Philippine companies taking the lead in ESG

More companies now are beginning to embrace sustainability as well as greater responsibility to the communities they work with, and the environmental, social, and governance (ESG) standard is leading them straight to that path.

With climate risks looming, the business community is stepping up the adoption of ESG into their operations and reporting in the past few years.

In a briefing held by the Makati Business Club last year, SGV & Co.’s Managing Partner Wilson P. Tan noted how sustainability reporting is becoming a significant factor in attracting investors to Philippines companies.

“Global investors are looking at how Philippine companies compete. They put greater importance on the corporation’s ESG performance when it comes to their investment strategy and decision-making. If these institutional investors are looking at ESG as part of their investment strategy and decision-making, how do we compete if we are not up to par with their expectations?”

Such expectations have been rising recently, particularly in terms of investing in ESG programs and in more green projects.

“There is a desire for banks and funds to support projects that are ESG-responsive and slowly a premium on these kinds of projects is emerging as the correlation between sustainable governance and risk mitigation becomes evident,” Valentino S. Bagatsing, president and chief executive officer of Investment & Capital Corporation of the Philippines, was quoted as saying in a statement.

Several companies in the country have been recognized for taking the lead in adopting ESG, setting examples for the rest of the business community to follow.

Metro Pacific Investments Corp. (MPIC) was recognized as an “ESG Industry Top Rated” company by international ratings firm Morningstar Sustainalytics for two consecutive years. Back in 2021, MPIC ranked first among multi-sector holdings companies in the Philippines after receiving an ESG Risk Rating score of 12.8, which placed them in the top 4% of companies in the Sustainalytics Diversified Financial Industry. In March 2022, MPIC received an ESG Risk Rating score of 11.0, which positioned them in the top 3% of companies in the aforementioned industry. It was also recognized as an ESG Top-Rated Regional company in 2022.

According to Sustainalytics, an ESG Risk Rating of 10-20 places a company at the “Low Risk” category of experiencing material financial impacts from ESG factors.

MPIC has adopted a sustainable approach that identifies, measures, and manages ESG risks, policies and regulations, as well as strategies in business operations. Such an approach opens doors for progress and inclusivity, steering the country towards a future driven by sustainable practices.

With sustainability in its core, Aboitiz Equity Ventures, Inc. (AEV), a public holding company by the Aboitiz Group, is making great advancements in ESG-focused strategies and practices, including implementing water conservation efforts by protecting watersheds, rehabilitated rivers, and estuaries in communities, according to AEV First Vice-President and Chief Reputation and Sustainability Officer Ana Margarita N. Hontiveros-Malvar.

The company is also tapping into tech opportunities, utilizing data science and artificial intelligence to streamline operations and minimize carbon emissions. Through Aboitiz Data Innovation (ADI), it is transforming data to produce new products and services.

To date, AEV ranked first in the Industrial Conglomerate Sector of the 2022 S&P Global Corporate Sustainability Assessment (CSA) for the second year in a row, landing in the upper quartile among global peers in the same category. The latest assessment showed that AEV implemented enhanced and accelerated ESG performance and achieved maximum scores in several critical criteria such as environmental and social reporting, risk governance, and climate strategy.

Globe, meanwhile, is raising the bar for sustainability in the telco market as it earned the highest rating (AA) from MSCI ESG Research for a Philippine company in 2023. It made history as the first publicly listed company to commit to science-based targets initiatives and innovating digital solutions in efforts to minimize environmental impact. Since then, it has successfully pivoted to green solutions, focusing and investing on renewable energy and tech, playing a key role in achieving a net-zero future.

MSCI ESG Research provides MSCI ESG Ratings on global public and a few private companies on a scale of AAA (leader) to CCC (laggard), according to exposure to industry-specific ESG risks and the ability to manage those risks relative to peers.

As of 2024, Globe has maintained its “AA” rating for the second consecutive year.

Another top-rated sustainable company, SM Investments Corp. (SMIC) is also known as a major contributor to stable and sustainable growth and development in the Philippines.

For SMIC, its commitment to sustainability means working to better serve Filipino communities and drive sustainable development. This includes building integrated lifestyle cities, delivering banking services that promote financial inclusivity, modernizing retail, and investing in sectors with high growth potential — all in efforts to cater to every Filipino need.

Recently, the group’s strong adherence to sustainability and corporate governance earned them an ESG Risk Rating of 13.3 by Morningstar Sustainalytics and is listed as one of the Top-Rated ESG Companies in the Asia Pacific 2023.

(The article was originally published by A.K.S. Brillantes on BusinessWorld.)