Independent Assurance Statement

Introduction 

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 VeriSustain^TM1, 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:

• Review of the non–financial sustainability-related disclosures in this Report; 
• Review of approaches to materiality determination and review of outcomes of stakeholder engagement; DNV  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 framework adopted by MWC; 
• Interviews with select members of leadership team, and senior managers responsible for management of  sustainability issues and review of selected evidence to support generic disclosures. 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 discussed findings and  resolved with the Corporate Sustainability Team; 
• Carried out remote assessments with two (2) sites - East Zone and Clark Water (both the sites have waste  and waste water treatment plants), to review the processes and systems for preparing site level sustainability  data and implementation of sustainability strategy. We were free to choose the sites for remote assessment  or verification; 
• Review of supporting evidence for key claims and data disclosed in the Report. Our verification processes  were prioritized based on 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.

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: 

Stakeholder Inclusiveness  

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. 

Materiality 

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.

Responsiveness  

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. 

Reliability 

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. 

Completeness  

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.

Neutrality

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.

Limitations

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

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

 

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¹ The VeriSustain protocol is available on www.dnv.com
* Assurance Engagements other than Audits or Reviews of Historical Financial Information.