INNOVATE...Innovate The changing business environment and new technological trends pose challenges to businesses to keep afloat and thriving. To retain the market relevance and economic

INNOVATE

InnovateThe changing business environment and new technological trends pose challenges to businesses to keep afloat and thriving. To retain the market relevance and economic stature of a business, it is necessary to constantly evolve and innovate.

F-I-R-S-T Carbon Solutions continues to improve its business processes and create shared value with its stakeholders through its sustainability solutions that highlight Environmental, Social, and Governance (ESG) impacts.

ABOUT THE COVER

INNOVATE

THEME

CHAIRMAN’S MESSAGE

ABOUT F-I-R-S-T CARBON SOLUTIONS

PRODUCTS AND SERVICES

CORPORATE GOVERNANCE

ENVIRONMENT

HUMAN CAPITAL

SOCIAL VALUE

COMPLIANCE

ECONOMIC VALUE

AUDITED FINANCIAL REPORT

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Contents

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I CONTENTS 3

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I CHAIRMAN’S MESSAGE4

Dear Fellow Stakeholders:

We are proud to present to you this sustainability report. F-I-R-S-T Carbon Solutions is a company with a vision to advance sustainable practices around the world and help organizations to grow responsibly and operate their businesses through our initiatives on building and developing Environmental, Social and Governance (ESG) applications and solutions. Alongside this vision, the Company will continue to commit and align itself to the United Nations Global Compact’s ten principles on human rights, labor, environment, and anti-corruption.

We uphold the importance of embracing sustainability practices for both individual businesses and the global business community. We believe that sustainability reinforces profit and long-term financial viability. By aiding businesses in addressing their ESG concerns, we enable them to manage risk and be socially responsible.

As a corporate organization that promotes sustainability, we have been constantly innovating and expanding our product offering, developing new solutions and customizing existing ones to meet the unique needs of our clients. We combine expert consulting with custom software solutions to deliver comprehensive and cost-effective sustainability solutions. We seamlessly deliver fully integrated, cost-effective consulting, data management and software solutions that help clients optimize resource use, reduce costs, save time and operate efficiently. Through our flagship product, the Sustainability WorkBench (SWB) – a robust software-as-a-service (SaaS), customers can easily monitor their sustainability performance, and relate it to their operational and financial performance.

As we move forward in our journey of helping corporate organizations and institutions worldwide, be assured that our internal structures and mechanisms are strongly in place. We embrace the principles that we promote. With these, expect us to continue developing custom-tailored solutions that are based on data-driven insights and designed to generate healthy returns on ESG and economic investments.

James M. DonovanChairmanF-I-R-S-T Carbon Solutions

Chairman’s Message

Company ProfileF-I-R-S-T Carbon Solutions Corporation (the Company), incorporated in the Philippines, is engaged in Information Technology-enabled services in relation to ESG. Its services are mostly provided to foreign clients including carbon data management; data encoding; data processing; data conversion; transcription; software development; and other services involving Information Technology (IT) and business process needs. In delivering these services, the Company also taps the expertise of related parties.

The registered office of the Company, which is also its principal place of business, is located at the 26th Floor, Philippine AXA Life Centre, Sen. Gil Puyat Avenue, Makati City, Philippines. The Company has global presence in six countries, which includes the United States, the United Kingdom, Australia, Kenya, Malaysia and the Philippines.

About F-I-R-S-T Carbon Solutions

Commitment

Making things happen by creatively maximizing our resources to ensure each other’s success.

Customer FoCusContinuously understanding the unique needs of our clients, enabling us to deliver unparalleled customer solutions through our world-class services.

exCellenCe

Being dynamic, innovative and passionate for learning, fueling our relentless pursuit to achieve the highest levels of standards in everything we do.

respeCt

Treating stakeholders, clients, employees, suppliers and community with courtesy and compassion.

teamwork

Proactively working together and being accountable to each other to achieve our goals.

integrity

Advocating honesty in our workplace by doing the right thing even when no one is looking.

CoRE VAluESThe Company, its directors, officers and employees uphold the following six core values in all their dealings:

North America

Europe

AfricaAsia

Australia

Vision and MissionMISSIonTo create value by redefining and delivering innovative Environmental, Social and Governance solutions worldwide.

VISIonWe are a world leader in Environmental, Social and Governance solutions.

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I ABOUT F-I-R-S-T CARBON SOLUTIONS 5

Ownership Structure The Company is 60% owned by REDECS Green Holdings Corporation (REDECS, or the parent company). The remaining 40% interest is held equally by JICA BPO Holdings Limited (JICA) and ADEC Solutions, Ltd. The parent company is incorporated in the Philippines and is presently engaged in investing, purchasing, developing, leasing, selling, transferring or otherwise disposing of properties of every kind, nature and description and wherever situated, including real estate. The Company is a business entity with injected capital coming from private organizations. It does not receive any financial or material favor from the government.

Associations and AffiliationsThe company is associated with the following associations and advocacy groups:

About F-I-R-S-T Carbon Solutions

60%

20%

20%ADEC Solutions,

Ltd.

REDECS Green

Holdings Corporation

JICA BPO

Holdings Ltd.

RelationshipAssociation/ Advocacy GroupCDP (formerly Carbon Disclosure Project) The Company is one of CDP’s

scoring partners and go-to solutions provider for any CDP member company looking to outsource environmental data collection from complex worldwide operations.

Active member

Active member

Active member

Active member

Active member

Active member

Active member

Active member

Active member

British Chamber of Commerce Philippines (BCCP)Philippines-New Zealand Business Council

Australian-New Zealand Chamber of Commerce (ANZ Chamber )

American Chamber of Commerce (AMCHAM)European Chamber of Commerce of the Philippines

Philippine Green Building CouncilAustralia Philippines Business Council (APBC)

Healthcare Information Management Outsourcing Association of the Philippines (HIMOAP)

IT & Business Process Association Philippines (IBPAP)

Ownership Structure(as of December 31, 2015)

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I ABOUT F-I-R-S-T CARBON SOLUTIONS6

Management SystemsF-I-R-S-T Carbon Solutions has access to industry certifications and accreditations acknowledging its commitment and adherence to recognized best practices. The Company has access to global certifications on Quality Management System (QMS), Information Security Management System (ISMS) and Environmental Management System (EMS) and it is Sedex Member Ethical Trade Audit (SMETA) assessed.

The Company is also preparing to be certified on Statement on Standards for Attestation Engagements (SSAE 16), Energy Management System (ISO 50001) and Business Continuity Management System (ISO 22301).

2014 F-I-R-S-T Carbon Solutions’ parent company, ADEC Innovations, won the “Business Responsibility & Ethics” category and received a special recognition in the “Energy Management” category during the 1st Sustainable Business Awards Philippines.

F-I-R-S-T Carbon Solutions’ affiliate technology company Envirosite Corporation won the Oracle Technology Company of the year Award at the Asia CEO Awards.

F-I-R-S-T Carbon Solutions CEO James M. Donovan was awarded the South-South and Triangular Cooperation Visionary Award by the United Nations Office for South-South Cooperation at the Global South-South Development Expo held in Washington DC.

2011 F-I-R-S-T Carbon Solutions won “Most Innovative Company of the year” at the 5th ICT International Awards Philippines.

2010 F-I-R-S-T Carbon won “Best Eco-Industrial Service” at the 1st Philippine International Eco-Show Awards.

Awards and Recognition

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I ABOUT F-I-R-S-T CARBON SOLUTIONS 7

our Products and Services

Globally Accessible Information System and Technology PlatformSustainability Workbench (SWB): Measuring carbon footprints and environmental impacts has become a standard for businesses, organizations, governments and communities. SWB delivers a suite of ESG applications that help organizations manage data for better sustainability performance. It is a highly scalable, customizable, and robust SaaS technology platform that helps organizations and communities optimize resource use, reduce operational costs and improve sustainability performance.

Integrated Software and Data Bureau Benefits for Business and Workers Initiative: Based on our Supply-LINK™ platform, the Company has worked with retail brands and suppliers to collect operational and personnel information from factories, import this into our web-based application and provide benchmarking data to factories, mills, and Non-governmental organizations (NGO’s). Our data bureaus collect information by liaising with factory managers. This data is then checked for consistency and verifiability before being imported into our system. Supply-LINK™ monitors key indicators for each factory such as fabric wastage, water usage and quality, energy, waste, and staff

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I PRODUCTS AND SERVICES8

our Products and Services

CDP: The Company has been in partnership with CDP since 2011. As part of this partnership, our team of trained personnel has read and reviewed over 11,000 disclosures and evaluated individual responses against the CDP scoring methodology – assigning a point value to each question reviewed. In addition, we built a database and standard dashboard report with 24x7 access to help companies interpret their CDP score. We are the exclusive CDP scoring partner for the global Supply Chain program, and for the S&P 500, FTSE 350, Canada and Benelux, India, Southeast Asia, and Nordic regions. Due to the success of the program, we expect to expand to other countries and regions in 2015 and beyond (e.g. South Africa).

Large Scale Business and Knowledge Processing

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I PRODUCTS AND SERVICES 9

Corporate Governance

The Board of Directors

Board ResponsibilityThe governance of the Company is the primary responsibility of the Board of Directors. It shall ensure the Company’s compliance with the principles of good corporate governance and provide an independent check on Management. It shall be the Board’s duty and responsibility to foster the long-term success of the Company and secure its sustained competitiveness in a manner consistent with its corporate objectives and fiduciary responsibility, which it shall exercise in the best interest of the Company and, in proper cases, its shareholders and other stakeholders.

The Board shall conduct itself with utmost honesty and integrity in the discharge of its duties, functions and responsibilities. To ensure good corporate governance, the Board shall institute adequate internal control mechanisms and exert its best efforts to ensure best practices are carried out, keeping in mind its objective of steering the Corporation towards sustained profitability.

Other Board responsibilities include the determination of the Company’s purpose and values, its vision and

mission, the strategies to achieve this purpose, and the implementation of its values in order to ensure that the Corporation survives and thrives. The Board shall establish a process for the selection of qualified and competent directors and corporate officers and adopt an effective succession planning program for the Management.

In 2014, the Board and the management conducted an annual review of the Company’s vision and mission and aligned its roadmap and strategies with them. The Board drew the strategies and set the targets for the management to execute. These activities coincided with the Company’s strategic planning, held in November, which was participated in by members of the Board and the Management.

Board CompositionThe Board is composed of seven directors, two of whom are independent, who are elected annually. It is led by its Chairman, Mr. James M. Donovan, who is also the Company’s Chief Executive Officer (CEO) and President.

F-I-R-S-T Carbon Solutions’ Board Structure

Audit and RiskManagement

Committee

Internal Audit

RemunerationCommittee

Nomination, Election &

GovernanceCommittee

Chief Executive

Management

Board of Directors

ExecutiveCommittee

The Company’s Governance Structure

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I CORPORATE GOVERNANCE10

Corporate GovernanceThe responsibility of the Chairman is to ensure that the Board executes its functions effectively and efficiently. The Management, on the other hand, is accountable to the board in terms of executing the strategies and managing the operations of the company. The Board ensures that there are proper control mechanisms that oversee the separation of the functions of the Chairman of the Board and the CEO and President.

The members of the Board are selected through the procedures set forth by the Nominations, Elections and Governance Committee which considers diverse expertise and experience from various industries. This diversity is highly appreciated by the Company as evidence by the presence of two women executive directors, Ms. Carol S. Esguerra and Ms. Corina P. Buñag.

Board CommitteesThe Board has four standing committees, namely the Executive Committee; the Nomination, Election and Governance Committee; the Remuneration Committee; and the Audit and Risk Management Committee.

ExECuTIVE COmmITTEEThe Board of Directors may create and, from time to time, prescribe the number and classification of memberships in, as well as the formalities and procedures for holding the meetings of, an Executive Committee, or ExCom. The ExCom may act, by majority vote of all its members, on specific matters within the competence of the Board, as may be delegated to it in the By-Laws or by a majority vote of the Board, subject to the limitations provided by the Corporation Code of the Philippines.

NOmINATION, ElECTION AND GOVErNANCE COmmITTEE The Nomination, Election and Governance Committee, or Nom & GovCom, is composed of at least three members, one of whom is an independent director. The committee has the responsibility to review and evaluate the qualifications, including the independence, relationships and potential conflict of interest, of all persons nominated to the Board and other appointments that require Board approval, and to assess the effectiveness of the Board’s processes and procedures in the election or replacement of directors. The committee is also responsible for setting up the performance evaluation mechanism of the Board and providing the programs for the continuing education of its members. The Company requires all Directors to attend a seminar on corporate governance conducted by a duly recognized private or government institute before assuming office.

rEmuNErATION COmmITTEEThe Remuneration Committee, or RemCom, is composed of three members, namely: (a) the Chairman of the Board and (b) two directors, one of whom shall be an independent director, or such other number as may be prescribed by the Board. The RemCom shall have powers and functions over the remuneration of the corporate officers other than the Chairman. The RemCom is responsible for establishing the Company’s formal and transparent procedure for developing a policy on the remuneration of directors and officers to ensure that their compensation is consistent with the corporation’s culture, strategy and the business environment in which it operates. The Chairman of the Board shall be the designated Chairman of RemCom. The Chairman of the Board’s remuneration shall be reviewed and set by a Committee composed of the Vice-Chairman and two directors, one of whom shall be an independent director.

AuDIT AND rISk mANAGEmENT COmmITTEEThe Audit and Risk Management Committee, or Audit & RiskCom, is composed of at least three members of the Board and its Chair shall be an independent director. The members should preferably have an accounting, audit, finance or legal background. Each member of the Audit & RiskCom shall have adequate understanding of the Corporation’s financial management systems and environment. The Audit & RiskCom assists the Board in the performance of its oversight responsibility for the financial reporting process, the system of internal control, the audit process, and the monitoring of compliance with applicable laws, rules and regulations. The Audit & RiskCom also performs oversight functions over the corporation’s internal and external auditors. It ensures that the internal and external auditors act independently from each other and that both auditors are given unrestricted access to all records, properties and personnel to enable them to perform their respective audit functions.

The Audit & RiskCom also assists the Board in its oversight responsibility in the system of risk management and in reviewing the effectiveness of the Company’s risk management processes. It provides oversight over Management’s activities in managing the Company’s credit, market, liquidity, operational, legal, environmental, and other risks. This function includes regular receipt from Management of information on risk exposures and risk management activities. The committee is also responsible for the implementation of due diligence processes.

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I CORPORATE GOVERNANCE 11

Corporate Governance

Directors’ ProfileJAmES m. DONOVAN Chairman of the Board, President and Chief Executive Officer Mr. Donovan is the Chairman of the Board, the President and Chief Executive Officer of the Company. He was elected as Chairman of the Board in 2013. He is concurrently the CEO of ADEC Innovations. He is likewise the President and Co-founder of First Carbon Solutions in the USA, Australia, and the United Kingdom. He also worked as Vice President of Lehman Brothers Investment Bank Ltd. from 1989-1991 and Vice President of Daiwa Securities from 1993-1996.

CArOlINA S. ESGuErrAChief Financial Officer and DirectorMs. Esguerra is the Chief Financial Officer and Director of the company. She is concurrently the CFO and Director of REDECS Green Holdings Corporation, JICA BPO Holdings Limited and ADEC Innovations. She is also a co-founder of First Carbon Solutions in the USA, Australia and the United Kingdom. She has a Bachelor of Arts in Social Sciences from the University of the Philippines - Manila.

VICENTE P. rEVENTAr IIIDirectorMr. Reventar has been a Director of the Company since August 10, 2011. He is concurrently the Chairman of the Department of Quantitative Management and Information Technology at John Gokongwei School of Management, Ateneo de Manila University, where he has been a faculty member for almost 40 years. He was the President of SVI Technologies from 1997 to 2003. He also served as Senior Vice President for the Home Development Mutual Fund from 1981 to 1996. He obtained his Bachelor of Science degree in Management Engineering from the Ateneo de Manila University

JOSE rENATO T. BADEllESDirectorMr. Badelles is a Director of the company and is the President and Director of AMDATEX Las Piñas Services, Inc., and AMDATEX Services Corp. He obtained his Bachelor of Arts degree in Psychology from the Ateneo de Manila University. He also completed the Management Development Program of the Asian Institute of Management.

mArIA COrINA P. BuñAGCorporate Secretary and DirectorAtty. Buñag has been a Director and the Corporate Secretary of the company since August 10, 2011, and the Corporate Counsel since November 2010. She is also the Director and Corporate Secretary of PharmaKPO Corporation and ADEC Innovations, and a Director of Maria Victoria Realty Development Corporation and Blue Pearl Management and Development Corporation. She obtained her Bachelor of Arts degree in Management Economics from the Ateneo de Manila University and her Juris Doctor degree from the Ateneo Law School. ShErWIN JOhN Y. lImIndependent DirectorMr. Lim was elected as an Independent Director of the Company on March 10, 2012. He is concurrently the President of Asian Bonded Customs Warehouse Corporation. Previously, he was a Director of Taiga Building Products. He obtained his Master of Business Administration degree from Laurentian University in Canada. DONAlD r. FElBAumIndependent DirectorMr. Felbaum was elected as an Independent Director of the Company on March 10, 2012. He is also an Independent Director of Merlin Philippines, Blue Cross Philippines, SPI Global and Integra Business Processing Solutions Inc, and the Managing Director of OPTEL Ltd. He is also a Vice President of PAMURI and an Ex-Officio of AMCHAM. Mr. Felbaum obtained his Master’s Degree in Strategic Business Economics from the University of Asia and the Pacific.


Corporate GovernanceTransparencyInvestor RelationsThe stockholders and the investors are the backbone of the Company’s existence. It recognizes the importance of engaging its stockholders through various communication channels and the Annual General Meeting (AGM). The Company conducts its AGM every 27th day of April of each year. During the AGM the stockholders approve and ratify the Board’s actions in the past year and the Company’s financial statements and remuneration policies. It is also a venue for giving stockholders the opportunity to raise their issues and concerns to the Board.

Media RelationsThe media is one of the major channels of information that the Company utilizes. In a month, the Company sends out at least two media releases. It also conducts constant monitoring of the Company’s exposure in all media outlets. The Company maintains its relationship with these media entities through media rounds.

Risk Management The Company annually conducts its risk assessment with the participation of all the offices, the Management and the Board. It utilizes the framework of the ISO31000:2009 – Risk Management Standard, as can be seen in the diagram below.

Framework of the ISO31000:2009 – Risk Management Standard

Establishthe Context

IdentifyRisks

AnalyzeRisks

Evaluate Risks

TreatRisks

COM

MUN

ICAT

E AND

CON

SULT

MON

ITOR

AND

REVI

EW

COM

MUN

ICAT

E AND

CON

SULT

RISK

ASS

ESSM

ENT


Corporate GovernanceThe following discussions tackle the identified risks and the exposures of the Company in 2014.

I. FOrEIGN CurrENCY rISkMost of the Company’s transactions are carried out in Philippine pesos, its functional currency. Exposures to currency exchange rates arise from the Company’s overseas sale of services which are primarily denominated in United States (U.S.), New Zealand (N.Z.) and Australian (A.U.) dollars. The Company also holds U.S.-dollar-denominated cash in banks,

Foreign-currency-denominated financial assets translated into Philippine pesos at their respective closing rates amount to P37.0 million and P33.8 million as at December 31, 2014 and 2013, respectively. As of the same period, the Company has no outstanding financial liabilities denominated in foreign currency.

If the Philippine peso were to strengthen against the indicated currencies with other variables held constant, the Company’s profit before tax would decrease by P10.3 million and P7.9 million, respectively. Conversely, if the Philippine peso were to weaken by the same percentages during the same period, profit before tax would increase by the same amount.

II. INTErEST rATE rISkThe Company has no financial instruments subject to floating interest rate except cash in banks, which historically has shown small changes in interest rates. As such, the Company’s management believes that the interest rate risk is not material.

III. lIquIDITY rISkThe Company manages its liquidity needs by carefully monitoring cash outflows due in a day-to-day business. Liquidity needs are monitored in various time bands on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a six-month and one-year period are identified monthly.

IV. CrEDIT rISkCredit risk is the risk that a counterparty may fail to discharge an obligation to the Company. The Company is exposed to this risk with respect to financial instruments arising from granting of advances to related parties, recognition receivables from customers as a result of services rendered and placing of deposits with banks.

Generally, the maximum credit risk exposure of financial assets is the carrying amount of the financial assets as at

December 31, 2014 and 2013. The Company considers that all financial assets at the end of each reporting period under review are of good credit quality. None of the financial assets are secured by collateral or other credit enhancements.

V. BuSINESS CONTINuITY DurING NATurAl DISASTErS AND mAN-mADE EVENTSAll the operations of the Company are conducted in the Philippines, which is along the typhoon belt in the Pacific and is visited by an average of 20 typhoons every year. The country is also situated in the “Pacific Ring of Fire”, which makes it vulnerable to earthquakes and volcanic activity. Such natural calamities pose risks to the continuity of the Company’s operations.

To avoid the operational disruptions when natural calamities occur, the Company has set up a Business Continuity Plan (BCP) which lays down the action plans to be executed during times of emergency or disaster. The purpose of the Business Continuity Management Policy is to formalize the business continuity programs of the Company and to provide guidelines for developing, maintaining and exercising its BCP. The policy establishes the basic principles and strategic and operational framework necessary to ensure emergency response and the resumption and recovery of the Company’s operations and business activities during a business interruption event.

VI. TEChNOlOGICAl rISkSThe Company’s success can be attributed to its ability to continuously develop and deliver services and solutions that can adapt and compete amidst the continuing changes in technology, industry trends, and new products and services of new entrants. Such technological trends include mobility, cloud-based computing and processing, and big data analysis. These trends may conflict with the Company’s existing legacy solutions. The Company’s strategy is to respond to these trends through the development of innovative solutions, new services and more advanced business processes, lest its envisioned growth may be negatively affected.

VII. INFOrmATION SECurITY rISkSThe Company is highly dependent on IT networks and systems to securely process, transmit and store electronic information and to communicate to its offices, partners, vendors and clients present globally. As these systems and infrastructures continue to grow, there is the potential risk of security breaches and cyberattacks. These breaches could lead to system disruptions or shutdowns, as well as potential unauthorized disclosure of confidential information.


Corporate GovernanceThe Company also manages client information. As a result, the risk of unauthorized disclosure of confidential client information may negatively impact the Company’s reputation and cause the Company to lose clients. Furthermore, the Company may also be subject to significant monetary damages, regulatory enforcement actions, fines and/or criminal prosecution.

In order to avoid any breaches, the Company consistently safeguards its information networks and systems and updates its infrastructures as needed.

Board’s Internal Control MechanismThe Company’s control environment consists of (a) the Board, which ensures that the Company is properly and effectively managed and supervised; (b) the Management, which actively manages and operates the corporation in a sound and prudent manner; (c) the organizational and procedural controls supported by effective management information and risk management reporting systems; and (d) an independent audit mechanism to monitor the adequacy and effectiveness of the Company’s governance, operations and information systems, including the reliability and integrity of financial and operational information, the effectiveness and efficiency of operations, the safeguarding of assets, and compliance with laws, rules, regulations and contracts.

The minimum internal control mechanisms for the performance of the Board’s oversight responsibility includes:

(a) The definition of the duties and responsibilities of the CEO, who is ultimately accountable for the Company’s organizational and operational controls;

(b) The selection of the person who possesses the liability, integrity and expertise essential for the position of CEO;

(c) The evaluation of proposed senior management appointments;

(d) The selection and appointment of qualified and competent senior management officers; and

(e) The review of the Company’s human resource policies, conflict of interest situations, compensation program for employees and management succession plan.

The Company also has an established internal audit organization with a functioning system and methodologies that can reasonably assure the Board, Management and shareholders that the Company’s key organizational and operational controls are faithfully complied with. The Board appoints the Chief Internal Auditor to perform the audit function and may require him to report to a level in the organization that allows the internal audit activity to fulfill its mandate. The Internal Auditor shall be guided by the Internal Standards on Professional Practice of Internal Auditing. It also follows the framework of the Committee of Sponsoring Organization of the Treadway Commission (COSO) – an organization providing thought leadership and guidance on internal control, enterprise risk management and fraud deterrence –for its internal audit activities.

Company’s open Communication ChannelThe Company has an open communication channel called the Improvement Management System or IMS. It covers all the directors, officers and employees of the Company. The issues raised by known or anonymous individuals may be escalated, depending on the gravity of the subject and the level of the individuals or offices. The types of concerns that the IMS handles include operational process enhancements; fraud; financial nonfeasance, misfeasance and malfeasance; information and infrastructural security; and other auditable concerns. These concerns may be sent through various media such as online application, telephony, and email or post. The concerns received by the channel are monitored and resolved by an independent body. In 2014, there were no issues or concerns filed at the IMS that required escalation to the Board.

COSO Enterprise Risk Management Framework

Internal Environment

Objective SettingEvent Identification

Risk Assessment

Risk Response

Control Activities

Information & Communication

Monitoring

Subsidiary

Business Unit

DivisionEntity-Level

Opera

tions

Strate

gic

Repo

rting

Comp

lianc

e


Environment

Supply ChainThe Company’s Supply Chain can be segmented in three major processes: (a) procurement; (b) development; and (c) delivery. Under the procurement process, the suppliers provide the software platform, subject matter expert services, and the administrative and operating supplies and equipment. These materials, equipment, and services are utilized in the development stage, where software solutions are developed as per customer requirements. Once completed and tested, these solutions are delivered to the customers for acceptance.

Sustainability Programs

F-I-R-S-T Carbon Solutions established various sustainability-related programs such as energy, water and waste management. These programs involve infrastructural and policy review and/or improvements, monitoring and maintenance.

The Company’s waste management program involves the segregation of biodegradable and non-biodegradable materials. Awareness campaigns and reminders support such program.

Under the energy management program, the Company’s main objective is the efficient use of electricity. This requires the replacement of existing equipment with more energy-efficient ones. It also entails company-wide awareness campaigns on the proper use of office equipment and fixtures that utilizes electricity.

For the water management program, the Company measures water effluence and impact against internationally accepted standards. This program also involves the reduction of water consumption and reusing treated water for sanitary facilities. The Company has its own sewerage treatment plant, and it has also installed grease traps in its kitchen areas.

F-I-R-S-T Carbon Solutions’ Supply Chain

PROCUREMENT DEVELOPMENT DELIVERY

Supplier A

Supplier B

Supplier C

Supplier A

Supplier B

Supplier C

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I ENVIRONMENT16

2014 Sustainability ReportThe Company’s Sustainability Report for the year 2014, its first, covers the fiscal year starting January 1, 2014 to December 31, 2014. This report, which shall be updated annually, encompasses the activities conducted by the Company, independent of its owners and related parties. In 2014, there were no significant changes in the organization’s size, structure, ownership and supply chain.

The Company shares the same vision on sustainability with some non-government institutions, as well as advocacy and industry groups. These organizations are crucial in spreading awareness on various environment, social and governance issues and initiatives. The Company engages and advances its advocacy with these groups on various sustainability-related programs that benefit them and their members. The Company constantly meets with these groups through conferences and special scheduled meetings to discuss the programs.

Non-Government Institutions, Advocacy and Industry Group Partnerships

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I ENVIRONMENT 17

a minimum of five years of credit service. The normal retirement benefit is an amount equivalent to 100% of the final monthly covered compensation (average monthly basic salary during the last 12 months of credited service) for every year of credited service.

The present value of the defined benefit obligation is calculated by reference to the best estimate of the mortality of the plan participants both during and after their employment and to their future salary. Consequently, increases in the life expectancy and salary plan of participants will result in an increase in plan obligation.

Employee ProfileThe employees are the most important asset of the Company, and it takes care of their welfare and ensures their wellbeing. The Company’s workforce totals 92 personnel, composed of three regular hires and 89 insourced. Among these personnel, 51% are male and 49% are female. They are deployed in two locations within the Philippine capital. From the 92 employees, 74 have permanent contract status, eight are probationary, and ten have project-based employment contracts.

Employee Engagement ProgramsThe Company values its employees. It ensures their professional development and wellness. It provides them avenues for participation in various activities that will showcase their creativity and their unity of purpose with the Company. Such activities also open opportunities for them to interact with the community and contribute to advocacies and community-building initiatives that the Company supports. The ultimate objective of these employee engagement programs is to encourage more employee involvement and to retain those with exceptional skills and abilities.

Human CapitalEmployeesHuman Resources Policies

The Company Headquarters operates in the Philippines, and it complies with existing national laws and employment regulations and practices. It is the Company’s policy to hire the most suitable individuals and compensate them without any discrimination, and it treats its employees fairly by providing fair wage and working hours and by embracing diversity by giving respect to gender, race, religion, beliefs and culture.

Human resource policies are placed in the organization to set rules and guidance for employees. Such internal policies include the Code of Discipline, or the Employee Handbook, which integrates the rules concerning the observable conduct of directors, officers and employees, as well as the appropriate measures and corresponding corrective actions for implementation.

The remuneration policy of the Company is based on the philosophy of internal equity in its salary structure. This is based on various factors such as the relationship between jobs and wage rates-- which considers the qualifications required for the job, including the years of related experience, competency and skill set, and educational attainment – and the criticality of the job measured against the supply and demand for the said position. The Company also benchmarks with the industry players on the market rate per job type and rank. The employee remuneration package complies with statutory requirements on the minimum wage and benefits, which also considers the cost of living in the area. Prior to hiring, F-I-R-S-T Carbon Solutions provides ample consideration of the Company’s strategic objectives, operating and financial conditions, and the corresponding return on investment. For existing employees, the remuneration progression occurs based on the annual performance evaluation, promotions and periodic job evaluation.

Currently, the Company does not have a formal post-employment benefit plan. However, it follows the provisions of the Philippine Republic Act No. 7641 (R.A. 7641), Retirement Pay Law, which is effectively an unfunded, non-contributory post-employment benefit plan covering all regular full-time employees, in recognizing its post-employment benefit obligation.

Under R.A. 7641, the normal retirement age is 60 with

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D. EmPlOYEE rECOGNITIONF-I-R-S-T Carbon Solutions recognizes the contributions of its employees in the daily operations and business of the Company. It gives recognition to employees who have been with the Company for at least five years through service awards and incentives. The Company also conducts various events for the employees to give them a venue to showcase their talents and skills in sports and the arts. These friendly competitions aim to develop camaraderie among employees.

A. lEArNING AND DEVElOPmENTIn order to retain employees with exceptional skill set, the Company conducts extensive technical and personal development trainings and workshops. The major learning and development activities that the Company provides its employees, aside from regular technical trainings, include leadership and personal effectiveness workshops. Townhall meetings are also conducted as a venue for the two-way communication between the Company and the employees. During these events, the employees are encouraged to raise their concerns to the Company. In 2014, the employees of the Company spent 444 training man-hours, or an average of 4.83 training man-hours per employee. Among these programs, 53% were in-house technical trainings, 32% were for personal development, and 15% were external technical or personal development trainings.

F-I-R-S-T Carbon Solutions also encourages employees to join interest groups within the organization. They have the freedom to engage in any employee association as long as it is not in conflict with the provision of the Company’s Employee Handbook which prohibits “unauthorized engagement in any activity that is illegal under local or international law within Company premises and/or utilizing Company-owned resources.” The employees are also given an opportunity to voice out their issues and concerns through the IMS.

B. hEAlTh AND SAFETYThe Company ensures the wellness of its employees through its healthcare programs, which also extends to the employees’ families. It also promotes a safe working environment for everyone in the organization. Employees are encouraged to participate in the training programs for health and safety, such as emergency drills and proper use of safety equipment that are frequently conducted by the Human Resources Department. In 2014, the Company recorded zero lost time incident.

C. ADVOCACIES AND COmmuNITY-BuIlDING INITIATIVESThe core business of the Company relates to sustainability and the ESG concept. Thus, the Company, with its employees, supports various advocacy groups and activities that contribute to sustainability and community-building. Employees are encouraged to participate in these kinds of activities to foster a culture of social awareness and environmental responsibility.

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I HUMAN CAPITAL 19

Social ValueOur CustomersThe Company’s customers are its reason for being. It adheres to its core commitment of providing the best products and services while exceeding the expectations of the customers. The Company administers a periodic client feedback mechanism where clients can provide insights on service delivery and the Company’s customer experience.

The Company’s customers may be categorized by industry, focus area and services:

F-I-R-S-T Carbon Solutions’ customer services organization supports the Company’s customers through a combination of on-line self-help, e-mail communications, telephone and video conferencing and face-to-face meetings. Its internet-based on-line self-help tools enable customers to resolve simple issues on their own, eliminating the need to directly communicate with the Company’s customer service representatives.

The Company’s customer services segment provides 24/7 customer support. Existing customers have dedicated support personnel, available as needed, for immediate resolutions of queries, issues and other concerns.

Our CommunityF-I-R-S-T Carbon Solutions is constantly engaged in Corporate Social Responsibility (CSR) efforts for to the local, national and global community. In 2014, the Company reached out through medical programs, monetary and in-kind donations for Typhoon Haiyan survivors, and outreach projects. The Company also participated in various environmental initiatives, including tree-planting events and the Earth Hour project.

Industry Focus AreaSustainability

EnergyEnvironmental

Due Diligence and Entitlements Services

Due Diligence

ServicesConsultingSoftware

ReprographicsData Processing

IndustrialInsuranceManufacturingMunicipalitiesPackagingRestaurantsRetailTelecommunications

Commercial Real EstateConsumer Products

DevelopersEducation

FinanceFood Products

GovernmentHealthcareHospitality

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I SOCIAL VALUE20

Compliance

Company Compliance to Legal and Regulatory RequirementsF-I-R-S-T Carbon Solutions is subject to a number of foreign and domestic laws and regulation that covers companies conducting business over the internet and, in some cases, using services of third-party telecommunications, internet and hosting services. These include, among others, laws and regulations addressing privacy, data storage, retention and security, freedom of expression, content, taxation, advertising and intellectual property.

The government and regulators are two of the most important stakeholder groups for the Company. In doing its business, the Company diligently complies with all of its requirements. The Company also engages in government-funded projects aligned with good governance.

The Company complies with the statutory and regulatory requirements of the Philippine Corporation Code and the Securities and Exchange Commission (SEC), respectively. F-I-R-S-T Carbon Solutions’ Compliance Officer, Mr. Anthony Catajan, and General Counsel, Ms. Corina Buñag, have the responsibility of assuring the Company’s compliance to these legal and regulatory requirements. Also, part of the Compliance Officer’s responsibility is the formal review and approval of the organization’s sustainability reporting and ensuring that all the material aspects are considered.

Supplier/ Vendor Accreditation The suppliers/vendors of the Company are its ultimate partner in delivering its promise to the customers. F-I-R-S-T Carbon Solutions’ vendor accreditation process ensures that the Company accredits and transacts with vendors whose business philosophies are aligned with the Company’s. These vendors are required to comply with various environmental, institutional, regulatory and governmental requirements and standards. The Company ensures that compliance with these standards is established as pre-qualification and accreditation requirements and that continuous compliance is made a contractual obligation. The Company also conducts periodic vendor performance evaluation based on agreed indicators and metrics.

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Audited Financial ReportEconomic Value

2014 Financial HighlightsThe Company believes that the primary competitive factors that determine success is our unparalleled experience in the data processing; its financial strength and stability; its pricing methodology; aservice reliability and security; service scalability; and its premium and customizable solutions.

In 2014, the Company’s total revenue amounted to PHP 28 million ($0.636 million) while it posted a Total Comprehensive Income of Php5.6 million ($0.127 million).

Audited Financial Report

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F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I AUDITED FINANCIAL REPORT 25

F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I AUDITED FINANCIAL REPORT36 F-I-R-S-T CARBON SOLUTIONS 2014 SUSTAINABILITy REPORT I AUDITED FINANCIAL REPORT36

CONTACT INFORMATIONF-I-R-S-T Carbon Solutions Corporation26/F Philippine AXA life Centre, Sen. Gil Puyat Avenue1200 Makati City, PhilippinesTel.: +63 2 775 0632

CONTACT PERSONAnthony A. CatajanChief Compliance officerTelephone: +63 2 798 8408 local [email protected]

www.firstcarbonsolutions.com.ph

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