CEOs vs the threat of the three planets

Alexander B. Cabrera Chairman and Senior Partner, PwC Philippines 08 Sep 2019

as-easy-as-abc
(First of two parts)

The only thing scarier-sounding than Day Zero is the need for three planet Earths.

Day Zero is the day running water stops and people line up for water – now a real risk being postponed or prevented if it can be helped in the City of Cape Town, South Africa – and in fact has recently been feared as a possibility in Metro Manila. The three-planet threat is cited in one UN study that if sustainable practices are not put in place, the estimated human population in 2050 nearing 10 billion people will need the resources of three planet Earths to survive.

Before the scenario of fighting for resources, there is the clear and present danger of global warming. There is a report that sets CO2 levels dangerous to humans about 25 years from now if carbon emissions remain unabated. This is a frightening, and not merely an inconvenient, truth.

Those climate threats over a country that has 47 percent of its population living in areas exposed to floodings and droughts, with 21 percent still in persistent poverty, and supply chains that desire ethical practices, form the backdrop of the latest PwC-MAP CEO survey on sustainability – or the future of business. In the past three years, top concerns of CEOs have been trained on cyberthreats, geopolitical uncertainty, availability of key talents, speed of technological change and over-regulation. But this year, climate change and environmental damage occupy the top spot in their minds as business threats. Today, more than ever, CEOs plan about being sustainable and not merely being profitable. Obligation to shareholders is now necessarily discussed alongside obligation to stakeholders, namely communities and the human race.

While the PwC-MAP CEO survey reveals that 83 percent of the CEO respondents are trying to address sustainability-related issues, the survey could not yet account for the intensity of the effort. We can, however, take a look this Sunday on some best practices and business models of Philippine corporations with sustainability on top of their agenda, as articulated by their CEOs.

Hans Sy
SM Group

He listened to Al Gore say that if the ice glaciers melt, the sea level will rise by two meters. So he elevated the SM malls he built by three meters. He also made it a rule to add 10 percent contingency costs to their project costs for disaster risk reduction (DRR). He is the champion of DRR initiatives not only in the SM conglomerate, but in the country. As the first Filipino member of the ARISE International Board, formed under the United Nations International Strategy for Disaster Reduction, he is one of the principal advocates of public-private partnership in battling disaster risks.

His work begins with the 20,000 micro, small and medium enterprises (MSMEs) in SM’s value chain, whose understanding of what to do when disaster incidents strike before was “almost zero.” Thus the education of MSMEs on disaster resiliency and how to normalize operations after closing down, from a fire or earthquake, is key. Now co-chair of the National Resiliency Council, he strengthens partnerships with local government units, NGOs, private corporations, academe and business organizations to encourage disaster risk sensitive investments and initiatives across the country.

Earl Lim and Derya Tanghe Co-founders
NXTLVL Farms

Farming at the next level is about doing environmentally friendly and weather-proof farming using hydroponic technology. Their farms don’t use soil, and their high-quality agricultural products are grown inside 40-foot shipping containers under a controlled environment: controlled temperature, humidity, special lighting, and sustained conditions optimal for growing crops. Mind you, they grow premium crops such as dinosaur kale, roquette arugula, cilantro, parsley, and basil in those containers with hydroponic equipment.

What is so fascinating about their indoor farming business is that these farms can be located quite near the marketplace, removing the traditional farm-to-market transport and logistics costs and issues, not to mention reliance on imports for these high-end veggies. They plan to situate their farms as near as 10 kilometers away from supermarkets, across Metro Manila. This guarantees freshness of the produce when it reaches the end users and avoids spoilage of some of the inventory that cannot be avoided in produce transported from the likes of Baguio, Benguet, or the Cordilleras.

Giles Puno
First Philippine Holdings

“We have never made investment in coal,’’ said Giles of FPH, who made a bold official pronouncement in 2016 that the organization will never make an investment in coal. Its journey to using only clean energy started when FPH acquired controlling stake in Energy Development Corp., a dominant geothermal player in the country.

Their “Powered by Good” campaign takes into account that the stakeholders most affected by climate change are the lowest-income households. But their campaign is also about doing well in the bottomline. For one, it is the right offering for captive customers who have energy needs but are equally intent on using low-carbon energy source. Going for clean energy sources also reduces the group’s exposure to “potentially stranded costs in the future” (or investments that may lose useful value because of changes in conditions).

To be continued…

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Alexander B. Cabrera

Chairman and Senior Partner, PwC Philippines

Tel: +63 (2) 459 2002

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