Jaime Augusto Zobel de Ayala, chairman of the country’s most admired conglomerate, said it is about time for companies to convert their sustainability and Environmental, Social, and Governance (ESG) commitments from “big words to bigger actions.”
In a keynote at the opening of the 14TH International Innovation Summit, an annual summit by the IT & Business Process Association of the Philippines (IBPAP), Zobel lauded the officers of the country’s single largest industry employer for taking up the issue of sustainability as he shared the Ayala Groups’ journey to actualizing its commitment to sustainability via the ESG metrics even as he admitted that sustainability is a long journey.
ESG investing refers to a set of standards for a company's behavior used by socially conscious investors to screen potential investments. ESG topics are quite broad and far-reaching, including among others, issues of climate change, biodiversity, human rights, health and safety, and anticorruption.
Zobel put it simply. “ESG is all about keeping our house in order, while understanding which of the different environmental, social, and governance factors are becoming increasingly important to our stakeholders. ESG allows us to hold ourselves accountable regarding the impact that we create along environmental, social, and governance lines.”
To concretize its commitment to ESG, Zobel said, the Ayala Group uses robust materiality assessments and sustainability reporting. Annually, Ayala conducts a materiality assessment process to check that they are addressing sustainability issues that are sufficiently important to their stakeholders.
Zobel said this process also allows the conglomerate to engage its different business units, ensure alignment with a shared sustainability agenda, and gather concrete pledges.
“Identifying the issues that are most material to us is perhaps the most crucial step in the process,” he said.
In this phase, he said, the conglomerate considers issues that are the most common among majority of Ayala companies; has a significant impact on the brand and reputation of our group; and has significant importance to our stakeholders.
The group also takes guidance from several international institutions and research by its in-house Sustainability and Risk Management teams to guarantee the relevance of the ESG issues identified. Ayala enjoys active partnership with the World Business Council for Sustainable Development.
From there, Ayala follows the highly intensive process of data gathering; validating the impact and importance of each of these topics to each of our businesses; prioritizing and categorizing them into thematic focus areas for the year; then conclude with a review of these thematic areas before starting the next assessment cycle next year.
For the Ayala group, Zobel said, they have classified their material ESG topics this year into five thematic areas, which has several sub-items underneath them.
First is climate change and biodiversity, which includes the Ayala Group’s commitment to Net Zero Greenhouse Gas Emissions by 2050. “We are just at the beginning stages of this journey, starting with an accounting and validation of our emissions, and aiming to have a comprehensive Net Zero Roadmap ready by next year,” he said.
Second is resource efficiency and waste management, where the group continues to implement existing protocols, and even explore new ways to properly transport, treat, store, and dispose of waste.
Third is workplace experience and future of work. This includes ensuring high levels of employee engagement by providing a gainful and meaningful place to work, while at the same time ensuring that their mental and physical well-being are guaranteed.
Fourth is customer experience and protection, where Ayala companies fulfill their promise to customers of providing superior levels of quality, safety, and customer experience for each of their products and services.
Fifth, which Zobel said is not certainly the least, is equitable business practices where the conglomerate ensures they adhere to the highest standards of integrity and ethics in their operations, transactions with peers, and in their collaborative projects with the public sector.
“Once again, holding ourselves accountable to ESG metrics through a robust materiality assessment and reporting process is crucial in the sustainability agenda,” he said.
But ESGs are just one part of the equation. “To truly be relevant and value-adding members of society, institutions should not only hold themselves accountable for their impact through the ESGs, but should also go over and beyond these and be proactive contributors to the wellbeing of their communities,” said Zobel.
With that, Zobel said the ESG metrics “must be complemented by a more proactive approach at creating tangible and meaningful impact.”
This is where Creating Shared Value comes in. Guided by this principle, Ayala makes sure their investments and other projects result in a net positive gain for the environment and stakeholders. Ayala draws from the United Nations Sustainable Development Goals to align its organization’s operations and initiatives.
“We have embraced these goals and have tried to capture our commitments to these through the Ayala Sustainability Blueprint. The Blueprint features Ayala’s concrete pledges to 11 SDGs that are naturally aligned to each of their businesses.
Developing this blueprint involved intensive consultations with each of the business units over an extended period. While their targets and commitments differ from each other, there is a shared goal across the entire Ayala Group—to ensure that the Filipino will have an improved quality of life and will be a responsible global citizen by 2030.
Moving towards 2030, where most – if not all – the SDGs are hoped to have already been achieved, the Blueprint illustrates how Ayala hopes to be the Filipino’s active companion in the three journeys.
First is Access and Inclusivity. Here, Ayala will ensure that Filipinos will have access to basic needs such as health services, education, sanitation, and safe and clean water. With that, its AC Health champions universal health care coverage and hopes to touch one in five Filipinos by 2030 by creating the country’s largest primary care network, expanding access to quality and affordable medicines, and improving essential hospital and specialty services. Since AC Health committed this in 2018, they have achieved 23 percent of their target while continuing to expand facilities and investments in digital health, pharmaceuticals, clinics, hospitals, and other similar partnerships.
Next is Productivity and Competitiveness where Ayala hopes to provide the necessary infrastructure, technology, products, and services that will aid Filipinos to be competitive in a globally connected economy.
This is shown by Ayala’s growing digital initiatives – BPI’s digital platform and GCash, which enable seamless access to financial solutions that can best serve stakeholders’ needs.
In the case of GCash side, there are now at 66 million, which includes not just individuals, but also small businesses and social sellers.
Finally, Responsible Growth and Innovation. The conglomerate aims to enhance resilience against climate hazards, while sustainably managing its impact to communities and the environment. This is highlighted by ACEN, the group’s foremost champion in this journey with its recently announced ambition to achieve 20 GW of attributable renewables capacity by 2030, from its current capacity of 3.4 GW. ACEN plans to continue its investments in wind and solar, while exploring new technologies, such as energy storage, floating solar, and offshore wind.
While the Ayala Sustainability Blueprint is a comprehensive and concrete plan to actualize its forward-looking commitments, Zobel admitted that more can still be done.
While transitioning commitments to ESG and sustainability from big words to bigger actions certainly requires significant effort, Zobel said stressed it is “a journey worth making” given its impact to communities and the transformative potential it holds for organizations trying to institutionalize a strong sense of corporate purpose within itself and its employees.
“At Ayala, we found that a winning formula involves holding ourselves accountable to globally accepted ESG metrics, then complementing this with proactive and meaningful efforts at being a positive contributor to society,” Zobel concluded.