Ayala’s path to an ESG driven business | FinanceAsia

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With several ESG-backed initiatives in recent years, the Philippines-based conglomerate Ayala has solidified its commitment to sustainability. Operating across verticals including energy, finance, infrastructure, and real estate, Ayala has committed to net zero greenhouse emissions by 2050. The conglomerate’s energy wing ACEN recently created the world’s first energy transition mechanism (ETM) in November 2022, backed by BPI and RCBC.

On the social front, Ayala’s GCash app and BPI’s BanKo have  played pivotal roles in financial inclusion for unbanked Filipinos and small to medium size enterprises. BPI and Globe are currently reviewing their framework to consciously focus on these areas.

When it comes to governance, Ayala’s boards are working towards an appropriate level of diversity and independence. This involves maintaining high standards when it comes to transparency and disclosure.

The 190-year-old company’s social and sustainability initiatives have a long history. Albert de Larrazabal, CFO at Ayala Corporation said, “We have always aligned ourselves to national interest and had very high standards of governance and stewardship. As we must be mindful of the ecosystems we operate under, ESG in various forms has always been part of our value proposition.”

Ayala’s approach to ESG

Today, ESG-based financing is a priority for Ayala. Apart from ACEN’s implementation of the world’s first ETM, Ayala has issued a social bond with the IFC in support of its cancer hospital. Larrazabal said, “We are looking to do KPI-linked social and ESG financing, which incorporates targets into the commercial terms and conditions of the loan.”

Even during the M&A process, the conglomerate is mindful of integrating new acquisitions into its ESG framework. Ayala has also taken steps to ensure that ESG is a priority that is ingrained at the highest levels of the organisation, leveraging its membership with the World Business Council for Sustainable Development (WBCSD). The conglomerate’s board has received training which ensures they can play an active role in tracking and monitoring developments in the ESG space.

Corporates making public commitments to sustainability draw a lot of attention, not all of it positive. Asked how Ayala approaches concerns about greenwashing, Larrazabal said, “Sometimes it happens inadvertently because of incorrect measurements. That’s why we brought in South Pole. We have taken steps to ensure we are on the right track by committing to independent verification, to give people a degree of reassurance.”

Building a model for the APAC region

While the need for sustainable leaders is strongly felt across APAC, many countries in the region have a minimal contribution to emissions — the Philippines emits half the global average on a per capita basis. Larrazabal said, “Between 80% to 88% of our emissions — depending on individual businesses — are scope 3.” These emissions are defined as the result of activities from assets not owned or controlled by a reporting organisation, but which are a part of its value chain. Larrazabal said, “Our scope 3 is somebody else’s scope 1 and scope 2. We need an environment that enables, incentivises, and if that fails, penalises those who disregard scope 1 and 2.”

Many emerging markets grapple with issues similar to those facing the Philippines — adopting renewable energy, while meeting the demands of a growing population and economy. As a result, ETM-like arrangements may be embraced to a greater extent. Asked for his advice on managing such a transaction, Eric Francia, president and CEO at ACEN said, “It is important for investors to reconsider their position on coal, so long as the principles are well understood. One may be investing in a coal plant, but for a good purpose, which is enabling its early retirement.”

Offering a financial perspective on the ETM, TG Limcaoco, president and CEO Bank of Philippine Islands added, “We provided lending and brought in other institutions. We took reduced rates of returns for equity and debt exposure, which allowed us to shorten the life of the plant by 10 to 15 years. It is a big win for everyone involved.”

For more on Ayala’s adoption of ESG and a deeper insight into the world’s first ever ETM, please watch the accompanying video.

 

 

¬ Haymarket Media Limited. All rights reserved.

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Talim forecast to hit southern China as a typhoon late Monday

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BEIJING: Severe tropical storm Talim is forecast to make landfall as a typhoon in the south of China on Monday (Jul 17) night, the country’s weather forecaster said, with local authorities cancelling flights, recalling ships and warning residents to stay home. China Meteorological Administration issued an orange alert for TalimContinue Reading

CPTPP: UK agrees to join Asia’s trade club but what is it?

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Logistics and transportation of Container Cargo ship and Cargo plane with working crane bridge in shipyard at sunriseGetty Images
By Dharshini David
Global trade correspondent, BBC News

The UK has signed a deal to join a trade pact with several countries in Asia and the Pacific, including Japan and Australia.

The name of this pact – CPTPP – is an unwieldy mouthful, but it’s also a new club of 500 million people the UK will be able to access.

So what does it mean for the fortunes of businesses and households?

What is the CPTPP?

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a trade agreement between 11 nations: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Those founding members signed the Pacific trade pact in March 2018.

Between them, they generate 13% of the world’s income.

The UK is the first non-founding country to join, and will be its second biggest economy after Japan. It takes the value of the new grouping to £11 trillion.

Representatives from CPTPP countries signed the rebranded Pacific trade pact in March 2018

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What’s in it for the UK?

The short-term gains are marginal.

The UK already had deals with the majority of these nations as part of its EU membership which have been carried over.

Since Brexit, the UK has added Australia and New Zealand to its trade deal tally.

It was just Brunei and Malaysia left that the UK didn’t have a deal with and between them those two account for less than 0.5% of the total of UK trade.

Even with some changes to the trading arrangements with other countries, the gains from the expanded accord is expected to be fairly small – around 0.08% of GDP over 10 years, according to the government’s best stab at an estimate.

However the Business and Trade Secretary likens CPTPP to a start-up, indicating the estimates doesn’t account for the fact that some members – for example, Vietnam – are rapidly growing in importance in global trade.

Even so, by contrast, leaving the EU, the government’s independent forecasters reckon, will have reduced the UK’s growth by far more – perhaps 4% of our income.

In total, the CPTPP accounted for 8% of UK exports in 2019 – less than we sold to Germany.

What changes?

The key perk is greater access to each other’s markets, and a pledge to eliminate or reduce 95% of import charges or tariffs.

But some are kept to protect sensitive domestic areas, such as Japan’s rice farming industry.

Also, manufacturers that get components from lots of different places can claim their products qualify for preferential treatment.

That means they can tick the so-called “rules of origin” box, as long as 70% of those components come from any of the participating countries.

The provisions could help UK producers of items such as machinery and medicines – our most valuable exports to those nations – by reducing their costs and allowing them to expand their supply chains across the constituent countries.

Away from trade, membership means investors from CPTPP countries get the same treatment as domestic firms when they put money into projects taking place in other member states, which could benefit UK firms.

In 2017, the CPTPP nations accounted for about £1 in every £12 of foreign investment in the UK, and the same going the other way – supporting business and jobs.

In return, countries must co-operate on regulations, such as food standards.

However, unlike the European Union, the CPTPP is neither a single market nor a customs union.

So countries are not required to have identical regulations and standards.

And countries can strike their own trade deals with others, as the UK has with the EU – although membership of the CPTPP would not be consistent with re-joining the EU itself.

What are the concerns?

In short, what has the UK had to agree to as the price of admission?

Some, including members of a House of Lords committee want to know how the UK intends, for example, to ensure environmental and animal welfare standards will be met.

The government has pointed out that CPTPP allows members to set their own levels of protection and it wouldn’t compromise the UK’s standards.

As part of the agreement, the UK will grant Canadian farmers more access to UK markets – but hormone-treated meat will still be banned.

And it is conceding to lower tariffs on imports of Malaysian palm oil – which has been blamed for aiding deforestation. Those charges currently can be up to 12%.

Trade unions have voiced concerns that plans to encourage more investment could allow multinational companies to legally challenge British policies – although trade experts say this capacity exists in other trade deals, and hasn’t ever been successfully exercised against the government.

Container ship

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What about the future?

The treaty will be scrutinised and ratified by members before coming into force, which could take at least a year.

It is the partnership’s potential that is key.

The agreement will loosen restrictions on services and digital trade, which matches the UK’s ambitions, and ties it in with some of the faster-growing nations.

But the biggest rewards – and challenges – could occur if others join the club.

China is among those vying to sign up, as is Taiwan.

Could the UK veto China’s membership? Or use its membership to shape China’s access and ambitions?

The real prize would be if the US reverses the decision made by President Trump not to sign up.

America buys about double the amount of UK exports than the current CPTPP nations put together, but membership doesn’t appear to be on President Biden’s to-do list.

At present, membership of the CPTPP is a mainly symbolic win for post-Brexit Britain.

But ultimately it could yield considerable rewards.

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Dig uncovers four stone lintels at Hindu temple

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An 11th or 12th century lintel found in Prasat Ban Bu Yai in Nakhon Ratchasima.
An 11th or 12th century lintel found in Prasat Ban Bu Yai in Nakhon Ratchasima.

NAKHON RATCHASIMA: Four stone lintels carved in the Old Khmer style dating back to the 11th or 12th century have been found at an archaeological site in Prasat Ban Bu Yai in this northeastern province.

The 10th Regional Office of Fine Arts in Nakhon Ratchasima found the stone lintels featuring delicately carved scenes from Hindu mythology at an archaeological dig at Prasat Ban Bu Yai, which is undergoing restoration in tambon Sung Noen of Sung Noen district, said Rakchart Kiriwattanasak, president of Nakhon Ratchasima’s Provincial Administrative Organisation Council.

Mr Rakchart said on Friday that the stone pieces were found scattered around the site.

The 10th Regional Office of Fine Arts will turn the stone temple into a tourist attraction, he said.

Prasat Ban Bu Yai was originally a Hindu temple in ancient Khmer culture. Built with sandstone, some of the architectural features such as lintels, door frames and tympanums (a triangular decorative wall surface) were carved in decorative patterns.

Judging by the artistic style of the sandstone carvings, the Hindu temple was built in the 11th or 12th century in the Baphuon and Angkor Wat style.

Mr Rakchart said archaeologists found all four stone lintels which had been installed above the gates, however only one is still intact. The intact lintel depicts a mythical lion holding a long garland.

Before the archaeological excavation, it was found that looters had dug up precious items including various metal artefacts and small bronze Buddha images.

“This was the theft of our national treasures. I would ask the looters to return everything they took rather than sell the artefacts in foreign markets,” Mr Rakchart said.

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Deng and ‘Gee, whiz’: the 1st PRC-based US reporters

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The deterioration in Sino-American relations in recent years has led, among many other consequences, to a dramatic drop in the size of the American press corps based in China.  For reasons that include expulsions and visa denials, the number of American journalists on the ground in China is lower than at any time in decades. It’s an appropriate time to look back on the pioneering generation of reporters who opened the first US news bureaus in China after the establishment of diplomatic relations in 1979. Their stories are recounted in this excerpt from Assignment China: An Oral History of American Journalists in the People’s Republic, a new book by Mike Chinoy, who served as CNN’s first Beijing bureau chief. –Editors

With the establishment of diplomatic relations, the Chinese government agreed to allow American news organizations to open bureaus in Beijing, and the Carter administration welcomed Chinese journalists to be based in Washington. For the newly arrived American reporters, Deng Xiaoping’s policies of economic reform and opening China to the world up after the isolation of the Mao years was the major story.

Sandy Gilmour had been the NBC News Houston correspondent when asked by the network to open its bureau in Beijing.

Sandy Gilmour, NBC News, reporting from Shenzhen, Photo courtesy of Sandy Gilmoour

Sandy Gilmour, NBC News:

Clearly the primary story was the economic opening to the West, China beginning to develop some semblance of private enterprise, to reform this socialist command economy. I tried to do as many stories along those lines as I could. And slice-of-life. Those kinds of stories were always very popular. You could go out on the street, and you could shoot street scenes, bicycles, people walking, the cabbage piled up on the sidewalks in the wintertime for storage, stores and shops and so forth. You could go up to people and ask them questions, although many didn’t want to answer because they were afraid of the potential consequences, even if it was a nonpolitical question such as “How do you enjoy life?” But to get into a Chinese enterprise, to go to a collective farm, a factory, those kinds of things took weeks and weeks of preparation, of phone calls, of begging and pleading and wheedling with the office in the Foreign Ministry that permitted correspondents to get out and do their business. It was extremely frustrating.

§

CBS sent Bruce Dunning, who had spent years covering the war in Vietnam.

Bruce Dunning (1940-2013). Photo: the Foreign Correspondents’ Club of Japan

Bruce Dunning, CBS News:

A lot of us were trying to counteract the years of “Red China Menace” kind of stories and say, “These are people.” It’s the largest country in the world. What are they really like? There was generally a lot of good feeling. Early on, you could get almost anything on the air. There was just that novelty, you know: We have a bureau in Beijing. We have a presence in China. They were willing to put almost anything on the air.

§

Jim Laurie, who arrived for ABC News, also had covered Vietnam and had been one of the few American journalists to stay in Saigon after the Communist victory.

L-R, Frank Ching, Wall Street Journal, and Jim Laurie, ABC News, with Deng Xiaoping, Beijing, January 1979. Photo courtesy of Jim Laurie

Jim Laurie, ABC News:

In the early days, the opening of China to the West, there was a “gee whiz” mentality. If you go back and look at the programming on ABC, NBC and CBS in 1979, that is very much reflected. China opening up. Every little innovation that was part of the reform program that Deng was outlining was seized upon. The first private restaurant. The first private car. It was all a series of firsts. There was an insatiable appetite for slice-of- life stories, particularly if you could get good images. It’s hard to understand now, but you’ve got to realize that in this period, ’79 to ’83, this was “coming out” for China. Very little had been seen of China, especially by American TV viewers. So almost anything that was visually interesting went.

§

Bruce Dunning, CBS News:

We did stories on private restaurants. People would set up restaurants in their homes and those were some of the first examples of private enterprise.

I remember when free markets began to show up on the outskirts of Beijing, just a few farmers setting up primitive benches and selling produce, but it was such an improvement over the state stores and the quality of produce just increased remarkably.

§

Linda Mathews, who had been working in Hong Kong for the Asian Wall Street Journal, opened the Los Angeles Times bureau.

Linda Mathews, Los Angeles Times:

On Good Friday 1980, some of the churches were just being reopened after being shut down during the Cultural Revolution. We walked into a church and met this bishop named Moses Xie. There was a choir practicing for Sunday services, and they had hand-lettered hymnals because the real hymnals had been burned during the Cultural Revolution. They were singing in Chinese, “Rise up, you men of God.” It was a magical moment to be in a Chinese church, which had been a factory for years and years, and here was a choir and a couple of Jesuits.

Linda’s husband Jay, who had studied Chinese at Harvard, became the Washington Post bureau chief.  They faced a special problem, as neither of their papers was happy having its correspondent married to the competition.

Jay Mathews, Washington Post, and Linda Mathews, Los Angeles Times, at the Ming Tombs, Beijing, Photo courtesy of Jay and Linda Mathews

Jay Mathews, Washington Post:

The Washington Post had a tradition of correspondents signing a letter of understanding before they went overseas. There was a paragraph in my letter which said, Don’t you dare ever be beaten by your wife on any kind of story, and if you can beat her as often as possible, that’s fine. And I signed that very happily. But we’ve learned, as correspondents go overseas, that they do team up.

§

As part of his reforms, Deng Xiaoping authorized the establishment of four special zones along the country’s southeastern coast as laboratories to experiment with market-style economics, and, he hoped, spearhead economic growth. For the first time since the Communist revolution, capitalist activities such as private enterprise and foreign investment were not only permitted but actively encouraged. The first zone was Shenzhen, at the time just a small fishing community directly across the border from Hong Kong.

Frank Ching, born in Hong Kong, edited China stories for several years for the New York Times. In 1974, he returned to the territory to join the Asian Wall Street Journal before being assigned to Beijing.

Frank Ching, Wall Street Journal:

Shenzhen was nothing. A little village, very few people. When you first went down, there was nothing to see. They hadn’t done anything yet. But they talked about their plans. Now there are millions of people. It’s incredible that China could build up a city like this almost overnight.

§

Liu Heung-shing, who had also been born in Hong Kong, joined the Associated Press bureau in Beijing.

Coca-Cola’s entry into the China market was a huge story. Here’s is a famous shot by Pulitzer Prize-winning photojournalist Liu Heung-Shing. Source: YouTube

Liu Heung-Shing, Time, Associated Press:

They were laying out their blueprints and telling us where they’re going to build a highway and where they’re going to build a Holiday Inn hotel and convention center, where they’re going to build the port. And the reaction from my colleagues on that trip was that, “Yeah, right.”

§

Like Jay Mathews, Richard Bernstein had studied Chinese at Harvard. He had been serving as Time magazine’s Hong Kong correspondent.

Richard Bernstein, (Time,) on a train, Photo courtesy Liu Heung-Shing

Richard Bernstein, Time:

I think what we got wrong was, we totally underestimated the ability of China to change rapidly. Nobody could have predicted. We certainly didn’t predict the extent to which China would become a country like a lot of others.

§

Some of the most dramatic changes began to unfold in the countryside, where Deng Xiaoping authorized the breakup of that symbol of radical Maoism, the people’s communes. The collective farms, set up during the Great Leap Forward in the late 1950s, were replaced by a system of household family farming that sharply boosted rural incomes.

Melinda Liu, a Chinese American from Ohio, opened the Newsweek bureau.

Melinda Liu, Newsweek:

The People’s Commune system was such an icon of Maoism. The fact that it was being broken up into family-based farms, which turned out to be much more productive than the big collectives, was very telling. On the group visits, the challenge was, how do you get anything out of it that’s not the same as everyone else? There was one of these group visits to Anhui where a People’s Commune was being literally parceled out. I kind of infiltrated a family and they were so excited and really happy. One farmer was like, “Yeah, I got such and such a plot, [of land].” They had even divided up the wheelbarrow so that someone had half, and someone had the other half. “My neighbor got the wheel, and I got the rest of it.” And I’m like, “How is that going to work?” But they were so happy.

§

Indeed, as the Mao years faded into memory, the dominant theme in the China of Deng Xiaoping was hope.

Jay Mathews, Washington Post:

We were fairly hopeful. This very strong culture was coming back, was building businesses, was creating a government that was more responsive to the people’s needs, was letting people talk more freely, if not in the public press. That was unleashing all kinds of interesting and hopeful changes in the way Chinese were going about their lives – and producing flashes of humor, creative art, filmmaking, things they hadn’t had before and were going in interesting directions. I am an optimist, so I was always looking to see the glass half full, and I thought the glass was really getting much fuller.

###

Mike Chinoy, a non-resident senior fellow at the University of Southern California’s US-China Institute, spent 24 years as a foreign correspondent for CNN, serving as the network’s first Beijing bureau chief and senior Asia correspondent. He won Emmy, Dupont and Peabody Awards for his coverage of Tiananmen Square. He is the author of five books including China Live: People Power and the Television Revolution; Meltdown: The Inside Story of the North Korean Nuclear Crisis; The Last POW; and Are You With Me: Kevin Boyle and the Rise of the Human Rights Movement. This excerpt adapted from his Assignment China: An Oral History of American Journalists in the People’s Republlic, is copyright © 2023 Columbia University Press. Used by arrangement with the publisher. All rights reserved.

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