Ethics and Compliance - A World Class Lie

Ethics and Compliance

At PG&E, we are committed to complying with both the letter and the spirit of the law, and our own Code of Conduct, at all times. We hold ourselves to these standards in all actions, both as a business and as individuals. To accomplish this, PG&E promotes a culture in which employees are empowered to raise concerns and are supported by a structure to ensure compliance.

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 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, and
  • Identifying areas of compliance and ethics risk, and developing action plans to prevent, detect and correct risks and issues.
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, determine the best way to address them and then allocate resources to successfully manage our work. In 2016, we focused on strengthening the integration and management of regulatory compliance risk and operational risk.
In addition, we developed and implemented a standardized framework for PG&E’s lines of business to enhance their respective compliance and ethics programs. The framework is composed of eight elements derived from the U.S. Federal Sentencing Guidelines. The framework also provides an objective assessment tool to measure PG&E’s overall compliance program. We completed an initial assessment of each line-of-business compliance program in late 2016, and established maturity targets for 2017 and 2018.
Two management-level governance bodies help drive and coordinate our compliance activities:
  • Compliance and Ethics Committee: Comprised of senior 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 company requirements.
  • Compliance and Ethics Leadership Team: This cross-functional team of non-officer compliance 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.
To provide guidance on conduct requirements, PG&E maintains codes of conduct for the following:
In addition, we maintain a Chairman’s 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 regularly throughout the year, including one meeting that is open to all employees.

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:
ENTITYRISK OVERSIGHT RESPONSIBILITIES
Compliance and Public Policy CommitteeFootnote1a
  • Coordinates the compliance-related oversight of the various committees of the Boards, 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
  • Oversees and monitors compliance with legal and regulatory requirements, in concert with other Board committees
Nuclear, Operations and Safety CommitteeFootnote1b
  • Oversees 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. Refers to committees of the PG&E Corporation Board of Directors only. 1a1b
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 2017 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 program. The line of business compliance programs are overseen by the respective senior officer for each line of business.

2016 Milestones

In 2016, PG&E focused on enhancing our governance structure and “speak up” culture, which aims to create a work environment where everyone feels safe to express their views and concerns—and where everyone is confident that those concerns will be heard and taken seriously. Highlights included the following:
  • Updated our compliance program framework to create a road map for each line of business. This model will be used to assess and monitor each line of business’s compliance program.
  • Improved our misconduct investigations and reporting process. The redesigned, centralized process promotes thorough and timely investigations of all allegations of misconduct; centralized oversight and record-keeping; consistent outcomes on an enterprise-wide basis; improved tracking and reporting on trends and lessons learned; and follow-up with employees who raise an issue.
  • Promoted a “speak up culture.” All employees were invited to attend two events focused on compliance and ethics:
    • Chairman’s Ethics Council: PG&E Corporation’s Chairman, CEO, and President (at that time) hosted the annual all-employee meeting of the Council. More than 2,500 employees participated in the meeting, which featured guest speaker Keith Darcy, one of the world’s foremost experts in corporate compliance and ethics.
    • Compliance and Ethics Week: The theme was Speak Up in Action and featured a keynote with Cynthia Cooper, an internationally recognized speaker on ethical leadership and best practices in corporate governance.
  • Surveyed employees on compliance and ethics. PG&E’s biennial employee survey included an index of compliance- and ethics-related questions, which provided us with an assessment of PG&E’s speak-up culture.

Measuring Progress

In 2016, PG&E’s annual compliance and ethics training, which we aim for all employees to complete annually, focused on speaking up. Specifically, the training was designed to build awareness of how to enhance an open communication environment; improve understanding of how to appropriately handle misconduct reports, as measured by the volume of calls to our Compliance and Ethics Helpline; and help employees understand how our attitudes and actions may inadvertently foster perceptions of retaliation. Video vignettes were based on real-world issues that supervisors and their teams might face.
In addition to the annual compliance and ethics training, management 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.
COMPLIANCE AND CONDUCT TRAININGFootnote1
201420152016
Compliance and Ethics Training99.8%99.9%99.4%
Code of Conduct Training99.8%99.8%99.8%
  • 1. For a variety of reasons, a statistically small number of PG&E’s employees are unable to attend a training session in any calendar year. 
The volume of Helpline calls received in 2016 was roughly 4.0 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 5 percent over 2015, with a 3 percent increase in calls requesting guidance. This suggests that more employees are turning to the Helpline for advice before taking actions that might be in conflict with PG&E’s Code of Conduct, policies, procedures or the law.

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:
  • Continuing to encourage a speak-up culture through annually updated training and communications campaigns, and by leveraging results from our employee survey,
  • Revising PG&E’s Employee Code of Conduct,
  • Engaging our governance bodies to develop and drive cross-organizational enhancements to PG&E’s compliance and ethics program,
  • Strengthening our processes to ensure that all allegations of employee misconduct are consistently investigated and remediated,
  • Enhancing our approach for identifying, managing and mitigating compliance-related risks, and
  • Fortifying our program to improve enterprise-wide monitoring and analytics, and support compliance with federal contract regulations.
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