MANILA, Philippines — Private companies are working double time with their sustainability efforts.
This has a lot to do with growing demand from ESG funds.
Indeed, investors aren’t as simple-minded as they once were. Nowadays, they want to know that their investments are going to companies that not only turn profits, but also conduct their business activities responsibly. They want to invest in companies that are committed to ESG (environmental, social, and governance) issues, according to a report on Triple Pundit (The Business of Doing Better).
Global ESG funds saw a record $649 billion in investments through Nov. 30, 2021. That’s up from $542 billion in 2020 and $285 billion in 2019, the report said.
Indeed, the private sector needs to change its ways if it wants to continue attracting big funds.
Beyond that, sustainability is also a must because it is the right way and it is the only way for a business to last.
“In the Philippines, and elsewhere, if you love your country and you love your children, you should really try to help. All of us should be into this. If you apply sustainability in everything, even in your own personal life, the world will be much better,“ said Chaye Cabal-Revilla, the chief finance, risk and sustainability officer at Metro Pacific Investments Corp. (MPIC).
The private sector is widely considered the engine of economic growth, fueling economies, providing convenience and choices to consumers and more, but this engine is also wreaking havoc on the ecological systems that support human life on this planet.
Studies have found that 100 companies are responsible for 71 percent of industrial greenhouse gas emissions since 1988. And despite humanity having already cut down 46 percent of the trees on the planet, more than half of the most significant timber and pulp companies still refuse to commit to protecting biodiversity or achieving zero-deforestation in tropical forests they manage, which are collectively almost as large as England.
This is according to Dr. Dina Hestad, an environmental writer and research advisor in a report published by the International Institute for Sustainable Development.
As a result, the private sector has been blamed for significantly contributing considerably to social inequality.
Green washing
It’s no surprise that some companies have turned to green washing.
In industry parlance, green washing is the process of conveying a false impression or providing misleading information about how a company’s products are more environmentally sound.
It is considered an unsubstantiated claim to deceive consumers into believing that a company’s products are environmentally friendly.
But Cabal-Revilla said green washing is not sustainable.
“Green washing isn’t sustainable. It’s not real,” she said.
She said green washing isn’t a solution to solving our environmental issues. This means the problem would still be there and thus, if left unaddressed, would negatively affect the companies themselves.
“Green washing is not ‘sustainability’ and it is risky and people including investors won’t trust you anymore,” she said.
In short, companies that just engage in green washing will also suffer the consequences if collectively, the private sector does not reduce its negative impact on the environment, Cabal-Revilla said.
This is the reason the MVP Group sets realistic targets. It wants a holistic approach in its sustainability measures.
“Targets will be different (for each company). It’s a case-by-case basis. Like, the targets have to be tailored-fit based on each company’s and industry’s capacity,” Cabal-Revilla said.
“With Manila Electric Co. for example, you have to balance out the social and environmental considerations. The journey of each company and each industry is going to be different,” she explained.
But the MVP Group today, as it has been doing, already has sustainability in its DNA.
Cabal-Revilla said that in everything the MVP Group does, its projects or its investments, it considers the impact on the environment and the community.
She cited as an example the Cebu–Cordova Link Expressway.
Also known as the Cebu–Cordova Bridge and the Third Cebu–Mactan Bridge, the project is an 8.9-kilometer toll bridge expressway in Metro Cebu that links Cebu City and Cordova, Cebu, a project of the MPIC Group.
The original design of the project was just a straight bridge but the group had to change the design because it would affect an area with mangroves.
“We took into account the mangroves. If we did a straight line, we could have saved a billion pesos but in doing so, we would have disrupted the mangroves there. If that happens and there is a storm surge, the whole community will be affected. That is what sustainability is about,” Cabal-Revilla said.
Experts said the way forward is to continue prodding companies to step up their sustainability efforts and to ensure transparency in reporting.
At last year’s climate change conference (COP26) in Glasgow, Scotland, the International Sustainability Standards Board (ISSB) was established to develop a global framework for ESG reporting, according to Triple Pundit, an online portal on sustainability, in an August 16, 2022 article on transparency reporting.
“The new ISSB standards are expected to be released later this year. There won’t be anything legally binding about the framework yet, but it will at least create a global standard to make ESG reporting much more transparent and easier to understand for consumers and investors,” it said.
Indeed, as Triple Pundit said, standardized reporting is a crucial step to take as more and more money flows into the sustainable investing market.
In the Philippines, private corporations need to commit to this as well.
“I think all companies should embrace it fully as what we have done in MPIC. You cannot not embrace it because it touches everything—your operations, our communities and the way of lives of our employees,” Cabal-Revilla said.
Companies need to remember that “there is only one earth.”
Only One Earth was also the slogan of the first United Nations conference on the human environment, held in Stockholm in 1972.
It sounds like a cliche but cliche it is not.
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The article was originally published in Phil Star Global and written by Iris Gonzales.
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