Petron. The Committee members were compensated individually by UA&P for the time and expertise they contributed to conducting the external review. Petron underwrote all professional fees and out-of-pocket expenses related to the ERC’s work, the outcome of which is the following general statement.

The Assurance Statement expresses the views of the ERC members in their capacity as individual experts. Aside from issuing the statement, the ERC members also submitted to Petron their individual recommendations on the company’s sustainability initiatives.

Our FocusWe reviewed the Petron 2009 Sustainability Report based on the GRI G3 Guidelines, using the latter’s Principles for Defining Report Content and Principles for Ensuring Report Quality as the framework for assessing the SR.

Our ProcessThe ERC started its assurance review in early June 2010 and completed its work at the end of the same month. Given the limited time period to complete the assurance, we did not verify the accuracy of the information cited in the report, including most of the environmental performance data. During this period, the ERC members convened seven times and conducted three site visits to the following locations pre-selected by Petron: its Bataan oil refinery in Limay, its Mandaue terminal in Cebu, and a company-owned and company-operated (or COCO) service station along C-5 road in Taguig, Metro Manila. In the course of these visits, we found sufficient opportunity to speak with company officers, employees, and selected stakeholder representatives.

In the course of these meetings and visits, we commented on the first two drafts as well as the finalversion of Petron’s 2009 Sustainability Report. Petron used our comments on the drafts to refine its final version of the SR.

Our FindingsWe recognize Petron’s pioneering effort to strengthen its sustainability reporting from its B level 2008 report to a B+ level application in 2009 by, among other things, seeking external assurance.

Assurance Statement of the External Review Committee


An assessment of its 2009 SR clearly reflects Petron’s continuing commitment to sustainability: i.e., its committing to understand the connection between its business goals and the economic, social and environmental impact of its daily activities. As a result of this commitment, we noted that Petron’s CSRrelated spending increased by 13 percent (from Php 94M in 2008 to Php 101M in 2009). Similarly, Petron made substantial contributions to public sector inflows, particularly through the payment of corporate taxes and royalties as well as donations. Quite significantly, we also noted the laudable initiation and continuation of various efforts in the following performance areas: human rights, labor practices, society, environment, and product responsibility.

On human rights and labor practices, Petron disclosed its investment in human capital formation through work-life balance programs, its openness to collective bargaining, and the encouragement of employee volunteerism, among others. It also demonstrated its continuing social concern through community investments that have produced positive effects in the communities where it operates: contributions to improving child welfare through the Petron-supported schools, increasing fish yields to benefit marginal local fishermen, and to increasing agro-forestry productivity to benefit forest farmers. Its reforestation of 330 hectares in Bataan and support for fish sanctuaries have highlighted its pioneering approach to crosssector partnerships involving local communities, local governments, and civil society organizations.

We also noted Petron’s investments in environmental management systems. The refinery and most of the terminals and depots are certified to ISO14000, a set of international standards which aids organizations in the continual improvement of their environmental performance, solidly demonstrating Petron’s journey towards sustainability. We also see greater efforts on Petron’s part in measuring its environmental footprint, particularly its initiative to make an inventory of greenhouse gas emissions leading to a program of GHG reduction in the future as well as to monitor and reduce its water utilization. It also appears to be adequately mindful of compliance with product responsibility standards.

Petron’s ChallengesThe ERC recognizes Petron’s current initiatives at stakeholder engagement, especially disclosure ofinformation on potentially adverse environmental and social impacts. Nonetheless, to continually engage these stakeholders, especially for future sustainability reporting, it would be desirable to elicit meaningful stakeholder inputs specific to sustainability reporting as well as expand its engagement to include, among others, its dealers, transport contractors, and manpower suppliers. We recognize the need, however, for Petron to maintain oversight over the outcomes of this engagement.

We observed that Petron has managed to align its sustainability strategies and goals with its businessgoals. The company can push this alignment further into its corporate culture through: (a) effectivecompany-wide information dissemination strategies (for example, through regular kapihan dialogue, optimal use of the company intranet, and the issuance of weekly internal bulletins, among others), (b) utilizing and integrating GRI metrics in the company’s performance management system, and (c) communicating the impact of its sustainability efforts to capital markets, shareholders, and other stakeholders.

As to the process of selecting, compiling, and reporting of performance indicators, the ERC suggests that in order to better analyze significant changes over time and any variation between reporting periods, the materiality process in selecting these indicators must be better reflected and documented. We also see the need for a more comprehensive application of GRI protocols in future reports so that Petron’s performance can be benchmarked against similar data from other companies and sectors. Also, the protocols can ensure that relevant data for assessment or decision-making by stakeholders are adequately provided.


Looking ForwardFor two consecutive reporting periods, Petron has significantly emphasized its social and community investments. In keeping with its drive to remain globally competitive, Petron may also benefit from complete reporting coverage of its supply chain, accompanied by the training, support and facilitation needed to make the sustainability initiative and GRI standards normative requirements: e.g., incorporating sustainability principles in vendor and supplier agreements. Similar attention also needs to be directed at GRI-described disclosures on company personnel (regular employees and contractual workers) involved in core business operations: e.g., specifying clear policies on non-discrimination, equal opportunity and diversity, protection for whistle-blowing.

We also recommend that Petron identify and explore the most critical and emerging issues in sustainability reporting in its sector. For example, the company may want to consider reporting in more detail on the following GRI areas: corruption and bribery, anti-competitive behavior, disclosure in investment and procurement practices. Likewise, it would be useful for future reports that data on relevant performance indicators are disaggregated according to geographic context, facility, source or type. It might also be highly informative to see details on Guimaras, Pandacan, and other areas of operation. Finally, we recommend for future reporting that Petron allocate a section describing its approach to sustainability reporting as well as a transition to the GRI’s Sector Supplement for Oil and Gas when it becomes available.

ConclusionWe recognize that while this is only Petron’s second year of sustainability reporting, it has succeeded in improving its 2008 GRI B level report to a B+ disclosure by allowing itself to undergo the rigors and challenging demands of an external review. With this in mind, we see that the publication of Petron’s 2009 Sustainability Report as yet another milestone in its brave journey towards sustainability.

Given the ERC’s positive experience during the external assurance review, we look forward to Petron’s sustainability reports in the years to come. We are confident that Petron’s commitment to making further progress in sustainability can only redound to better financial, social, and environmental performance for the company.

Members of the External Review Committee

COLIN L. HUBOGRI Elected Stakeholder Council Member, 2007-2012

Vice-Chairman, Operations Committee Center for Social ResponsibilityUniversity of Asia and the Pacific

JAY A. YACATManaging Director, Pambansang Samahan sa Sikolohiyang Pilipino (PSSP) [National Association for Filipino Psychology]

Assistant ProfessorDepartment of PsychologyUniversity of the Philippines, Diliman

GRACEF.FAVILAAdviser to the BoardPhilippine Business for the Environment


1.1.11.22.2.12.22.32.42.52.62.72.82.92.103.3.13.23.33.43.53.63.73.83.93.103.113.123.134.4.14.24.34.44.5

4.64.7

4.8

4.9

4.10

4.114.12

4.134.144.154.16

4.17

Strategy and AnalysisStatement from the most senior decision maker(s) of the organizationDescription of the main impacts, risks and opportunitiesOrganizational ProfileName of the organizationPrimary brands, products, and/or servicesOperational structure and major divisionsLocation of the company headquartersCountries of operationsNature of ownership and legal formMarkets servedScale of the reporting organizationSignificant changes during the reporting periodAwards and recognitions received during the reporting periodReport ParametersReporting periodDate of most recent previous reportReporting cycleContact point for questions about the report and its contentsProcess for defining report contentBoundary of the reportLimitations on the scope or boundary of the reportBasis for reporting on joint ventures, subsidiaries, and other related entitiesAssessment methods for data and bases for estimates in data compilationExplanation of the effect of any re-statements of information provided in previous reportsSignficant changes from previous reporting periodGRI Index PageCurrent policy and practice dealing with external verificationGovernance, Commitments, and EngagementGovernance structure of the organizationIndicate if the Chair of the highest governance body is also an Executive OfficerNumber of Independent and non-executive membersMechanisms for shareholders and employees to provide recommendationsAssociation between the compensation of the members of top management, high directors and the performance of the organization including environmental and social performanceProcedures for avoiding conflict of interest in top managementProcedures for determining qualifications and experience of top management for guiding the organization in economic, environmental, and social aspectsStatement concerning missions and values implemented internally, codes of conduct and standards for economic, environmental, and social performance, and the status of implementationProcedures for top management to supervise the identification and management of the organization’s economic, environmental, and social performance, including assessment of risks and opportunities, as well as adherence to international level codes of conduct and standards.Process to assess the performance of top management, especially with respect to economic, environmental, and social performance Explanation of how the organization has adopted the precautionary principleExternally developed economic, environmental, and social standards adopted or any other related initiativesListing of groups of interest included by the organization List of stakeholders groupsBasis for identification and selection of stakeholders groupsApproaches used to include interest groups, including frequency of participation according to the type of group of interestMain concerns and topics raised by stakeholders and how the organizations has responded to these concerns

GRI INDICATOR AND DESCRIPTIONREFERENCE/ PAGE NUMBER

GRI Content Index

4-627-28

1010-11

11Back Cover

Not Applicable1210

10-111222

2223

3, 72, 72-32-32-3

Not ApplicableNot Applicable

76-783, 70-75

12-151212

14-15

12-1513

14-15

7, 14-15, 23, 26, 32-33, 44-46

14-15

1428, 31

26, 33, 4668

20-2113, 15,17-18, 20-21

20, 21

15-19


EC 1

EC 3EC 5

EC 8

EN1EN3EN4EN6

EN 8EN 13EN 16EN 18EN 20EN 21EN 23EN 24

EN 26

EN 28

EN 29

EN 30

LA 1LA 2LA 4LA6

LA 7

LA 8

LA 10LA 12

LA 13

HR 5

HR 6

Economic Performance IndicatorsDiscussion of Management ApproachesEconomic value generated and distributed, including revenues, operating costs, employee compensation, donations and other community investments, retained earnings, and payments to capital providers and governments.Coverage of the organization’s defined benefit plan obligations. Range of ratios of standard entry level wage compared to local minimum wage at significant locations of operation. Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement. Environmental Performance IndicatorsDiscussion of Management ApproachesMajor Materials used by weight or volume. Direct energy consumption by primary energy source.Indirect energy consumption by primary source. Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives. Total water withdrawal by source. Habitats protected or restored. Total direct and indirect greenhouse gas emissions by weight. Initiatives to reduce greenhouse gas emissions and reductions achieved. NOx, SOx, and other significant air emissions by type and weight. Total water discharge by quality and destination. Total number and volume of significant spills. Weight of transported, imported, exported, or treated waste deemed hazardous under the terms of the Basel Convention Annex I, II, III, and VIII, and percentage of transported waste shipped internationally. Initiatives to mitigate environmental impacts of products and services, and extent of impact mitigation. Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with environmental laws and regulations. Significant environmental impacts of transporting products and other goods and materials used for the organization’s operations, and transporting members of the workforce. Total environmental protection expenditures and investments by type. Social Performance IndicatorsDiscussion of Management ApproachesTotal workforce by employment type, employment contract, and region. Total number and rate of employee turnover by age group, gender, and region. Percentage of employees covered by collective bargaining agreements. Percentage of total workforce represented in formal joint management-worker health and safety committees that help monitor and advise on occupational health and safety programs. Rates of injury, occupational diseases, lost days, and absenteeism, and number of work-related fatalities by region. Education, training, counseling, prevention, and risk-control programs in place to assist workforce members, their families, or community members regarding serious diseases. Average hours of training per year per employee by employee category. Percentage of employees receiving regular performance and career development reviews. Composition of governance bodies and breakdown of employees per category according to gender, age group, minority group membership, and other indicators of diversity. Operations identified in which the right to exercise freedom of association and collective bargaining may be at significant risk, and actions taken to support these rights. Operations identified as having significant risk for incidents of child labor, and measures taken to contribute to the elimination of child labor.


GRI Content Index

25

26-2828

52

26-28

3133, 35

33, 35-3633, 35-36

34-3933, 3639-40

33, 34-3534-35, 38-39

3333

33, 56

33

34-40

34

38-3933

4352-53

5352-53

55

56-58

52, 54-55, 5852, 54

52-54

52-53

54

54


SO 1

SO 5PR 3

PR 5

PR 6

Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating, and exiting. Public policy positions and participation in public policy development and lobbying. Type of product and service information required by procedures and percentage of significant products and services subject to such information requirements. Practices related to customer satisfaction, including results of surveys measuring customer satisfaction. Programs for adherence to laws, standards, and voluntary codes related to marketing communications, including advertising, promotion, and sponsorship.


GRI Content Index

8-9, 43-5115

62-63

63-64

64

Report on:1.12.1 - 2.103.1 - 3.8, 3.10 - 3.124.1 - 4.4, 4.14 - 4.15

C C+ B B+ A A+Report on all criteria listed for Level C plus:1.23.9, 3.134.5 - 4.13, 4.16 - 4.17

Same as requirement for Level B

Report on a minimum of 20 Performance Indicators, at least one from each of Economic, Environmental, Human rights, Labor, Society, Product Responsibility.

Report on each core G3 and Sector Supplement* Indicator with due regard to the Materiality Principle by either: a) reporting on the Indicator or b) explaining the reason for its omission.

Management Approach Disclosures for Each Indicator Category

Management Approach Disclosures for Each Indicator Category

Report on a minimum of 10 Performance Indicators, including at least one from each of: Economic, Social and Environment

Stan

dard

Dis

clos

ures

Repo

rt E

xter

nally

Ass

ured

Repo

rt E

xter

nally

Ass

ured

Repo

rt E

xter

nally

Ass

ured

ReportApplication Level

* Sector supplement in final version

Not Required

G3 Performance Indicators and

Sector Supplement Performance

Indicators

G3 Management Approach

Disclosures

G3 Profile Disclosures

OU

TPU

TO

UTP

UT

OU

TPU

T


This 2009 Petron Sustainability Report cover is printed on FSC©-certified Beckett Expression manufactured carbon neutral and contains 30% postconsumer recycled fiber. This paper is certified by Green Seal, and by SmartWood in accordance with the rules of the Forest Stewardship Council which promote environmentally appropriate, socially beneficial, and economically viable management of the world’s forests.

Petron CorporationSMC Head Office Complex40 San Miguel Avenue1550 Mandaluyong CityTelephone Number: 886 – 3888Website: www.petron.comEmail Address: [email protected]

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ENRICHING our COMMUNITIES - Petron. A long-time fisherman and resident of Bataan province, Mang Rogelio is also the chairman of the fisherfolk federation PANGMAMALI or Panguluhan ng