Ayala Group underscores paradigm shift to sustainability
By Mary Ann Reyes (The Philippine Star) Updated November 11, 2009 12:00 AM

SOURCE: http://www.philstar.com/Article.aspx?articleId=522290&publicationSubCategoryId=63

 

MANILA, Philippines – “We are in a race against time,” Ayala Corporation chairman and chief executive officer Jaime Augusto Zobel de Ayala told some 300 key executives and managers of the Ayala Group of Companies who gathered yesterday for the first sustainability summit to discuss ways these companies can address urgent sustainability issues.

The one-day summit aimed to provide direction and additional impetus to the Ayala companies, six of which are publicly listed, to make significant adjustments to their strategies, business models, products, and operations.

“We have to recognize that we are in a race against time. But it will be more of a marathon rather than a sprint,” he said.

Zobel told The STAR that it will take some time before sustainability can be an integral part of their business, but the more important thing right now is that the managers are more aware that sustainability has to become part of their planning process.

Zobel pointed out the urgent need for a paradigm shift toward sustainability and a change in the way businesses do things.

For one, he noted that society is on a dangerously unsustainable track. As resources become increasingly scarce, he said tensions are building up. “We should be part of the solution rather than the problem. We must gear ourselves to be solution providers,” he emphasized.

Among those in attendance were Ayala Corp. president and chief operating officer Fernando Zobel de Ayala, senior managing directors Jaime Ayala, Gerardo Ablaza Jr. and Delfin Lazaro; Bank of the PhilippineIslands president Aurelio Montinola III, Manila Water president Rene Almendras, and Ayala Land president Antonino Aquino.

Zobel said another reason for the need for a paradigm shift is that customers and society in general expect large institutions, like Ayala, to be more engaged in providing solutions.

He added that talent and investments will gravitate more and more toward companies that are socially responsible.

While previously admitting that the shift in business orientation towards sustainability can limit the Ayala Group’s choice of new businesses, Zobel emphasized that this approach can also open new opportunities.

“The shift towards a more sustainable way of doing business will give us a whole new dimension in terms of branding, as well as pride as a company. It also encourages us to look for interesting new solutions,” he said.

In order to shift to a fully sustainable business, Zobel said there is first a need for those in the Ayala group to be more familiar with the concept of sustainability. “Even our planning assumptions will have to change,” he pointed out.

He also said they have to be more proactive in integrating sustainability efforts in the way they do business. “After all, it opens up new opportunities as well as new markets for us,” he said.

He also cited the need to increase the social impact of their corporate social responsibility (CSR) activities.

He pointed out that last year alone, the Ayala group produced 260,000 tons of carbon dioxide (CO2).

“We need to plant 1.5 million trees a year to address this. It would be easier if we just reduce our electricity usage,” he said.

Zobel added that there is a need for the Ayala Group, and other businesses, to alter their definition of success by putting more emphasis on their activities’ social impact and less on the balance sheet and profit and loss statement.

In the past, the CSR approach was more oriented towards philanthropy and charitable institutions. In recent years, Ayala’s CSR activities have become more focused on interventions in education, environment, and entrepreneurship.

“Currently, we are putting more emphasis on the impact and sustainability of our interventions. So while our philanthropic work will continue, we expect to see more of our CSR activities with a sustainable business model attached to them,” the company said in a statement.

For the first time, the company noted that they now have standard metrics of sustainability across all Ayala companies covering human resource development, environment, and financials.

“Ayala has decided to take a careful and broader look at how we can incorporate more powerful and innovative sustainability principles into our business models and operating practices for greater impact on the environment around us and the development of the communities in which we operate,” he said.

“While there are many challenges to achieving substantial and lasting impact, we are committed to being leaders and catalysts in moving business practices back towards sustainability,” he stressed.

Ayala’s commitment to sustainability includes continuously reducing the environmental impact of its operations; innovating in its essential products and services to serve the disadvantaged in an environmentally friendly way; addressing education, microenterprise, environmental and emergency issues in its community involvement.

“While we are in the relatively early stages of our sustainability journey, we are confident that with perseverance and focus, we will be able to make significant and lasting contributions to a stronger country and a better world while growing our profitability as we have done for the last 175 years,” Zobel said.