How a CFO champions governance

Practice what you preach, and investors will reward you.

This is the advice of the 10 ING FINEX CFO of the Year awardees, whose companies not only comprise more than P3.5 trillion of the Philippine stock market’s capitalization, but also belonged to the top 50 firms in the ASEAN Corporate Governance Scorecards.

For these chief finance officers (CFOs), a company’s financial performance is only as important as its good governance practices. And “in a macroeconomic environment that has become more volatile, more global, and more interconnected, the CFO’s role becomes more pronounced, especially as a governance champion in his organization,” said ING Bank country manager Consuelo D. Garcia.

This is why ING Bank and the Financial Executives Institute of the Philippines (FINEX), which sponsor the Philippines’ longest running and only CFO search, chose the theme, “A Decade of the CFO: Championing Good Governance” on the 10th anniversary of the ING FINEX CFO of the Year Award.

The CFO’s role may have vastly evolved over the years — from being a traditional number-cruncher, to taking on multi- hyphenate roles as the company’s operator, strategist, catalyst, and steward — but one thing that separates an outstanding CFO is how he champions good governance in his organization.

Here’s what the 10 CFO of the Year awardees say about their role as their organization’s corporate governance champion and how this affects business performance:

“After the Bangladesh (money laundering) issue, it has become more important for CFOs to strictly enforce and comply ( with governance standards). A P1-billion fine, after all, is no joke. It’s going to be a major initiative to prevent slippages from happening, especially when you have a nationwide operation. You need to have the systems and processes that would enable you to see these things, and the use of IT is going to play a major role,” he explained.

— 2007 awardee Delfin Gonzalez Jr., formerly CFO of Globe Telecom and now managing director of AG Holdings, Inc., Ayala Group’s Singapore-based investment firm

“A values-centered approach to governance helps set the right tone at the top by putting a high premium on the integrity of an organization and how employees will conduct themselves in an ethical way, while ensuring they discharge their roles effectively.”

— 2008 awardee Sherisa Nuesa, who was CFO of Manila Water Co. when she won the title, and now president of ALFM Mutual Funds

“Being a well- governed company means you take care of your employees and other stakeholders. This way, you’ll shine, grow, and increase your profit and revenue. Those that don’t are bound to fail.”

—2009 awardee Jose T. Sio, CFO and executive vice-president of SM Investments Corp.

“Good governance is all about doing the right things even if your customers don’t know. We’ve had cases when we had to lower the price points of certain products just because they would benefit our customers. While our margins would be relatively thin, we compensate for that through loyalty: customers would keep coming back. What is more important for us is to offer value for money.”

—2010 awardee Ysmael V. Baysa, CFO and compliance officer of Jollibee Foods Corp.

“Call it ‘ governance

premium,’ especially for Western-based institutional investors. Investors put a premium on companies with good governance because they believe that doing right will actually make the business much more sustainable and profitable.”

—2011 awardee Jaime E. Ysmael, Group CFO of Ayala Land, Inc.

“Being a catalyst in social, economic and sustainable development in the local communities is also good corporate governance. It’s not just about the results and the numbers; we have to think beyond that. A well-governed company benefits the national and local government units with the creation of economic opportunities, which can generate more jobs and increase tax revenues. As a catalyst, we make sure that our projects are anchored on corporate social responsibility activities and sustainability projects that impact our communities.”

—2012 awardee Jeffrey C. Lim, former CFO and now president of SM Prime Holdings

“We’re a pretty straightforward organization, transparent from topdown. We place great value on fairness and accountability to the viewing public. We “walk the talk” when it comes to public accountability by having a whistleblowing policy that allows anyone who has a complaint or who wants to report bribery or abuse to write directly to the chairman of the broadcasting giant.

—2013 awardee Felipe S. Yalong, GMA Network, Inc. executive vice president

“We want to do things properly and we feel strongly about anti-bribery and corruption. We will not pay bribes just to get things done quicker. At the end of the day, it is about doing business the right way, not just right away.”

—

2014 awardee Jose Jerome Pascual, CFO of Pilipinas Shell

“Beyond the scorecards and compliance, governance is the attitude of the owners, board directors, and everyone involved. It is trying as much as possible to work by consensus, not the overwhelming control to force your way; it is listening to everyone before making a decision.”

—2015 awardee Luis Juan Oreta, CFO of Manila Water Co.

“I’m both the CFO and the Corporate Governance Officer of Philex. Handling both functions makes it easier to implement and improve governance processes, as there will be less coordination needed. We introduced a number of changes at the Board and management levels from the creation of Corporate Governance Committee at the board level and the establishment of CG Department at the management level down to institutionalization of CG policies.”

—2016 awardee Danny Y. Yu, CFO and Corporate Governance Officer of Philex Mining Corp.