Sustainable development–put purpose before profit

LAST week I wrote about the fact that in recent years, a growing number of companies around the world have voluntarily adopted and implemented a broad range of sustainability practices.

I added that in the Philippines, the Securities and Exchange Commission (SEC) has issued the sustainability reporting guidelines for publicly listed companies. The guidelines are intended to help PLCs access and manage nonfinancial performance across economic, environmental and social aspects of their organizations, and enable PLCs to measure and monitor their contributions toward achieving universal targets of sustainability such as the United Nations Sustainable Development Goals, as well as national policies and programs.

I selected six of the 17 UNDP sustainability goals that influence people directly and asked six questions. Do you have the answers?

Question: How many families live in Metro Manila in the streets and under bridges?

Answer: More than 350,000 families in Metro Manila have no homes and live in the streets and under bridges.

Question: Why are the children of farmers in the Philippines leaving the rural areas and flock to urban areas?

Answer: Farmers remain poor; even farmers with 10 and more hectares cannot convince their children that there is a future in farming. Consequently, the children of farmers move to the cities, hoping to find jobs there.

Question: Why are essential medicines and vaccines substantially more expensive in the Philippines compared to other countries in Asean?

Answer: I suggest to compare medicine prices in the supply chain from import or local production through the supply chain to the patient in at least two countries: Thailand and the Philippines. (I admit that this is not an answer— but it could lead to positive price changes in the Philippines).

Question: What can the Philippine government and the private sector do to ensure access to education and the development of higher skills needed in today’s work environment?

Answer: The government and the private sector should expand the cooperation with Technical Education Skills Authority and Philippine Business for Social Progress within the framework of Public-Private Partnership Program. The cooperation can assist young people to move from high school to employment, making use of dual education, apprenticeship and longer-term internships.

Question: What percentage of unemployment/underemployment in the Philippines pertains to the youth?

Answer: There are about 10 million jobless people in the Philippines; most of them in the 18 to 24 years old age group.

Question: Are the overseas Filipino workers (OFW) enjoying the maximum 3 percent financial charges on remittances from abroad to the Philippines?

Answer: Unfortunately, I don’t know the answer and no OFW has responded to my challenge. My gut feeling tells me that they are paying more. I need feedback!! If you look at the answers, you will agree that there is a great need for the private sector to assist the government to address the targets of sustainable development and create inclusive growth for the benefit the poor, or the base of the pyramid.

Allow me to highlight some areas of “sustainable development” the SEC is looking at:

Direct economic value generated and distributed MEASURING the direct economic value generated, measured as revenue and distributed (costs) shows that an organization does not just create economic value for itself but also ensures that this value flows back to its various stakeholders, such as stockholders, suppliers, employees, the government and the community. This also discloses the remaining value that is retained in the company for liquidity and for future investments.

Resource management DISCLOSURES on resource management, such as energy consumption, water consumption, and ma- terials use show how efficiently an organization uses scarce natural resources, which has implications on reduction of environmental impacts from extraction and processing of these resources. The efficiency of managing resources relates to profitability of the organization.

Environmental impact management

REPORTING on an organization’s impact on air, soil, and water through emissions, wastes, and effluents provides basis for companies to manage these impacts. Responsible companies take an effort to minimize such impacts through cleaner production and pollution prevention measures.

Supply-chain management

DISCLOSURES on supply-chain management is most relevant for companies with a significant portion of value creation carried out by suppliers. Organizations can report on how the reporting company ensures that suppliers comply with sustainability standards and practices including compliance to Philippine laws. Let me add here that supply-chain management is enormously important for the survival of Philippine agriculture; without addressing supply-chain management, the farming community will not be able to become competitive and consequently address poverty in the rural areas.

Relationship with community

THESE disclosures show how an organization meaningfully engages the community around their sites, and how it aims to create a net positive impact to its host or neighbors. These also include how the company contributes in addressing issues of indigenous people and those coming from vulnerable groups (youth, elderly, persons with disabilities, vulnerable women, refugees, migrants, internally displaced persons, people living with HIV and other diseases, solo parents, and the poor or the base of the pyramid ] [BOP; Class D and E]) in its business operations.

In closing, let me go back to a strategy that makes sustainable development a competitive advantage. Research data suggest that some companies are creating real strategic advantage by adopting sustainability measures that their competitors can’t easily match. I hope that many Philippine PLCs accept that challenge!

Feedback is invited; e-mail me at Schumacher@eitsc.com.