More than two-thirds of chief executive officers (CEOs) in the Philippines have committed to boost spending for environment, social and governance (ESG) initiatives, with the COVID-19 pandemic becoming a catalyst to accelerate the sustainability agenda.
However, only 36 percent of CEOs said their companies were measuring and reporting the financial impact of their sustainability practices, mostly large publicly listed corporations that are required by corporate regulators to do so, based on the PwC Management Association of the Philippines CEO Survey 2021.
"The goal of most business leaders is not to go back to how business was done prepandemic, but to build something better," Mary Jade Roxas-Divinagracia, Deals and Corporate Finance Managing Partner at PwC Philippines, said in a recent press briefing.
Divinagracia said while the pandemic seemed like the most urgent concern at this time, climate change would be a much bigger challenge, especially so for the Philippines, which is historically prone to natural disasters and thus among the most vulnerable to climate change.
"However, when we drill down on the environmental initiatives of various businesses, only a few CEOs said that they track their carbon emission and make a deliberate effort in reducing carbon footprint," she said.
The survey revealed that climate change initiatives were limited in scope, and were mostly in the area of reducing paper, energy and water consumption. While 69 percent had ESG initiatives, only 43 percent have incorporated climate change and environmental damage into their strategic risk management activities.
"As more regulations are put in place, I think we will see more businesses incorporating ESG and climate considerations into their corporate strategy," she said.
The pandemic has also allowed businesses to revisit their governance practices, including tax compliance.
"However, we can still do better in terms of incorporating ESG in management KPIs (key performance indicators). ESG, as we know, is far too important, and it needs to be driven from the top," Divinagracia said.
But as consumer behavior and expectations evolve, demand for change is seen to snowball.
"Customers, as they say, will vote with their wallets and will choose to support companies and brands that they believe are aligned with their values. Also, we see that more investors will demand that their investee companies are ESG-compliant," she said.
"Employees will also be motivated to work for companies that they can be proud of. So companies are, therefore, expected not just to respond to the needs of their shareholders but to the wider network of their stakeholders as well."
While most of the CEOs who said their firms were measuring their sustainability impact came from publicly listed corporations, Divinagracia said a number of privately held companies, even start-ups, were embracing ESG, at the behest of institutional investors that were required to report their ESG practices and compliance.
Alexander Cabrera, PwC Philippines chair emeritus, noted that in this year's survey, it was noticeable that CEOs were now thinking more of the long-term benefits of ESG.
"And while the amount of CEOs that are confirming that they're going to integrate ESG into their business model is not yet a majority of the CEOs, I think it's a very good momentum already," he said.
Alma Jimenez, who chaired MAP's CEO Conference this year, said the survey reflected the reality that few companies knew how to produce ESG reports. Building such know-how would be something that the MAP could advocate, she added.
"Also right now, for most of the companies, the mood is more of firefighting. It's like they look at the concept of ESG as something that they can do in better times when the company's operation is already good and it's something that they can train their sights on moving forward," Jimenez said.
"So it's a matter of accountability. If the public will call on the companies to be accountable for what they do in terms of ESG, they will be pressured, because it now will hurt the market if they will not come up with ESG practices."
There were 178 business entities covered by the survey, 62 percent of which were large corporations and 26 percent were medium-sized, while small and micro-enterprises accounted for 6 percent each.
Based on the PwC-MAP survey, the majority of the CEOs still prioritized their employees' welfare by providing COVID-19 assistance, and health and wellness benefits.
During the pandemic, there were more instances of mental health concerns while others also experienced challenges working from home. To help their employees, 47 percent of CEOs also provided work- from-home allowances because of the new work setup as employees now have to invest in faster internet and furnishings to make remote working comfortable and possible. INQ
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