PG&E Corporate Responsibility and Sustainability Report 2018

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Ethics and Compliance

With our Mission, Vision and Culture as the foundation, our Code of Conduct helps to ensure that all employees understand the expectations and requirements for which we are accountable and how we go about meeting them. In that spirit, PG&E promotes a culture in which employees are encouraged to speak up and empowered to meet these standards at all times.

Our Approach

Compliance and ethics at PG&E are managed on three levels:

Business-wide

Within senior leadership, compliance and ethics are managed by the companies’ Senior Vice President, Chief Ethics and Compliance Officer and Deputy General Counsel (CECO), who reports to the PG&E Corporation Chief Executive Officer (CEO) and President. The CECO has additional reporting responsibility to the Audit Committees of the PG&E Corporation and Pacific Gas and Electric Company Boards of Directors and the Compliance and Public Policy Committee of the PG&E Corporation Board.

The CECO is responsible for:

  • Building a best-in-class compliance and ethics program and managing its implementation,
  • Overseeing enterprise-wide programs for compliance monitoring, reporting, assessment and remediation,
  • Strengthening ethics- and compliance-related training,
  • Reinforcing PG&E’s compliance and ethics culture,
  • Identifying areas of compliance and ethics risk and developing action plans to prevent, detect and correct risks and issues, and
  • Supporting the federal monitorship and probation arising out of Pacific Gas and Electric Company’s San Bruno criminal conviction.

As part of our enterprise-wide strategic planning process, PG&E’s senior executives from every line of business meet annually to review and assess our compliance obligations, including establishing focus areas for the year. Broadly, this process enables PG&E to assess compliance risks and determine the best way to address them, and then allocate resources to successfully manage our work. In 2017, we continued mapping regulatory compliance areas to operational risks in order to enable a more integrated approach to risk management.

In 2016, we developed and implemented a standardized framework called a Maturity Model, which includes eight elements derived from the U.S. Federal Sentencing Guidelines that define the parameters of an effective compliance and ethics program. To assess and monitor each line of business’s compliance and ethics program, we completed an initial baseline assessment of each line-of-business program in 2016 and established targets for 2017 and 2018.

All lines of business must achieve an agreed-upon program maturity for each element by the end of 2018. Program maturity requires completion of more than 70 milestones, including implementing effective practices in areas such as risk assessments, program governance and compliance controls.

Management-level governance bodies help drive and coordinate our compliance and ethics activities:

  • Compliance and Ethics Committees: Comprised of officers, this committee provides leadership, strategic guidance and oversight of PG&E’s compliance and ethics program, and works to promote an organizational culture committed to integrity, ethical conduct and compliance with all applicable laws, regulations and PG&E requirements.
  • Compliance and Ethics Leadership Team: This cross-functional team of non-officer compliance and ethics leaders within PG&E is accountable for promoting the effectiveness of PG&E’s compliance and ethics program by coordinating across the lines of business on strategy, goals and programs, as well as sharing best practices.
  • Risk and Compliance Committee in each Line of Business: Comprised by the line-of-business officer and senior leaders, this committee provides leadership, strategic guidance and oversight of the line of business’s compliance and ethics program and works to promote compliance with all laws and regulatory requirements as well as maintain focus on operational risk management and ethics.

To provide guidance on conduct requirements, PG&E maintains codes of conduct for the following:

In addition, we maintain an Ethics Council—composed of management and union-represented employees at multiple levels—that helps raise and address issues relating to ethics and conduct at PG&E. The Council meets five times throughout the year, including one meeting that is open to all employees.

In 2017, the CECO created a new function to lead and manage PG&E’s full and timely compliance with requirements and requests under the terms of the federal monitorship and probation, including its community service obligations.

Boards of Directors

Certain PG&E Corporation and Pacific Gas and Electric Company Board committees have specific oversight responsibility for compliance management in their respective substantive areas:

Entity Compliance Oversight Responsibilities
Compliance and Public Policy Committee Footnote 1
  • Coordinates the compliance-related oversight of the various committees of the Boards, including with respect to:
    • The companies’ compliance and ethics program,
    • Compliance with laws, regulations and internal policies and standards, and
    • Internal or external compliance reviews or audits.
  • Oversees public policy, sustainability and corporate responsibility issues that could affect customers, shareholders or employees
Audit Committees
  • Oversee and monitor compliance with legal and regulatory requirements, in concert with other Board committees
Safety and Nuclear Oversight Committees Footnote 1
  • Oversee matters relating to safety, operational performance and compliance issues related to Pacific Gas and Electric Company’s nuclear, generation, gas and electric transmission, and gas and electric distribution operations and facilities
  • 1. Committees of the PG&E Corporation Board of Directors only.1a, 1b

For a full description of Board committee oversight responsibilities, please see the webpages of the Boards of Directors of PG&E Corporation and Pacific Gas and Electric Company, as well as our 2018 Joint Proxy Statement (PDF).

Lines of Business

Each of PG&E’s lines of business has employees who are responsible for implementing the line of business’s compliance and ethics program. Each of these programs is overseen by the respective senior officer for the line of business.

2017 Milestones

In 2017, PG&E focused on enhancing our management of risk and compliance requirements, compliance with the federal monitorship and the terms of PG&E’s probation and promoting a “speak-up, listen-up and follow-up” culture, which aims to create a work environment where everyone feels safe to speak up about safety, employee conduct and new ideas—and where everyone is confident that those concerns will be heard and taken seriously. Highlights included the following:

  • Advanced PG&E’s annual risk and compliance session to enable a more integrated approach to risk management. The session provided a platform for the lines of business to better understand PG&E’s most important risks and compliance requirements.
  • Created a new corporate compliance function to support the federal monitorship and probation, including community service requirements, arising out of Pacific Gas and Electric Company’s San Bruno criminal conviction. PG&E held over 80 meetings and informational sessions with the monitor team as they began implementing their work plan focused on safety culture, compliance and ethics, and gas transmission integrity management requirements.
  • Promoted a speak-up culture. Used employee survey data, other employee feedback and recommendations from external experts to identify high-impact improvement opportunities and develop a systematic approach to long-term culture change. This includes:
    • Establishing the Speak Up Award, which honors employees who had the courage to speak up about an issue or concern, resulting in a positive impact on PG&E, customers or culture. Five employees received recognition.
    • Holding PG&E’s third annual Compliance and Ethics Week with a focus on speaking up. Among other things, more than 1,100 employees attended the annual all-employee Compliance and Ethics Council event that was held during this week.

Measuring Progress

In 2017, PG&E’s annual compliance and ethics training, which we aim for all employees to complete annually, focused on speaking up. Specifically, the training reinforced the LEADR (Listen, Engage, Affirm, Decide, Respond) model, included information and tips for employees on how to raise concerns, and increased focus on PG&E’s non-retaliation policy. Video vignettes were based on real-world issues that supervisors and their teams might face.

In addition to the annual compliance and ethics training, all employees are required to complete Code of Conduct training and certify that they have read, understand and will comply with our Employee Code of Conduct. Beginning in 2017, all employees were required to complete the Code training annually.

We also implemented a training module for supervisors that teaches leaders skills related to how to receive and escalate concerns and allegations.

Compliance and Conduct Training Footnote 1
2015 2016 2017
Compliance and Ethics Training 99.9% 99.4% 99.9%
Code of Conduct Training 99.8% 99.8% 99.9%
  • 1. For a variety of reasons, a statistically small number of PG&E’s employees are unable to attend a training session in any given calendar year.1

The volume of calls to our Compliance and Ethics Helpline in 2017 was roughly 2.7 calls per 100 employees, falling within the normal range of 0.3 to 10.0 calls per 100 employees, according to a benchmark report prepared by NAVEX Global. The total call volume increased 13 percent over 2016, with a slight decrease in calls requesting guidance.

Looking Ahead

To achieve PG&E’s commitment to establish a best-in-class compliance and ethics program, we intend to drive continuous improvement by:

  • Increasing compliance and ethics program maturity in each line of business,
  • Promoting the behaviors needed to further “speak up, listen up and follow up” through annually updated training, communications campaigns, and setting expectations,
  • Launching PG&E’s revised Code of Conduct for PG&E suppliers,
  • Integrating ethics and culture into the enterprise-wide strategic planning process,
  • Expanding our shared compliance requirement framework and approach,
  • Continuing to enhance our existing compliance metrics and controls and
  • Improving enterprise-wide monitoring and analytics by further implementing PG&E’s new enterprise compliance management software.

In addition, PG&E in 2018 launched our updated Employee Code of Conduct and revised the Code of Conduct for our Boards of Directors.