BPI sustainability formula: ESG is not enough

in the investment community, ESG is not a convenient mnemonic for a set of criteria that defines a sustainable organization. it stands for environmental, social and governance (ESG) factors that are required to be reported for publicly listed companies.

For the Bank of Philippine islands (BPI), however, something else must be added. As explained by Jo Ann B. eala, Vice President and Head of Bpi’s Sustainability Office, Bpi’s unique sustainability formula is esg+e2.

“Since ESG is the focus the 2nd e is usually forgotten. And this is the economic impact of the things that we do. We ask ourselves as we engage in these ESG initiatives: would the businesses flourish and boost our bottom line and the bottom line are our clients. How about the employees, are we sustaining uninterrupted business success and profitability? So that is the 2nd e that we hope we could always put together in ESG. This is because it is only when we can have economic gains can we ensure sustainability on the ESG fronts,” eala stressed.

BPI reporting journey

AS early as 2008, eala said BPI and the Ayala Group of companies have already been doing Global Reporting initiative (GRI) reporting. BPI partnered with the international Finance corporation (ifc) to ensure that initiatives under Bpi’s sustainability program are compliant with global standards.

in 2010, BPI initiated a study on 16 cities which the bank felt were vulnerable to the impacts of climate change. They were so disturbed by the findings that they decided to convene roadshows from 2014 to 2020 to discuss the outcomes with the cities involved in the study.

“We initially did this study because we wanted to know our exposures. The findings were just so scary so we had to convene roadshows to tell the public and private sector in those cities that they were very vulnerable in various aspects and in natural hazards,” she related.

As the years progressed, BPI continuously refined its sustainability reports to make them at par with reports that were prepared internationally. By 2018, BPI already did integrated reporting and how it had contributed to the un Sustainable development Goals.

“By 2019, we already had a blueprint for the whole Ayala Group. You see, sustainability is not unique to BPI. There is in fact Ayala Sustainability council. They’re the real experts on sustainability. We even had Sustainalytics, one of the multi-awarded 2nd party opinion providers to check on our Green Bonds framework,” she said.

“Just last year, we already converted the Green Bond framework to a sustainable public framework. This is the first among banks. We had what we call an environmental risk assessment of bank assets and kind assets because as i was telling you earlier, we are in the Pacific Ring of Fire, we are in the typhoon belt so we needed to map assets not only of the bank but of the clients. exposure, too, is what we’re looking for because of natural hazards from earthquakes to climate-related risks like typhoons to f looding and then also volcanic eruptions.”

Also last year, eala reported that they started reporting based on SAS or Stability Accounts Standard Goals and introduced a mandatory course on sustainability for all BPI employees to attend.

“We are also the first bank to sign up with the Task Force on climate-related Financial disclosures which is not common in the Philippines. There are only 12 companies that signed up to give their support to BPI. i give credit to our partners. i’ve learned a lot from these people,” she said.

“And BPI will not stop there. By 2026, Bpi’s commitment is to halve its coal portfolio, and zero out coal by 2032. That’s out of coal completely five years earlier than the original plan of 2037,” she added.

Today is the best time for sustainability practice

eala admitted that environmental issues were close to her heart, adding that the best time to strengthen her skills in this field is now “because wer are in the middle of a big health crisis with over 154 million infected and over 27,000 deaths resulting from the virus.”

She recalled the time when her team were mapping the possible hazards that Tacloban faced back in September 2013. They were already preparing five-year plan for Tacloban when it was struck by Typhoon Yolanda in 2013.

“The country lies along the Pacific Ring of Fire and we are in the typhoon belt so we needed to map assets not only of the bank but of the clients. So why do we need sustainability? There are about 100 to 150 earthquakes in the Philippines per year. You know what the truth is, we have an average of 20 a day and it’s happening over a hundred kilometers underneath so we don’t feel that. Being in the typhoon belt we have 20-25 typhoons per year. We are also expecting an increase of sea level 3.4mm per year or around 4 inches by 2050. These are alarming facts,” she said.

Environmental risks and opportunities

While the country faces numerous risks, these risks can be transformed into opportunities where business plans can be designed to be more resilient. Business innovations can also be adopted to make companies more efficient.

“This pandemic jumpstarted the country’s digital transformation -- actually globally. it has forced us to be more efficient in our resources. We are now looking at how to further reduce electricity, water, even the use of paper and gas because practically all the meetings and events now are done online. So, imagine the reduction in carbon footprints that is resulting in all of these new ways of doing things, even working from home, which is brought about by the pandemic.