Sustainability Report

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Sustainable Growth

Robust Fundamentals

Sustainable Growth

GRI 3-1, 3-3

A strong foundation is necessary for sustainability, encompassing both stable structures and the right values.

Good governance guarantees clear and adequate objectives and processes, fair and equitable rules, and proper representation. It involves taking deliberate and dedicated action to benefit all stakeholders.

Enterprise Risk Management (ERM) aims to prevent adverse events, reduce negative impacts, and transform risks into value-creation opportunities.

Capabilities are the foundation for success, adding value and competitive advantage in the market. Though setbacks may be unavoidable, they offer opportunities for learning, and perseverance and dedication lead to success.

The Company

GRI 2-2, 2-6

D&L Industries is a Filipino company engaged in product customization and specialization for the food, chemicals, plastics, and consumer products ODM industries. The Company’s principal business activities include manufacturing of customized food ingredients, specialty raw materials for plastics, and oleochemicals for personal and home care use.

With a track record that spans over five decades, D&L has established itself as the dominant market leader in the industries it serves. It also enjoys long-standing customer relationships with the Philippine’s leading consumer and manufacturing companies.

As the majority of the products that the Company manufactures caters to basic industries which are considered essential, D&L sees continued strong demand for its products even amidst global geopolitical, energy, and food supply uncertainties, even as pandemic fears still linger.

Orgnanization


The Company was incorporated on July 27, 1971

It was listed on the Philippine Stock Exchange on December 12, 2012. It is 72% beneficially owned by the Lao family, the rest by the public.

The Company’s registered office address and principal place of business is at 65 Calle Industria, Brgy. Bagumbayan, Quezon City, Philippines.

Business Presence

GRI 3-1, 3-3

Food Ingredients

Oleo-Fats, Incorporated
D&L Premium Foods Corporation

  • Fats & oils, specialty food ingredients, food safety products

  • Serves the domestic market
  • Exports mostly to Asia, plus US & EU

Oleochemicals & Specialty Chemicals

Chemrez Technologies, Inc.

  • Oleochemicals (cocobiodiesel & high-value coconut derivatives)

Chemrez Product Solutions, Inc.

  • OResins, colorants, powder coating

  • Serves the domestic market
  • Exports to Asia and US, UK, EU, & AU

Specialty Plastics

First in Colours, Incorporated

  • Pigment blends, color and additive masterbatches

  • Predominantly domestic

D&L Polymer & Colours, Inc.

  • Engineered polymers for various applications such as auto, construction, electrical, etc.

  • Domestic, plus exports predominantly to Asia

Consumer Products Original Design Manufacturer

Aero-Pack Industries, Inc.
Natura Aeropack Corporation*

  • Consumer products for personal and home care applications in aerosol or bottle packaging

  • Predominantly domestic

*Pre-operating for the full year in 2022

Corporate Social Responsibility

GRI 2-2, 2-6

Altruism permeates D&L’s culture, from excellence in every act, to every choice in favor of the best outcome for the majority of stakeholders.

Culture

GRI 2-22, 2-24, 2-29

Values passed on from the first to the second generation of leaders permeate the inclusive culture of excellence the Company cultivates and nurtures, throughout and across, within and beyond, its boundaries.

Our Vision

To be the Philippines’ Majority Leader in Sustainable Ingredients, Materials and Solutions, and a Major Exporter in identified continents.

Our Mision

To excel and be the leader in the industries we serve.

We are dedicated to growth. We are not complacent, timid, or satisfied with the status quo.

We are research-oriented. We will keep abreast of the latest technology and have our fingers on the pulse of the market to identify the market needs that must be met.

We are committed to increase productivity and profitability, but not at the expense of ethics.

We will continuously enhance our reputation for quality and value. Our products and services must always represent good value for money and be competitive in the marketplace.

We will maintain our market leadership through creativity, innovation and excellence in performance tempered with experience.

We are proud of our employees. We consider them as our most valuable asset. We will maintain an atmosphere where our people can develop their abilities and potential while working together enthusiastically to achieve our goal. We will contribute to the well-being of the communities in which we operate, and accept our responsibilities as citizens of the Philippines.

Our Beliefs

Progress and development can be realized only through the combined efforts and cooperation of each member of our organization from the highest to the lowest.

Dedication to meeting customers’ expectations and needs by providing them the best value from our products and the best service, through the combined efforts and cooperation of each member of the organization.

Passion for excellence in providing intelligent, responsible, and capable direction in the conduct of the business.

Conviction to manage company activities on the basis of the highest standards of conduct and ethics.

Passion to lead Drive to excel
Discipline and hard work
Positive attitude
Being honest, fair, and humble Integrity and honesty
Fairness and humility
Caring Together Gratitude and appreciation
Harmony and cooperation
Courtesy and respect for others

The Way We Commit to the Code

We call upon our people to comply and commit to the Code of Business Principles. We exhort them to conform to the norms of conduct prescribed therein. We encourage them to seek clarification and guidance from their supervisors, the Head of HR, the Legal Counsel, and the Compliance Officer. We do not tolerate non-compliance. We enforce heavy disciplinary measures on those who ignore and fail to follow the Code. We expect more from our managers and supervisors. We look at them to inspire, lead and model the way of ethical behavior.

Our business unit heads and managers are ultimately responsible in ensuring compliance. We expect them to actively and visibly provide support. We enjoin them to patiently but persistently promote and encourage employees’ adherence to the Code. We hope that our organizational leaders personally engage in assisting and training their own staff in the context of their specific duties and responsibilities.

We urge our employees to bring to the attention of their supervisor or of senior management any breach or suspected violation of the Code. We have support provisions to safeguard strict confidentiality. We also assure that those reporting do not suffer the consequence of disclosing in confidence what they know.

The Way We Do Business

We conduct business guided by the principles of honesty, integrity and transparency. We respect the legitimate rights and interests of those we transact with. We take into account the unique culture of the countries we operate in and comply with their laws and regulations.

The Way We Care for Our Stakeholders

Our People
Our employees are our greatest asset. We provide them with opportunities for continuing skills and capability development. We communicate with and consult them. We provide them with safe and healthy working conditions. More importantly, we recognize the dignity and uniqueness of their person. We respect their freedom and their valid and lawful rights. We do not resort to force or any form of coercion. We do not employ child labor or engage minors to work.

We do not discriminate. We treat all equally regardless of race, religion, color, status, sexual orientation, ethnicity, or nationality. Our screening, selection, and hiring and compensation policies are solely based on qualifications. Our training, development, evaluation, promotion, reward, retention and separation procedures follow the principles of meritocracy and objectivity.

Our Customers
We offer products and services of the highest standards of quality and safety. We are committed to creating value. We make sure they are properly and accurately labelled. We use available and appropriate media communications to advertise their unique proposition.

Our Community
We recognize our responsibility as good corporate citizens. Our aim is to contribute to the development of the communities we operate in. Our goal is to create lasting and deep impact benefits to society. We take extra care to avoid disruptions, if not minimize them.

Our Environment
We care for the environment. We are committed to sustainable development. We meet the ever- increasing needs of the business but never forget the conservation and preservation of nature. Our long- haul horizon goes beyond the present and stretches to generations yet to come. Our efforts not to endanger but rather enhance the ecosystem continue. We also recognize the importance of biodiversity and support the global community in protecting it.

Our Business Partners
We acknowledge the contribution of our customers, suppliers and business partners. We are grateful. We are strongly committed to continue building lasting and mutually benefiting relationships with them. We urge them to partner with us in the pursuit and practice of the Code.

Our Shareholders
We adopt the principles and practice of internationally accepted prescriptions of good corporate governance. We regularly update our shareholders with timely, reliable and accurate information on the company’s operational performance and financial position. We continually communicate with them our key initiatives and major activities

The Way We Grow

We are dedicated to growth. In pursuit thereof, we continually innovate. We develop new ways and new products to meet the changing needs of our customers.

We adopt strict standards of sound science and apply very disciplined testing procedures to ensure high level product quality and safety

The Way We Deal with Politics

We cooperate with governments and other organizations in the protection and promotion of the company’s legitimate business concerns. We closely collaborate with them in the development of regulatory and legislative initiatives impacting our investments and interests. We do not in any way participate in party politics. We also neither make contributions in kind nor fund campaign connected activities

The Way We Handle Conflicts of Interest & Maintain Integrity

Our employees are expected to keep clear from financial, business, or other relationships and activities that might be opposed to, in competition with, and disadvantageous to company businesses and the proper performance of their duties. We exhort them to conduct themselves in a manner that avoids even just the appearance of a conflict of interests between their personal self-interests and those of the company.

We refrain from receiving gifts beyond accepted, common, and customary courtesy, in cash or kind, directly or indirectly, that might impair judgement, provide preferential treatment, and result in unfair competition. We also do not subscribe to tendering nor accepting payments as bribes. We strongly advise that any demand or offer be readily rejected and immediately reported to management.

Our corporate funds, assets, services, and facilities are not to be used for any unlawful, unethical, and personal enrichment purpose.

Corporate Governance

GRI 3-3, 2-9, 2-10, 2-11, 2-12, 2-13, 2-14, 2-17, 2-18, 2-19, 2-20, 2-22, 405-1 | SDG 5.1, 5.5, 8.5, 16.6, 16.7

D&L is committed to good Corporate Governance aligned with its purpose to Better Lives Through Sustainable Innovation for the Company’s long-term success shared with all its stakeholders and the nation.

The Company’s Corporate Governance provides for the system of stewardship, control and feedback that guides the organization in fulfilling its long-term economic, moral, legal and social obligations to all its stakeholders. It establishes the direction, feedback and control using regulations, performance standards, and ethical guidelines to hold everyone in the organization accountable starting from the Board of Directors (BOD) and Senior Management.

Commitment to Sustainability

D&L recognizes the interdependence between business and society, and promotes a mutually beneficial relationship that allows the company to grow its businesses, while contributing to the advancement of the society. The Company commits to its social responsibility in all its dealings with the communities in which it operates and ensures that its business activities serve the environment and all its stakeholders in a positive and progressive manner. In this regard, D&L not only complies with existing regulations, but also voluntarily employs value chain processes which take into consideration Environmental, Economic, Social and Governance (EESG) issues and concerns.

Board of Directors

D&L is headed by a competent BOD and is composed of directors, who individually and collectively, have working knowledge and experience relevant to the Company’s industries. The Company’s BOD has an appropriate mix of competence and expertise to fulfill its roles and responsibilities and respond to the needs arising from the evolving business environment and strategic direction.

To ensure the exercise of objective and independent judgement on all corporate affairs and for proper checks and balances, six (6) of the seven (7) Board seats are occupied by Non-Executives (NED), and four (4) of the six (6) NEDs are Independent Directors (ID). The BOD has three (3) female ID and sufficient diversity to ensure optimal decision-making is achieved to avoid the acceptance of a viewpoint or conclusion that represents a perceived group consensus. In addition, the BOD has a Lead Director among the IDs to ensure independent views and perspectives. The Lead Independent Director has sufficient authority to lead the BOD in cases where management has clear conflicts of interest.

The NEDs conduct separate periodic meetings with the external auditor and head of internal audit, compliance and risk functions without any executive directors for proper checks and balance, constructive scrutiny of performance and satisfy themselves on the integrity of Company’s internal control and effectiveness of the risk management systems.

Board of Directors

Chairperson Non-executive Yin Yong L. Lao
Vice Chairperson Non-executive John L. Lao
Members Lead Independent Director Atty. Mercedita S. Nolledo
Independent Director Corazon S. de la Paz-Bernardo
Independent Director Dr. Lydia R. Balatbat-Echauz
Independent Director Engr. Filemon T. Berba, Jr.†
Executive Alvin D. Lao

† Mr. Berba passed on last April 4, 2023. His position remains to be vacant as of this writing.

Board Committees

The Board established committees composed of board members that focus on specific board functions to aid in the optimal performance of the BOD’s roles and responsibilities. Each Committee has a Committee Charter that contains its purpose, membership, structure, operations, reporting process and other relevant information.

Audit Committee

The Audit Committee enhances the Board’s oversight capability over the Company’s financial reporting, internal control system, internal and external audit as well as compliance with applicable laws, regulations, and internal policies. It is responsible for overseeing the Senior Management in establishing and maintaining an adequate, effective internal control framework that will allow operational efficiency and safeguarding of assets.

The Audit Committee is composed of four (4) IDs and all members have relevant background, knowledge, skills and experience in the areas of accounting, auditing and finance.

Audit Committee

Chairperson Independent Director Corazon S. de la Paz-Bernardo
Members Lead Independent Director Atty. Mercedita S. Nolledo
Independent Director Corazon S. de la Paz-Bernardo
Independent Director Engr. Filemon T. Berba, Jr.†
Related-Party Transaction Committee

The Related-Party Transaction (RPT) Committee evaluates relations between businesses and counterparties to continuously identify related-parties and review RPTs to ensure that these are undertaken on an arm’s length basis that is appropriately monitored, reported and disclosed. The RPT Committee further ensures that no corporate or business resources are misappropriated or misapplied, and determines potential reputational risks that may arise as a result of or in connection with the RPTs.

Related-Party Transaction Committee

Chairperson Independent Director Dr. Lydia R. Balabat-Echauz
Members Lead Independent Director Atty. Mercedita S. Nolledo
Independent Director Engr. Filemon T. Berba, Jr.†
Corporate Governance Committee

The Company is committed to good corporate governance, which promotes the long-term interests of shareowners, strengthens Board and Management accountability, and helps build public trust in the Company.

The Corporate Governance (CG) Committee oversees the implementation of the corporate governance framework, principles and practices, and ensures its continued relevance in light of the Company’s size, complexity, business strategy and the regulatory environment. CG Committee also oversees the evaluation and assessment of the BOD and the Board Committees, nomination of BOD members and appointment and remuneration of key executives and officers.

Corporate Governance Committee

Chairperson Lead Independent Director Atty. Mercedita S. Nolledo
Members Independent Director Dr. Lydia R. Balatbat-Echauz
Independent Director Corazon S. de la Paz-Bernardo
Non-executive Yin Yong L. Lao

NominationCommittee

Chairperson Non-executive John L. Lao
Members Independent Director Engr. Filemon T. Berba, Jr.†
Executive Alvin D. Lao

Compensation/Remuneration Committee


The Compensation/Remuneration Committee establishes a formal and transparent procedure for developing a policy on the remuneration of directors and officers to ensure that their compensation is consistent with the Company’s culture, strategy and the business environment in which it operates.

Corporate Governance

GRI 3-3, 2-9, 2-10, 2-11, 2-12, 2-13, 2-14, 2-17, 2-18, 2-19, 2-20, 2-22, 405-1 | SDG 5.1, 5.5, 8.5, 16.6, 16.7

D&L is committed to good Corporate Governance aligned with its purpose to Better Lives Through Sustainable Innovation for the Company’s long-term success shared with all its stakeholders and the nation.

The Company’s Corporate Governance provides for the system of stewardship, control and feedback that guides the organization in fulfilling its long-term economic, moral, legal and social obligations to all its stakeholders. It establishes the direction, feedback and control using regulations, performance standards, and ethical guidelines to hold everyone in the organization accountable starting from the Board of Directors (BOD) and Senior Management.

Commitment to Sustainability

D&L recognizes the interdependence between business and society, and promotes a mutually beneficial relationship that allows the company to grow its businesses, while contributing to the advancement of the society. The Company commits to its social responsibility in all its dealings with the communities in which it operates and ensures that its business activities serve the environment and all its stakeholders in a positive and progressive manner. In this regard, D&L not only complies with existing regulations, but also voluntarily employs value chain processes which take into consideration Environmental, Economic, Social and Governance (EESG) issues and concerns.

Board of Directors

D&L is headed by a competent BOD and is composed of directors, who individually and collectively, have working knowledge and experience relevant to the Company’s industries. The Company’s BOD has an appropriate mix of competence and expertise to fulfill its roles and responsibilities and respond to the needs arising from the evolving business environment and strategic direction.

To ensure the exercise of objective and independent judgement on all corporate affairs and for proper checks and balances, six (6) of the seven (7) Board seats are occupied by Non-Executives (NED), and four (4) of the six (6) NEDs are Independent Directors (ID). The BOD has three (3) female ID and sufficient diversity to ensure optimal decision-making is achieved to avoid the acceptance of a viewpoint or conclusion that represents a perceived group consensus. In addition, the BOD has a Lead Director among the IDs to ensure independent views and perspectives. The Lead Independent Director has sufficient authority to lead the BOD in cases where management has clear conflicts of interest.

The NEDs conduct separate periodic meetings with the external auditor and head of internal audit, compliance and risk functions without any executive directors for proper checks and balance, constructive scrutiny of performance and satisfy themselves on the integrity of Company’s internal control and effectiveness of the risk management systems.

Compensation/Remuneration Committee

Chairperson Non-executive Yin Yong L. Lao
Members Lead Independent Director Atty. Mercedita S. Nolledo
Non-xecutive John L. Lao
Risk Oversight Committee

The Risk Oversight Committee (ROC) helps the BOD in assuring that there is an effective and integrated risk management process in place. The ROC oversees that a sound Enterprise Risk Management (ERM) framework is instituted to effectively identify, monitor, assess and manage key business risks. The risk management framework guides the BOD in identifying business unit and enterprise-level risk exposures, as well as the effectiveness of the risk management strategies.

Risk Oversight Committee

Chairperson Independent Director Engr. Filemon T. Berba, Jr.†
Members Lead Independent Director Dr. Lydia R. Balatbat-Echauz
Independent Director Corazon S. de la Paz-Bernardo
Non-executive John L. Lao
Executive Alvin D. Lao

Executive Committee

During the intervals between the meetings, the BOD lawfully delegated to the Executive Committee (EXCOM) the exercise of the powers of the Board related to the management and direction of the affairs of the Company. All actions by the EXCOM are reported to the BOD at its meeting and may be subject to revision and alteration by the Board, provided that no rights of third parties are affected by targets and budgets, should there be any such revision or alteration.

Roles and responsibilities that may be relegated to the EXCOM include governance, strategic and operational leadership, drive portfolio/investment decisions, resource allocation, setting and approval budgets and hard targets, approval of strategic transactions and performance review.

Executive Committee

Chairperson Non-executive Dean L. Lao
Members Non-executive Leon L. Lao
Non-executive Alex L. Lao
Non-executive Yin Yong L. Lao
Non-executive John L. Lao
Executive Alvin D. Lao

Advisory Board

Acknowledging the wisdom of the Founders, the Advisory Board was established as a source of insights and advice, help explore new opportunities by stimulating robust, high-quality conversations and stimulate critical thinking to increase the confidence of decision-makers who represent the Company to help the organization achieve its goals and objectives. The Advisory Board helps fill in the knowledge gap in the Company and acts like an impartial third-party or a sounding board.

Advisory Board

Chairperson Non-executive Dean L. Lao
Non-executive Leon L. Lao
Non-executive Alex L. Lao

Corporate Governance & External Parties

External Auditors
PwC Philippines – Isla Lipana & Co.

Government Agencies
Board of Investments (BOI)
Bureau of Animal Industry (BAI)
Bureau of Customs (BOC)
Bureau of Fire Protection (BFP)
Bureau of Internal Revenue (BIR)
Department of Environment and Natural Resources (DENR)
Department of Labor and Employment (DOLE)
Department of Trade and Industry (DTI)
Energy Regulatory Commission (ERC)
Fertilizer and Pesticide Authority (FPA)
Food and Drug Administration (FDA)
Intellectual Property Office (IPO)
Laguna Lake Development Authority (LLDA)
Land Transportation Office (LTO)
Local Government Units (LGUs)
National Privacy Commission (NPC)
Philippine Drug Enforcement Agency (PDEA)
Philippine Economic Zone Authority (PEZA)
Securities and Exchange Commission (SEC)
Investor Conferences

JP Morgan Philippine Conference
January 27, 2022 | Virtual

Credit Suisse Finding Alpha Conference
February 24, 2022 | Virtual

CLSA ASEAN Forum
March 9-10, 2022 | Virtual

Jefferies Regis CEO Roundtable Forum
March 24, 2022 | Virtual

Nomura Investment Forum Asia
June 10,2022 | Virtual

PSE Star Investor Day
August 17, 2022 | Virtual

Non Deal Roadshow in London
September 19 – 21 | In-person, London

UBS Consumer Conference
November 15 | In-person, Manila
Membership Associations GRI 2-28

Aero-Pack Industries, Inc.
Chamber of Cosmetics Industry of the Philippines, Inc. (CCIP)
Cosmetic Toiletry & Fragrance Association of the Philippines, Inc.

Chemrez Product Solutions, Inc.
Philippine Association of Paint Manufacturers, Inc. (PAPM)

Chemrez Technologies, Inc.
Chamber of Cosmetics Industry of the Philippines, Inc. (CCIP)
Entrepreneurs’ Organization Philippines (EO)
Metalworking Industries Association of the Philippines, Inc. (MIAP)
Philippine Oleochemical Manufacturers Association (POMA)
Philippine Parts Maker Association, Inc. (PPMA)
Private Label Manufacturers Association (PLMA)
The Philippine Biodiesel Association (TPBA)
United Coconut Associations of the Philippines (UCAP)

D&L Industries, Inc.
Association of Petrochemical Manufacturers of the Philippines (APMP)
Entrepreneurs’ Organization Philippines (EO)
Financial Executives Institute of the Philippines (FINEX)
Management Association of the Philippine (MAP)
Packaging Institute of the Philippines (PIP)
Wallace Business Forum (WBF)

D&L Polymers & Colours, Inc.
Technical Committee on Electric Wires And Cables (TC1)
First in Colours, Incorporated
Philippine Plastics Industry Association, Inc. (PPIA)

Oleo-Fats, Incorporated
American Oil Chemists’ Society (AOCS)
Packaging Institute of the Philippines (PIP)
Philippine Association of Food Technologists, Inc. (PAFT)
Philippine Chamber of Food Manufacturers, Inc. (PCFMI)
Roundtable on Sustainable Palm Oil (RSPO)
Sustainable Coconut and Coconut Oil Roundtable (SCCOR)
Awards & Recognition

Institutional Investor 2022
Honored Company
Small & Mid cap category
D&L Industries, Inc.

Institutional Investor 2022
Honored Company
Consumer Staples category D&L Industries, Inc.

Institutional Investor 2022 Best IR Professional in Asia-ex China, Japan
Consumer Staples Category as voted by Buyside 1st place | Crissa Bondad

Institutional Investor 2022
Best IR Professional
Small and MidCap Category as voted by Buyside
3rd place | Crissa Bondad
Certification Description
COSMOS Organic and Natural Certification for Cosmetics
Food Safety System Certification
Food Safety System Certification