WALA LANG HAIYAN CALAMITY Tacloban City, Leyte in the aftermath of Yolanda The Securities and Exchange Commission (SEC) requires directors of listed companies to attend a corporate governance training program on topics selected by the company and conducted by accredited providers. The Governance Commission for Government-Owned or -Controlled Corporations (GOCCs) also requires newly appointed GOCC directors to attend such programs. I attended one last week and the selected topics were risks arising from corruption and from global warming and what companies can do about them. Corruption The presentation cited a 2021 survey that ranked 180 countries in order of corruption.  We were No. 117 in “perceived levels of public sector corruption, according to experts and business people” with No. 180 being the most corrupt. Scored least corrupt were New Zealand, Singapore, and Hong Kong while immediately below us (i.e., supposedly more corrupt) were Papua New Guinea, Laos, and Myanmar. The champ was reportedly North Korea. Corruption also exists in the private sector, most prevalently in procurement. Some suppliers are not above bribing company purchasing officers. The thrust of the presentation was risk minimization and the suggestion was to avoid doing business in countries and with companies where corruption and bribery exist. Needless to say, not all investors and companies think that way and indeed, some probably think of risk minimization in the context of finding a way of minimizing the risk of being caught and of how to minimize damage from a disappointed and angry bribee. Climate Change Already the effects of global warming are being felt. Glaciers are melting, rainfall is more erratic, typhoons are stronger and hitting new places. In the Philippines, scientists predict longer warm spells, particularly in coastal areas. This is bound to raise demand for energy and water and lead to lower worker productivity. Some areas will have heavier rain and be subject to flooding while others will be drier, causing reduced harvests. As if that were not enough, power and household water supply will also be affected. Almost all (98 percent) of our coral reefs will be dead by 2050, reducing fish catch. With global warming also affecting Vietnam, Thailand, and our other food suppliers, hunger and food riots could follow. Everyone will be exposed to climate change risks. Individuals and businesses will be affected and those who identify and seize opportunities will survive. This will be true for businesses, individuals, and countries. The message is that companies have to act now. The biggest contributors to global warming and climate change are China, the US, India, and Russia but developing countries including us are the most vulnerable. Under the circumstances, everyone has to prepare for the worst, to do what they can to help limit global warming, and definitely to decide on products, investments, location, financing, manufacturing processes, and so on, taking into account what may happen. Not only growth but more importantly survival depends on how well one manages anticipated risks, how one anticipates or responds to:

• Acute risks – those that are event-driven, specifically the severity of typhoons and floods;
• Chronic risks – longer term shifts in climate patterns that may cause rising sea level rise or heat waves;
• Policy action – steps that may be taken by government in the effort to mitigate the adverse effects of climate change;
• Shifts in supply and demand for production inputs and company products and services;
• Technological changes that support a more energy efficient economic system.

Success will depend on how well a company seizes opportunities such as the use of more efficient processes, development and/or expansion of low emission products, access to new and emerging markets, and response to climate-related initiatives taken by national and international bodies. On a personal level, super seniors like me, Baby Boomers and Generation X (i.e., people aged 41 or older) will probably not experience the really extreme impact of global warming. Sea level will rise by a few centimeters, typhoons will be more frequent and heat waves longer, gasoline and electricity will be more expensive, and life a bit more difficult but we will manage. Times will be progressively more difficult, however, for our Millennial children, Generation Z grandchildren, and any unborn Alpha generation great-grandchildren. By then large sections of our populous cities will be submerged. Indeed, one estimate is that between the rising sea and Metro Manila’s sinking land (due to pumping of aquifers), only rooftops will be above water in parts of Manila within a few decades. Knowing all these, whatever people now alive, companies and government decide and do will determine how their respective families and businesses and the Philippines will fare in the coming decades. They are masters of the fate of their families, companies, and country. Notes: (a) This article is based on a seminar conducted by SyCip Gorres Velayo & Co. for the board of directors and officers of GMA Network, Inc.; and (b) The title is adapted from the poem Invictus (Latin for “unconquered”) by British poet William Ernest Henley (1849-1903).  Its final lines are I am the master of my fate / I am the captain of my soul. Comments are cordially invited, addressed to [email protected]