“Firms must support ESG efforts”

The private sector must get serious about implementing environmental, social and governance (ESG) efforts, and not just “tick the box” as required by the country’s regulators.

In a webinar hosted by the Institute of Corporate Directors, Maria Victoria Tan, Head of Risk Management and Sustainability at Ayala Corp., said that ESG should be a major factor in a company’s business model and add value to efforts for the business.

“It’s about keeping order in the house. You cannot add value if your ESG fundamentals are weak,” Tan said during the webinar.

Tan said the company’s leaders, brothers Jaime and Fernando Zobel de Ayala, were talking about taking corporate social responsibility, or CSR, to the next level to create shared value, or CSV.

CSR is the use of business resources to solve social and environmental problems in the world. CSV is about incorporating this positive social and environmental impact into the company’s business model in a way that creates economic value.

“You are transforming communities wherever you are with the financial and human resources that are provided to you,” she said.

“Companies and organizations need to do more than just comply. They must create value not only for their companies but also for society in the long run. They must not only be sustainable, but also resilient so as not to deplete the planet’s ever-dwindling resources,” said Pedro Maniego Jr., Senior Policy Advisor at the Institute for Climate and Sustainable Cities and Trustee of the ICD.

Tan also said that Ayala Group is looking into the cost of living and aims to set an amount above the minimum wage that can provide a satisfactory living environment for their employees.

“Being a sustainable company means that you solve problems in an integrated manner. “Building a business that is an ecosystem is about creating value for all stakeholders,” she said.

Chuchi Fonacie, Deputy Governor of Bangko Sentral ng Pilipinas, said addressing environmental issues is as important as addressing governance and socio-economic issues.

“The social and economic impact of the global health crisis requires organizations to pay increased attention to governance issues, especially those related to disclosure, business ethics and reputation, risk management and internal control,” said Fonasier.

“Strong governance and risk management systems are critical components to achieving effective sustainable financing and supporting the transition to a green economy. This requires long-term commitment, increased accountability and coordination among government agencies, the private sector and the rest of society.”

According to Amabel Asunción, general counsel at Manila Water Co. Inc.

“It is not enough for the government to regulate and legislate. You need the support 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 carried out,” Asunción said.

“Even when bills are still being debated or discussed, it is important to already ensure the participation of the private sector. There must be a balance between the ideal and the achievable, and whether there is a transition to achieving the ideal. It’s important to find that balance and communicate the immediate and long-term effects.”