DNV AS Philippines Branch (‘DNV’) has been commissioned by the management of Manila Water Company Inc. (‘MWC’ or ‘the Company’, Securities and Exchange Commission Identification Number: A199611593) to undertake an independent assurance of the sustainability / non-financial disclosures in MWC’s 2021 Integrated Report (‘the Report’) in its printed format for the year ended 31 December 2021. The intended users of this Assurance Statement are the management of the Company.
We performed a limited level of assurance using DNV’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 and the Sustainability Accounting Standards Board’s (‘SASB’s’) industry-specific Standards. The verification engagement was carried out from December 2021 to March 2022.
Scope and Boundary of Assurance
The scope of assurance included a review of sustainability related disclosures and performance data from MWC Parent Company and all Manila Water operating subsidiaries, namely East Zone Concession of the Metropolitan Waterworks and Sewerage System (MWSS), Manila Water Philippine Ventures (MWPV), and Manila Water Asia Pacific (MWAP).
Our assurance engagement included limited level of verification of sustainability performance disclosures for the identified material topics of MWC as detailed under the section ‘Materiality Assessment Process’ in the Report i.e., covering entities over which MWC has operational control or has seconded employees in operations. Our verification applies a ±5% uncertainty threshold towards errors and omissions for the performance data brought out in the Report.
Responsibilities of the Management of MWC and of the Assurance Provider
The Company’s management has sole responsibility for the integrity of the Report and this responsibility includes designing, implementing and maintaining internal controls over collection, analysis, aggregation and preparation of data, fair presentation of the information, ensuring that data is free from material misstatement and maintaining the integrity of their website under digital domain. The Board has complete oversight and is responsible for the Company’s sustainability reporting. MWC has stated that this Report has been prepared based on the Guiding Principles and Content Elements of the International <IR> Framework (the ”<IR> Framework”) and has adopted general disclosures and selected topic-specific disclosures related to identified material topics from the GRI Standards (2018 and GRI 306: Waste 2020) as well as the SASB Standards 2018 (Water Utilities & Services).
In performing our assurance work, DNV’s responsibility is solely towards the Management of MWC in accordance with terms of reference agreed, however this assurance statement represents our independent opinion and is intended to inform the outcome of the assurance to the Company’s stakeholders. DNV’s responsibility is to form an independent conclusion. In doing so, we carried out the sampling procedures required for the evidence for a limited level of assurance based on VeriSustain i.e., DNV is responsible for planning and performing the engagement to obtain assurance about whether the selected information is free from material misstatement and meets the disclosure requirements.
Basis of our Opinion
We planned and performed our work to obtain the evidence considered necessary to provide a basis for our assurance opinion as part of the assurance engagement. We adopted a risk-based approach, i.e., we concentrated our verification efforts on the issues of high material relevance to MWC and its key stakeholders. A team of sustainability assurance specialists reviewed non-financial disclosures related to the Head Office at Quezon City, and selected sites of MWC (East Zone and Clark Water – both the sites have water and wastewater treatment plants) in the Philippines, based on DNV’s sampling plan. Due to the COVID-19 pandemic and associated travel restrictions, we undertook remote audits in line with DNV’s remote assessment methodology as site visits were not possible. We undertook the following activities:
Opinion and Observations
On the basis of the assurance engagement undertaken, nothing has come to our attention to suggest that MWC’s 2021 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 against the principles of VeriSustain:
The participation of stakeholders in developing and achieving an accountable and strategic response to Sustainability.
The Report has brought out key stakeholders (e.g., Employees, Community / Customers, Regulators, National Government Agencies, Local Government Units, Supply chain, Finance Community, Media, etc.) to engage with, to build trust based on significant influence on MWC’s sustainability performance. The Report also describes the engagement modes such as meetings, involving, or collaborating with each stakeholder considering based on the extent of influence and articulates the value MWC seeks to deliver through various engagement platforms including MWC’s responses to the key concerns through various disclosures on strategies and value creation in the Report.
Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Stakeholder Inclusiveness.
The process of determining the issues that are most relevant to an organization and its stakeholders.
The Report brings out MWC’s process for identification and prioritization of the Company’s material matters. Aligned with the GRI framework, the Company completed an online materiality assessment process with its internal and external stakeholder groups, considering the requirements of the <IR> Framework’s Guiding Principles. The material topics identified for 2021 also includes top risks identified in the Enterprise Risk Management Program (ERM) as MWC considers these are most significant to the business and stakeholders.
Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Materiality.
The extent to which an organization responds to stakeholder issues.
The Report brings out the Company’s responses to identified material topics, key challenges faced and significant issues including risks which have arisen during the reporting period through disclosures on Governance, Business Review, strategic responses to key stakeholders’ concerns, to deliver shared values. Further the Report also brings out its non-financial performance related to its material topics through selected GRI Topic Specific Standards and SASB industry specific Standards as Performance Indices. The Report may further strengthen on this Principle in future reporting periods by bringing out the long- and medium-term targets towards value creation related to its identified material topics.
Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Responsiveness.
The accuracy and comparability of information presented in the report, as well as the quality of underlying data management systems.
The majority of the performance disclosures verified through 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, however our procedures did not include testing controls or performing procedures relating to checking aggregation or calculation of data within IT systems. 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.
Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Reliability.
How much of all the information that has been identified as material to the organization and its stakeholders is reported.
The Report discloses the Company’s non-financial disclosures based on the <IR> Framework and performance during the reporting period 2021 related to its material issues using appropriate GRI Topic Specific Standards and SASB disclosures, for the identified boundary of operations and covers the Company’s approaches to value creation during the reporting period.
Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Completeness.
The extent to which a report provides a balanced account of an organization’s performance, delivered in a neutral tone.
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’ opinion made based on the reported data and information.
Nothing has come to our attention to suggest that the Report does not meet the requirements related to the Principle of Neutrality.
DNV’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, are true, and is 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. 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’s position statements, the statements for the management approach, and case studies and examples are excluded from the scope of our work. We did not interview external stakeholders as part of this assurance engagement.
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.
The procedures performed in a limited assurance engagement vary in nature 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.
Statement of Competence and Independence
DNV 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 Code of Conduct2 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 was not involved in the preparation of any statement or datum included in the Report except for this Assurance Statement. DNV maintains complete impartiality toward internal stakeholders interviewed during the assurance process.
DNV has provided assurance to Ayala Corporation, Bank of the Philippine Islands, Ayala Land Inc., AREIT, AC Energy Corporation and Globe Telecom, Inc. In our opinion, there is no conflict of interest in the assurance engagement provided to the business units of Ayala Group. DNV did not provide any services to MWC in 2021 that could compromise the independence or impartiality of our work.
Purpose and Restriction on Distribution and Use
This report, including our conclusion has been prepared solely for the Company in accordance with the agreement between us. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our work or this report.
For and on behalf of DNV AS Philippines Branch
DNV Business Assurance Singapore Pte. Ltd.
Regional Manager - APIME
DNV Business Assurance Singapore Pte. Ltd.
Head, Sustainability Services
DNV Business Assurance SingaporePte. Ltd.
30 March 2022, Manila, Philippines.
DNV AS Philippines Branch is part of DNV - Business Assurance, a global provider of certification, verification, assessment and training services, helping customers to build sustainable business performance. www.dnv.com
1 The VeriSustain protocol is available on www.dnv.com
* Assurance Engagements other than Audits or Reviews of Historical Financial Information.