Sustained Focus on ESG

Materiality: Gaining Focus in 2021

After a successful integration of various elements and metrics in 2020, Ayala’s Sustainability Reporting Framework gained focus in 2021 to maximize our relevance and impact. It continues to feature a blend of metrics on which our disclosures are based, with emphasis on how we in Ayala go beyond mere compliance in creating shared value and being a responsible organization.

Where possible, we intentionally track both our financial and ESG performances. We continue to align with global standards and frameworks in our disclosures of ESG items, as well as uphold the Ayala Sustainability Blueprint, which was based on the UN Sustainable Development Goals.

Connects financial and ESG aspects, and explains how a company creates value through the following capitals:

  1. Financial
  2. Manufactured
  3. Human
  4. Social and Relationships
  5. Intellectual
  6. Natural

Recommends disclosures on climate-related financial risks and opportunities; primarily used by investors, lenders, and insurers

Focuses on the company’s ESG performance and impact; and lists interrelated items that are both universal and topic-specific for a company’s materiality

Highlights pre-selected, industry-specific, material topics that are prioritized by investors

As a founding member of the Global Compact Network Philippines, our report also discloses how we remain true in adhering to UNGC’s 10 principles.

Our Materiality Process

Our sustainability framework was the result of a rigorous process involving the different business units of the group. It began with the definition and setting of the criteria that will guide us in finalizing our material topics:

  1. It is common among the majority of the Ayala companies.
  2. It has a significant impact on the brand and reputation of Ayala.
  3. It has significant importance to key stakeholders of the company.

This was followed by the identification of the material topics from the previous reporting framework and engagements with the different stakeholders, an in-depth look at the different reporting standards, evaluation of reviews by the World Business Council for Sustainable Development (WBCSD) and ESG rating institutions, and lastly, research on ESG trends and challenges.

We then looked closely at each material topic to gather their impact and importance in the context of our businesses and stakeholders. The results then went through validation by having thematic workshops that were attended by sustainability champions and management representatives of the business units.

The insights and results gathered from the workshops were reviewed. Prioritization occurred based on their strategic importance and impact on the value chain—all in the context of industries we are in and what our stakeholders value. The final step of categorization involves the analysis of the interconnectivity of the material topics and disclosures.

This resulted in five thematic areas:

  1. Climate change and biodiversity
  2. Resource efficiency and waste management
  3. Workplace experience and future of work
  4. Customer experience and protection
  5. Equitable business practices

Our review for the year showed that the five thematic areas and their related indicators continue to be relevant across the group. We conducted roadshows with every business unit where we tackled the trends in their industry, changes in their business operations, and the important matters for them and their key stakeholders.

Due to the decrease of the investment of Ayala in Manila Water Company, these two indicators are no longer part of Ayala’s materiality:

  • Water distribution network efficiency
  • Wastewater management

Since Ayala joined the World Business Council for Sustainable Development (WBCSD), their annual feedback on our report became a significant component of our review process. Inputs from our latest feedback session with WBCSD as well as from our roadshows helped refine our materiality framework where focus areas are now highlighted per theme. After much deliberation, the heat map shows the level of importance of the material indicators for both our key stakeholders and the business. Indicators that fall in the priority zone are then the primary focus of our materiality themes.

  1. GHG Emissions
  2. Energy Resource Planning
  3. Physical Impacts of Climate Change
  4. Biodiversity
  5. Energy Management
  6. Water Management
  7. Waste and Hazardous Materials Management
  8. Material Consumption
  9. Employee Engagement and Mental Health
  10. Training and Development
  11. Occupational Health and Safety
  12. Non-discrimination
  13. Child Labor
  14. Forced Labor
  15. Product Quality and Safety
  16. Customer Privacy
  17. Security Practices
  18. Business Ethics
  19. Economic Value Distribution
  20. Supplier Sustainability
  21. Community Engagement

As Ayala firmed up its 2050 net-zero commitment, GHG Emissions became the focus for Climate Change and Biodiversity. Globally, stakeholders are keeping an eye on GHG Emissions, holding companies accountable, ensuring that they lower their negative environmental impacts. We take the lead in reshaping the agenda for Philippine business, declaring our climate commitment with a clear plan on how to follow it through.

The second thematic area’s focus on Waste and Hazardous Materials Management is related to Ayala’s drive to lower negative environmental impact. Climate change has accelerated our need to find measures to reduce and manage the waste we create, especially since waste management has been a pressing issue in urban centers where we operate.

On Workplace Experience and Future of Work, the highest demand of key stakeholders is on employee engagement and mental health–two areas that have become increasingly important especially during the pandemic. We at Ayala recognize that employees are our primary customers whose well-being at work is part of our responsibility.

The fourth thematic area’s focus turned out to be Product Quality and Safety. Both the key stakeholders and companies recognize that product quality and safety is of high importance to any organization.

The final theme, Equitable Business Practice, gives more focus on a governance-related indicator–Business Ethics. Our stakeholders expect that Ayala Corporation will continue to exercise strong corporate governance and hold all its business units to the same standard.

Maximizing relevance and impact through focus

Our ESG Reporting Framework and Ayala Sustainability Blueprint guide us in disclosing and communicating our performance. We give high importance to our environmental, social, and governance impacts to ensure that we remain a responsible organization, while we continue to set our sights to positively contribute to societal development.