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Group of interest: Corporate Government - Shareholders and Investors

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Bank of Best Practices


Last updated Nov 22, 2014

Group of interest: Corporate Government - Shareholders and Investors
Commitment: To assure business sustainability through ethical, transparent and accountable management.
Object: To assure corporate governance and promote ethical and transparent behavior.
Synopsis: Transforming Ecopetrol into a joint venture with private shareholders implied implementing a solid Corporate Government system that guarantees confidence of all groups of interest and the Company´s sustainability.

A reliable Company

In 2009, Ecopetrol attained the second best rating in the first classification process of Corporate Government Practices in Colombia, conducted by BRC Investor Services. To grant this award, BRC Investor Services mainly took into account that not a single complaint about infringements to the Good Governance Code was raised in 2009. 

This record was attained thanks to the successful implementation of multiple Good Governance mechanisms, including those of dispute settlement, which made it possible to reach direct agreements with 22 foreign investors and three Colombian legal persons, which had acquired shares without fulfilling all legal requirements. Furthermore, several disputes with partners were settled by means of direct agreement or arbitration. 

Ecopetrol Corporate Government is one of the pillars of the new strategic market, adapted to the competence goals on domestic and international hydrocarbon markets and stock markets. "This is a top priority from the firm´s President down to base levels, because it is important to add value to the company, render its operation more transparent and provide both the domestic and international markets with assurance and good messages," Ignacio Sanín, who has led this process as member of the Company´s Board of Directors, states. 

Clear Rules 

"The aim of the corporate government is gaining confidence of the groups of interest, because when you gain that confidence, the company not only will be sustainable over time, but will also gain value, thus generating value for the company," Margarita Obregón, the Secretary General, explains, adding that this aim is developed through three mechanisms: governance, transparence and control.
This is why in preparing for its conversion into a joint venture, Ecopetrol adopted in 2004 its first Good Corporate Governance Code and, at the same time, began to strengthen its control systems. The Code gathered all the social responsibility policies of the company, its code of ethics, the best practices taken form the Code-Country, the international practices of the World Trade Organization and rigorous good governance codes of firms in the US, England and Sweden. 

"The market should have the assurance that Ecopetrol not only complies with the law, but it also applies respectful practices within the company and toward all segments of the society, shareholders, suppliers, employees and workers," Ignacio Sanín sustains.

The first issuance of shares in 2007 entailed minor adjustments in the Good Governance Code. "We defined our seven groups of interest and made the statement that those were our standards of conduct in terms of our relations to them and not only to our shareholders. At that time, we had it very clear that the essential element of our corporate government should be transparency," Obregón adds. 

In the pursue of this criterion, the National Government produced a statement in which it pledged to respect the right of minor shareholders, support their initiatives and pay dividends every year, turning down the possibility it has as a controlling partner of not doing it and capitalizing dividends instead.

In 2009, the Board of Directors approved new modifications to the Good Governance Code. "We have conducted regular reviews, depending on the evolution of the company and the changes that have occurred in both the local and international climate," Ignacio Sanín assures. 

The Good Governance Code has been disseminated throughout all officials of the company and it is in the process of being appropriated. "Interiorizing good practices of corporate governance, making them part of the officials´ DNA is our high goal by 2015, Margarita Obregón explains. 

Sound Directive Structure

The high level of confidence of Ecopetrol, which has been certified by means of diverse international evaluations, is related to the existence of a clear government structure, which is a pyramid at the top of which the General Shareholders´ Meeting is found, followed by the Board of Directors, its Committees, the President and the different directive and executive teams. 

The Board of Directors is appointed by the General Shareholders´ Meeting and consists of nine members; seven of them are delegates of the National Government and represent the State as the controlling partner. To provide assurances to non-controlling partners, the National Government voluntarily committed itself to include one representative of these partners in its yearly list of candidates for the Board of Directors; this  representative would be chosen by the ten non-controlling partners with the largest partnership interest, as well as a representative of the hydrocarbon producing departments, chosen by them. 

Furthermore, the Board of Directors includes four thematic committees, which are composed of its members and take care of management strategic areas: Corporate Governance, Compensation and Nomination, Audit and Businesses. 

"Knowing that the incumbent government cannot make any decision, but that the company has a government system and very strong institutions, is important to any new shareholder," the Secretary General explains. 

Good Governance Instruments

A further Good Governance instrument is the Code of Ethics, adjusted in 2009 to international standards. It has been broadly disseminated among the members of the Board of Directors, workers, providers and contractors of the company, by means of shops, lectures, forums, communications and messages; in addition, it forms part of the contents of the induction and hiring processes. 

Meanwhile, in-company control systems have been strengthened by implementing the process-based control system, adopting international measurement scales and moving forward toward self-control, as the top objective of the area. 

Likewise, mechanisms intended to guarantee transparency have been developed; the Citizen Involvement office was created; monitoring processes have been developed to learn the opinions of the groups of interest; and a system to measure results has been implemented. "Here, everything is public; there is no forbidden information, no secrets. If we have any negative experience, we share it with every one and tell which were the lessons learnt," Margarita Obregón sustains. 

Furthermore, corporate government practices for the settlement of conflicts of interests and disputes have been developed, as well as internal-external control mechanisms (tax inspection) and a Comprehensive Risk Management System, which is oriented toward the fulfillment of goals, preservation and creation of value for the Company and to respond to unexpected events.
The existence of all these Corporate Government instruments guarantees the observance of rights and fulfillment of commitments to all groups of interest and renders Ecopetrol a highly reliable and sustainable company. 

"The general and permanent objective is turning Ecopetrol into an increasingly viable and respectable company, which can be more admired by its shareholders, workers and the whole country," the member of the Board of Directors states. 


As a company that at the same time competes on the stock market and the hydrocarbons market, Ecopetrol is subject to accreditation of its Corporate Government practices. In Colombia, it is accountable to the Securities Superintendent´s Office and in the US to the Securities and Exchange Commission, which are institutions that oversight adherence to stock market laws. Furthermore, Ecopetrol yearly submits to the Code-Country survey developed by the Financial Superintendent´s Office, which promotes the best practices of Corporate Government for issuers of the real and financial sector. 

Ecopetrol is also a member of Global Reporting Initiative - GRI, which is an international entity leading self-evaluation of corporate social responsibility by means of instruments such as the Annual Sustainability Report, which Ecopetrol conducted for the first time in 2009. 

As a state-owned company, Ecopetrol is also subject to oversight by State control bodies, including the National Comptroller´s Office, the Nation´s General Accounts Office and the Attorney General´s Office.