Corporate Responsibility and Sustainability Report 2020

Our Approach

Business-wide

Within senior leadership, the companies’ Chief Ethics and Compliance Officer (CECO) leads compliance and ethics. The CECO reports to the PG&E Corporation Chief Executive Officer (CEO) and President 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,
• Managing a library of policies and procedures,
• 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.

During 2019, we integrated culture and ethics into strategic planning discussions with PG&E’s senior executives from every line of business in order to consider how PG&E’s culture impacts risk and compliance work. During line of business Risk and Compliance Committee meetings, we focus on the impact of behavior on compliance performance as issues arise.

Beginning in 2016, we developed and implemented a standardized framework called the Compliance and Ethics 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 maturity level targets across PG&E.

Throughout 2019, PG&E’s Compliance and Ethics organization supported the lines of business in advancing their own programs’ maturity, while concurrently seeking to advance its own program. Advancements include documenting and testing 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’ 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.
• Ethics Council: 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.

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

• Employees
• Boards of Directors
• Contractors, Consultants and Suppliers

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:

• 1. Committees of the PG&E Corporation Board of Directors only.¹

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 (PDF).

Lines of Business

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

2019 Milestones

In 2019, PG&E maintained its focus on safety and these objectives in a number of ways. Highlights included the following:

• Communications related to culture and the Code of Conduct. We focused on updating and enhancing our Code of Conduct communications and associated training. We also worked to strengthen 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.
• Remediated causes of Notices of Violation (NOVs) and Non-Conformances (NCs). We partnered with our lines of business to develop plans to remediate the causes of their NOVs and NCs (i.e., self-identified instances of non-compliance for which no regulator has yet to issue a NOV). Senior leaders review the status of this work and report out semiannually at the joint meetings of the Audit, Compliance and Public Policy, and Safety and Nuclear Oversight Committees of the Boards.
• Advanced overall compliance and ethics program maturity. We continued to strengthen enterprise-wide compliance and ethics program maturity through an increased focus on compliance controls and by improving management of cross-functional compliance work.
• Enhanced employee outreach. We launched our Reach Every Employee program, which offers every employee the opportunity to speak up about safety concerns, identify potential misconduct issues and share new ideas. Every supervisor is accountable to follow up on the issues and ideas raised by their employees. We introduced a survey that yielded important feedback. In 2019, 99.9 percent of employees completed these conversations.
• Implemented enhanced training, process improvements and expanded reporting capabilities for the employee conduct program. We continued to improve our employee conduct program, which manages our standards, policies and processes to address potential employee misconduct. We completed these actions to promote greater transparency, fairness and consistency in the program.

Measuring Progress

In 2019, PG&E’s compliance and ethics training focused on speaking up. The annual all-employee training is comprised of video vignettes based on real-world issues that employees might face. It emphasizes the importance of ethical decision-making.

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.

• 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 PG&E’s Compliance and Ethics Helpline in 2019 was approximately 3.2 calls per 100 employees. That volume was notably higher than the global benchmark of 1.4 calls per 100 employees reported by NAVEX Global. The total call volume increased 10 percent over the prior year, but with a substantial decrease in calls requesting guidance.