Corporate Responsibility and Sustainability Report 2017

Our Approach

Environmental Management System

PG&E’s operations are subject to extensive federal, state and local environmental laws and regulations. These requirements relate to a broad range of activities, including preventing the discharge of pollutants; safely transporting, handling and storing hazardous materials; properly managing hazardous wastes; protecting threatened and endangered species; and reporting and reducing carbon dioxide and other greenhouse gas (GHG) emissions.

To ensure we meet these requirements, PG&E uses an Environmental Management System (EMS) modeled after the ISO 14001 environmental management standard and consistent with its “Plan, Do, Check, Act” model for continuous improvement. The EMS uses a series of compliance work processes that enable PG&E to manage regulatory compliance and our environmental impacts by each line of business.

The Vice President of Land and Environmental Management for Pacific Gas and Electric Company oversees our commitment to meet environmental requirements. PG&E’s integrated planning process provides a mechanism for managing environmental risk and compliance while driving continuous improvement, as do enterprise-wide initiatives such as our Corrective Action Program and numerous other forums.

Compliance performance updates are reviewed monthly by PG&E’s officers, and an annual environmental compliance summary is presented to the Compliance and Public Policy Committee of the PG&E Corporation Board of Directors.

2016 Milestones

Planning

In 2016, PG&E conducted an independent third-party gap analysis of our EMS based on the ISO Standard 14001:2015. This gap analysis yielded detailed recommendations to leverage existing programs to close identified gaps, which included the need to update the EMS, include more controls, integrate more stakeholders and better communicate the system with employees and contractors. In 2017, PG&E will address these gaps.

Implementation and Operation

PG&E employs a variety of operational controls to help ensure that the actions we take in meeting our environmental compliance obligations are correct and repeatable. We also learn from our experiences and integrate any lessons into our work processes and staff development.

In 2016, we continued to find new opportunities for applying technologies and processes to further our compliance efforts and minimize impacts on the environment. Key EMS initiatives included:

• Leveraging our SAP-based tool to analyze trends in environmental compliance,
• Enhancing and expanding the use of an automated tool to assess distribution projects for potential environmental impacts using geographic information system spatial data, and
• Leveraging enterprise-wide initiatives—such as records and information management and the integrated planning process—to strengthen compliance.

In addition, in 2016 PG&E enhanced and standardized the environmental release-to-construction process across all operating lines of business. This process catalogs all activity-specific permits, agreements, authorizations and other environmental requirements that are managed by PG&E’s Land and Environmental Management teams.

PG&E conducts extensive training to ensure employees have the skills and knowledge to correctly perform environmental activities associated with their work. Each year, PG&E trains thousands of employees on various environmental compliance responsibilities. Additionally, we require employees to take a training course on our environmental policy to reinforce every employee’s role in supporting PG&E’s goal of environmental leadership.

Reviews and Corrective Actions

A robust environmental auditing program is critical to ensure compliance with the many environmental laws and regulations relating to our business.

We review and audit environmental performance in four ways: self-assessments, comprehensive reviews, compliance and risk management reviews, and internal audits.

• Self-Assessments: Environmental personnel perform self-assessments of facilities or projects they oversee. Each assessment evaluates a facility or project for compliance with environmental regulations.
• Comprehensive Reviews: These reviews are performed by personnel from the Land and Environmental Management department who are not responsible for compliance at the facility or the project being inspected. Each comprehensive review involves evaluating all environmental compliance obligations associated with the operation of a facility or project.
• Compliance and Risk Management Reviews: These reviews, designed to assess adequacy of controls and risk mitigation, as well as compliance work processes, are conducted by the Compliance and Risk Management team, which is independent from the Land and Environmental Management department.
• Internal Audits: The Internal Audit department, which reports directly to the PG&E Corporation Chief Financial Officer, conducts systemic and programmatic controls-based audits to independently analyze the effectiveness of our environmental compliance management systems. The results of these audits are reported annually to the Audit Committees of the PG&E Corporation and Pacific Gas and Electric Company Boards of Directors.

During 2016, we performed 4,752 self-assessments, 57 comprehensive reviews, 4 internal audits and one compliance and risk management review of various environmental processes, facilities and projects.

To drive continuous improvement, we employ a rigorous corrective action process, which includes performing root cause analyses of noncompliance issues identified through environmental agency inspections and tracking detailed corrective action plans to resolution.

Measuring Progress

Operational Performance

PG&E tracks and reports a wide range of annual environmental compliance performance indicators. This section covers our performance results for 2016.

Reported Unintentional Releases and Permit Exceedances

We report unintentional releases that exceed regulatory thresholds, as well as many smaller releases, in an effort to ensure operational transparency to local agencies. We reported a total of 225 releases, defined as an unintentional discharge of a regulated substance that exceeds a reporting threshold or thresholds allowed in applicable permits.

Agency Inspections

In 2016, a total of 790 agency inspections were conducted at our facilities. The majority of these inspections were performed by Certified Unified Program Agencies, such as city and county environmental health departments and fire departments.

Environmental Sanctions and Penalties

To measure compliance results, we categorize all written enforcement actions issued by a regulatory agency as either Level 1 (findings that resulted in an actual or potential environmental impact) or Level 2 (findings that did not result in an actual or potential environmental impact). We also track the percentage of agency inspections that do not result in written enforcement actions.

We received three Level 1 enforcement actions in 2016. Our rate of inspections without a written sanction was 95 percent, nearly 5 points above our target of 90.25 percent.

In 2016, PG&E paid a total of $135,650 in environmental penalties.

• 1. Includes system audits, comprehensive reviews and compliance and risk management reviews. ^▲

Looking Ahead

We will maintain our commitment to continuous improvement as we work to enhance our EMS and address results from our third-party gap analysis. We will continue to focus on expanding the use of technology to minimize environmental impacts as we perform gas and electric infrastructure improvements. We will also leverage our enterprise-wide strategic planning process to adopt shared goals regarding environmental compliance and enhance our EMS to better measure our progress in achieving these goals.