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Equitable Business Practices

The Philippine government is firm in its goal to reduce the number of Filipinos who cannot afford basic necessities to 11 percent by 2022, using as a point of reference the 16.6 percent poverty incidence in 2018.

Recognizing the influence of businesses to the country’s economic performance, Ayala aims to contribute to SDG 1 (No poverty) and SDG 8 (Decent work and economic growth) by creating economic values that improve lives, especially for the underserved and unserved. Moreover, Ayala observes fair and ethical practices in its business activities.

Economic Value Distribution

Ayala contributes to economic growth through distribution of economic value among various stakeholders. In 2019, the total economic value generated by the Ayala group increased by 8.5 percent to about ₱560 billion. This growth was driven by significant increases in revenue of ALI, BPI, and Globe, and divestment gains from AC Energy and AC Education.

Of this total value generated, 76 percent was distributed to stakeholders while only 24 percent was retained by the companies. About 41 percent was used to pay suppliers to cover operating costs, 10 percent to employees, 15 percent to providers of capital, and 10 percent to government and community investments.

At the parent company, total economic value generated increased by five percent to ₱309.6 billion and total economic value distributed to stakeholders also increased by six percent to ₱318.9 billion.

Sustainable Procurement Practices

Ayala companies encourages their suppliers to comply with quality standards and ethical practices. Our business units have their respective supply chain policies and code of conduct that require suppliers to undergo an accreditation process to examine their legitimacy, technical competence, financial capability, service quality, and, in some cases, their sustainability performance. In particular, Ayala Land, Manila Water, and IMI use environmental and social criteria for their supplier accreditation process.

  • Ayala Land
  • BPI
  • Globe
  • IMI
  • AC Infra
  • AC Health
  • iPeople

Highlighted company practices

The ISO 20400:2017 guidelines for Sustainable Procurement is the benchmark for Ayala Land’s supply chain policies and processes to align with sustainability standards. It is currently drawing up a Sustainable Procurement Roadmap to enable vendors to adhere to sustainability standards of the company and provide additional requirements.

In 2019, a Supplier Self-Assessment Survey was launched via their procurement systems. To further extend sustainability to its supply chain, the company plans to conduct external audits for its critical suppliers in the next few years.

Capacity building is incorporated into the company’s supply contracts with critical vendors. Across the areas where it operates, the company establishes strategic partnerships with local suppliers and service providers.

Regular audits for critical vendors, which include a review of environmental and social risks, are conducted. The company also enables local job creation through its strict adherence to the engagement of local companies for major capital expenditure projects.

The global EMS company complies with and requires suppliers to adhere to the Responsible Business Alliance Code of Conduct.

Generika products are Food and Drug Administration (FDA) compliant and fit for human consumption. They also conduct audits of manufacturing facilities and review processes of new suppliers. They further monitor validity of Certificates of Product Registration and constantly communicate with suppliers of House Brand products for any products due for renewal.

Mapua Schools improved their centralized online system to streamline procurement and financial processes. The company is working on integrating its other schools specifically NTC, UNC, and APEC Schools to the centralized financial system.

Performance

Some Ayala companies are more deliberate in their commitment to support local economic growth, cognizant that supporting local suppliers improves economic activity. The following charts shows the percentage of procurement budget spent on Philippine-based suppliers by these Ayala companies.

Percent Local Spending

Manila Water

100%

AC Energy

99%

AC Infra

87%

HCX

81%

Globe

59%

Community Engagement

Ayala builds trust among the people in areas where its businesses operate by creating value that benefits all and managing the impacts its operations may have.

Each business unit has community engagement programs that help build capabilities not only among beneficiaries but also project partners including LGUs. Most programs encourage and support volunteerism among employees.

Ayala continues to nourish the spirit of volunteerism among its employees. Its biggest volunteer-driven initiative in celebration of its 185th year is a combination of activities spanning environmental causes, donation drives, and outreach programs. When it was launched, a target of 185,000 hours was committed. This was eventually surpassed with more than 600,000 volunteer hours through the combined efforts of employees across the group.

  • Ayala Land
  • BPI
  • Globe
  • AC Energy
  • iPeople

Highlighted company practices

  • Alay sa Komunidad Program in Alviera turned over four classrooms to relocated Brgy. Sapang Uwak Elementary schools.
  • From Hooks to Books teaches guests traditional bottomline fishing. Through the program, partner fishermen in El Nido received a total of ₱2.9 million to fund their activities and projects such as a community library and environmental education for kids.
  • Through the Corporate Vegetable Program, 25 rice farmers in El Nido and Narra, Palawan were re-tooled and re-skilled in fruits and vegetables farming.
  • Palengke Caravan provided 53 sessions of entrepreneurial financial literacy workshops for self-employed, micro-entrepreneurs
  • Sulong, a financial education and entrepreneurship module for migrant workers and their families in Hong Kong and Singapore, reached a total of 4,213 Overseas Filipino workers and 12,532 family members in 2019.
  • Tech-Voc Program conducts training programs that combine valuable technical-vocational skills with entrepreneurial and management skills. In 2019, 16 trainings were conducted across 10 communities with a total of 457 community members.

Key community engagement strategies

  • Creating proofs of concept on the use of technology to address social issues in specific communities
  • Supporting government programs
  • Monitoring social return on investment (SROI) of community programs

Programs with high SROI

  • Developing modules to foster a safe, inclusive, and collaborative online environment, assisting LGUs on marine conservation and rehabilitation, and supporting advocacies of its subscribers through Globe Rewards.
  • Through its Marine Biodiversity program, Globe introduced underwater mapping to select LGUs to access information that can be used to develop targeted plans on marine biodiversity rehabilitation and conservation in four coastal communities and major tourist destinations in Bohol, Siargao, and Palawan.
  • Globe provides access to all subscribers to contribute to their advocacy by donating their Globe Rewards points using their mobile application.

As part of AC Energy’s flagship sustainability program, the Conservation Estate reiterates the company’s adherence to the Ayala group philosophy of creating value not just for its businesses, but for the environment and communities where they operate. The program completed its pilot phase and is in the process of scaling up.

The company runs an integrated Water, Sanitation, and Hygiene program, which is a participatory intervention that will result in access to clean and potable water and improvement in sanitation facilities and hygiene practices in the communities. In 2019, it adopted two new communities, Sitio Monicayo in Mabalacat City, Pampanga, and Barangay Sapang Uwak in Porac, Pampanga, reaching more than 2,000 residents.

Other flagship community programs include infrastructure programs for drinking and sanitation facilities in public institutions and low-income communities.

Buoyed by the knowledge that we have maintained strong foundations across the five materiality themes that we focused on in our 2019 assessment presented by emerging trends, we are confident that we can deliver more to our stakeholders.