PHL listed firms lag­ging be­hind in sus­tain­abil­ity re­port­ing

Business World - - Corporate News - Arra B. Fran­cia

PUB­LICLY LISTED com­pa­nies fell short when it came to publishing sus­tain­abil­ity re­ports as part of their good cor­po­rate gov­er­nance ini­tia­tives, amid in­creas­ing aware­ness on the im­por­tance of sus­tain­abil­ity to move busi­nesses for­ward.

This is ac­cord­ing to the 2nd Cor­po­rate Gov­er­nance Study by the Good Gov­er­nance Ad­vo­cates & Prac­ti­tion­ers of the Philip­pines in part­ner­ship with PwC Philip­pines (GGAPPPwC). The group cited non-fi­nan­cial and sus­tain­abil­ity re­port­ing as among the ar­eas for de­vel­op­ment PLCs can im­prove on, along­side board com­mit­tees and risks and con­trols.

The group found that while 89% of com­pa­nies rec­og­nized and placed im­por­tance on sus­tain­abil­ity — higher than the first study’s 76% — only 22% were able to pub­lish sus­tain­abil­ity re­ports in ac­cor­dance with glob­ally rec­og­nized stan­dards, such as the guide­lines set by the Or­gan­i­sa­tion for Eco­nomic Co-oper­a­tion and De­vel­op­ment (OECD).

“The Philip­pines is ac­tu­ally very much be­hind in sus­tain­abil­ity re­port­ing, not only glob­ally but also our ASEAN neigh­bors,” Se­cu­ri­ties and Ex­change Com­mis­sion Cor­po­rate Gov­er­nance and Fi­nance Depart­ment As­sis­tant Di­rec­tor Rosario Carmela B. Gon­za­les-Aus­tria said in dur­ing the 6th An­nual GGAP fo­rum in Pasay City yes­ter­day in re­ac­tion to the study.

Ms. Gon­za­les-Aus­tria noted that Malaysia, Thai­land, and Indonesia have been re­leas­ing sus­tain­abil­ity re­ports from the early to mid2000s, with all three com­pa­nies, along with Sin­ga­pore, al­ready equipped with their own sus­tain­abil­ity re­port­ing guide­lines.

The GGAPP-PwC study eval­u­ated 246 listed firm in the pe­riod end­ing Aug. 31, based on in­te­grated an­nual cor­po­rate gov­er­nance re­ports sub­mit­ted to the Philip­pine Stock Ex­change and Se­cu­ri­ties and Ex­change Com­mis­sion (SEC).

PwC Chair­man and Se­nior Part­ner Alexan­der B. Cabr­era ex­plained that the gap be­tween aware­ness and ac­tual re­port­ing is due to the lack of com­mit­ment and sturdy guide­lines in the coun­try.

“You need re­sources to pre­pare the sus­tain­abil­ity re­port. You need teams of two or three with cer­tain ex­per­tise. So first is the com­mit­ment, se­cond is frame­work. If the study is your frame­work, then you can re­duce that to an in­formed re­port,” Mr. Cabr­era said in an in­ter­view on the side­lines of the fo­rum.

Speak­ing in a panel dis­cus­sion dur­ing the fo­rum, Ayala Corp. (AC) Group Risk Man­age­ment & Sus­tain­abil­ity Head Ma. Vic­to­ria Tan high­lighted that firms should mon­i­tor their non­fi­nan­cial per­for­mance such as sus­tain­abil­ity since it also con­trib­utes to the over­all growth.

“Be­cause when the fi­nan­cial per­for­mance that you have is grow­ing, it’s be­cause of the non­fi­nan­cial per­for­mance that ac­tu­ally con­trib­utes to that. The nat­u­ral re­sources that we use, those are not un­lim­ited. We have to put that into the equa­tion,” Ms. Tan said dur­ing the panel.

Univer­sity of Asia & the Pa­cific Pro­fes­sor and Ex­ec­u­tive Di­rec­tor for the Cen­ter of Cor­po­rate So­cial Re­spon­si­bil­ity Colin Le­garde Hubo iden­ti­fied the chief fi­nan­cial of­fi­cer (CFOs) as the top ex­ec­u­tive who should most pay at­ten­tion to sus­tain­abil­ity is­sues, tak­ing cues from AC which was the first listed con­glom­er­ate to come up with a sus­tain­abil­ity re­port.

To note, AC CFO Jose Teodoro K. Lim­caoco also acts as its chief risk of­fi­cer and chief sus­tain­abil­ity of­fi­cer.

“CFOs nowa­days are be­com­ing the dar­lings of sus­tain­abil­ity. Now CFOs are mak­ing de­ci­sions on the ba­sis of in­tan­gi­bles,” Mr. Hubo said, not­ing that only 17% of CFOs based their in­vest­ment de­ci­sions on in­tan­gi­ble fac­tors in the 1970s com­pared to 2015’s 84%.

“Glob­ally, there is a trend to align ex­ec­u­tive com­pen­sa­tion with sus­tain­abil­ity per­for­mance and bonuses,” Mr. Hubo added.

One Mer­alco Foun­da­tion Chief CSR Of­fi­cer Jef­frey O. Tarayao noted the same, em­pha­siz­ing the im­por­tance of plac­ing lead­ers in charge of sus­tain­abil­ity pro­grams.

“We look at two crit­i­cal points, the first one is that who in the or­ga­ni­za­tion is re­spon­si­ble for sus­tain­abil­ity both at the strate­gic and op­er­a­tional ar­eas. And se­cond, is sus­tain­abil­ity part of per­for­mance eval­u­a­tion, and im­ple­ment­ing sus­tain­abil­ity per­for­mance into the man­age­ment in­cen­tive sys­tem?,” Mr. Tarayao ex­plained.

Right now, AC’s Ms. Tan said the SEC has been en­forc­ing the im­por­tance of start­ing sus­tain­abil­ity re­port­ing among com­pa­nies.

“The first thing re­ally is to start re­port­ing. You can only man­age what you can mea­sure, and you can only mea­sure what you know. And we can only know if you start col­lect­ing... we are far in terms of re­port­ing, but I think it is al­ready in the busi­ness model,” Ms. Tan said. —

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