The private sector should commit to the earnest implementation of environment, social and governance (ESG) efforts and not just “tick the box” as required by the country’s regulators.
In a webinar organized by the Institute of Corporate Directors, Maria Victoria Tan, Ayala Corp.’s risk management and sustainability unit head, said ESG should be a major factor in a company’s business model and should add business value to the effort.
“It’s about keeping your house in order. You cannot add value if your ESG foundations are weak,” Tan said during the webinar.
Tan said the company’s chief executives, brothers Jaime and Fernando Zobel de Ayala, have been harping about taking corporate social responsibility, or CSR, to the next level to create shared value, or CSV.
CSR is about using business resources to respond to social and environmental problems in the world. CSV is about incorporating that positive social and environmental impact into the company’s business model in a way that generates economic value.
“You are transforming communities wherever you are located through the financial resources given to you, the human resources given to you,” she said.
“Businesses and organizations must do more than comply. They must create value, not only for their companies but also for the society over the long term. They must not only be sustainable, but aim to be regenerative, so as to not deplete the planet’s continuously declining resources,” said Pedro Maniego Jr., senior policy advisor of the Institute for Climate and Sustainable Cities and trustee of ICD.
Tan also said the Ayala Group is looking into the living wage and is aiming to set an amount above the minimum wage that can lead to satisfying living conditions for their employees.
“Being a sustainable company would mean that you are addressing issues quite comprehensively. Putting up a business, which is an ecosystem, is all about creating value for all stakeholders,” she said.
Chuchi Fonacier, deputy governor of the Bangko Sentral ng Pilipinas, said tackling environmental concerns is equally important as confronting governance and socio-economic issues.
“The social and economic repercussions of the global health crisis have demanded organizations to devote increased attention to governance issues, particularly those concerning disclosure of information, business ethics and reputation, risk management, and internal controls,” Fonacier said.
“Strong governance and risk management systems are crucial components to achieving effective sustainable financing and supporting the transition to a green economy. This requires long-term commitment, increased accountability, and coordination between government agencies, the private sector, and the rest of society.”
Public-private sector partnerships are also important, especially in the implementation of sustainability laws and regulations, according to Amabelle Asuncion, chief legal officer of Ayala-led Manila Water Co. Inc.
“It is not enough that the government regulates and comes up with legislation. You need the buy-in of the private sector because after all, they are the ones who have to make sure that the policies embodied in these laws are actually followed,” Asuncion said.
“Even when the bills are still being discussed or deliberated upon, it is important to already get private sector participation. There has to be a balance between what is ideal and what is achievable, and whether there is a transition to getting to the ideal. It is important to find that balance and communicate the immediate and long-term impacts.”