PG&E Corporate Responsibility and Sustainability Report 2018

PG&E Chapter 11 Update

Ethics and Compliance

With our Mission, Vision and Culture as the foundation, our Code of Conduct identifies the expectations and requirements for which employees are accountable. In that spirit, PG&E promotes a culture in which employees are encouraged to speak up and empowered to meet the standards laid out in our Code of Conduct at all times.

Our Approach

Business-wide

Within senior leadership, compliance and ethics are managed by the companies’ Chief Ethics and Compliance Officer (CECO). The CECO reports to the PG&E Corporation Chief Executive Officer (CEO), and 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,
  • 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 compliance risks and to determine the best way to address them. In 2018, we integrated culture and ethics into these discussions in order to consider how PG&E’s culture impacts risk and compliance work.

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 the compliance and ethics program for each line of business, we completed an initial baseline assessment of each line-of-business program in 2016 and established targets for 2017 and 2018.

Throughout 2018, PG&E’s Compliance & Ethics organization supported the lines of business in advancing their own programs, while concurrently seeking to advance its own program. Advancements include documenting controls, developing training and communications programs, performing compliance investigations, and promoting adherence to the Code of Conduct.

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

  • Compliance and Ethics Committee: Made up of officers, this committee provides leadership, strategic guidance and oversight of PG&E’s compliance and ethics program. It 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: This committee includes the line-of-business officer and senior leaders, and provides leadership, strategic guidance and oversight for each 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, which includes management and union-represented employees at multiple levels. The Council meets five times throughout the year, including one meeting that is open to all employees, and helps raise and address issues relating to ethics and conduct at PG&E.

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
  • Oversees compliance with Pacific Gas and Electric Company’s Wildlife Safety Plan
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 2019 Joint Proxy Statement.

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.

2018 Milestones

In 2018, PG&E focused on updating and enhancing its Code of Conduct and associated training. We also worked to expand our “speak up, listen up and follow up” culture, which aims to create a work environment where everyone feels safe to speak up about safety, misconduct and new ideas—and where everyone is confident that those concerns will be heard and taken seriously. While measurable progress takes time, PG&E is maintaining its focus on safety and these objectives in a number of ways. Highlights included the following:

  • Updated the PG&E Employee Code of Conduct. We led the first major update to our Employee Code of Conduct since 2013, incorporating more values-based content to focus on and advance PG&E’s Mission, Vision and Culture. The Director Code of Conduct was also updated to echo the changes to the Employee Code of Conduct.
  • Advanced overall compliance and ethics program maturity toward Level 3. We developed a Maturity Model program to improve our management of cross-functional compliance work. The program itself is meant to improve compliance and ethics management and performance (whether cross-functional or not).
  • Centralized risk and compliance management. We implemented a comprehensive integrated risk and compliance management platform that includes centralized data access and analytics, and improved reporting capabilities. The rollout has continued into 2019.
  • Implemented enhanced training, process improvements and expanded reporting capabilities for the employee conduct program. We continued to improve our employee conduct program, which manages the standards, policies and processes in the company to address potential employee misconduct. These actions were completed to promote greater transparency, fairness and consistency in the program.

Measuring Progress

In 2018, PG&E’s compliance and ethics training, which we aim for all employees to complete annually, focused on speaking up. Video vignettes included in the training were based on real-world issues that employees might face.

In addition to annual compliance and ethics training, we require all employees to complete Code of Conduct training annually and certify that they have read, understand and will comply with our Employee Code of Conduct.

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

Compliance and Conduct Training Footnote 1
2016 2017 2018
Compliance and Ethics Training 99.4% 99.9% 99.9%
Code of Conduct Training 99.8% 99.9% 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 2018 was roughly 2.5 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 decreased 10 percent over the prior year, with a slight decrease in calls requesting guidance.