Independent Assurance Statement

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INTRODUCTION

DNV GL Business Assurance Philippines Branch (“DNV GL”) has been commissioned by the management of Manila Water Company Inc. (“MWC”, SEC Identification Number: A199611593) to undertake an independent assurance of the sustainability/non-financial disclosures in MWC’s 2019 Integrated Report (the “Report”) in its printed format for the year ended 31st December 2019. The intended users of this Assurance Statement are the management of the Company.

We performed this assurance engagement using DNV GL’s assurance methodology VeriSustainTM1 , which is based on our professional experience, international assurance best practice including International Standard on Assurance Engagements (ISAE) 3000 Revised*, along with the Global Reporting Initiative’s (“GRI’s”) Principles for Defining Report Content and Report Quality. The verification engagement was carried out from December 2019 to March 2020.

We understand that the reported financial data and related information are based on statutory disclosures and Audited Financial Statements#, which are subject to a separate independent statutory audit process. We did not review financial disclosures and data as they are not within the scope of our assurance engagement.

We planned and performed our work to obtain the evidence we considered necessary to provide a basis for our assurance opinion related to non-financial sustainability disclosures in this Report. We are providing a ‘limited level’ of assurance based on DNV GL VeriSustain and no external stakeholders were interviewed as part of this assurance engagement.

The engagement excludes the sustainability management, performance, and reporting practices of MWC’s suppliers, contractors, and any third-parties mentioned in the Report. The Company position statements, the statements for the management approach, and case studies and examples are excluded from the scope of our work.

 

RESPONSIBILITIES OF THE MANAGEMENT OF MWC AND OF THE ASSURANCE PROVIDER

The Board of MWC has sole responsibility for the preparation of the Report and is responsible for all information provided in the Report as well as the processes for collecting, analysing and reporting the information presented in the Report. MWC has stated that this Report was based on the <IR> framework and has adopted general disclosures and selected performance indicators for disclosures related to identified material topics from the GRI Standards 2016.

DNV GL’s assurance engagements are based on the assumption that the data and information provided by the Company to us as part of our review have been provided in good faith, true, and free from material misstatements. Because of the selected nature (sampling) and other inherent limitation of both procedures and systems of internal control, there remains the unavoidable risk that errors or irregularities, possibly significant, may not have been detected. DNV GL was not involved in the preparation of any statement or datum included in the Report except for this Assurance Statement. DNV GL expressly disclaims any liability or co-responsibility for any decision a person or an entity may make based on this Assurance Statement.

Our verification engagement included limited level of verification of sustainability performance disclosures for the identified material topics of MWC as identified under the reporting boundary brought out in the Report in the section “Material Aspects” ie. covering entities over which Manila Water has operational control or has seconded employees in operations. Our verification applies a ±5 percent uncertainty threshold towards errors and omissions for the performance data brought out in the Report.

 

BASIS OF OUR OPINION

A multi-disciplinary team of sustainability and assurance specialists performed assurance at the Head Office at Quezon City, and selected sites of MWC. We undertook the following activities:

• Review of the non–financial sustainability disclosures in this Report;
• Review of approach to materiality determination and stakeholder engagement and recent outputs although DNV GL did not have any direct engagement with external stakeholders;
• Review of information provided to us by the Company on its reporting and management processes related to sustainability performance for the reporting year based on the reporting framework adopted by MWC;
• Interviews with selected members of leadership team, and senior managers responsible for management of sustainability issues and review of selected evidence to support issues discussed. We were free to choose interviewees and interviewed those with overall responsibility for the programmes to deliver the targets for medium-and long-term vision, mission and milestones;
• Performed desk review of selected sustainability parameters for sampled entities, and findings were discussed with Corporate Sustainability Team;
• Planned site visits to three (3) sites – the Taguig North Sewage Treatment Plant in Taguig City, the East La Mesa Water Treatment Plant in Quezon City and the Marikina Business Area Office in Marikina City – to review the processes and systems for preparing site level sustainability data and implementation of sustainability strategy. We were free to choose the sites we visited
• Review of supporting evidence for key claims and data disclosed in the Report. Our verification processes were prioritised based on our risk-based approach, i.e. relevance of identified material topics and sustainability context of the business;
• Review of the processes for gathering and consolidating the performance data and, for a sample, checking the data consolidation at site and corporate levels.

The procedures performed in a limited assurance engagement vary in nature and timing and are shorter in extent than for a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained if a reasonable assurance engagement had been performed. During the assurance process, we did not come across limitations to the scope of the agreed assurance engagement.

 

OPINION AND OBSERVATIONS

On the basis of the limited assurance engagement undertaken, nothing has come to our attention to suggest that MWC’s 2019 Integrated Report does not properly describe the non-financial performance of identified material topics based on the Guiding Principles and Content Elements of the International <IR> Framework (“<IR> Framework”).

Without affecting our assurance opinion, we also provide the following observations:

Stakeholder Inclusiveness

The participation of stakeholders in developing and achieving an accountable and strategic response to Sustainability.

Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Stakeholder Inclusiveness.

The Report brings out the Company’s relationships with its key stakeholders who affect operations and influence performance ie. regulators, customers, employees, the finance community, suppliers and the media. The Report adequately brings out the channels and initiatives that the business has established to engage with identified stakeholders and the key concerns arising from these engagements which are considered in the Company’s strategic planning process.

Materiality

The process of determining the issues that are most relevant to an organization and its stakeholders.

Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Materiality.

The Report describes the processes for identification and prioritization of the Company’s material matters, considering the significance of their impacts on communities, business partners, workforce and the environment, and the relative influence on stakeholders’ assessment and decision making, considering the <IR> Guiding Principle requirements. The material matters identified were further validated through stakeholder engagements conducted during the year.

Responsiveness

The extent to which an organization responds to stakeholder issues.

Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Responsiveness.

The Report brings out the Company’s responses to identified material topics and significant issues which have arisen during the reporting period through disclosures on strategies, management approach and dedicated ‘Special Reports’. Further the Report also brings out its non-financial performance related to its material topics through selected GRI Topic Specific Standards. The Report considers the risks, opportunities and outcomes associated with significant stakeholders and the external environment, and brings out the implications and mitigation mechanisms deployed by the Company to maintain its ability to create value on the long term.

Reliability

The accuracy and comparability of information presented in the report, as well as the quality of underlying data management systems.

Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Reliability.

The majority of the performance disclosures verified through onsite and offsite verification, i.e. at the Head Office and sampled sites, and through desk reviews, were found to be fairly accurate, reliable, identifiable and traceable to the source. Considering the limited sampling, we did not detect any major errors related to data collection or aggregation. We also reviewed the calculations and related assumptions used for its suitability, taking into account the principle of Reliability. Some of the data inaccuracies identified during the verification process were found to be attributable to interpretation and aggregation errors. These identified errors were communicated, and the responses and corrections made to the reported data and information were reviewed.

Completeness

How much of all the information that has been identified as material to the organization and its stakeholders is reported.

Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Completeness.

The Report discloses the Company’s non-financial disclosures based on <IR> framework and performance during the reporting period 2019 related to its material issues using appropriate GRI Topic Specific Standards, for the identified boundary of operations and covering the Company’s approaches to value creation and responses to key challenges faced.

Neutrality

The extent to which a report provides a balanced account of an organization’s performance, delivered in a neutral tone.

Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Neutrality.

The Report presents disclosures related to the Company’s performance, challenges and concerns of stakeholders during the reporting period in a neutral, consistent and balanced manner, applying adequate consideration to not unduly influence stakeholders’ assessments made based on the reported data and information.

 

STATEMENT OF COMPETENCE AND INDEPENDENCE

DNV GL applies its own management standards and compliance policies for quality control, in accordance with ISO/IEC 17021:2015 – Conformity Assessment Requirements for bodies providing audit and certification of management systems, and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards, and applicable legal and regulatory requirements. We have complied with the DNV GL Code of Conduct during the assurance engagement and maintain independence wherever required by relevant ethical requirements.

This engagement work was carried out by an independent team of sustainability assurance professionals. DNV GL was not involved in the preparation of any statement or datum included in the Report except for this Assurance Statement. DNV GL maintains complete impartiality toward internal stakeholders interviewed during the assurance process.

DNV GL has provided assurance to Ayala Corporation, Ayala Land Inc., AC Energy, Globe Telecom, Inc and the Bank of Philippine Islands. In our opinion, there is no conflict of interest in the assurance engagement provided to the business units of Ayala Group.

DNV GL did not provide any services to MWC in 2019 that could compromise the independence or impartiality of our work.

For and on behalf of DNV GL Business Assurance AS Philippines Branch

23^rd March 2020, Manila, Philippines

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DNV GL Business Assurance AS Philippines Branch is part of DNV GL – Business Assurance, a global provider of certification, verification, assessment and training services, helping customers to build sustainable business performance. www.dnvgl.com