Corporate Governance /Risk Management / Corporate Compliance

Challenges (GRI 103-1) (GRI 102-16)

CKPower recognizes that corporate governance forms the foundation of its efficient and sustainable business operations and society. Thus, it adheres to corporate governance policies, business codes of conduct, and practices guided by transparency and accountability and takes into account all stakeholder groups.

In addition, it operates in strict compliance with relevant regulations and laws and strives to maintain international standards to demonstrate its commitment and responsibility to ethical business practices and efforts against all forms of corruption. Furthermore, CKPower has put in place corporate risk management processes in anticipation of various risks and changes that may arise to prevent or minimize potential damage from such risks, thus inspiring confidence among its stakeholders and investors towards its business operations.

Execution (GRI 103-2) (GRI 102-18) (GRI 102-20) (GRI 102-21) (GRI 102-22)

The Board of Directors is responsible for controlling and overseeing the management of CKPower’s operations to ensure compliance with the law and the organization’s vision and good practices. It is also tasked with carrying out shareholder resolutions with integrity, protecting the Company’s best interests, as well as putting in place a check-and-balance system and ensuring the board’s auditability, while also striving to develop business innovations and taking care of society and the environment. The board structure comprises 12 directors with knowledge and experience that correspond with CKPower’s business strategies. The details are as follows:

Governance structure

a. Governance structure of the organization, including committees of the highest governance body.
b. Committees responsible for decision-making on economic, environmental, and social topics.

BALANCED STRUCTURE OF THE BOARD

BOARD OF DIRECTORS	NUMBER (PERSON)
Executive director (Managing Director)	1
Non-executive directors (Four independent directors)	11

BOARD OF DIRECTORS	NUMBER (PERSON)	PERCENT
Male	1	9
Female	11	91
Total	12	100

The segregation of duties between directors and the chief executive officer results in checks and balances and auditability between executive and non-executive directors.

In addition, CKPower has placed director nomination in the purview of the Nomination and Remuneration Committee and charged it with the task of selecting individuals with qualifications, including knowledge, professional skills, specialized expertise, and experiences beneficial to the Company’s business operations, without any discrimination on the basis of age, gender, ethnicity, nationality, religion, or physical disability, as well as considering their suitability to directorship or membership in sub-committees so as to ensure that the board composition is appropriate, diverse, and consistent with the organization’s strategies and that the Board of Directors is prepared for business challenges and problems and ready to support the Company’s operations to achieve sustainable growth.

CKPower recognizes the significance of stakeholder engagement and believes that their opinions and suggestions contribute to its ability to accomplish its goals. As such, the Company has instituted stakeholder consultation as part of the process to achieve its goals as an organization with sustainable development and growth.

Measuring Executive Performance

CKPower assesses the performance of the Managing Director and the executives on a yearly basis, using performance indicators that encompass growth, suitable returns on investment, and sustainability in all aspects of the business, in accordance with the Company’s 5 Core Values (CAWTA). The Company also establishes key performance indicators (KPIs) annually as criteria for evaluating the performance of the Managing Director and the executive team, consisting of the following:

Key Performance		MD	DMD, AMD	GM
Growth	Performance excellent Accelerate growth opportunity
Profitability	Operational excellent to achieve high productivity
Sustainability	Drive sustainability in every possible area, comply with global model, localize to business and community

Financial performance indicators, such as the achievement of target revenue, EBITDA, and net profit
Related financial performance indicators, such as readiness of credit limits for taking out loans and issuing debentures, financial structure optimization for new projects, return on investment maximization, and achievement of plant productivity goals
Environmental sustainability performance indicators, such as energy efficiency, reduction of GHG emissions, and waste management; and social sustainability performance indicators, such as production process safety and impact on surrounding communities

Performance based on the aforementioned indicators will be reflected in the remuneration for the Managing Director and the executive team. The Company has a transparent and appropriate process for the consideration of remuneration, which comprises salary, bonuses, and other benefits.

Nevertheless, CKPower is aware of the importance of stakeholder involvement, as it believes that input and suggestions from stakeholders will contribute towards the attainment of its goals. To this end, the Company arranges stakeholder meetings so as to enable it to achieve its goal of sustainable growth and development.

Risk Management (GRI 102-29) (GRI 103-30) (GRI 102-31)

CKPower places importance on introducing a risk management system to business operations to ensure the ability to efficiently handle challenges and changes in external factors and enable the Company to conduct business with stability and bring maximum benefits to all stakeholders sustainably. To this end, the Board of Directors has charged the Corporate Governance and Risk Management Committee with the responsibility of reviewing and approving risk management actions, acknowledging the risk management of CKPower and its subsidiaries, prescribing risk management policies, and providing recommendations to the Board of Directors and the Management, effectively overseeing and reviewing risk management, monitoring and assessing the management of key risks that affect the Company’s businesses, as well as acknowledging the risk management plans of the Company and its subsidiaries. The committee is to report issues and obstacles related to key risks and the progress on the resolution of such issues at board meetings on a quarterly basis.

Recognizing the significance of risk management, CKPower formulated a risk management plan for the year of 2020 to serve as guidelines for effective risk management. The risk management working group of the Company and its subsidiaries consists of executives from all lines of work, including business planning, engineering, operations and maintenance, and power plant managers and is responsible for formulating annual risk management plans, subject to risk assessment in the five following aspects:

The risk management working group also considers various risks, analyzes potential impacts and opportunities, and determines risk appetite or risk tolerance, risk indicators, risk management measures. It is also to report risk management performance on a quarterly basis so as to ensure that the risk management measures are regularly assessed and can effectively keep risk levels within the risk appetite. CKPower has also assigned the Internal Audit Division, which works independently from the risk management working group, to monitor and review its risk management processes and appoint a knowledgeable and capable candidate as the secretary to the Corporate Governance and Risk Management Committee, responsible for gathering information and report risk management performance to the Corporate Governance and Risk Management Committee, which then submits such reports to the Board of Directors for approval.

Risk Management Structure

Risk Management Process

To achieve efficient risk management, a risk management process has been introduced as a tool for identifying, analyzing, and managing potential risks that may affect business operations. CKPower’s risk management process consists of six steps as follows.

Objective setting
Risk identification
Risk assessment
Risk response
Control activities
Monitoring

In addition, the risk assessment criteria for CKPower’s risk analysis are based on types and levels of impact and likelihood of such impact and are divided into five levels of risk exposure ranging from from very low to very high. The overall risk level considered to be within the risk appetite/risk tolernace of CKPower is the medium level. For risks that exceed the risk appetite, CKPower will formulate additional mitigation plans to mitigate such risks as well as designate responsible persons and specify completion time.

In 2020, CKPower assesses risks associated with the Company, which can be divided into five categories as follows:

Risk Type	Risk	Management Plan
1. Strategic Risk	In terms of investment risks, CKPower invests in other businesses, with the Company deriving its core revenue from dividend income from the companies invested in by the Company. Should any business in which the Company holds shares be affected by various risks, the operating results will not meet the goal, and the Company will be impossible to pay dividend as expected.	Introducing clear policies to invest in other companies that operate power production and distribution businesses to manage and keep risks within the risk appetite as well as gain appropriate returns Introducing mechanisms for the governance of the companies in which CKPower invests to the control policy and appointing representatives to director or executive positions in a subsidiary and associated company according to the shareholding percentage Monitoring and reporting the management performance of the companies in which CKPower invests on a regular basis through financial statements and performance reports Assign the Internal Audit Division to audit the control system of all companies within CKPower Group to ensure suitability and strict compliance with the Company’s policies
2. Operational Risk	With regard to availability risks, CKPower’s goal is to deliver electricity and steam with quality and availability to customers, including various suppliers, taking into consideration the security and stabilization of production of electricity and steam. The Company focuses on management of machinery and equipment, including the development and optimization of the power plants to ensure their round-the-clock availability.	Establishing an annual proactive maintenance plan in order to inspect equipment, machinery according to schedule; overseeing and monitoring maintenance under the maintenance plan to ensure that the machinery and equipment are in a ready condition and function efficiently; as well as guaranteeing the availability of the power plants in accordance with the agreements Ensuring sufficient and suitable backup of necessary equipment and supplies, including critical spare parts for maintenance of the power plants, with regular inspection and stocktaking of necessary equipment and supplies Encouraging staff to receive training to increase their knowledge and capability and enhance their efficiency, as well as organizing knowledge sharing activities through which knowledge can be exchanged among staff within the Company Introducing the ISO 9001: 2015 Quality Management System to the Company’s power plants to ensure that the power plants have the quality management system in place and meet the working standards in various processes, such as, production, maintenance, inventory management, and procurement
3. Financial Risk	With respect to liquidity risks, given the Company’s plans to expand its investment in the business of electricity production and distribution from various types of energy to achieve its operational goals, financial liquidity is of paramount importance to its business operations. As such, it controls and manages its liquidity to ensure that its cash flows are sufficient for its business operations under normal circumstances and can accommodate future investment expansion.	Preparing reports on cash flow projections and regularly updating the data, as well as managing the loan agreements and closely coordinating with the lending banks in order to minimize risks of breaching the conditions of the loan agreements Establishing a policy to manage excess cash by investing in bank deposits and short-term investments that demonstrate high liquidity with reliable financial institutions, as well as arranging for credit availability with commercial banks when funding is needed Entering into credit facilities agreements with commercial banks, the terms of rights of which the Company and its affiliated companies have the duty to comply, as with the conditions and terms of debentures or debts owed to other financial institutions, such as maintaining the interest-bearing debt to equity ratio and the debt service coverage ratio.
4. Compliance Risk	In terms of compliance risks, CKPower and its affiliated companies, which operate in Thailand and the ASEAN region, must comply with applicable rules, regulations, and laws of every country they operate in, as well as monitor changes in such applicable rules, regulations, and laws.	Collecting criteria, rules, regulations related to information disclosure of listed companies and presenting them to the Board of Directors, the management, and staff of the Company for compliance Regularly monitoring legal situations both within Thailand and in related countries so that the Company has enough time to take action, make improvement, and prepare for changes in all dimensions that may have significant impact on the business operations Engaging legal advisors to handle cases involving highly complex laws, rules, and regulations
5. nvironment and Social Risk	With regard to environmental and social risks, the Company’s power plants may have impact on local communities and the environmental in their vicinity.	Introducing environmental and social policies and guidelines as well as appointing an environmental and social working team to oversee the environmental and social performance of CKPower and its subsidiaires. Promoting/supporting environmental and social activities in the vicinities of the power plants as well as monitoring/evaluating the outcome of such activities to the executives on a regular basis

The risk assessment results reveal that the risk in most categories was at an acceptable level or lower, except the environmental and social risk in the areas around CKPower’s power plants, which was found to be at a very high level. CKPower was aware of the outcome and followed its risk management process by formulating a mitigation plan and designating responsible persons to address such risk. In addition, CKPower promotes risk culture within the organization by hosting training sessions on risks to its executives and all employees and communicating the significance of risk awareness internally on a regular basis.

Internal Risk Culture Promotion Activity

Risk Management Training

CKPower organized a knowledge sharing session on risk management to the risk management working group. The session covered corporate risk management, risk management processes, risk assessment criteria, risk management steps and methods, and individuals responsible for risk management in order to allow the participants to review and exchange knowledge on risk management and use the acquired information to develop and optimize CKPower’s risk management. The Company also encouraged officers responsble for risk management to attend online lectures, including Risk Management in a Crisis, Shadow IT (Opportunities and Hidden Threats), Battle with Emerging Risks with SheleadsTech, organized by the Institute of Internal Auditors of Thailand.

Management of Risk from the Coronavirus Disease 2019 (COVID-19) Pandemic

Despite the outbreak of Coronavirus Disease (COVID-19), the Company’s operations, including production and sale of electricity, have not been substantially affected thanks to its power purchase agreements with the Electricity Generating Authority of Thailand, Provincial Electricity Authority, and industrial users across a diverse range of industries. The Company’s risk management with respect to COVID-19 is as follows:

Establishing a BCP Pandemic Team, responsible for closely monitoring the COVID-19 situation
Formulating COVID-19 measures and communicating such measures to the staff, suppliers, and contractors of the Company and its affiliated companies working in Thailand and the Lao People’s Democratic Republic for acknowledgment and strict compliance
Designating the power plant areas as control areas where staff must strictly follow regulations on requests for entry-exit permission, with a security unit responsible for the monitoring of entering and exiting such areas. Each entry into such areas by any third must be approved by the power plant manager and reported to the Managing Director.
CKPower established guidelines for the 2020 Annual General Meeting of Shareholders in accordance with the government’s new normal policy to reduce and prevent the spread of COVID-19. The duration of the meeting was limited to 1 hour and 30 minutes, with attendance limited to 100 people. Social distancing and mask guidelines were to be observed at all times, and participants were requested to remain seated during the meeting. The Company also suspended the addition of extra seating, and in lieu of microphone use, attendants were asked to write their questions on slips of paper and submit them to the staff. Additionally, checkpoints were set up for the participants to register using the “Thai Chana” platform, prior to both entry and exit, undergo temperature checks, and receive stickers which were to remain on their persons at all time during the meeting. The Company reserved the right to deny entry to anyone exhibiting symptoms of illness, fever (or a body temperature higher than 37.5 degrees Celsius), cough, sore throat, runny nose, difficulty breathing, fatigue, or any other signs of COVID-19 infection in order to prevent the spread of disease and ensure the safety of all attendants and staff. For more information on the measures established by the Company, please click here.

Emerging Risks

CKPower recognizes the significance of emerging risks that may affect its business operations and sustainability and present either opportunities or obstacles. The Company has been monitoring and keeping track of new risks, so as to be able to identify and analyze key emerging risks that may impact the Company in the next 3-5 years.

Future Risks

CKPower has studied and analyzed key emerging risks that may impact the Company in the next 3-5 years to ensure that it can put in place proactive measures in a timely fashion before such risks can affect its business operations.

RISKS

Impacts of climate change, such as rising water volumes, rising sea levels, rising temperature, and more severe natural disasters.

Potential impacts

Lower electricity production efficiency, impacting power system stability
Greater difficulty declaring availability of electricity production due to climate change and varying water levels

Risk management

Conducting research studies on water volumes and changes in natural disaster patterns and their impacts on system reliability
Conducting natural disaster risk assessments and forecasting the severity of climate change impacts on all power plants in details
Formulating disaster response plans with respect to production, maintenance, equipment, and staff safety
Improving power plants’ ability to withstand natural disasters or unusual weather patterns, such as by elevating power plants to prevent floods, utilizing machinery that can withstand extreme heat/cold, and flood-proofing power plant infrastructure through design
Installing reservoir monitoring equipment and real-time, web-based monitoring systems to ensure that once the commercial operation has begun, the structures of the power plants are continuously monitored through proactive measures by teams of engineers and experts.
Introducing upgraded digital systems that allow the entry of a wider range of parameters to achieve more precise electricity cost estimation

Risks

Energy technology development, such as the use of renewable energy and energy storage

Potential impacts

Changes in energy consumption behavior
Potential changes in power production business models
Changes in relevant policies and laws for system reliability
Potential cost-dependent changes in the electricity tariff structure

Risk management

Studying and assessing the capability of operating renewable energy businesses in terms of personnel, budgets, and relevant policies and laws
Studying and keeping track of renewable energy policies of different countries
Determining investment goals and expanding towards renewable energy businesses
Studying and developing technology and price trends of energy storage devices/batteries

Risks

Technological changes and digital transformation

Potential impacts

Changes in energy consumption behavior
Agile business operations in line with technological changes
Greater vulnerability to cyberattacks, such as data leakages, unauthorized data manipulation, or data theft, due to technology related to data mining, artificial intelligence, and quantum computing

Risk management

Optimizing operational efficiency in personnel
Studying new technologies that affect business operations
Improving work procedures to accommodate technological shifts
Adding disaster recovery systems to ensure business continuity
Keeping track of the development and types of cyberattacks and regularly assessing the effectiveness of the Company’s IT security system and the operating systems of the power plants

Ensuing Compliance with Applicable Laws, Rules, Regulations, and Requirements (GRI 102-17) (GRI 102-25) (GRI 205-2) (GRI 205-3)

CKPower, along with its subsidiaries, promotes compliance with regulations and its code of conduct among directors, executives, and employees at all levels and encourages the Board of Directors and executives to continuously foster the practice and culture across the organization in order to promote adherence to business ethics and codes of conduct related to corporage governance as well as compliance with applicable laws, rules, regulations, and requirements among employees. In addition, all employees and new recruits of CKPower and its subsidiaries are required to undergo business ethics training. CKPower’s code of business conduct is disseminated to all stakeholders across the supply chain on a regular basis through its website.

Furthermore, under the anti-corruption policy, CKPower has announced the introduction of a no-gift practice, in effect since 2019, and notified all stakeholders of the practice through various channels of the organization, such as the website and Facebook page.

In addition, CKPower continued to elevate the no-gift practice into an official policy of the organization in 2020 to demonstrate its intent and commitment to internal management under the approach of zero tolerance against corruption.

Corporate Governance Performance in 2020 (GRI 103-3)

0 complaint of corruption within the organization	0 complaint of corruption from external parties	0 resolved complaint of corruption

Opinion, Suggestion, and Complaint Management

The Company provides reliable and independent whistleblower channels through which any third parties can report any non-compliance with the codes of conduct, violation of laws, or any suspicious behavior of fraud or misconduct committed by personnel in the Company. Such reports may be submitted to the following designated channels:

via the Company’s website directly to the Investor Relations at www.ckpower.co.th/th/ir
via E-mail to the Members of the Audit Committee and the Board of Directors at directors@ckpower.co.th or Investor Relations at ir@ckpower.co.th
via a sealed letter to the Chairman of the Audit Committee of CK Power Public Company Limited No. 587 Viriyathavorn Building, Sutthisan Winitchai Road, Ratchadaphisek Subdistrict, Dindaeng District, Bangkok 10400

Complaint Management

CKPower has put in place whistleblower channels through which a report on any non-compliance with the codes of conduct, any illegal acts or any suspected dishonest acts or misconduct committed by personnel in the Company and its subsidiaries, as well as any flaws in the internal control system, can be filed by both staff and other stakeholders. In addition, a whistleblower protection mechanism has also been instituted. The whistleblower guidelines are as follows:

Whistleblowing: The Company has arranged for three whistleblower channels through which a whistleblower report can be filed with the executives and the Board of Directors, as follows:
- To the Company Secretary at compliance@ckpower.co.th
- To the audit committee members and the Board of Directors at directors@ckpower.co.th
- To the Investor Relations at ir@ckpower.co.th
Implementation: The executives and the Board of Directors have assigned the Audit Committee to collect information, review and investigate facts, and determine suitable methods for dealing with each case. The Audit Committee is to track the progress and outcome periodically.
Reporting of results: The Company Secretary, executives, or Audit Committee Members shall report findings to the Board of Directors for acknowledgement, to be further reported to stakeholders.

Complaints	2018	2019	2020
Received and resolved complaints	0	0	0
Received and processed tip-offs	0	0	0

In addition, CKPower has prescribed whistleblower protection measures and confidentiality policy, the details of which appear under stakeholder engagement guidelines published on the Company’s website along with the whistleblower channels. Access to complaints and tip-offs is restricted to only relevant individuals in order to foster confidence and a sense of security to the complainant.

Tax Action

To ensure that the Company and its subsidiaries operate in accordance with the principle of good corporate governance and a code of business conduct that corresponds with sustainability practices, CKPower has placed emphasis on legal compliance, transparency, and accountability with regard to tax management and fulfilled its duties under its tax policy by paying taxes correctly in order to foster public confidence in the organization.