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M A N II L A W A T E R C O M P A N Y ,, II N C ..

MA N L A WAT E R C O M N C
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About this Report Message from the Chairman and President Company Profile Our Approach to Sustainability Empowering Employees Empowering Customers Protecting the Environment Enhancing Sustainable Development Engaging Stakeholders Continuing Our Commitments Our Sustainability Report Card GRI Index Stakeholders Commentaries

About the Cover


Our vision is to become the leader in the provision of water, wastewater and other environmental services which will empower people, protect the environment, and enhance sustainable development. The Manila Water vision encapsulates our commitment to national development which we fulfill by incorporating corporate social responsibility (CSR) and sustainability into our core business.
b | Manila Water Company, Inc.

About this Report


Manila Water is pleased to release our 2010 Sustainability Report with the theme Our Commitment, the seventh in a series of yearly reports that highlight our Companys social and environmental initiatives. This report is in accordance with the Global Reporting Initiative (GRI) G3 Guidelines, a set of internationally-recognized standards that have been followed by the Company since 2004. Similar to the previous year, we self-declare our 2010 Sustainability Report as Level A application with stakeholders commentaries. Using the GRI, we discuss our Companys sustainability performance during the calendar year against 79 performance indicators classified under the following sections of this report: Empowering People (employees and customers), which includes indicators on labor practices and decent work, product responsibility, human rights and economic performance; Protecting the Environment, which includes environmental and economic indicators; and Enhancing Sustainable Development, which includes economic and society performance indicators. Disclosures for all indicators are limited to Manila Waters business operations in the East Zone of Metro Manila, Philippines. Social and environmental initiatives of our subsidiaries Laguna Water Company, Boracay Island Water Company, Manila Water Total Solutions and Manila Water International Solutions, as well as our additional CSR arm, Manila Water Foundation, are not covered by this report. Unless otherwise indicated, all data presented are actual figures as of year-end 2010 and all financial information are verified by our external auditor. Stakeholder testimonials are also provided to validate the information presented. For our future reports, we shall seek external assurance in compliance with GRI standards to attain Level A+ application. The release of this report once again demonstrates Manila Waters serious commitment to sustainability as well as to transparency in communicating our organizations performance to our stakeholders. For further information, please contact: Carla May Beria-Kim Head, Sustainable Development Department Email: carla.kim@manilawater.com susdev@manilawater.com Tel.: + 63 (2) 928-1459, 917-5900 loc. 1565 Fax: + 63 (2) 981-8164

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Message from the Chairman and President


FERNANDO ZOBEL DE AYALA Chairman

GERARDO C. ABLAZA, JR. President and ceo

T
1.7M 24/7 100% 11% 36 500
Urban poor customers Water availability amidst El Nio Customer satisfaction rating Non-revenue water Wastewater treatment plants Hectares of Marikina Watershed for rehabilitation

he United Nations recent declaration of access to water and sanitation as a fundamental human right is consistent with our commitments at Manila Water.

As a water and wastewater services provider, we find ourselves in a unique opportunity to create a significant difference in the lives of the 6.1 million people we serve in the East Zone of Metro Manila. By delivering clean and affordable drinking water 24/7 even in extreme cases of drought or flood, and by bringing reliable, quality sanitation services, we help our customers from all walks of life carry out their day-to-day activities so they can engage in more productive work and better realize their full human potential. However, the fact that an estimated 884 million people around the world still lack access to potable water, while more than 2.6 billion still do not have access to sanitation clearly manifests the severe conditions afflicting a large segment of the population. Manila Water endeavors to do its share in alleviating the problem by taking the triple bottom line approach to address issues in areas where we operate. This approach aligns economic viability, social responsibility and environmental sustainability in all aspects of our business, creating shared value for the Company and all stakeholders. The triple bottom line also serves as the guiding force for our sustainable development initiatives.

P3.99B Net income with 23% growth 409.8 Billed volume in mcm 50,000 Jobs generated through
investment program plan

2 | Manila Water Company, Inc.

Water for the Community / Tubig Para sa Barangay


A component of the triple bottom line strategy is Manila Waters flagship programthe Tubig Para Sa Barangay (TPSB) or Water for Low-Income Communities, which is a holistic approach to connecting urban poor households to our water lines and retaining the connection for the long haul. As a result of the TPSB, significant contributions have been made to the safe water target of the Millennium Development Goal (MDG) of ensuring environmental sustainability. Today, over 1.7 million people from marginalized communities are provided continuous, reliable access to safe and affordable water. Water connection costs have dropped by almost twothirds and urban poor residents are now able to save up to 95 percent for piped water compared to costly vended water. Indirect social benefits addressing various dimensions of family and community life are also clearly evident. Gone are the days when residents have to queue for long hours around community wells or suffer diseases from contaminated water. With a healthier community, they are now able to engage in more productive activities and small businesses. The affordability of sustaining water services is as important as lowering the barrier to access. Complementing the TPSB are livelihood opportunities provided by the Company through the Kabuhayan Para Sa Barangay (KPSB) or Livelihood and Community Development Program. Among the opportunities provided by the KPSB are micro-business activities involving the creation of materials used in company projects such as meter protectors and board-ups. Similarly, the companys investment program plan generated around 50,000 jobs through accredited contractors and suppliers who carry out the projects.

International Water Association (IWA) awards, cementing Manila Waters place as among the worlds best in water efficiency. Clearly, the TPSB is a compelling program that not only sustains communities but also integrates well into our core business. As a result of providing reliable access to water to all our customers in the East Zone, water sales increased from the previous years 396 million cubic meters (mcm) to 409.8 mcm in 2010. This contributed to a double-digit net income growth of 23 percent this year from P3.23 billion to P3.99 billion over the same period.

Safeguarding Health and Safety


Manila Water invests heavily on ensuring that we provide clean and potable water to all of our customers. Water quality monitoring is conducted regularly through the Manila Water Laboratory Services which has been accredited by the stringent quality and safety standards of the International Organization for Standardizations (ISO) ISO/IEC 17025:2005, ISO 14001:2004 and OHSAS 18001:2007, as well as by the Philippine Department of Health (DOH) and the Department of Environment and Natural Resources (DENR). In 2010, a total of 10,366 water samples were collected across the Companys distribution network and tested against more than 50 physical, chemical and microbiological parameters of the Philippine National Standards for Drinking Water (PNSDW). We maintained compliance with the standards at 100 percent, which is five percent above the PNSDW requirement.

Continuous Water amidst the 2010 El Nio


As we strive to continuously bring safe, affordable and reliable water to our customers, Manila Water faced a severe environmental challenge posed by the El Nio in 2010. This brought the levels of the Angat Dam, our main water source, to 157.54 meters above sea level, the lowest ever recorded. Despite the 30 percent reduction in our water supply allocation, our customers continued to enjoy uninterrupted water service from their taps, with adequate pressure 24/7. What could have been a water shortage crisis was averted due to the successful management of our NRW levels and the efficiencies in our network that offset these supply reductions.

Sustaining Communities, Delivering Results


Operationally, the TPSB is instrumental in contributing to the improvement of our network efficiencies, which resulted in 24/7 water availability to 99 percent of our network and the reduction of our Non-Revenue Water (NRW) from 63 percent in 1997 to 11 percent as of the end of 2010, saving over 611 million liters of water per day (mld). Our multipronged approach to NRW reduction has also earned us recognition from two prestigious international award-giving bodies in 2010the Global Water Intelligence (GWI) and the

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The El Nio also highlighted the urgent need to develop new water sources to address the serious risks related to our dependency on one primary water source, as well as the increasing demand for water by the East Zones growing population. Moving forward, we will place a high priority on finding long-term and sustainable alternative water sources. Our immediate imperative will be to activate Laguna Lake as a water source for an initial allocation of 50 to 100 mld, a project which we aim to be operational in the next 18 to 24 months.

We now have 36 wastewater treatment plants, increasing our capacity to a total of 135 mld, which is equivalent to a 45 percent year-on-year increase as compared to 2009s 93 mld. We expect to further increase treatment capacity by 200 mld by commissioning three more STPs within the next three years. These initiatives are essential toward contributing to the clean up of the three rivers. An encouraging sign of the progress on these efforts were the 12 Lakan ng Lawa or Chieftain of the Lake Awards presented to Manila Water by the Laguna Lake Development Authority, the highest recognition given by the agency to any company in 2010. These awards recognize our exemplary performance in environmental protection and our consistent compliance with the agencys effluent standards and regulatory requirements.

Customer Satisfaction
As a result of our strong focus on maintaining customer service levels, the 2010 Public Assessment of Water Services (PAWS) survey, which was independently conducted by the University of the Philippines National Engineering Center (UPNEC) indicated that 100 percent of surveyed customers gave Manila Water a very good ratingthe highest possible in the PAWS study. This is the third straight year that Manila Water has achieved this rating. Similarly, the recently launched Public Assessment of Sewerage and Sanitation (PASS) survey reported that 100 percent of surveyed customers are highly satisfied with our wastewater services.

Addressing Climate Change


Coming from a year that was marked by widespread devastation caused by Ondoy in 2009, Manila Water has geared its 2010 environmental strategies toward enhanced climate change mitigation and adaptation. Apart from employing sustainable design standards in our facilities, we have assumed a key role in initiatives to rehabilitate the Marikina Watershed such as developing a comprehensive management plan and committing to reforest 500 hectares of the watershed to mitigate the effects of climate change in the East Zone of Metro Manila, as well as in the adjacent province of Rizal.

Cleaning the Rivers through Wastewater Management


As much as we are committed to delivering reliable water, we are committed to protecting the environment. In line with the Three-River Masterplan, which aims to rehabilitate Metro Manilas major water bodiesthe Pasig, Marikina and San Juan Rivers, Manila Water has further expanded its sanitation coverage in the East Zone by commissioning two new sewage treatment facilities located at East Avenue in Quezon City and Olandes in Marikina. It is worthy to note that the Olandes Sewage Treatment Plant (STP) was recognized in 2010 by the Asia Pacific Regional Project Innovations Awards of the IWA for its exceptional and creative design. Sensitive equipment were elevated while submersible process tanks were placed underground so that the facility will be able to withstand floods. The STPs capacity was proven when it survived the severe floods of Tropical Storm Ondoy (International Name: Ketsana) without any structural damage.

Further Talent Development


A good pool of talents will certainly be key to effective execution of the initiatives we are pursuing to deliver better services to our customers within and beyond the East Zone. As such, we continue to strongly invest in our people. In 2010, we spent P20.7M in training and development, of which 53 percent went to technical skills development to ensure a steady supply of talent in our operations and to keep them abreast of international best practices in our industry; 34 percent was invested in leadership development toward enabling our managers to grasp and experience the important facets of leading and getting results through others; and 13 percent went to exposing our key talents to local and international forums to enable them to network and benchmark with other practitioners in the field.

4 | Manila Water Company, Inc.

We believe that experience remains the best source of lasting development. Thus, we complement training with robust cross-posting to strengthen learning through actual work and first-hand leadership experiences. This approach to talent development allows us to strengthen our capability to deliver our current commitments, and at the same time, prepare the organization and our people for the challenges ahead.

Industry Accolades
Our experience at Manila Water serves as a testament to the effectiveness of public-private sector partnerships in realizing fundamental human rights such as access to potable water and sanitation. We have come a long way from the situation that met us at the start of the concession. One of our early partners, the Department of Trade and Industry Center for Industrial Competitiveness recognized our complete transformation and awarded Manila Water the Pro-active Program Achievement Hall of Fame Award in 2010. This accolade puts Manila Water on the map of setting industry standards on labor quality, productivity and community relations practices in the Philippines. On the same year, Manila Water was the only Philippine company to receive the Silver Award in the CSR Leadership Category of the 2nd Global CSR Awards in Singapore. This award affirms Manila Waters unique approach to doing business through the triple bottom line as we consistently align our social and environmental objectives with our business goals.

We thank our Board of Directors, the management team and our employees for their support and hard work to achieve all the milestones we have set during the year. Furthermore, we extend our appreciation to our stakeholders from government agencies and units, international aid agencies, non-government organizations, academe, media, as well as our investors, suppliers and business partners who have helped us achieve our triple bottom line. Finally, we thank our customers for constantly inspiring us in our quest to provide clean and safe water to more communities, and in driving us to secure the future today.

FERNANDO ZOBEL DE AyALA Chairman

Commitments for the Future


Moving forward, we shall continue to be guided by the triple bottom line as we sustain our business, the communities we serve, and the environment within which we operate. We aspire to replicate our success in the East Zone in communities outside our concession area through our subsidiaries and our additional CSR arm, the Manila Water Foundation, which aims to provide sustainable water access to base of the pyramid (BOP) communities.

GERARDO C. ABLAZA, JR. President and Chief Executive Officer

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Company Profile
Overview
Manila Water Company, Inc. is a private utility agent and contractor engaged by the state-owned Metropolitan Waterworks and Sewerage System (MWSS) to improve the infrastructure and delivery of water and wastewater services in the East Zone of Metro Manila, Philippines.

Operational Setup

Core services
Water supply treatment and distribution Wastewater (sewerage and sanitation) Customer service

Regulatory framework
Manila Water operates under a highly regulated environment to guarantee quality services to customers. MWSS Regulatory Office monitors Manila Waters performance relative to the service obligations defined in the concession agreement and implements a reward and penalty system through rate rebasing exercises. Department of Health (DOH) ensures customer health and safety by monitoring water supply compliance with Philippine National Standards for Drinking Water (PNSDW). Department of Environment and Natural Resources (DENR) oversees the utilization and conservation of water bodies in coordination with its attached agencies: National Water Resources Board (NWRB) regulates the use and allocation of water resources; Laguna Lake Development Authority (LLDA) enforces pollution control standards in wastewater effluent released to water bodies leading to the Laguna Lake.

Corporate Development

Project Delivery

Ownership Main Office


MWSS-Administration Building, 489 Katipunan Road, Balara, Quezon City 1105, Philippines

Service area
Manila Water services the East Zone concession area, which includes the eastern portion of Metro Manila and the adjacent province of Rizal. The area spans 1,400 square kilometers and covers 23 cities and municipalities.

Major developments in 2010


Changes in leadership In the middle of 2010, the Board of Directors appointed Gerardo C. Ablaza, Jr. as President and Chief Executive Officer of Manila Water. Previously, Mr. Ablaza led Globe Telecom, another Ayala subsidiary, to become one of the countrys top publicly-listed companiesan achievement that earned him prestigious titles such as the Asia Business Leader of the year, CEOs Choice of the year and Best Asian Telecom CEO.
6 | Manila Water Company, Inc.

President and CEO

Corporate Finance and Governance

East Zone Business

Corporate Resources

Business Areas
Balara Cubao Marikina AntipoloRizal Mandaluyong Makati Taguig Pasig

Also in the same year, Operations Group Director Frank Beaumont retired after a ten-year career at Manila Water. Project Delivery Group Director Geodino V. Carpio subsequently assumed the role of Mr. Beaumont. Establishment of Quality, Environmental, and Health and Safety (QEHS) Policies In a move to further optimize operations and delivery of services, Manila Water established QEHS policies which are complemented by related programs in order to promote best practice within the organization. Said policies are communicated to all employees, service providers and business partners, and are subject for review at least once a year.

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Certification International Philippines Managing Director Renato Navarrete (front row, fourth from left) formally hands Manila Water the ISO 14001:2004 and OHSAS 18001:2007 certifications symbolic of the Companys compliance with world-class environmental, health and safety management standards.

Regulation and Corporate Development Group Director Perry Rivera receives the prestigious Water Project of the year Award from Her Majesty Queen Noor of Jordan during the 2010 Global Water Awards in Paris.

Director for East Zone Business Operations Abe Basilio and Group Director for Regulation and Corporate Development Perry Rivera receive the Grand Prize for Operations/Management Category in the IWA Project Innovation Awards from IWA Member and Water Environment Research Foundation Vice Chair of the Board William Dee.

LLDA confers 12 Lakan ng Lawa Awards to Manila Water in the 5th Public Disclosure Program and Awarding of Industries Environmental Performance.

Company officials and employees led by retired Operations Group Director Frank Beaumont, directors Abe Basilio, Atty. Rene Tale and Erick Reyes, as well as Union President Ed Borela accept the DTI Hall of Fame award from DTI officials led by Efren Leao and Virgilio Fulgencio.

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Awards and Recognitions


Manila Waters strong commitment to excellence is affirmed by the numerous awards and recognitions we received during the year, thereby demonstrating the significance of our programs to the local and international landscape. Operational / Business Excellence Global Grand Prize Operations/Management Category, International Water Association (IWA) Project Innovation Awards for The Manila Water ExperienceReducing Water Losses Through a Multi-Pronged Approach, which implemented creative strategies in reducing systems losses that resulted in huge benefits to customers. Water Efficiency Project of the Year, Global Water Awards, Global Water Intelligence and Water Desalination Report for Manila Waters NRW Strategy, which achieved the highest water efficiency savings in the Philippines while doubling the size of population served and improving customer satisfaction. Honor Award Small Projects Category, Asia Pacific Regional Project Innovations Award, IWA for the Olandes Sewage Treatment Plant (STP), an innovative facility amidst a community park that helps reduce pollution in the Marikina River and withstand floods that may occur in the area. Hall of Fame, Pro-Active Programs Achievement Award, Department of Trade and Industry Center for Industrial Competitiveness for consistently implementing programs on labor and management cooperation, quality and productivity improvement, and family welfare and community relations. Corporate Governance Best Managed Mid-Cap Company / 2nd Best Corporate Governance / 3rd Best Managed Company in the Philippines, FinanceAsia, demonstrating the high regard of Asias top finance leaders and professionals, which make up FinanceAsias voters. Best in Corporate Governance in the Philippines, Corporate Governance Asia for Manila Waters continuing commitment to uphold good corporate governance practices in the Company. Gold Award, Institute of Corporate Directors for obtaining top scores in the Corporate Governance Scorecard Project for 2009. Environment 12 Lakan ng Lawa Awards, 5th Public Disclosure Program and Awarding of Industries Environmental Performance for the Laguna de Bay Region, Laguna Lake Development Authority (LLDA) for consistent compliance with effluent standards and regulatory requirements.

Sustainability and Corporate Social Responsibility (CSR) Silver Award, 2nd Global CSR Awards, Pinnacle Group International for promoting the practice of all aspects of CSR by integrating sustainability into the Company's overall business model. 2nd Best CSR in the Philippines, FinanceAsia as per the ratings given by finance leaders and professionals. Investor Relations 4th Best Investor Relations in the Philippines, FinanceAsia as per the ratings given by finance leaders and professionals. Communication Programs Award of Merit, Philippine Quill Awards, International Association of Business Communicators (IABC) for the Lakbayan Water Trail Education Program that educates stakeholders on water and wastewater concepts and issues, and encourages participants to protect the environment and mitigate the effects of climate change. Award of Merit, Anvil Awards, Public Relations Society of the Philippines (PRSP) for the Lakbayan Water Trail Education Program. Certifications ISO 14001:2004 and OHSAS 18001:2007 certifications, International Organization for Standardization (ISO) given to five Manila Water facilities (Balara Pumping Station, Balara Treatment Plant 2, Manila Water Laboratory Services, South Septage Treatment Plant (SpTP), and UP STP), confirming the Companys sound and world-class environmental, health and safety management system. Procurement Manual Certification, Foundation of the Society of Fellows in Supply Management, Philippine Institute for Supply Management and BayanTrade, Inc., which attests Manila Waters efforts and unwavering commitment to uphold transparency and good governance in all aspects of procurement and supply chain management.

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Our Approach to Sustainability


Sustainable Governance
Manila Water employs a top-to-bottom approach to sustainability through our corporate governance, where sustainability serves as a key guiding principle together with accountability, fairness and transparency. We believe that the interests of our stakeholders are upheld when the highest standards of ethics and good governance are observed in the pursuit of our triple bottom line objectives. Governance Structure The Manila Water Board of Directors oversees the management of the Company and provides direction for the formulation of sound corporate strategies. It is composed of 11 members elected during the last Annual Stockholders Meeting. As provided under the Corporate Governance Manual, independent non-executive directors comprise 20 percent of the Board membership but in no case shall they be less than two, thus ensuring fairness, transparency and accountability in all business decisions. In addition, the Chairman is a non-executive director with a role that is distinct from that of the President and Chief Executive Officer. This arrangement enables a balance of power, thereby ensuring greater independence in decisionmaking. AUDIT AND GOVERNANCE COMMITTEE The committee serves as the Boards check and balance mechanism and is expected to produce positive results in supervising and supporting the Companys management. It is responsible for ensuring the development of, compliance with, and periodic review of corporate governance policies and practices in the Company. The committees role also includes risk management functions. Oscar S. Reyes* Keiichi Asai Jose L. Cuisia, Jr.* Delfin C. Gonzalez, Jr.** Chairman Member Member Member

NOMINATIONS COMMITTEE The committee reviews and evaluates the qualifications of all persons nominated to positions in the Company which require appointment of the Board. It encourages the selection of a mix of competent directors, each of whom can add value and create independent judgment as to the formulation of sound corporate strategies and policies. Jose L. Cuisia, Jr.* Jaime Augusto Zobel de Ayala John Eric T. Francia Oscar S. Reyes* Chairman Member Member Member

REMUNERATION COMMITTEE The committee is given the power and duty to determine and approve all matters relating to the remuneration and benefits of the Companys officers and directors. It continuously evaluates and recommends, for Board approval, pertinent guidelines on executive compensation, particularly with regard to non-monetary compensation such as the stock purchase plan. Oscar S. Reyes* Gerardo C. Ablaza, Jr. Fernando Zobel de Ayala Jose L. Cuisia, Jr.* Chairman Member Member Member

EXECUTIVE COMMITTEE The committee acts by the majority vote of all its members on specific matters within the competence of the Board, as may from time to time be delegated to it in accordance with the Companys By-Laws, except with respect to certain matters specified in the By-Laws and Corporate Governance Manual. Fernando Zobel de Ayala Gerardo C. Ablaza, Jr. Antonino T. Aquino John Eric T. Francia Chairman Vice-Chairman Member Member

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PROXy VALIDATION COMMITTEE The committee is empowered to pass on the validity of proxies. Ma. Lourdes P. Miranda*** Atty. Jhoel P. Raquedan*** Representative of external auditor COMPLIANCE OFFICER Chairman Member Member Luis Juan B. Oreta***

Following the Companys By-Laws, each director receives a reasonable per diem allowance for attendance at each Board meeting. As compensation, the Board receives and allocates an amount of not more than 10 percent of the Companys net income before income tax during the preceding year. This is determined and distributed among the directors in a manner the Board deems to be proper, subject to the approval of stockholders representing at least a majority of the outstanding capital stock at a regular or special meeting of the stockholders.

* Independent director ** Non-Board member *** Manila Water officer / senior manager

Risk Management
Manila Waters commitment to provide reliable highquality services to customers is challenged by certain risks that may affect the continuity and efficiency of business operations. With this in mind, we introduced the Enterprise Risk Management (ERM) Program in 2000 to identify the Companys risks and integrate them into our strategic, tactical and execution planning exercises. We believe that keeping our key risks in check allows us to consistently meet our corporate and sustainability commitments. At the same time, this allows us to continuously improve the scope and delivery of our services that include venturing into new businesses in line with providing water and wastewater solutions to communities outside our East Zone concession area. The risk management process is cascaded to the different corporate groups with the ultimate goal of implementing the process down to the shop-floor level. The management of top corporate risks is distributed and delegated among the groups to ensure accountability and holistic approach. Our key risks and their corresponding mitigating measures are identified and discussed in the succeeding table.

Protecting Stockholder Rights The Board ensures that shareholder rights are protected through the provisions stated under all applicable government laws and corporate By-laws, as well as in the Corporate Governance Manual. Likewise, shareholders, in accordance with the Corporation Code, are empowered to elect, remove and replace directors, as well as express their position on certain corporate acts through their voting right. All shareholders are given the opportunity to make inquiries and raise issues to the Companys Board and officers during annual stockholders meetings. At the same time, the Corporate Governance Manual stipulates instances that characterize conflict of interest. The concerned director is required to make full disclosure of the event and is disallowed to participate in the decision-making process. Employees are also covered by the same policy through the Code of Business Conduct and Ethics, which is regularly rolled out to increase awareness among employees. Evaluation and Remuneration The Board and the executive officers of the Company undergo a yearly evaluation of their performance in terms of governance practices. The Audit and Governance Committee, in coordination with the Corporate Governance Office, conducts the evaluation and discusses the results at a Board meeting.

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Top Corporate Risks and Risk Management Measures TOP CORPORATE RISKS Incidents and Natural Events Risk Incidents and environmental disasters such as terrorism, earthquakes, floods and typhoons necessitate the development of comprehensive business continuity and disaster management plans to ensure the recovery and continuity of business operations. Regulatory Risk Adverse conditions brought about by regulatory, social and political forces within area of operations may negatively affect the Company and its ability to meet concession agreement and rate rebasing commitments. Water Supply Risk The development, security, reliability and quality of existing and new water sources and treatment and distribution facilities are critical to the provision of sustainable service to customers. Talent Management Risk The ability to meet manpower requirements of current and future businesses is critical in achieving business objectives. New Business Risk Expansion to new businesses within and beyond the East Zone increases exposure to various risks related to project development, start-up operations and integration. Capital Investment Risk The ability to meet service obligations and stay aligned with the regulatory disbursement planwhile ensuring profitability and return on investment largely depends on the planning, management and execution capabilities for bigger and more complex projects. Automate capital expenditure reporting and analysis Strengthen project evaluation process and review team Tap specialists and augment project management team Augment project management capability through training Capitalize partnership opportunities Use risk-based project selection criteria and due diligence process Monitor market developments for emerging technologies and competency requirements Conduct corporate manpower review Implement cross-posting and training programs Implement development programs for high potential talents Develop in-house training modules to tailor-fit curricula to the participants job profiles Fill target gaps through hiring Develop new and alternative water sources, such as the Laguna Lake, for the East Zone to ensure water supply security Continue and enhance implementation of watershed protection and rehabilitation programs Construct additional water treatment plants to cover demand projections Maintain non-revenue water at optimal level Implement an integrated asset management plan to ensure the quality and reliability of existing networks and facilities Apply risk-based approach in the adoption of new water technologies Undertake proactive policy research, development and advocacy Assess 2008 rate rebasing performance and plan for the 2013 rate rebasing exercise Enhance document management system Improve reporting procedures and guidelines Conduct review of critical project activities Ensure operability of standby water sources Implement Earthquake Contingency Plan, based on the 2004 Metro Manila Earthquake Impact Reduction Study Climate-proof critical facilities Test preparedness and response capability through random drills Strengthen functions of Business Continuity and Incident Management Response Teams RISK MANAGEMENT MEASURES

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Our Sustainability Agenda


The triple bottom line approach integrates social and environmental sustainability into our business model. This is embodied by the Manila Water Vision, which reads: Our vision is to become the leader in the provision of water, wastewater and other environmental services which will empower people, protect the environment, and enhance sustainable development . Sustainability Policy Manila Water puts a very high premium on sustainable development and as much as practicable, integrates our principles into our business processes. We believe that the continued sustainability of our business is dependent on the communities that we serve and the environment that supports our resources. This policy supports our values that promote CSR. With this in mind, we can address the needs of the community, the environment and the economy, without sacrificing the quality of our services. Focus Areas We focus on areas within our sphere of influence as a water and wastewater services company to maximize the impact of our CSR initiatives. These are: (1) water provision to the urban poor; (2) water education; and (3) environmental protection. Consequently, the programs under these focus areas contribute not only to the Companys business goals but more importantly, to the attainment of poverty alleviation, as well as the water and wastewater infrastructure targets of the Medium-Term Philippine Development Plan (MTPDP) and, ultimately, the environmental sustainability targets of the MDGs.

Sustainable Development Framework

Help ing Bu il

ni es mu m Co

Pro tec

ng

Developing Employees

et

gH

ea

lt h

t ng E l ri b u a C o nt N a o n

Focus Areas

Millennium Development Goals (MDGs)

Medium-Term Philippine Development Plan (MTPDP)

Commitments Help build communities by providing them with potable water, sewerage and/or sanitation services at affordable rates Develop and promote programs that nurture, protect and conserve natural resources Operate the business in a way that the health of our employees, service providers and the general public is safeguarded Develop self-sustainability of targeted communities by instituting capacity-building mechanisms and livelihood programs Assess and manage risks associated with operations by instituting and adopting mitigating measures Incorporate the principles of good corporate governance in all aspects of our business operations Strengthen and sustain our relations with the communities and the government through community development programs Ensure that the principles of sustainable development are well-communicated to all our stakeholders Make sure that the construction of new facilities and adoption of new technologies support the principles of sustainability Design and develop an environmental management system that will ensure the sustainability of our operations

Water Provision to the Urban Poor

Environmental

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co o L o n o cal mi and es

ment ron nvi eE th

in a rd g u S af Safe and

Developing Employees

Empowering Employees

Creating an Enabling Environment Rewarding Performance Empowering Beyond Employment

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Management Approach Disclosure


Our employees are at the fore of our commitments because we consider them our most valuable resources. By nurturing them, we increase their capability to drive the business to succeed in meeting the needs and expectations of our stakeholders. Manila Water is an equal opportunity employer that observes ethical hiring and employment practices in accordance with local and international laws and standards in labor, employment, and occupational health and safety. Over the years, labor-management relationship in the Company has been a healthy partnership, resulting in highly satisfied customers and stakeholders. This partnership is manifested by successful collective bargaining agreements (CBAs), zero grievances as an outcome of work-related issues clarified and settled at shop-level, and livelihood opportunities that serve as means to provide additional income to rank-and-file employees and their families.

In 2010, we focused our employee development programs toward equipping employees with leadership and functional skills that empower them to meet our growing business requirements. At the same time, we implemented new programs, as well as provided additional tools and facilities to ensure an environment that enables our people to effectively execute their functions. Human resource (HR) management in Manila Water is divided under the responsibilities of senior management officers for Talent Management and Leadership Development, HR Services and Labor Relations led by the Corporate Resources Group Director.

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Company President and CEO Gerardo C. Ablaza, Jr. addresses the Manila Water workforce during an employees meeting.

Our People
Manila Water Workforce Employee Breakdown by Area
Main Office
5.3% 84

12.5% 225
*

4.9% 5.6% 7.6% 4.8% 88 121 76 113 98

Balara BA Cubao BA Marikina BA


831 52.5%

77

AntipoloRizal BA Pasig BA Mandaluyong BA Taguig BA Makati BA

1,583 87.5%
*Reputable manpower agencies are engaged by the Company for some core business functions. Assigned workers are supervised by the coordinators of their respective agencies.

7.1% 6.2%

95

6%

Note: Main office figures include employees based in the Companys facilities. Other employees are distributed across eight Business Areas (BAs) in the East Zone of Metro Manila.

Average Hours of Training per Employee by Category (Internal Trainings) EMPLOyEE CATEGORy Senior Managers Middle-Level Managers Rank-and-File TOTAL TRAINING HOURS / EMPLOyEE / yEAR 57.9 41.8 68.9 54.2

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Developing Employees
Our investments in our people strengthen our Companys capability to deliver high-quality services to customers, as well as ensure the welfare of all stakeholders. Employees are continuously provided with opportunities to develop their leadership and technical skills such that they are able to effectively perform their duties. Remarkably, our approach to employee development has been instrumental in the transformation of former MWSS employees, still consisting majority of the workforce at 74 percent, to become the Companys changemakers.

Technical Schools Technical schools seek to boost employee skills for better organizational performance. The schools include the Project Delivery Management School, which equips project managers with decision-making and budget-monitoring techniques by means of an in-depth appreciation of project contracts. The Program Management School, on the other hand, trains program managers to be efficient in handling significant initiatives of the organization. In addition, the Business Zone Management and the Facilities Management schools enable employees to effectively manage BA territories and company facilities, respectively. Finance Academy for Managerial Excellence (FAME) FAME is a training program developed in partnership with the Ateneo de Manila University John Gokongwei School of Management and BayanTrade, Inc. It aims to enhance the technical competence of Corporate Finance and Governance Group employees in areas such as risk management and financial analysis. It produced its first batch of graduates in 2010.

Leadership Trainings
Cadetship Training Program (CTP) The CTP molds fresh graduates and young professionals to become the Companys future leaders. Cadets acquire skills and principles that are relevant to their day-to-day tasks through classroom-type lectures, exposure to different operating units and hands-on management of a BA territory or project via a six-month program. Two batches of cadets were added to Manila Waters pool of talents in 2010. Leadership Institute for Manila Water Employees (LIFE) Launched in 2010, LIFE is a two-year leadership program with a highly structured and customized curriculum intended for selected key talents in the organization. LIFE develops leaders by improving individual competencies through opportunities to learn innovative processes and best practices.

Code of Conduct
Code of Conduct workshops are administered to enhance employees familiarization with the provisions of the Code that uphold the Companys corporate values, particularly on integrity and respect for people.

Functional Schools
NRW Certification Program In line with Manila Waters accomplishments in NRW reduction, the NRW Certification Program was introduced in 2010 to institutionalize learnings acquired from years of practice and pass them on to new and emerging talents.

Creating an Enabling Environment


Occupational Health and Safety (OHS)
We believe that well-trained employees function effectively if they are provided with an environment that is safe and conducive for work.

Manila Waters new Fitness Center promotes a healthy lifestyle among hardworking employees.

2010 Sustainability Report | 17

Because of this, we institutionalized OHS practices through our Companys Health and Safety Policy, as well as the CBA, which has stipulations on the provision of safe working conditions and safety gadgets to employees, among others. To ensure consistency in enforcement, recording and reporting of accidents, including near-miss incidents, were part of the 2010 Safety Solutions performance metrics under the Companys Total Management System (TMS). Twenty-five (25) percent of our employees participated in formal joint management-worker health and safety committees at the corporate and facility levels and took part in monthly safety inspections and audits. In 2010 alone, workshops in safety solutions totaled 6,025 man-hours.

Organizational Breakdown by Gender


Male Female

42

Furthermore, we take care of the health of our employees and their families through the provision of services such as first aid, health consultation, and physical and laboratory exams via our fully-equipped and appropriately staffed Wellness Center. In 2010, the Center extended its services by holding doctors visits to BAs and conducting audiometry tests for employees exposed to noise. In addition, the new Fitness Center was opened to ensure greater well-being among employees. Five of our facilities have been OHSAS 18001-certified in 2010, demonstrating our conformity with stringent international OHS standards. Our initiatives resulted in significant improvements in OHS performance, yielding zero work-related fatalities, injuries and lost days in 2010.

Board of Directors

Senior Management

Middle-Level Management

Rank-and-File

Organizational Breakdown by Age


Above 50 30-50 Under 30

3 4
Board of Directors Senior Management

fatalities injuries lost days occupational diseases absentee rate

Middle-Level Management

Rank-and-File

Ratio of Basic Salaries of Male and Female Employees


1.0 : 1.2 1.0 : 1.0

2.7%
Safeguarding Rights

1.0 :1.1

Male Female

Manila Water conscientiously observes labor laws and ethical practices as a way of respecting diversity and securing the rights of employees. Equal employment opportunities are provided for all, and only applicants of legal age are hired by our Company. Because of these measures, there has never been any incidence of discrimination and child labor in the Company. Similarly, Manila Water does not have any reported incidents or complaints on forced labor. Although operations require a 24/7 work schedule to ensure uninterrupted service to customers, work shifts are arranged in such a way that employees report for eight hours a day, five days a week and with two consecutive rest days. Any excess work rendered due to emergencies is paid with rates that are in accordance with the law. On regular occasions, however, our management provides at least two weeks notice for any significant changes in operational requirements. In addition, 174 security guards commissioned from a reputable agency are regularly trained on modules that include relevant human rights topics such as laws on arrests, searches and seizures.
18 | Manila Water Company, Inc.
Senior Management Middle-Level Management Rank-and-File

Employee Turnover
By Gender

Mobility and Automation


In 2010, we provided our employees with additional tools and facilities that increase mobility and speed, which, in turn, enhance their productivity at work. These new facilities include the Luntiang Bughaw or Green and Blue, a 12-room facility that serves as a venue for employee meetings with stakeholders, as well as the mobile stage equipped with an audio and video system, which makes it more convenient for the Company to implement public consultations, inaugurations, and educational activities. The mobile stage further complements our existing mobile facilities such as the mobile office and treatment plants which have been very useful in our operations. We continued our automation program as a means to further simplify work processes and boost operational efficiency. This program also supports our environmental initiatives as we reduce the use of paper and paper products in our internal and external processes.

Male 51% 32 31 49% Female

By Age

Above 50 30-50 Under 30

Rewarding Performance
By Area
1 (1.6%) 6.4% 3%

Main Office Balara BA Cubao BA Marikina BA AntipoloRizal BA Pasig BA


65.1%

As an employer that values the work of its people, we offer a competitive compensation package to employees, starting with entry-level wages that are above the governments minimum wage standards. This measure serves as a way of ensuring that our employees are capable of meeting their needs, as well as those of their families. Salary adjustments are based on employee performance and not on age, gender or any cultural factors. In 2010, 62 percent of employees underwent a formal performance appraisal while the rest, comprising of Union members, were not included in line with the provisions of the CBA.

6.4% 1 (1.6%) 1 (1.6%) 2 (3.2%)

Mandaluyong BA Taguig BA Makati BA

*Employee turnover: 63 employees or 4 percent of the total population

The Company takes pride in its 2010 Huwarang Manggagawa awardees led by Grand Huwarang Manggagawa, Bert Ramirez.
2010 Sustainability Report | 19

As a way of recognizing high-performing talents and encouraging other employees to render outstanding performance, we hold the yearly Chairmans Circle (C2), Presidents Pride due to Performance (P3), and Huwarang Manggagawa or Model Employee Awards for senior managers, middle-level managers, and rank-and-file employees, respectively. A total of 156 employees from all employment categories were awarded by the Company during the year. Regular Employee Benefits
GOVERNMENT-MANDATED 1. Social Security System (SSS) advanced payment of sickness benefit, maternity benefit and loan, among others 2. PhilHealth health insurance 3. Pag-ibig housing and multi-purpose Loan COMPANy-INITIATED 1. Health insurance (HMO), including one free dependent 2. Wellness benefits, including medical and dental treatment 3. Life and accident insurance, including one dependent 4. Uniform 5. Encashment of sick leave and vacation leave credits 6. Car loan and multi-purpose loan for covered management-level employees 7. Emergency loans 8. Bereavement assistance

employees covered by Collective Bargaining Agreement

38%

Ratio of Standard Entry-Level Basic Salary to Local Minimum Wage

1.4

1.0

Manila Water

Minumum Wage

Manila Water Chairman Fernando Zobel de Ayala and former President Rene D. Almendras (middle) lead the 2010 C2 awardees.

20 | Manila Water Company, Inc.

An employee conducts a storytelling activity as a way of encouraging young children to help protect the environment.

Empowering Beyond Employment


Our commitment to develop employees goes beyond their employment. This is why we provide opportunities for livelihood and lifelong learnings that enrich both their professional and personal growth.

Employee Volunteerism
We develop employees in such a way that they espouse our social and environmental aspirations, being a company that values concern for others. Hence, we provide them with venues to make personal contributions to social development and environmental sustainability through volunteerism. Major volunteer events in 2010 include planting trees at the Marikina Watershed and participating in Ayalawide initiatives such as the Earth Day painting activity and Habitat for Humanity Build, as well as in the Department of Educations (DepEd) Brigada Eskwela, a yearly activity where partners clean up and repaint school facilities. Members of the Sagip Buhay or Save Lives volunteer group and other Manila Water employees participated in all these activities.

Labor-Management Relations
Successful CBAs between the Union and the management manifest healthy labor-management relations within the Company. Such CBAs are results of smooth and brief negotiations without any business disruptions. Remarkably, they contain terms and conditions that are within regulatory and business parameters. We take our labor-management relations to a higher level as we become partners not only in obtaining our targets as an organization, but also in creating sustainable livelihood opportunities to supplement the income of rank-and-file employees and their families. The Manila Water Employees Multi-Purpose Cooperative (MWEMPC) currently runs a grocery and a mobile carwash business that caters to company and employee vehicles. The MWEMPC has already generated a cumulative income of around P1.2 million since it started in 2007. In 2010, wives and children of our rank-and-file employees formed the first all-women enterprise under Manila Waters Kabuhayan Para Sa Barangay (KPSB) or Livelihood and Community Development Program. At the end of the year, they had an estimated earnings of more than P400,000 from job orders for corporate giveaways and other marketing collaterals.

Retirement Benefits
Employees automatically become entitled to retirement benefits upon regularization. Retiring employees receive benefits that include trainings in entrepreneurship and business planning, as well as financial benefits through the Company Retirement Plan. The financial assistance comes from the accrued contributions of Manila Water comprising 100 percent of the retirement and welfare fund. Some employees who pursue small businesses after retirement find opportunities to partner with Manila Water in providing business requirements such as leak repair, landscaping and consultancy. In some occasions, we offer job placement services for qualified dependents of retired employees. These initiatives help our employees undergo a smooth and easy transition to a non-working life as our commitment to empower our people goes beyond their careers at Manila Water.
2010 Sustainability Report | 21

Stakeholders Testimonials

Bert Ramirez Plant Operator, Wastewater Operations UP Sewage Treatment Plant, Manila Water Company 2010 Grand Huwarang Manggagawa Inventor of various tools and equipment to enhance plant operations I appreciate how Manila Water values its employees by allowing each of us to share what we know and innovate operational solutions that help our Company save and make work more efficient. At first, I thought I had no chance of obtaining the prestigious Grand Huwarang Manggagawa Award since I was not fortunate enough to have a college diploma. But thankfully, Manila Water looked beyond this and instead, recognized my abilities and dedication to work. Indeed, the Company gives me reasons to constantly perform my best. (Translated)

Buddy Gazo Retired Manila Water Employee Member Contractor, Water and Sewer Services Cooperative (WASSECO) Manila Water helped me prepare very well for my retirement. The Company trained me on how to properly manage my retirement benefits and start a business that will support my family. After my retirement in 2009, I joined WASSECO as a member contractor and was immediately tapped by the Company to perform service improvement projects. Now with more time for my family and a stable source of income even after retirement, I am grateful that I have learned much in terms of knowledge, skills and values as an employee of Manila Water.

Alicia Diamante President Group of Active Wives and Dependents of MWC Employees (GAWAD) Manila Waters Kabuhayan Para Sa Barangay livelihood program has empowered me to transform from a housewife to a woman who is capable of earning additional income for her family. Running a business that requires me to transact with an established company like Manila Water makes me more self-confident and responsible while I learn the ropes of operating an enterprise and managing people. I look forward to making our business grow by purchasing new equipment that will help us increase our product offerings. (Translated)

22 | Manila Water Company, Inc.

Ronnie Lim Chief Operating Officer Ho Chi Minh, Vietnam / New Business Development Manager, Manila Water Company CTP Batch 4, 2-time P3 Awardee I compare the Cadetship Training Program (CTP) to learning a sport or hobby for the first time: one needs a basic course that will teach the language, the key steps and the concepts of that sport. Without going through these basics, one does not stand a chance in competing in the sport. The CTP is where I learned the basic framework of the water business and developed the foundation that helped me take bigger roles in Manila Water. I believe that the Programs on-theground approach to learningparticularly on customer service, NRW management, project delivery and people management brings better results as theories are tested in actual conditions. My experiences in CTP serve as my platform as I take on the challenge of helping expand Manila Waters business beyond the Philippines.

Ricardo Lopez Carwash Employee Manila Water Employees Multi-Purpose Cooperative (MWEMPC) I would like to thank Manila Water for extending its livelihood program to the family members of its employees. For the past three years, the mobile carwash business of the Union Cooperative has been a good source of additional income for us. I am happy to be part of the Manila Water family. (Translated)

Linda Quines Area Business Manager, Rizal BA, Manila Water Company Consistent C2 Awardee In Manila Water, very clear goals are set for each department and individual such that everyone is aligned with the Companys agenda. This enables all business units and employees to strategize and focus on achieving our business goals, and social and environmental objectives. Correspondingly, regular tracking and evaluation of performance versus targets keeps us always on our toes and pushes us to go beyond our limits in delivering results, making us better persons in every milestone. My evolving roles, being always in the front line of the business, have helped me overcome my introvert personality. I feel responsible to make each change of role a success story and along the way, build my confidence. Professionally, cross-posting has helped me hone and enhance my leadership, communication and people management skills. It has broadened my horizon and deepened my understanding of the Companys operations and the industry in general.

2010 Sustainability Report | 23

Empowering Customers

Providing Clean and Safe Water for All Ensuring Health and Safety Caring for Customers Employing a Participatory Approach

24 | Manila Water Company, Inc.

Management Approach Disclosure


Manila Water strives to provide superior customer experience as we recognize the impact of our services to the lives of our customers. Following the stipulations of our concession agreement with the MWSS, we constantly find ways to ensure 24/7 potable water availability to our customers from all walks of life. We take a proactive and participatory approach toward improving our services by holding public consultations, and providing various means of communication with our customers through our BA offices, 24-hour hotline, and website. Customer relationship management falls under the leadership of the East Zone Business Operations Group Head and is decentralized among the Companys eight Area Business Managers. On the other hand, the Head of Laboratory Services under the Operations Group ensures compliance with product responsibility standards.

Manila Waters Customer Profile


(Based on water service connections)
6% 23% 49,149

189,681

575,112 71%

Residential - regular; semi-business Residential - marginalized communities Commercial / Industrial

2010 Sustainability Report | 25

Providing Clean and Safe Water for All


Manila Water strives to consistently comply with our obligation to provide continuous potable water supply to Metro Manilas East Zone residents. Notably, the Company has fulfilled peoples right to access clean and safe water by lowering barriers to access among marginalized communities through the Tubig Para Sa Barangay (TPSB) or Water for Low-Income Communities Program. Stringent documentary requirements, including land titles, were eased, and costly connection fees were decreased by up to two-thirds and made payable in flexible terms so that urban poor residents enjoy the same quality of services given to regular customers. Moreover, they can save up to 95 percent on monthly water bills by connecting to our lines. Indirect effects of the TPSB include increased economic activities as a result of the financial and time savings brought about by continuous water availability. In most instances, residentsparticularly women, have been unburdened from waking up early to queue in long lines at public faucets and shallow wells, and carrying heavy pails of water at long distances. Complementing the TPSB is the grant facility provided through the World Banks Global Partnership on Output-Based Aid (GPOBA). The grant helps urban poor residents connect with added ease to Manila Waters services through the additional subsidies and the provision of deferred payment schemes of up to 36 months. To date, more than 1.7 million urban poor enjoy clean, safe and affordable water through the TPSB. The need for potable water extends outside the homes of our customers. In many instances, school children spend a substantial amount of their allowance on bottled water because of the lack of drinking fountains. Inmates at city jails also suffer from water-borne diseases as a result of rusted water lines and unkempt toilets. In this regard, we created the Lingap or Water and Sanitation for Public Service Institutions Program to address this need. Lingap projects involve the rectification of after-the-meter pipes and the installation of drinking fountains and wash facilities in schools, orphanages, markets, city jails and hospitals. More than 1.5 million people are now able to access potable water in over 300 public service institutions through Lingap.

Ensuring Health and Safety


Our Company diligently monitors water quality at all stages of production through the Manila Water Laboratory Services which has accreditations from the DOH and the DENR, as well as certifications from the ISO, namely, ISO/IEC 17025:2005, ISO 14001:2004 and OHSAS 18001:2007. On the distribution side, monitoring is conducted through a tri-partite scheme with the DOH and the MWSS, in coordination with local government units (LGUs). Samples are collected and tested against more than 50 physical, chemical and microbiological parameters of the PNSDW. The results of these tests are reported to the Metro Manila and Rizal Drinking Water Quality Monitoring Committees, as well as the MWSS-Regulatory Office, and are disclosed to the public through monthly publication in major broadsheets.

24/7 100% 10,366

water availability

water quality compliance with PNSDW

water samples collected

Caring for Customers


One way of showing concern for our customers is by putting a face to Manila Wateran individual who they can easily approach regarding water-related concerns. Through our decentralized business setup and walk-the-line culture, employees become accessible to customers as the former literally walk around their respective territories on a daily basis. These make our employees aware of issues on the ground, which enable them to come up with responsive and innovative solutions like the TPSB and Lingap programs. At the same time, we make ourselves open to customer inquiries and concerns through the 24/7 Manila Water Hotline 1627, website (www.manilawater.com) and eight BA offices strategically spread around the East Zone. We make sure that our customers receive timely and effective responses through our Customer Relationship Management system that logs all requests and tracks developments based on our target response time. In addition, we protect customer privacy by prohibiting third party database access, as well as by limiting viewing and editing of customer information. In this regard, no complaints regarding breaches to privacy has ever been made against the Company. Our efforts result in highly satisfied customers as evidenced by the favorable rating given by 100 percent of customers who responded to the PAWS and PASS surveys conducted by the MWSS-commissioned University of the Philippines National Engineering Center (UP NEC) in 339 communities within the East Zone.

Employing a Participatory Approach


We treat our customers not merely as project recipients but more importantly, as our partners in the planning, implementation, and evaluation of many of our initiatives. In 2010, we held 50 customer events consisting of public consultations, inaugurations, fun runs, and school rehabilitation activities. These events allow us to get community feedback regarding our projects and serve as venues to raise awareness on social and environmental issues related to our services. Our customer engagement initiatives have created a deep sense of ownership among our customers, thereby motivating them to value the services they receive. Significant business improvements, such as increased NRW savings and collection efficiency, have been achieved as customers themselves watch over illegal connections and meter tampering within the neighborhood, as well as ensure timely payment of water bills.

100%

customer satisfaction rating PAWS 2008-2010 PASS 2010


Customer concerns are directly addressed by territory managers during walk-the-line activities.

Lingap Eskwela beneficiaries give Manila Water the thumbs up for clean and safe drinking water.
28 | Manila Water Company, Inc.

Stakeholders Testimonials

Edna Camarao Assistant Principal Bagong Ilog Elementary School The wash area and drinking facility installed by Manila Water through the Lingap Program have been very beneficial to our students. For one, our students are now able to save from drinking tap water instead of bottled water. In addition, we use the Lingap facilities to implement our schools programs on handwashing and toothbrushing. We believe that by promoting good health and proper hygiene, we lessen absenteeism among the children.

Miriam Navarro Head DSWD Sanctuary We are glad to have better access to safe drinking water because of Manila Waters Lingap Program. The water facilities installed by the Company are being used by our clients for their various needs. Lingap has also helped us obtain our municipal permit since wash areas are among the requirements. Thank you, Manila Water!

Carmen Gramonte TPSB Beneficiary Sitio Olalia, Brgy. Dela Paz, Antipolo City Manila Waters TPSB Program is a big help for me and my family. Before, I budget around P1,000 monthly for water since we consume around seven drums a week that cost P30 to 35 each. Now that I am connected to Manila Water, I only pay less than P200 for our monthly water bill. Thats big savings for us! Having piped access to potable water also gives me more time for my family because I no longer have to spend my Saturday mornings in lining up for water that may not even be safe for drinking. Now I spend all my mornings cooking breakfast for my family. (Translated)

Lcdr. Joel D. Tafalla PN Commanding Officer Post Engineering Unit Bonifacio Naval Station The water supply provided by Manila Water has always been enough for the consumption of the Bonifacio Naval Station and the offices and tenant units located in the Naval Station Jose Francisco. We are glad the 2010 El Nio did not have any effect to our organization. Clean and safe water was, in fact, always available for our daily needs as a result of the measures implemented by Manila Water.
2010 Sustainability Report | 29

Protecting the Environment

Preserving Water Resources Striving for Operational Efficiency Taking Responsibility for By-Products Educating Stakeholders

30 | Manila Water Company, Inc.

Management Approach Disclosure


Manila Water takes a holistic approach to attaining environmental sustainability by placing environmental initiatives throughout the entire water trailstarting with preserving valuable water resources to bringing back properly treated wastewater to rivers. Since 2009 was marked by Tropical Storm Ondoys wide-scale devastation affecting our operations and customers, we took on new initiatives to enhance the execution of our Climate Change Policy that enable us to better manage climate change and its effects. In coordination with several partners, we began developing a comprehensive management plan for the severely denuded Marikina Watershed, which greatly contributed to the masssive floods of Ondoy. We also committed to rehabilitate 500 hectares of the watershed through a tree-nurturing program actively participated in by our employees, customers and other stakeholders. Programs were also implemented to further enhance our operational efficiency, including those that result in additional reductions in our NRW, as well as improve our energy efficiency. In addition, we began incorporating sustainable design standards, such as the Leadership in Energy and Environmental Design (LEED), into the planning of our future facilities. In line with our commitment to protect the environment, we continuously strive to make all our facilities, including those turned over by the MWSS, consistently comply with environmental laws and regulations. At the same time, we carefully take the necessary precautions in planning to ensure that our operations will not have any negative environmental impact. Environmental management in Manila Water is driven by the Environmental Planning and Sustainability Department under the guidance of the Operations Group Director.

2010 Sustainability Report | 31

Preserving Water Resources


Our journey to environmental sustainability begins at our water resources. Since 98 percent of the water we provide comes from watersheds, we focus our initiatives on increasing and preserving their forest cover. These programs aim to maintain our watersheds holding capacity and water quality, as well as protect the lives that flourish in them. During the reporting period, we worked with the MWSS, the DENR, the Metro Manila West Zone concessionaire Maynilad, and the environmental NGO Bantay Kalikasan to develop the Ipo Watershed Framework Plan. Said plan serves as a guide to consolidate all stakeholder efforts to protect and manage the Ipo Watershed. Significant Water Source Profiles WATERSHED Angat ** (storage dam) LOCATION Angat, Norzagaray, Bulacan San Mateo, Norzagaray, Bulacan AREA (hectares) 56,000 SIZE* ( mcm) 850 STATUS OF AREA Protected BIODIVERSITy VALUE 15 species of dipterocarps Varied species of pandan, palms, vines, grasses and other shrubs/creepers 5 endangered fauna species: Celestial Monarch, White-fronted Tit, Spotted Imperial Pigeon, Philippine Kingfisher and Philippine Hawk-Eagle 7 species of dipterocarps Varied species of pandan, palms, vines, grasses and other shrubs/creepers 42 species of vertebrate wildlife 7 orders of invertebrate fauna 31 genera of microfungi 5 genera of endomycorrhizal fungi

Ipo (diversion dam)

6,600

7.5

Protected

La Mesa *** Novaliches, (pre-treatment dam) Quezon City

2,600

50.5

Protected

* Size pertains to the dams maximum storage capacity. ** Management and operation of Angat Dam is under the National Power Corporation. *** Management of La Mesa Dam is under Bantay Kalikasan; data on area and biodiversity value is based from the Progress Report on the Biodiversity Resource Inventory of La Mesa Dam Watershed.

We also intensified efforts to reforest the watershed by cofunding the reforestation activities of Bantay Kalikasan, which has reforested 110 hectares with a total of 35,899 indigenous species of seedlings. In addition, we planted a total of 75,640 seedlings over 122 hectares through our Adopt a Watershed Program that has been carried out with 42 partner organizations since 2006. In 2010, 6,590 seedlings were planted over 13.5 hectares by our partners from the UP Mountaineers, the San Agustin Center of Studies, the Technological Institute of the Philippines, Miss Earth Philippines, Chemrez, The Philippine Star, PAUSE/ Punongbayan, Metro Rotary, Christian Bible, UP Crest, and Don Bosco Technical Institute. The Dumagats, a group of indigenous people living in the Ipo Watershed, help Manila Water sustain reforestation efforts by serving as the watersheds guardians. We empower them by providing educational activities and sustainable livelihood opportunities in partnership with the academe and some NGOs. Aside from maintaining reforested areas, the Dumagats prepare the planting sites and supply the seedlings for tree planting volunteers. Three Dumagats have been engaged by Manila Water as facility caretakers.

During the period, we also continued supporting Bantay Kalikasans Save the La Mesa Watershed Project and began soliciting proposals for a comprehensive La Mesa Watershed management plan as part of our participation in the technical working group of the La Mesa Watershed Management Council. Aside from implementing activities to maintain our primary water resources, we also took a key role in rehabilitating the Marikina Watershed by developing a comprehensive management plan and committing to reforest 500 hectares of the watershed with the help of Fostering Peoples Education, Empowerment and Enterprise (FPE3) and local community partners. In 2010, we reforested more than 30 hectares by planting 17,750 trees, with the remainder to be subsequently planted. Manila Water also actively participated in related undertakings led by the Philippine Disaster Recovery Foundation.

Groundwater Protection
As part of our Groundwater Protection Program, we continued our campaign to make customers aware of the need to keep groundwater resources clean, reliable and intact by avoiding overabstraction and illegal use of deepwells.

32 | Manila Water Company, Inc.

Angat Dam

Ipo Dam La Mesa Dam

Balara Treatment Plant Laboratory / Quality Testing

The Water Trail

Pumping Stations / Distribution System

Customers

Septage Treatment Plant

Discharge to Rivers

Biosolids Application to Lahar Areas

Sewage Treatment Plant

Effluent Reuse

2010 Sustainability Report | 33

Striving for Operational Efficiency


Water Abstraction by Source (in mld) TyPE Surface water (Angat Dam) Supplementary sources: - deepwells - other surface water (rivers) TOTAL VOLUME (in mld) 1259 % OF TOTAL ABSTRACTION 98.4%

WATER SUPPLY: Chemicals Used (in metric tons)

7,470 4,793

16 4 1279

1.6%

2009

2010

100%

Note: The decrease in water supply chemicals used can be attributed to our lower aluminum consumption as a result of the reduction in raw water turbidity during the El Nio.

Note: We increased abstraction from supplementary sources in 2010 to augment decreased water allocation from Angat Dam due to the El Nio.

In spite of Manila Waters continuous expansion, we remain committed to increase operational efficiency in terms of water, chemicals and energy use. This measure is in line with our Climate Change Policy, wherein we consider the operational and financial implications of climate change to our Company and our ability to deliver the service obligations defined in the concession agreement. With this, we also implement programs that help us manage our carbon emissions.

WASTEWATER: Chemicals Used (in metric liters)

737,621 408,935

NRW Management
The El Nio served as our biggest environmental challenge in 2010. Hence, we intensified our NRW Management Program as part of our mitigating measures. Water losses further reduced from 15.8 percent in 2009 to 11 percent in 2010, which helped us provide uninterrupted water supply to our customers despite reduced water allocation. Similarly, the program allowed us to cater to new customers, which nearly doubled since the start of the concession.

2009

2010

Note: The increase in chemical consumption is due to the additional wastewater facilities and sewer connections. An additional chemical, polymer, is required for the treatment of biosolids in our FTI and San Mateo Septage Treatment Plants (SpTP), which both began full operations in 2010.

Machines and equipment are regularly inspected to ensure efficient and uninterrupted services.

34 | Manila Water Company, Inc.

Managing Non-Carbon Emissions

Php 35.64M
energy savings

In addition to implementing energy efficiency initiatives that help reduce Scopes 1 and 2 greenhouse gas (GHG) emissions, we use chillers and air conditioning units that are energy efficient and ozone-friendly. This allows us to better manage our non-carbon emissions, as well as help counter global warming and its effects to the environment. Summary of Non-CO2 Air Emissions (in tonnes)
NON-C02 AIR EMISSIONS Carbon Monoxide (CO) Nitrogen Oxides (NOx) Hydro Carbons (HC) Particulate Matter TOTAL 2009 7.83 2.50 0.30 0.40 11.03 2010 8.14 2.57 0.33 0.40 11.44

2,006,591 L fuel
direct energy consumption

83,576,000 kWh
indirect energy consumption

Energy Efficiency Initiatives


Direct energy consumption, which is the total fuel usage of our fleet, generator sets and other equipment, was 2,006,591 liters in 2010. To make our vehicles and equipment run more efficiently and release less toxic fumes, we continued enforcing the BLOWTAGS rule. BLOWTAGS is an acronym for the different vehicular components that must be checked by authorized company drivers prior to usebody condition/battery/ brakes, lights, oil (and other fluids), water, tires/tools, accessories, gasoline/glass, and safety. This measure allows us to monitor the overall status of our vehicles and implement preventive maintenance as needed. On the other hand, indirect energy consumption went up by eight percent due to the increased amount of electricity needed to provide water to elevated expansion areas in Rizal and operate our new wastewater treatment facilities. Nonetheless, we implemented several initiatives to reduce indirect energy consumption such as pilot-testing solatube and LED lighting with harmonic filters, which we intend to fully utilize in our facilities in 2011. Significant savings amounting to P35.64 million have been realized as well from switching to Time of Use rates and adjusting the Guaranteed Minimum Billing Demand in some facilities. Summary of Carbon Emissions (in tons CO2 (e)) SCOPE Scope 1: Fuel* Scope 2: Electricity Scope 3: Business Travels TOTAL 2009 2,895 42,308 70 45,273 2010 5,500 49,644 217 55,361

Note: 1) The total non-CO2 air emissions of the Companys vehicles was calculated by multiplying the number of kilometers traveled by vehicles and the Philippine Clean Air Acts Emission Limits for Passenger Cars/ Light Duty Vehicle Type approval, which is equivalent to Euro 3. 2) NonCO2 emissions for 2009 were recomputed using the same factor.

Taking Responsibility for By-Products


Wastewater Management
In line with the Clean Water Act, the Philippine Sanitation Code, and the Supreme Court ruling, which orders various government agencies to coordinate for the clean up and restoration of the Manila Bay, we expanded our capital expenditure plan to include additional measures needed to implement our Three-River Masterplan. This plan aims to rehabilitate the major river systems in the East Zonethe Marikina, Pasig and San Juan Riversthat ultimately lead to the revival of Laguna de Bay and Manila Bay. Manila Water treated 57.75 mld of wastewater in 2010, which effectively removed 2,735 tons of Biochemical Oxygen Demand (BOD) in said rivers. Additionally, some 230,753 cu.m. of wastewater effluent were reused within the Companys facilities and at the UPAyala Land TechnoHub where offices and establishments use recycled water instead of potable water for flushing toilets and watering plants. Sewerage The construction of four STPsOlandes, Poblacion, East Avenue, and Road 5 STPsunder the World Bank-assisted Manila Third Sewage Project (MTSP) was completed in 2010, bringing our total number of wastewater treatment plants to 36, as well as increasing our treatment capacity by 42 mld. This, in turn, enables us to accomodate the increased amount of sewage as a result of our additional sewer connections, of which, 18,110 were installed during the year.

* Scope 1 data in 2009 have been recomputed to include emissions from Company vehicles and supplemental power equipment. ** The increase in Scope 2 emissions can be attributed to the higher emission factor yielded by the Luzon grid mix and the increase in electricity consumption.

2010 Sustainability Report | 35

Sanitation On the other hand, septic tank desludging services are provided to residential customers who are not yet connected to our sewer networks through the Sanitasyon Para Sa Barangay or Sanitation for the Community Program. In 2010, Manila Water emptied a total of 56,466 septic tanks, which serviced a total of 242,026 households. This amount translates to 203,595 cu.m. of septage properly collected and treated by the Company.

Educating Stakeholders
Protecting the environment is a commitment we cannot fully realize without the support of our stakeholders. Thus, we find opportunities to share with them environmental issues and practices that are related to our business. The Lakbayan or Water Trail Program takes participants to a tour of our various facilities with the goal of imparting the importance of securing our water resources and of treating wastewater prior to disposal. The Lakbayan Water Education Center, a commitment included in the previous report, was established in 2010. The center, along with animated audiovisual presentations, enriches the whole learning experience of participants. To date, more than 18,000 participants from over 500 groups have attended the Lakbayan since 2006. Around 3,000 participants from 126 groups participated in the Lakbayan in 2010.

57.75
mld

total volume of wastewater treated

230,753
cu.

wastewater effluent reused at UPAyala m. TechnoHub and within the facilities BOD removed

2,735
tons

Solid Waste Management


Aside from implementing wastewater management programs, we make sure that the other by-products of our operations are properly handled by adopting and implementing the prescribed waste segregation and disposal standards of the DENR. Currently, the biosolids generated by our SpTPs are used as soil conditioners in lahar-laden areas in Tarlac and Pampanga. During the year, we developed a biosolids and sludge management strategy to identify the appropriate, as well as the financially and technically feasible short-term, mediumterm and long-term applications for our biosolid and sludge by-products. In the same period, we sold more than P13 million worth of assorted metal, paper and plastic scrap materials to accredited junkshops and had 131 kilograms and 858 liters of hazardous waste transported and treated by DENR-accredited haulers and treaters.

3,000 126

participants groups

Our Environmental Investments


EXPENDITURES ON ENVIRONMENTAL PROGRAMS (in million pesos)

20,968
tons

biosolids produced

252
tons

scraps sold to junkshops

2,954 126 15 74 3,169

sewerage and sanitation projects wastewater operations watershed management sludge and septage management (hauling) TOTAL

1,508
tons

grits and screenings

Note: We computed for the weight of biosolids and grits and screenings, which are by-products from the primary treatment of wastewater, by multiplying the actual volume in cubic meters with the waste density based on literature, which are 1000 kg/m3 and 1,200 kg/m3, respectively.

36 | Manila Water Company, Inc.

Stakeholders Testimonials
Celina Marie E. Cruz Head, Environment Committee University of the Philippines Mountaineers (UPM) For the past 33 years, the UPM has been at the forefront of creating ways to heighten public awareness to the plight of the various ecosystems. We have been working closely with Manila Water for more than three years now. With this, we have learned that the Company places the needs of the community and addresses environmental concerns first and foremost. Their development approach effectively strives to include local communities in working toward solutions. By educating the community and building awareness for the environment, protection and restoration is taken into long term. Manila Water has been a reliable partner and a key proponent in helping UPM achieve its environmental advocacies. They never fail to give us their unwavering support and is always ready to provide us with assistance and guidance. The Company goes beyond their way to help their partners and stakeholdersnot all companies can say that. It is an honor and a great privilege to work with some of the most committed and driven people in the industry. We thank Manila Water for making us part of their mission to ensure sustainable water supply and an environment that will be preserved for the succeeding generations.

Manuel Cruz Ipo Watershed Caretaker Manila Water helps me support my family by engaging me as a facility caretaker at the Ipo Watershed. The Company also assists Dumagats in obtaining additional income for our families by providing livelihood programs such as maintaining a seedling nursery. Aside from this, women in our community earn from manufacturing and selling ginger ale and peanut butter. I am glad that Manila Waters strong partnership with our community helps protect our environment. (Translated) Teresa Aragota Forester Calawis Punlaang Bayan Our group supports Manila Waters undertaking at the Marikina Watershed. We conduct follow-up activities such as re-visiting sites that have been rehabilitated to ensure that planting activities are successful. Previously, members of our community are engaged with selling charcoal. Because of our joint tree nurturing project, residents now busy themselves with more sustainable and profitable activities like brushing, digging, sticking and hauling of seedlings. We also plant fruit-bearing trees such as lanzones, rambutan and mangosteen, as well as cash crops for sustainable livelihood.
2010 Sustainability Report | 37

Mark Ellie G. Ortinez 4th Year Civil Engineering Student Pamantasan ng Lungsod ng Maynila Prior to Lakbayan, what I learned in the classroom are purely theoretical. It is entirely different seeing the actual processes for water and wastewater treatment. Now that I know them, I aim to learn more about the environment. I am also going to start drinking tap water since it is safe to drink and more environment-friendly than bottled water.

Enhancing Sustainable Development

Doing Responsible Business Risk-Proofing Operations Creating Shared Value

38 | Manila Water Company, Inc.

Management Approach Disclosure


Providing access to potable water sets off a series of effects that ultimately lead to sustainable development. We aim to grow together with our communities by providing incomegenerating opportunities for our contractors and suppliers that include small and medium-scale enterprises (SMEs), as well as cooperatives from low-income communities. In 2010, Manila Water registered a net profit of P3.99 billion, the highest in our 13-year history. This achievement has a rippling effect to the local and national economies as we created around 50,000 jobs out of our combined capital and operational expenditures under the investment program plan. In addition, we provided more than P17 million worth of job orders to the cooperatives we support under KPSB as well as contributed around P1.4 billion to the governments funds in the form of taxes.

The Contracts and Vendor Management Department under the Corporate Finance and Governance Group oversees the Companys supply chain management. On the other hand, the Sustainable Development Department under the Regulation and Corporate Development Group coordinates with different business units for the implementation of the Companys social programs. Connecting people to our pipelines is more than simply providing access to our services. For us, it means creating shared value and growing with our customers and the communities they are part of.

2010 Sustainability Report | 39

Doing Responsible Business


Enforcing Corporate Governance
The Manila Water Corporate Governance Manual, together with the Code of Business Conduct and Ethics, provides guidance on how the Company and employees should conduct business with our stakeholders. In addition, the Code of Conduct serves as our employees reference to the Companys house rules. Said policies are strictly enforced to protect our business, as well as the interests of our stakeholders and thus, necessitate the application of appropriate sanctions for violations committed. In 2010, three employees were dismissed for integrityrelated offenses after observing due process. To prevent similar incidents in the future, we intensified efforts to raise awareness of anti-corruption policies among employees by holding workshops on the Companys Code of Conduct that also include topics on the Code of Business Conduct and Ethics. Some 80 percent or 1,273 of our employees have been covered by 84 hours of training intended for middle-level managers and rank-and-file employees, following an initial roll out for senior managers in 2009. We shall administer more workshops in 2011 to cover all our employees. Other measures to mitigate commission of corrupt acts include requiring employees to disclose any actual or apparent conflict of interest, as well as any corporate entertainment and gifts received, aside from prohibiting acceptance of those with an approximate value of P3,000 and above. Our stipulation for insider trading likewise prohibits employees from buying or selling shares within 10 calendar trading days before and three calendar trading days after the disclosure of quarterly and annual financial results, as well as three calendar trading days before and three calendar trading days after the disclosure of other material information. Essentially, 100 percent of our employees are screened for corruption and other integrity-related offenses as failure to report and act on any reports affects the annual performance plan and evaluation of line managers. Sound and ethical business practices followed by the Company entail the observance of a politically neutral stance even during the 2010 national elections. At the same time, we see to it that the service obligations defined in our concession agreement with the MWSS are consistently complied with. Despite being the sole water and wastewater services provider authorized by the agency to operate in the East Zone, we employ a participatory approach to creating and executing our initiatives through the conduct of public consultations and NGO dialogues, among other means.

Including the Supply Chain


Manila Water understands that doing responsible business also means influencing our business partners to do the same. As a first step, we abide by strict measures in screening suppliers and service providers during vendor accreditation. Part of their requirements is to have an established local office not only to ensure prompt delivery of after-sales services and technical support, but also to comply with the governments tax requirements. This measure is aligned with our procurement policy, which encourages the purchase of locally-manufactured materials such as High-Density Polyethylene (HDPE) and steel pipes, brass and galvanized iron (GI) fittings, board-ups and bollards, among others. We also see to it that we do not engage vendors that have been blacklisted by the World Bank and the government for corrupt practices and similar offenses. Additionally, we execute contracts for capital investment projects with clauses requiring vendors to comply with labor laws, implement decent work practices and protect human rights. In 2010, we updated our Vendors Code of Conduct and held Vendors Night, where we recognized business partners who consistently helped us deliver our services effectively. Special citations were given to vendors for their loyalty to the Company, adherence to safety policies, and participation in the Quality Execution (QX) Academy, an in-house training school which aims to enhance project quality and ensure safety among the personnel of accredited vendors.

18 457 708
40 | Manila Water Company, Inc.

vendors awarded QX Academy participants projects awarded

Children are able to save their allowance because of the clean and safe-to-drink water available through the Lingap Program.

Risk-Proofing Operations
We enhance sustainable development by making our services efficient and reliable since access to potable water translates to increased productivity. In spite of the water supply threats posed by the El Nio in 2010, our customers continued to enjoy 24/7 supply of potable water with adequate pressure as a result of our NRW savings and business continuity measures. Continuous access to water enabled residential customers and commercial establishments to carry out daily activities and transactions without any interruptions.

Recognizing our role in fostering growth in the communities we serve, we provide opportunities for SMEs and cooperatives to partner with us through the Vendor Management and KPSB programs. These programs help small entrepreneurs obtain access to financing and skills development trainings so that our growth as a company extends to our business partners and the bigger community.

Creating Shared Value


Through the years, Manila Water has been contributing to local and national development through infrastructure investments that have significantly improved water and wastewater services in the East Zone. Since 1997, we have spent around P42 billion in capital investments for service improvement projects, of which, P9.6 billion was spent in 2010. Social investments have been made through the sustainable development programs that are created and implemented in cooperation with our stakeholders. Together with our walkthe-line culture and decentralized business operations, we are able to incorporate socio-political considerations with technical solutions into the design of our programs. The TPSB has been proven to serve as a catalyst to the development of urban poor communities because of the economic savings and opportunities brought about by a reliable and affordable piped water supply. Moreover, the TPSB has empowered communities through convenient water access as it does not only improve living conditions, but also open livelihood opportunities. In addition, the improvement in the overall health and sanitaton of public service institutions as an effect of the Lingap Program has translated to financial savings. Clean and safe-to-drink tap water has replaced the need for expensive bottled water and has reduced spending for the treatment of diarrhea and other water-borne diseases.

50,000 8 P17M
(in million pesos)

jobs generated from investment program plan KPSB cooperatives job orders through KPSB

Economic Value Generated and Distributed

11,013 6,590
1,092 2,379 1,359 1,757 3

direct economic value generated economic value distributed employees (salaries and benefits) providers of capital (dividends and interest payments) government (taxes and licenses) materials, facility and service providers (operating costs*) community (donations*) economic value retained**

4,423

* Operating costs and donations do not include capital expenditures for service improvement projects. ** Economic value retained is not equal to net income.

2010 Sustainability Report | 41

Stakeholders Testimonials

Miguelito Salgado Founder / General Manager Lupang Arenda Muslim-Christian Development Cooperative (LAMCDC) LAMCDC is located in a small community where underprivileged Muslim and Christian families live. Some years ago, we did not have access to basic necessities such as water and electricity, and many of us did not have regular jobs and stable sources of income. These reasons prompted us to organize ourselves and pool our resources to form a cooperative. Our partnership with Manila Water began when they provided us access to potable water through the TPSB Program. Eventually, our cooperative received assistance from the Company through the KPSB Program. Since then, we have been supplying the Company with A-frames, meter protectors and services for Lingap projects. Thanks to KPSB, many of us have been encouraged to work and develop our skills. More importantly, Muslims and Christians in our community live harmoniously together because of a common purpose and a sustainable livelihood.

Diosdada and Abel Pangilinan Vice President and President ABDA Construction Inc. Best Safety Performer / Loyalty Awardee, Vendors Night We started our business in August 2002 with a capital of only P250,000. One of our first job orders was for a leak repair in the Cubao BA. We had only one truck, one compressor, one foreman and three laborers. We got our break when we were awarded our first major project with Manila Water. It was a pipe-laying activity that was part of the Companys NRW Reduction Program. Since then, our business grew from having merely seven employees in the beginning to becoming a business that supplies jobs to more than 300 employees. When before, we would only rent equipment to complete our projects; now we have 32 trucks, 3 loaders, 3 backhoes and 20 compressors with jackhammers. We are glad Manila Water taught us good values and strong customer orientation, which have been significant to our growth and development as an enterprise.

42 | Manila Water Company, Inc.

Jeff Gacula Operations Manager J.P. Gacula Construction QX Academy Topnotcher We became an accredited vendor of Manila Water in 2003. Back then, our projects were mostly for the Marikina Business Area (BA). Later on, we expanded our services to cater to the needs of two other BAs, particularly the Rizal and Pasig BAs, and moved on to deliver wastewater service improvement projects in the Taguig, Cubao and Balara BAs. In 2010, we were awarded our biggest sewer project so far. The QX Academy helped us organize our work processes and made us more effective in executing our sewer projects.

Engr. Lito Estorninos Engineering Officer Celebrity Sports Club Manila Waters services are vital to our day-to-day operations. The Companys services help us save on our electric consumption as we no longer have to use our booster pump due to the sufficient water supply and pressure we receive. In 2010, we had plans to reactivate our pump because of the threat of the El Nio on water availability. Thankfully, there was enough supply and pressure during that period. We did not have to use our booster pump anymore.

Eddie Go Falcon Metal Loyalty Awardee, Vendors Night Manila Water challenges its partners to innovate and improve locally-manufactured products. The trust it bestows on us inspires us to produce high quality products that are at par with international standards at reasonable cost.

2010 Sustainability Report | 43

Engaging Stakeholders
In order to be effective in attaining our sustainability objectives, we undertake various initiatives to address the issues of our stakeholders and engage them at various levels. During the year, the water supply threats associated with the El Nio posed serious concerns among our stakeholders. To address them, we launched a crisis communication plan that allowed key stakeholder groups to receive updates on the status of our water supply and the measures we implement to mitigate the droughts impact on our operations. Our partnerships with stakeholders complement our CSR initiatives and lead us to achieve our goals. Shareholders As a publicly listed company, we engage our shareholders by conducting annual stockholders meetings where our Board of Directors, led by the Chairman and President, can directly address the issues raised by our shareholders. During these meetings, we distribute our Annual Report. In addition, we make all relevant news and disclosures accessible to our shareholders by keeping the Investor Relations Section of the Manila Water website up-todate. We also hold investor briefings, roadshows and one-on-one meetings. Concerns may be directed to us through the contact details found in our reports and website. Employees As the most valuable of our resources, we employ various initiatives to empower and align our employees with our corporate goals. Under the Total Management Sytem (TMS), specific and measurable targets are monitored through regular management reviews (Key Result Area reviews, quarterback meetings, departmental meetings, etc.). In line with this, we have institutionalized an incentive/ rewards system. We also provide opportunities for professional development (e.g. functional trainings, leadership seminars, cross-posting, etc.). We release regular e-newsletters and quarterly magazines to keep our employees abreast of topics that include business updates, human resource matters, and occupational health and safety. We also hold regular All Managers and Partners meetings, respectively, for our management team and the Union. In 2010, we

launched Pipenet, the Manila Water intranet portal, for employees to conveniently access information and forms that help them carry out their tasks effectively. Vendors We influence our business partners to do responsible business and enable them to grow with us. Hence, we communicate our values and goals to our suppliers and contractors by organizing regular meetings, updating and cascading our Vendors Code of Conduct, holding trainings through the QX Academy, and rewarding vendors who have been consistent in complying with our policies and standards. (More discussion on this may be found in the Enhancing Sustainable Development Section.) Customers and Communities We value our customers and the communities they represent as all our sustainability efforts are intended to enhance the delivery of services that are vital for their daily lives. We take a proactive and on-the-ground approach to keep our customers informed, as well as empower them to share in our advocacies by educating them through our Lakbayan or Water Trail Program and public consultations, as well as through printing useful information tidbits in billing statements. (More discussion on this may be found in the Empowering Customers Section.) Regulatory Bodies, Government Agencies and LGUs We work with the government to attain social, environmental and economic development through public-private partnerships (PPP). We ensure that in meeting our service obligations, regulatory standards are also complied with. We provide timely reports to our regulators and to other concerned government agencies and LGUs. On some occasions, we are tapped to serve as resource persons in technical working group

44 | Manila Water Company, Inc.

Stakeholders tour the Balara Treatment Plant for better appreciation of the intricate processes involved in producing potable water.

discussions for policy-making and other undertakings related to our areas of expertise. In 2010, we participated in the MTSP-Global Environment Facility of the DENR, which seeks to address the missing policy instruments of the Clean Water Act. Business / Industry Groups We take the opportunity to learn and share our best practices, as well as identify and establish partnerships for sustainability within business and industry groups that include the Philippine Water Partnership, International Water Association, Management Association of the Philippines, Philippine Disaster Recovery Foundation, Philippine Business for the Environment, and various chambers of commerce and industry, among others. Non-Government Organizations (NGOs) As part of our corporate communications strategy, we constructively engage different types of NGOs by partnering with them for various social and environmental projects. We also engage hardline NGOs by conducting issue-based briefings and dialogues. International Agencies and Donor Organizations Since access to water, sanitation and sewerage are global issues that need urgent attention, we partner with international agencies and donor organizations to increase public access to our services. For instance, the World Banks GPOBA and MTSP have contributed to making water connection more affordable to marginalized households and expanding the scope of our wastewater services. Academe We provide learning opportunities for students and teachers in different educational levels by giving talks about our Companys initiatives, accommodating student researchers and providing

on-the-job trainings for college students through our Summer Linkage Program whenever possible. On the other hand, we tap the academe for support in creating training programs and in conducting baseline and impact studies for various undertakings. In addition, we lead and support programs such as Lingap Eskwela that help improve water access and hygiene in schools. Media We utilize the media to reach out and communicate our services to a broad audience, as well as to address issues that are of public interest. When needed, press briefings and conferences are held through our Corporate Communications Department.

2010 Sustainability Report | 45

Continuing Our Commitments


Our pursuit of sustainability is a continuous quest to overcome risks and challenges brought about by our changing economic, environmental and socio-political landscape. These changes, however, also provide us with opportunities to surpass our goals, and more importatly, satisfy the needs and issues of our customers and other stakeholders. As Manila Water advances to the future, we shall adapt to the times without putting behind our commitments.

Empowering People
We shall continue to foster the development of our employees through the provision of learning opportunities and the implementation of additional measures that support our OHS programs. We shall also find ways to consistently bring high-quality services to our customers and to effectively mitigate risks relative to the provision of our services.

Protecting the Environment


We look forward to enhancing the rehabilitation, management and protection of the Ipo and La Mesa Watersheds, through our partnership with Bantay Kalikasan. Similarly, we aim to plant and nurture more trees in the Marikina Watershed in line with our commitment to rehabilitate 500 hectares of the area with the help of our partners. We also aim to implement additional projects that connect more people to our sewer network, which will bring to fruition our Three-River Masterplan.

Enhancing Sustainable Development


We will consistently uphold our corporate governance principles of accountability, fairness, transparency, and sustainability as we conduct our business. We will see to it that our growth within and outside the East Zone creates a rippling effect to our business partners, customers and communities.

46 | Manila Water Company, Inc.

Our Sustainablity Report Card


SOCIAL PERFORMANCE INDICATORS Number of households connected to the network system (cumulative) Population served by Tubig Para Sa Barangay (TPSB) or Water for LowIncome Communities Program (in millions) Customer service complaints responded to within 10 days (expressed as % of total complaints)* Number of training days per employee per year Number of top performing employees recognized Man-hours lost due to work-related fatalities Salaries and benefits paid to employees (in million pesos)** Compliance with Philippine National Standards for Drinking Water Average number of water samples collected regularly ENVIRONMENTAL INDICATORS Carbon emissions (in tons CO2(e)) *** Number of Lakbayan tours held Number of Lakbayan participants Total number of seedlings planted at Ipo Watershed Water losses / Non-Revenue Water (as % of water produced) Volume of sewage treated (in million cubic meters) Compliance with DENR wastewater effluent standards Number of households connected to a sewer line Volume of effluent reused (in million liters per day) Volume of septage treated (in cubic meters) Number of households desludged ECONOMIC PERFORMANCE INDICATORS Collection efficiency Billed volume (in million cubic meters) Number of jobs generated from CapEx and OpEx (estimated) Total controllable operating expenditure (in million pesos) Total dividends paid (in million pesos) Taxes paid (in million pesos) 2009 1,086,296 1.6 99.82% 17.14 209 0 1,025 100% 917 2009 45,273 92 2,600 15,000 15.8% 18 100% 68,425 0.40 225,804 291,469 2009 102.00% 396.0 29,570 1,028.00 969 1,100 2010 1,157,807 1.7 99.95% 54.20 156 0 1,092 100% 864 2010 55,361 126 3,000 42,489 11.0% 19.54 100% 102,835 0.63 203,595 242,026 2010 100.47% 409.8 50,000 995.81 1,191 1,359 Variance +71,511 +0.1 +0.13 +37.06 -53 +67 -53 Variance +10,088 -34 +400 +27,489 -4.8% +1.54 +34,410 +0.23 +22,209 -49,443 Variance -1.53 +13.8 +20,430 -32.19 +222 +259

* Revised from previous year to show responses to general customer service complaints. ** 2009 data are adjusted to audited figures. *** For Scopes 1 and 2 only; 2009 data is updated to include emissions from supplemental power equipment.

2010 Sustainability Report | 47

GRI Index
NO. INDICATOR PROFILE 1.Strategy and Analysis 1.1 1.2 Statement from the most senior decision-maker of the company Description of key impacts, risks and opportunities Message from the Chairman and CEO, pp. 2-5 Our Approach to Sustainability Risk Management, pp. 11-12 Front Cover Company Profile, p. 6 Company Profile, p. 6-7 Company Profile, p. 6 Company Profile, p. 7 Company Profile, p. 6 Company Profile, p. 7; Empowering Our Customers, p. 25 Company Profile, p. 6; Empowering Employees, p. 16; Enhancing Sustainable Development, p. 41 Company Profile, p. 6-7 Awards and Recognitions, pp. 8-9 3. Report Parameters Report Profile 3.1 3.2 3.3 3.4 Reporting period Date of the most recent previous report Reporting cycle Contact point for questions regarding the report or its contents Process for determining the report content Boundary of the report Limitations on the scope or boundary of the report Basis for reporting on joint ventures / subsidiaries Data measurement techniques and the bases of calculations Explanation of the effect of any re-statements of information provided in earlier reports and the reasons for such restatement Significant changes from previous reporting periods in the scope, boundary or measurement methods applied in the report Table identifying the location of the Standard Disclosures in the report Policy and current practice with regard to seeking external assurance for the report About this Report, p. 1 About this Report, p. 1 About this Report, p. 1 About this Report, p. 1 REFERENCE COMMENT

2. Organization Profile 2.1 2.2 2.3 2.4 2.5 2.6 2.7 Name of the organization Primary brands, products, and/or services Operational structure of the organization Location of organizations headquarters Number of countries where the organization operates Nature of ownership and legal form Markets served

2.8

Scale of reporting organization

2.9 2.10

Significant changes during the reporting period Awards received in the reporting period

Report Scope and Boundary 3.5 3.6 3.7 3.8 3.9 3.10 About this Report, p. 1 About this Report, p. 1 About this Report, p. 1 About this Report, p. 1 About this Report, p. 1; also described in certain sections Protecting the Environment, p. 35; Our Sustainability Report Card, p. 47 Protecting the Environment, p. 35; Our Sustainability Report Card, p. 47 GRI Index, pp. 48-54

3.11

GRI Content Index 3.12 Assurance 3.13 About this Report, p. 1

48 | Manila Water Company, Inc.

NO. Governance 4.1

INDICATOR

REFERENCE

COMMENT

4. Governance, Commitments, and Engagement Governance structure of the organization Our Approach to Sustainability Sustainable Governance, pp. 10-11 Our Approach to Sustainability Sustainable Governance, p. 10 Our Approach to Sustainability Sustainable Governance, p. 10-11 Our Approach to Sustainability Sustainable Governance, p. 11 Our Approach to Sustainability Sustainable Governance, p. 11 Our Approach to Sustainability Sustainable Governance, p. 11 Our Approach to Sustainability Sustainable Governance, p. 10-11 Our Approach to Sustainability, p. 13; Enhancing Sustainable Development, p. 40 Our Approach to Sustainability Sustainable Governance, p. 10 Our Approach to Sustainability Sustainable Governance, p. 11

4.2 4.3

Indication of whether Chairman of the Board is also an executive officer Independent and/or non-executive directors of the Board

4.4 4.5

Mechanisms for shareholders and employees to provide recommendations or direction to the Board Linkage between compensation for Board members, senior managers, and executives, and the organizations performance Processes in place for Board to ensure conflicts of interests are avoided Process for determining the qualifications and expertise of the members of the highest governance body for guiding the organizations strategy Mission, values, codes of conduct, and principles

4.6 4.7

4.8

4.9

Procedures for Board / top management identification and management of economic, environmental and social performance Process for evaluating the Boards own performance

4.10

Commitments to External Initiatives 4.11 4.12 Explanation of how the organization adopted the precautionary principle Externally developed economic, environmental and social charters, principles or other initiatives Our Approach to Sustainability Risk Management, p. 11-12 Empowering Employees, p. 18; Empowering Customers, p. 27; Protecting the Environment, p. 35 Engaging Stakeholders, p. 45

4.13

Membership in associations and/or national/international advocacy organizations List of stakeholder groups engaged by the organization Basis for identification and selection of stakeholders with whom to engage Approaches to stakeholder engagement, including frequency of engagement by type and stakeholder group Key topics and concerns that have been raised through stakeholder engagement, and responses. Disclosure on Management Approach for Economic Aspects Disclosure on Management Approach for Environmental Aspects

Stakeholder Engagement 4.14 4.15 4.16 4.17 Engaging Stakeholders, pp. 44-45 Engaging Stakeholders, pp. 44-45 Engaging Stakeholders, pp. 44-45 Engaging Stakeholders, pp. 44-45 Enhancing Sustainable Development, p. 39 Protecting the Environment, p. 31

DISCLOSURES ON MANAGEMENT APPROACH EC EN LA

Disclosure on Management Approach for Labor Practices and Empowering Employees, p. 14 Decent Work Aspects

2010 Sustainability Report | 49

NO. HR SO PR

INDICATOR Disclosure on Management Approach for Human Rights Aspects Disclosure on Management Approach for Society Aspects Disclosure on Management Approach for Product Responsibility Aspects

REFERENCE Empowering Employees, p. 14 Enhancing Sustainable Development, p. 39 Empowering Customers, p. 25

COMMENT

ECONOMIC PERFORMANCE INDICATORS ASPECT: Economic Performance EC1 EC2 Direct economic value generated and distributed Financial implications and other risks and opportunities for activities due to climate change Enhancing Sustainable Development, p. 41 Our Approach to Sustainability Risk Management, p. 12; Protecting the Environment, p. 34 Empowering Employees p. 21 Manila Water does not receive any financial assistance from the government. On the contrary, we are paying the government, through the MWSS, concession fees to service existing loans of MWSS. Empowering Employees, p. 20

EC3 EC4

Coverage of the organizations defined benefit plan obligations Significant financial assistance received from government

ASPECT: Market Presence EC5 EC6 EC7 Range of ratios of standard entry level wage compared to minimum wage at significant locations of operation

Policy, practices, and proportion of spending on locally-based Enhancing Sustainable suppliers Development, p. 40 Procedures for local hiring and proportion of senior management hired from local community at locations of significant operation Although not specifically stated in a formal policy, Manila Water shows a strong preference for hiring Filipino talents as they are more attuned to local conditions. More importantly, this practice helps spur the local economy. Enhancing Sustainable Development, p. 41 Enhancing Sustainable Development, p. 41

ASPECT: Indirect Economic Impacts EC8 Development and impact of infrastructure investments and services provided primarily for public benefit through commercial, in-kind, or pro bono engagement Understanding and describing significant indirect economic impacts, including the extent of impacts

EC9

ENVIRONMENTAL PERFORMANCE INDICATORS ASPECT: Materials EN1 EN2 Materials used by weight or volume Percentage of materials used that are recycled input materials Direct energy consumption by primary energy source Indirect energy consumption by primary energy source Energy saved due to conservation and efficiency improvements Protecting the Environment, p. 34 Protecting the Environment, p. 35 Protecting the Environment, p. 35 Protecting the Environment, p. 35 Protecting the Environment, p. 35

ASPECT: Energy EN3 EN4 EN5

50 | Manila Water Company, Inc.

NO. EN6

INDICATOR Initiatives to provide energy-efficient or renewable energy based products and services, and reductions in energy requirements as a result of these initiatives Initiatives to reduce indirect energy consumption and reductions achieved Total water withdrawal by source Water sources significantly affected by withdrawal Percentage and total volume of water recycled and reused

REFERENCE Protecting the Environment, p. 35 Protecting the Environment, p. 35 Protecting the Environment, p. 34 Protecting the Environment, p. 32 Protecting the Environment, p. 35 Protecting the Environment, p. 32 Protecting the Environment, p. 32 Protecting the Environment, p. 32 Protecting the Environment, p. 32 Protecting the Environment, p. 32 Protecting the Environment, p. 35 Protecting the Environment, p. 35 Protecting the Environment, p. 35 Protecting the Environment, p. 35 Protecting the Environment, p. 35 Protecting the Environment, p. 15 Protecting the Environment, p. 36

COMMENT

EN7

ASPECT: Water EN8 EN9 EN10

ASPECT: Biodiversity EN11 Location and size of land owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas Description of significant impacts of activities, products, and services on biodiversity in protected areas and areas of high biodiversity value outside protected areas Habitats protected or restored Strategies, current actions, and future plans for managing impacts on biodiversity Number of IUCN Red List species and national conservation list species with habitats in areas affected by operations Total direct and indirect greenhouse gas emissions by weight Other relevant indirect greenhouse gas emissions by weight Initiatives to reduce greenhouse gas emissions and reductions achieved Emissions of ozone-depleting substances by weight NO, SO, and other significant air emissions by type and weight Total water discharge by quality and destination Total weight of waste by type and disposal method Total number and volume of significant spills Weight of transported, imported, exported, or treated waste deemed hazardous, and percentage of transported waste shipped internationally Identity, size, protected status, and biodiversity value of water bodies and related habitats significantly affected by the reporting organizations discharges of water and runoff Protecting the Environment, p. 36 Protecting the Environment, p. 32

EN12

EN13 EN14 EN15

ASPECT: Emissions, Effluents, and Waste EN16 EN17 EN18 EN19 EN20 EN21 EN22 EN23 EN24

Manila Water has never had any chemical, oil or fuel spills.

EN25

ASPECT: Products and Services EN26 EN27 Initiatives to mitigate environmental impacts of products and Protecting the Environment, pp. services, and extent of impact mitigation 35-36 Percentage of products sold and their packaging materials that are reclaimed by category Protecting the Environment, p. 36

2010 Sustainability Report | 51

NO. EN28

INDICATOR ASPECT: Compliance Monetary value of significant fines and total number of nonmonetary sanctions for non-compliance with environmental laws and regulations Significant environmental impacts of transporting products and other goods and materials used for the organizations operations, and transporting members of the workforce Total environmental protection expenditures and investments by type

REFERENCE Protecting the Environment, p. 31

COMMENT

ASPECT: Transport EN29 Protecting the Environment, p. 35

ASPECT: Overall EN30 Protecting the Environment, p. 36

SOCIAL PERFORMANCE INDICATORS LABOR PRACTICES AND DECENT WORK ASPECT: Employment LA1 LA2 LA3 Total workforce by employment type, employment contract, and region Total number and rate of employee turnover by age group, gender, and region Benefits provided to full-time employees that are not provided to temporary or part-time employees, by major operations Percentage of employees covered by collective bargaining agreements Minimum notice period(s) regarding significant operational changes, including whether it is specified in collective 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 total no. 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 Health and safety topics covered in formal agreements with trade unions Average hours of training per year per employee by employee category Programs for skills management and lifelong learning that support the continued employability of employees and assist them in managing career endings 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 biodiversity Ratio of basic salary of men to women by employee category Empowering Employees, p. 16 Empowering Employees, p. 19 Empowering Employees, p. 20

ASPECT: Labor/Management Relations LA4 LA5 Empowering Employees, p. 20 Empowering Employees, p. 18

ASPECT: Occupational Health and Safety LA6 Empowering Employees, p. 18

LA7

Empowering Employees, p. 18

LA8

Empowering Employees, p. 18

LA9

Empowering Employees, p. 18

ASPECT: Training and Education LA10 LA11 Empowering Employees, p. 16 Empowering Employees, p. 21

LA12

Empowering Employees, p. 19

ASPECT: Diversity and Equal Opportunity LA13 Empowering Employees, p. 18

LA14

Empowering Employees, p. 18

52 | Manila Water Company, Inc.

NO.

INDICATOR HUMAN RIGHTS

REFERENCE

COMMENT

ASPECT: Investment and Procurement Practices HR1 Percentage and total no. of significant investment agreements that include HR clauses or that have undergone HR screening Percentage of significant suppliers and contractors that have undergone screening on HR and actions taken The report covers only Manila Waters operations in the East Zone of Metro Manila and does not include its international businesses; thus, this indicator is irrelevant. Manila Waters compliance with human rights and labor laws and regulations are discussed in this report. Enhancing Sustainable Development, p. 40

HR2

HR3

Total hours of employee training on policies and procedures concerning aspects of HR that are relevant to operations, including the percentage of employees trained Total no. of incidents of discrimination and actions taken Operations identified in which the right to exercise freedom of association or 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 Operations identified as having significant risk for incidents of forced or compulsory labor, and measures taken to contribute to the elimination of forced or compulsory labor Percentage of security personnel trained in the companys policies or procedures concerning aspects of HR that are relevant to operations Total no. of incidents of violations involving rights of indigenous people and actions taken SOCIETy

ASPECT: Non-Discrimination HR4 HR5 Empowering Employees, p. 18 Empowering Employees, p. 21 ASPECT: Freedom of Association and Collective Bargaining

ASPECT: Child Labor HR6 Empowering Employees, p. 18

ASPECT: Forced and Compulsory Labor HR7 Empowering Employees, p. 18

ASPECT: Security Practices HR8 Empowering Employees, p. 18

ASPECT: Indigenous Rights HR9 Manila Water has never had any incidents involving the rights of indigenous people.

ASPECT: Community SO1 Nature, scope, and effectiveness of any programs and practices that assess and manage the impacts of operations on communities, including entering, operating and exiting Percentage and total number of business units analyzed for risks related to corruption Percentage of employees trained in companys anticorruption policies and procedures Actions taken in response to incidents of corruption Empowering Customers, pp. 27-28

ASPECT: Corruption SO2 SO3 SO4 Enhancing Sustainable Development, p. 40 Enhancing Sustainable Development, p. 40 Enhancing Sustainable Development, p. 40 Engaging Stakeholders, p. 45 Enhancing Sustainable Development, p. 40 Enhancing Sustainable Development, p. 40
2010 Sustainability Report | 53

ASPECT: Public Policy SO5 SO6 Public policy positions and participation in public policy development and lobbying Total value of financial and in-kind contributions to political parties, politicians and related institutions Total no of legal actions for anti-competitive behavior, antitrust and monopoly

ASPECT: Anti-Competitive Behavior SO7

NO. SO8

INDICATOR ASPECT: Compliance Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations PRODUCT RESPONSIBILITy

REFERENCE

COMMENT Manila Water had no fines or sanctions for non-compliance with laws and regulations in 2010.

ASPECT: Customer Health and Safety PR1 Life cycle stages in which health and safety impacts of products and services are assessed for improvement, and percentage of significant products and services categories subject to such procedures Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcomes Type of product and service information required by procedures, and percentage of significant products and services subject to such information requirements Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information labeling, by type of outcomes Empowering Our Customers, p. 27

PR2

Empowering Our Customers, p. 27

ASPECT: Product and Service Labeling PR3 Empowering Customers, p. 27 Manila Water does no have any non-compliance with regulations and voluntary codes concerning product and service information labeling. Empowering Customers, p. 28

PR4

PR5

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 Total number of incidents of non-compliance with regulations and voluntary codes concerning marketing communications, including advertising, promotion, and sponsorship by type of outcomes

ASPECT: Marketing Communications PR6 Protecting the Environment, p. 36 Manila Water does not have any non-compliance with regulations and voluntary codes concerning marketing communications.

PR7

ASPECT: Customer Privacy PR8 Total number of substantiated complaints regarding breaches Empowering Customers, p. 28 of customer privacy and losses of customer data ASPECT: Compliance P9 Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services Empowering Customers, p. 28 None.

We include this GRI Application Level table in our report to support our self-declaration of this report at Application Level A.
Report Application Level

G3 Profile Disclosures

Report on: 1.1 2.1-2.10 3.1-3.8, 3.10-3.12 4.1-4.4, 4.14-4.15

Report on all criteria listed for Level C plus: 1.2 3.9, 3.13 4.5-4.13, 4.16-4.17

Same as requirement for Level A

G3 Management Approach Disclosures

Not Required

Management Approach Disclosures for each Indicator Category

Management Approach Disclosures for each Indicator Category

G3 Performance Indicators & Sector Supplement Performance Indicators

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

Report on a minimum of 20 Performance Indicators, at least one from each: Economic, Environmental, Human Rights, Labor, Social, 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 the omission.

54 | Manila Water Company, Inc.

Stakeholders Commentaries

Virgilio P. Fulgencio Executive Director Department of Trade and Industry Center for Industrial Competitiveness The Manila Water Sustainability Report presents a very clear blueprint of the future direction of competitive companies. Its strict compliance to the long list of GRI indicators presents a very solid proof of the sincerity of the company to move beyond unilateral corporate success and to directly connect corporate success with social progress. In my opinion, Manila Water is a prime example of a company that practices the principle of shared value which is based on the principle that societal needs, not just conventional economic needs define markets. So this involves creating economic value that also creates value for society by addressing its needs and challenges. The long list of projects and activities that involve and impact on the community is a solid proof of this achievement. I can attest to this not just from the point of view of a key stakeholder, but from the point of view of a very satisfied Manila Water customer. What Manila Water has done is by itself a major transformation in business thinking. I am also very proud of the fact that a Filipino corporation has proven once again that it can be the best in its class. As I see it, Manila Water has in fact institutionalized its sustainable business practices way ahead of many companies, even those found in so-called economically advanced countries. It is my hope that other local companies will adopt the Manila Water business model so that eventually, we can have a critical mass of business entities in the country with the same holistic approach to sustainability. This perspective of creating shared value is an innovative way of creating economic success and a more competitive Philippines in the long run. But what really makes this approach unique is that in doing so, nobody will be left behind. Once again, my congratulations to Manila Water for a job well done!

Ms. Constancia Q. Lichauco Chairman Brgy. Bel-air, Makati City Sustainable development is an elusive term, which many people mistakenly consider as merely protecting the environment or attaining economic development. Sustainable development is more than that. It is about maintaining and improving the quality of life without compromising the ability of future generations to meet their needs. And Manila Water has shown this beyond measure. Its partnership with MWSS has been very beneficial and efficient because the consumers get what they deserve. Manila Water does not limit itself on one aspect of development; rather, it integrates the socio-cultural, environmental and economic aspects of sustainable development to its objectives. During the El Nio last year, Brgy. Bel-air was continuously provided with water. There could have been cases of low pressure but this was well-handled and communicated by our partners in Manila Water so as to avoid inconvenience to our residents. Their emphasis on excellent customer service is evident with how they managed the situation. I believe we are enjoying world-class services from Manila Water. I hope that Manila Water will continue to exceed our expectations and compete in the international arena given that it is one of the best utility companies today. I salute Manila Waters excellent corporate philosophy, culture and ways of conducting its businessa business with a heart.

2010 Sustainability Report | 55

Howard Belton President Philippine Business for the Environment Philippine Business for the Environment aims to develop and spread environmental best practice. Because environmental degradation is accelerating, it is vital that business plays a leading role in finding solutions. We base our approach on two principles: Take responsibility its too important to leave to others; Co-operate the environmental issues are too big for fragmented efforts. Both these principles are well-illustrated in the Sustainability Report. The efforts of Manila Water to expand its coverage, and especially to guarantee clean water to urban poor areas, serve as an excellent example of taking responsibility. Taking responsibility is also very much present in the long-term plans of the Company for wastewater treatment and watershed protection. Co-operation is at the heart of the development of long term plans for the key watersheds. It is admirable that Manila Water is working with local and national governments, citizens, scientists and NGOs in the development of effective plans. These are of vital importance to the well-being of the environment and of the millions of people who depend on water from these watersheds. PBE is proud to be one of the partners of Manila Water in its efforts.

Edgardo C. Amistad Chairman League of Corporate Foundations Taking up the business of providing one of the most basic necessities for human survival surely stems from courage to accept the immense responsibility of ensuring public welfare. To bring it beyond profit and loss statements can only mean a selflessness no single business objective can capture. Manila Water benefits from its commitment to bring out the best in its operations, employees, and communities, as exemplified by its focus on investing in environmentfriendly operations, growing a competent pool of human resources, and maintaining highlevels of safety for its product and client communities. One can glean from its sustainability report the company's diligence and confidence, having set itself against the stringent guidelines of the GRI. While the company has certainly risen to the scrutiny of a public which has questioned its motives for profiting from what essentially is a free resource, it is dared to sustain its strategic integration of environmental protection and social participation to its practices. Problems will continue to rise and ebb, brought by forces no human structure can completely muster, and we challenge the company to meet these head on. As an advocate for strategic Corporate Social Responsibility, the League of Corporate Foundations congratulates the Manila Water Company's continuing dedication to serve the Filipino people.

Rosenni A. Basilio Department Head, Financial Planning, Systems and Control Manila Water Company, Inc. I am always proud and happy to be part of Manila Water, a company that has consistently demonstrated its serious commitment to protect the environment and create value for its customers, employees and other stakeholders. The Companys sustainable development programs provide me, as an individual, the opportunity to help improve peoples lives especially the marginalized, and do something for the environment. I am truly lucky to be part of this organization whose vision aligns with my personal advocacies. This years report is again a testimony of the Companys accomplishments and best practices in the field of sustainable development. I hope these will also inspire other organizations to implement their own social and environmental development initiatives.
56 | Manila Water Company, Inc.

The Manila Water 2010 Sustainability Report cover is printed on FSC-certified Mohawk Options, which is made with 100 percent post-consumer waste. One hundred (100) percent of the electricity used to manufacture the paper is offset with Renewable Energy Certificates (RECs) from nonpolluting wind power projects. The inside pages of this report are printed on 9 lives offset 80 gsm 100 percent recycled, a unique uncoated paper that reduces carbon footprint. Photography: Oliver D. Marqueses Thom Ryan Q. Ortega Dexter Quibuyen Concept, Content Design and Layout: K2 Interactive (Asia) Inc. Print Production: Primex Printers Inc.

MANILA WATER COMPANY, INC. MWSS administration building 489 Katipunan road, balara Quezon city 1105, philippines www.manilawater.com