TOPIC 20:

PLUS Expressways Berhad’s

Corporate Social Responsibility

Policies, including Business Ethics,

and their Impact on Business Practice

and Key Stakeholders

OBJECTIVES OF THE STUDY:

EXPECTED OUTCOMES:

To determine the extent of PLUS’s CSR policies in conformance to guidelines provided by Bursa KL, Carroll’s CSR pyramid and the Global Reporting Initiatives (GRI). To understand the key stakeholders of PLUS and the effects of PLUS’s policies on them. To appreciate the critical aspects surrounding PLUS’s CSR in its strategy to create sustainability. To know how PLUS’s CSR policies and activities compare with those of its competitor, NEXCO. To seek ways to improve PLUS’s existing CSR practices so that PLUS can become a model CSR corporate citizen.

1

1. BURSA KL 2. GRI Guidelines 3. CARROLL’S CSR PYRAMID 4. MENDELOW’S MATRIX

CSR Frameworks used in this Research Project

2

3

MENDELOW’S MATRIX

4

What is Corporate Social Responsibility (CSR)?

Bursa Malaysia: The ‘open and transparent business practices that are based on ethical values and respect for the community, employees, the environment, shareholders and other stakeholders. It is designed to deliver sustainable value to society at large’.

The Singapore Compact for CSR: ‘Business’s efforts to achieve sustainable outcomes by committing to good business practices and standards’.

European Commission: ‘A concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis.’

5

A Brief Introduction of PLUS

Government-linked Company. Privatised the construction and administration of the North-South Expressway in 1988. Since 1994, PLUS has more highways under its wings through organic growth and takeovers. Mission Statement: To provide ‘efficient and safe expressways that enhances quality of life’.

6

Key Areas of CSR

Bursa Malaysia CSR Framework for Public Listed Companies

Environment Community

Marketplace Workplace

7

Impact on Business Practices

Environment

• Toll Collection: To reduce greenhouse gas emissions at toll plazas.

• Pilot project of alternative non-fossil materials to be used to replace bitumen.

• Processing food scraps at RSAs into organic fertilizers for use as plant nutrients.

• Reduce use of air-conditioning in operations

• . • Use of solar panels and energy-saving light bulbs.

•Advised drivers at RSAs to switch off the engines while they are resting in their cars.

•Transit tickets and disused road accessories are sent for proper recycling.

8

Community

Road safety campaigns - Malaysians Unite for Road Safety (MUFORS) campaign, 2009.

Employees: 2-days dedication to community work a year.

Providing business and employment opportunities.

Making donations to worthy causes.

Promote environmental awareness.

Sports for the youth – Go-kart.

9

Marketplace

Road safety audit by independent certified auditors.

User loyalty programme: PLUSMiles for customers, PLUSTrack for fleet operators.

Enhanced safety features on the highways.

Tenderers: Use e-bidding procedure to ensure

anonymity and transparency.

Clean RSAs, ATMs, suraus and even hotels available.

10

oA variety of training programmes (inhouse /outhouse). oPersonnel Exchange Programme with NEXCO in Japan.

oScheduled health check-ups for toll tellers.

oChild Development Centres (CDC).

oPre-retirement training: Retirement Settlement Scheme. oSports and Leisure.

o Staff toll payment subsidy.

Workplace

11

Key Stakeholders Identified

Key Stakeholders

Shareholders and Investors

Employees

Customers

Suppliers

Government and

Regulatory Authorities

Community

12

Shareholders

Company’s most influential stakeholders.

Has to engage majority shareholders – Obtain ‘blessings’ on any new corporate directions.

Balancing majority interests – Short term gains (dividend payouts) versus long-term growth investors (retain profits for growth).

PLUS - Performed well rising revenue and profits; dividend payout is good.

For 2010 – Net profit rose to RM1.301 billion. Dividend payout in 2009 was 16.5% while EPS was 23.73 sen.

IMPACT ON STAKEHOLDERS

13

0

2

4

6

8

10

12

14

PLUS PROFIT PROFILE (2003-2010)

RM

Bil

Year

14.64 15.37

21.3 22.1

25

21.6 23.7

26.12

0

5

10

15

20

25

30

2003 2004 2005 2006 2007 2008 2009 2010

SE

N

PLUS EARNINGS PER SHARE(2003-2010)

YEAR

6.00% 6.50%

9.00%

12.00%

14.00%

16.00% 16.50%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2003 2004 2005 2006 2007 2008 2009

Pe

rc

en

tag

e

Year

PLUS Dividends Profile(2003-2009)

FINANCIAL HIGHLIGHTS

14

Employees

Members of an in-house union. Consulted on areas affecting them. In-house union members have limited bargaining powers.

Customers

As PLUS manages some strategic highways, many customers have little choice but to use them. Customers are kept aware of PLUS operations through the media. Grievances over high toll rates and impending toll rate increases have compelled the government, a powerful PLUS stakeholder, to order a freeze on toll rate increases for the next 5 years. Can decide to use alternative mode of transportation such as using a plane or a train if they are disillusioned with PLUS’s service.

15

Suppliers

Minimal power over PLUS. Interests over what the procurement requirements of PLUS. A conduit of information to PLUS: New and better products that it can choose to use.

Government and Regulatory Authorities

Key stakeholder of PLUS. Always monitors the compliance of its rules and regulations. Appears dormant: Can exert powers through licenses/permits when these come for renewal or when punitive actions need to be taken because of breaches of law and regulations. PLUS must engage government and regulatory bodies actively and keep them constantly informed of the latest development in PLUS.

Has to follow rules laid down by the Securities Commission of Malaysia and Bursa KL.

16

Community

Do not wield much power over PLUS. Have a keen interest in the environment. PLUS has been engaging communities via:

Community-based Programmes

Philanthropic Pursuits

Business Opportunities

Work Opportunities

17

Competitor: NEXCO’s Good CSR Practices to be emulated

Using asphalt pavements besides installing sound insulation walls to

mitigate sound pollution.

Installing new black light road signs to decrease light pollution and

increase visibility. (Uses ultraviolet light to become luminescent, do not leak visible light into traffic lanes or into residential areas.)

Environment

18

Workplace

Organising safety seminars to ensure an accident-free workplace.

Building safety corridors for toll collectors to safely cross ETC lanes.

Limits the maximum hours that each employee can work and

discourages overtime work. Increase number of women workers with more emphasis on the

female gender in new appointments. Increasing job opportunities for the disabled.

NEXCO has its offices renovated for the convenience of the disabled

and elderly staff.

19

Reluctance to accept responsibility to protect flora and fauna within its operational areas. Bureaucratic and slow to respond to the public queries. Poor signages, inadequate night lighting, roadworks, traffic jams during festive seasons and slow response to consumer complaints.

Do not have many disabled workers. Not transparent on the number of women workers in its organisation. Complaints that certain RSAs have ‘sub-standard’ level of maintenance. Few respondents are aware of PLUS’s use of alternative energy like solar.

Criticisms

20

Recommendations

Encourage more migration of cash payment mode to ETCs. Use asphalt pavements to reduce noise pollution. Conduct a study on mitigation of light pollution. Reduce bitumen usage in road works with new non-fossil based materials.

More creative community programmes - River rehabilitation, rural areas road upgrading. Be more responsive to public request for information. Consider giving special rebates to disabled drivers and senior citizens.

Hire more of the disabled and women. Expand participation at conferences, seminars and visits and international fairs.

21

Conclusion

CSR is a dynamic process and a moving target. Analysis - PLUS has adhered to most of the disclosure guidelines in CSR frameworks in spirit and substance. PLUS needs to enhance further its CSR programmes and activities in the current areas of commitment by having more appropriate follow-up action plans. Attention should not only be limited to majority shareholders, the government and regulatory authorities or its employees. PLUS - be proactive and do its obligations as befit its image as the premier toll highway operator in the country and the world.

22

Thank you very much

&

The End