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Creating Shared Value Map

Our Vision

To be the most relevant, innovative, and enduring Philippine-based business group, enabling shared value and prosperity for the many stakeholders we serve

Our Mission

To ensure long-term profitability as we create value and forge synergies and alliances with entities who share our philosophies and values

Our Core Values

  • Integrity
  • Long-term Vision
  • Empowering Leadership
  • Commitment to National Development

Our Purpose

To improve lives through resilient businesses and risk-calculated investments that have a meaningful and lasting impact on the country’s economic and social landscape

Our Promise

Reinventing businesses, Transforming communities

Key Drivers

  1. Micro and Macro Economics
  2. Megatrends
  3. Leading Sustainability Practices

Sustainability Statement

Our transformation path that leads to a meaningful and lasting impact on the country’s economic and social landscape aligns with the SDGs and navigates within the focus areas of marginalization, untapped potential, and irresponsible growth

Sustainability Blueprint Principles

  1. Outside-in
  2. Bold leadership
  3. Impact at scale
  4. Focus
  5. Public-private partnership

Global Partnerships

Ayala sits in the Board of the UN Global Compact Network Philippines and supports the Global Compact and its 10 Principles.

Ayala is the first Philippine company to become a member of WBCSD and support its goal of transitioning to a sustainable world.

Global Standards

Our Strategy

We have a strong track record of building impactful businesses and steering their strategic transformation as industry-leading players. We identify opportunities in sectors that are either in nascent stages or are undergoing disruption to create strong franchises. We explore new sectors, geographies, and expert partners to develop new business models where we can innovate and unlock our unique advantage.

As our financial management strategy helps us be financially strong to grow and expand, our non-financial management strategy helps us ensure that we remain relevant despite the fast-changing business and social climates. Both strategies are given equal importance in Ayala and drives the group to be continually resilient and innovative.

financial management strategy

Our financial management strategy is rooted in discipline and a conscious alignment to the vision of Ayala to be the most relevant, innovative, and enduring business group. Using the five vision pillars as a guide, management gains a better understanding of how decisions on capital allocation, portfolio management, business development, and balance sheet management impact the overall strategy, allowing the company to be agile and ensure its longevity.

Our strategy execution is driven by four elements:

1

Strategic Business
Development

We continue to refine our existing business strategies and to identify new opportunities by leveraging our financial, intellectual, human, and social and relationship capital.
2

Robust Capital
Allocation

We utilized quantitative and qualitative criteria and a multi-step management approach to fund new or existing businesses.
3

Active Portfolio
Management

We continue to balance our holdings to crystalize value.
4

Active Balance Sheet Management

The engine that allows us to stay nimble drives our capacity to grow.

These four are done in the context of key global, regional, and local trends that we believe will impact markets, sectors, and businesses in which we choose to invest and operate.

  • Core Value Drivers
  • Portfolio Investments
  • Long-term Value Drivers
Our management approach and constant reinvention has cemented our business leadership over the past
185 years

Non-financial management strategy

The other component that defines the way we do business is our commitment to sustainability. Our non-financial management strategy revolves on:

1

Human Resource
Development

The belief that our employees are our primary customers and their welfare is our priority.
2

Corporate
Governance

This makes sure that we comply with policies and regulations required of responsible companies.
3

Stakeholder
Management

This is where we operate with the welfare of our stakeholders in mind.
4

Risk
Management

This gives us the balance and cautions us as we keep our balance sheet strong.
5

Brand
Management

Our mindset is that everything we do affects our brand and reputation.

With these, Ayala annually looks at environmental, social, and governance performance as aligned with its Sustainability Reporting Framework. Moreover, Ayala also monitors how it creates shared value and ensures that it significantly contributes to the UN Sustainable Development Goals through the commitments set in the Ayala Sustainability Blueprint.

Our Business Model

Ayala addresses structural and societal gaps in the Philippines by building businesses and transforming its industry-leading subsidiaries. Our long-term value creation is driven by our strategies with Sustainability at our core.
  • VALUE WE DRAW FROM
  • WHAT WE DO

FINANCIAL CAPITAL

Strong financial position including:

  • Reliable operational cash flow
  • Affordable, reliable access to debt supported by a robust capital allocation process

INTELLECTUAL CAPITAL

  • Deep expertise of Philippine ecosystem and key industries
  • Corporate culture focused on lifelong learning

HUMAN CAPITAL

  • Best-in-class talent across departments and disciplines
  • Diversity of talent, including global perspective and mindset

Diversity of talent, including global perspective and mindset

  • Strong relationships with a vast network of business partners, investors, communities, academe, and other relevant entities
  • Strong, trusted Ayala brand

Financial Management Strategy

  • Strategic Business Development
  • Capital Allocation
  • Portfolio Management
  • Balance Sheet Management

Non-Financial Management Strategy

  • Human Resources Development
  • Corporate Governance
  • Stakeholder Management
  • Risk Management
  • Brand Management
Strategic Business Development
  • We continue to explore new sectors, geographies, and expert partners to develop new business models that will drive our growth
  • We identify partnership opportunities among our business units and create an environment for collaborative innovation
Capital Allocation
  • Using quantitative and qualitative criteria and a multi-step management approach, we allocate financial resources to businesses we believe provide the best risk-adjusted stakeholder returns over the long term
Portfolio Management
  • We carefully evaluate the performance of our subsidiaries vis-à-vis market behavior to guide decisions on investments or divestments in a timely manner
Balance Sheet Management
  • We maintain a healthy balance sheet with significant debt capacity and a well spread out maturity profile, which gives us the flexibility to fund future growth opportunities. This is augmented by an optimal foreign exchange and interest rate mix and a healthy cashflow adequacy ration
Human Resources Development
  • We continue to build competencies to support the growing requirements of our businesses
Corporate Governance
  • We continually improve our policies and monitor our practices to ensure we are at par with the best standards of corporate governance
Stakeholder Management
  • We continue to listen to our stakeholders and keep them informed on matters important to their decision-making
Risk Management
  • We continue to elevate risk management as an essential consideration in every decision, activity, and initiative of the company
Brand Management
  • We continue to build and protect our brand by ensuring we deliver on our promise, and effectively communicate what we stand for as a company

Our Outlook

Ayala defines its strategy in the context of key global, regional, and local trends that we believe will impact markets, sectors, and businesses in which we choose to invest and operate. We monitor the evolving macro-political environment and adapt our strategy posture and investment decisions to ensure we remain in the best position to leverage and mitigate the impact of these factors.

The Philippines continues to be a consumption-driven economy. With tailwinds from lower inflation and interest rates, and with an increasing number of Filipinos entering the labor force, we expect consumption to remain strong as we look ahead into the next decade. Our demographic dividend of a young and large population is further augmented by continued strong remittances, expansion of industries, and rising average incomes. Alongside these is the growth of small and medium-sized enterprises, which help spur economic activity within their own communities. These factors fuel a growing base of urbanized, middle-income, and affluent consumers who will continue to unlock demand for products and services.
How Our Strategy Addresses ThisWe continue to prioritize the Philippines with most of our businesses positioned to both contribute to and grow alongside the country’s development. Our core business units continue to cater to the banking, telecom, real estate, and utility needs of the growing consumer class. Furthermore, each of these core units continues to explore ways addressing the needs and demands of a broader market – such as expansion of microfinance services of BPI through BanKo, and providing a broad array of residential options, including dormitory-style living of Ayala Land. As a group, we are also evaluating ways to better serve and support small and medium enterprises across our network and supply chains.

The Philippines continues to be a consumption-driven economy. With tailwinds from lower inflation and interest rates, and with an increasing number of Filipinos entering the labor force, we expect consumption to remain strong as we look ahead into the next decade. Our demographic dividend of a young and large population is further augmented by continued strong remittances, expansion of industries, and rising average incomes. Alongside these is the growth of small and medium-sized enterprises, which help spur economic activity within their own communities. These factors fuel a growing base of urbanized, middle-income, and affluent consumers who will continue to unlock demand for products and services.
How Our Strategy Addresses ThisWe continue to prioritize the Philippines with most of our businesses positioned to both contribute to and grow alongside the country’s development. Our core business units continue to cater to the banking, telecom, real estate, and utility needs of the growing consumer class. Furthermore, each of these core units continues to explore ways addressing the needs and demands of a broader market – such as expansion of microfinance services of BPI through BanKo, and providing a broad array of residential options, including dormitory-style living of Ayala Land. As a group, we are also evaluating ways to better serve and support small and medium enterprises across our network and supply chains.

The Philippines continues to be a consumption-driven economy. With tailwinds from lower inflation and interest rates, and with an increasing number of Filipinos entering the labor force, we expect consumption to remain strong as we look ahead into the next decade. Our demographic dividend of a young and large population is further augmented by continued strong remittances, expansion of industries, and rising average incomes. Alongside these is the growth of small and medium-sized enterprises, which help spur economic activity within their own communities. These factors fuel a growing base of urbanized, middle-income, and affluent consumers who will continue to unlock demand for products and services.
How Our Strategy Addresses ThisWe continue to prioritize the Philippines with most of our businesses positioned to both contribute to and grow alongside the country’s development. Our core business units continue to cater to the banking, telecom, real estate, and utility needs of the growing consumer class. Furthermore, each of these core units continues to explore ways addressing the needs and demands of a broader market – such as expansion of microfinance services of BPI through BanKo, and providing a broad array of residential options, including dormitory-style living of Ayala Land. As a group, we are also evaluating ways to better serve and support small and medium enterprises across our network and supply chains.

The Philippines continues to be a consumption-driven economy. With tailwinds from lower inflation and interest rates, and with an increasing number of Filipinos entering the labor force, we expect consumption to remain strong as we look ahead into the next decade. Our demographic dividend of a young and large population is further augmented by continued strong remittances, expansion of industries, and rising average incomes. Alongside these is the growth of small and medium-sized enterprises, which help spur economic activity within their own communities. These factors fuel a growing base of urbanized, middle-income, and affluent consumers who will continue to unlock demand for products and services.
How Our Strategy Addresses ThisWe continue to prioritize the Philippines with most of our businesses positioned to both contribute to and grow alongside the country’s development. Our core business units continue to cater to the banking, telecom, real estate, and utility needs of the growing consumer class. Furthermore, each of these core units continues to explore ways addressing the needs and demands of a broader market – such as expansion of microfinance services of BPI through BanKo, and providing a broad array of residential options, including dormitory-style living of Ayala Land. As a group, we are also evaluating ways to better serve and support small and medium enterprises across our network and supply chains.

The Philippines continues to be a consumption-driven economy. With tailwinds from lower inflation and interest rates, and with an increasing number of Filipinos entering the labor force, we expect consumption to remain strong as we look ahead into the next decade. Our demographic dividend of a young and large population is further augmented by continued strong remittances, expansion of industries, and rising average incomes. Alongside these is the growth of small and medium-sized enterprises, which help spur economic activity within their own communities. These factors fuel a growing base of urbanized, middle-income, and affluent consumers who will continue to unlock demand for products and services.
How Our Strategy Addresses ThisWe continue to prioritize the Philippines with most of our businesses positioned to both contribute to and grow alongside the country’s development. Our core business units continue to cater to the banking, telecom, real estate, and utility needs of the growing consumer class. Furthermore, each of these core units continues to explore ways addressing the needs and demands of a broader market – such as expansion of microfinance services of BPI through BanKo, and providing a broad array of residential options, including dormitory-style living of Ayala Land. As a group, we are also evaluating ways to better serve and support small and medium enterprises across our network and supply chains.

The Philippines continues to be a consumption-driven economy. With tailwinds from lower inflation and interest rates, and with an increasing number of Filipinos entering the labor force, we expect consumption to remain strong as we look ahead into the next decade. Our demographic dividend of a young and large population is further augmented by continued strong remittances, expansion of industries, and rising average incomes. Alongside these is the growth of small and medium-sized enterprises, which help spur economic activity within their own communities. These factors fuel a growing base of urbanized, middle-income, and affluent consumers who will continue to unlock demand for products and services.
How Our Strategy Addresses ThisWe continue to prioritize the Philippines with most of our businesses positioned to both contribute to and grow alongside the country’s development. Our core business units continue to cater to the banking, telecom, real estate, and utility needs of the growing consumer class. Furthermore, each of these core units continues to explore ways addressing the needs and demands of a broader market – such as expansion of microfinance services of BPI through BanKo, and providing a broad array of residential options, including dormitory-style living of Ayala Land. As a group, we are also evaluating ways to better serve and support small and medium enterprises across our network and supply chains.

Our Vision Pillars

There are five pillars that guide our decisions on financial management and non-financial management strategies. We carefully track our execution against these pillars with Key Performance Indicators outlined below.
  • 2020 Targets
  • 2019 Performance

FINANCIAL STRENGTH

Build a strong, growing, and diversified portfolio that can withstand and take advantage of economic cycles
  • ₱50 billion NIAT
  • 15% ROCE
  • Outperform peers in total shareholder return and growth in market capitalizaton
  • Outperform PSE TSR
  • Increased earnings capacity and quality, and in addition, pursued value realization consistent with our strategy
  • Diversified returns through exposure to various industries

REINVENTION AND GROWTH

Positively disrupt, transform, and impact the markets we serve
  • 20% of Equity Earnings from emerging businesses
  • Higher earnings contribution of emerging businesses, driven by AC Energy which continues to grow its renewable energy portfolio

geographic expansion

Strategic international expansion, with a focus on Southeast Asia, and driven by business expertise we bring as an advantage
  • 10% of Equity Earnings from international businesses
  • Expanded our presence in Southeast Asia through a landmark investment in the Yoma Group, and furthered our operations in Vietnam, Indonesia, and Australia

stakeholder empowerment

Align our strategy to the national development agenda, partner with respected local and global institutions, and attract and nurture 
the best talent
  • Define shared value targets for all business units (UN SDG)
  • Board stakeholder recognition
  • Forged partnerships with strong institutions that can further our growth ambitions
  • Further strengthened the integration of Sustainability and Risk Management to company strategy by aligning with Corporate Governance and including them as part of the Board Agenda
  • Forged partnership with a leading global Sustainability group
  • Continued commitment to the Ayala Sustainability Blueprint

BUSINESS LEADERSHIP

Create and support clear industry-leading businesses that show sustainable 
growth potential
  • Commited to creating industry-leading business with sustainable growth functions that support our business
  • Listed businesses are leaders in their industries
  • Recognized as among the best in the Philippines for management excellence, corporate governance, sustainability, and investor relations

Risk Management

At the apex of the risk intelligent enterprise is risk governance—the unifying touchstone and guide to the organization’s risk management efforts. It seeks not to discourage appropriate risk-taking, but to embed relevant and effective risk management procedures into all of an enterprise’s business pursuits.

Designed to inspire integrated thinking, Ayala’s risk management framework is based on Deloitte’s concept of the Risk Intelligent Enterprise, which integrates nine principles related to responsibilities of the Board, senior management and business unit leaders. At the apex of the risk intelligent enterprise is risk governance—the unifying touchstone and guide to the organization’s risk management efforts. It seeks not to discourage appropriate risk-taking, but to embed relevant and effective risk management procedures into all of an enterprise’s business pursuits.

By treating risk as intrinsic to the conduct of business, risk intelligent governance elevates risk management from an exercise in risk avoidance to an essential consideration in every decision, activity, and initiative.

Deloitte’s Risk Intelligent Enterprise Model
NINE FUNDAMENTAL PRINCIPLES OF A RISK INTELLIGENT ENTERPRISE
  1. Common risk definition
  2. Common risk framework
  3. Key roles, responsibilities, and authority
  4. Governing bodies’ oversight
  1. Common risk management infrastructure
  2. Executive management responsibility
  3. Objective assurance and monitoring
  1. Business units responsibility
  2. Support of pervasive functions
AYALA CORPORATION’S RISK GOVERNANCE FRAMEWORK
  • Board of DirectorsRisk
  • Management and Related Party
  • Transactions Committee
  • Management Committees
  • Ayala Corporation Management Committee
  • Investment Committee
  • Chief Risk Officer Group Risk
  • Management & Sustainability Unit
  • Ayala Group ERM Council   Top Risk
  • Reporting by Business Units
  • Business Functions
  • Transactional Risk Management
  • Corporate Strategy and Development
  • Corporate Resources
  • Public Affairs
  • Corporate Governance
  • Finance

Strategy development & execution

Continuous process

Assurance on the adequacy, effectiveness, and efficiency of the system

RISK GOVERNANCE

Mandate & commitment of Top management
+

RISK GOVERNANCE

Mandate & commitment of Top management

COMMON RISK INFRASTRUCTURE AND MANAGEMENT

  • People
  • Process
  • Technology
+

COMMON RISK INFRASTRUCTURE AND MANAGEMENT

  • People
  • Process
  • Technology

RISK OWNERSHIP

  • Identify Risks
  • Analyze & Evaluate Risks
  • Integrate Risks
  • Respond to Risks
  • Design, Implement & Test Controls
  • Monitor & Escalate
  • Governance
  • Strategy & Planning
  • Operations/Infrastructure
  • Compliance
  • Reporting
+

RISK OWNERSHIP

  • Identify Risks
  • Analyze & Evaluate Risks
  • Integrate Risks
  • Respond to Risks
  • Design, Implement & Test Controls
  • Monitor & Escalate
  • Governance
  • Strategy & Planning
  • Operations/Infrastructure
  • Compliance
  • Reporting

This framework supports the broader principles of ISO 31000 risk management standard, such as integration, structured and comprehensive, inclusive, and human and culture factors. According to ISO 31000, by adopting these principles, ERM can be successfully embedded in business operations.

Supporting the governance framework is the risk management process. At the center of the risk management process are the activities of risk assessment and risk treatment. Risk assessment is described as having the three stages of risk identification, risk analysis and risk evaluation. It provides valuable insight into how risks can be identified, how they can be analyzed in terms of likelihood and consequences, and finally, how they can be evaluated in relation to the established criteria to determine whether additional action is required.

Risk treatment is also a vitally important part of the risk management process. ISO 31000 believes that the selection of risk treatment options involves balancing the potential benefits of introducing further risk treatment against the associated cost, effort or disadvantages. The risk treatment plan should clearly identify the timescale and responsibilities for implementing the selected risk treatments.

2019 Risk Prioritization Results
RankRisk CategoryImpact Criteria ParametersOverall ImpactLikelihoodRisk ScoreChange
EnvironmentalPeopleFinancialReputationalCompliance
1Brand and Reputation Risk0555455254
2Political and Regulatory Risk0245254201
3Business Resiliency Risk3433244161
4Information Security and Cyber Risk1235252102
5Innovation and Technology Risk023313392
Portfolio Management Risk313323393
6Partnership and Alliance Risk013434286
7Funding Risk0132132.57.54
8Competition Risk033213264
Talent Risk033323261
Capital Markets Risk01332326Retain
9Governance and Controls Risk123233131
10Synergy Risk011111113

*Risk score was arrived at by multiplying the overall impact grade by the likelihood score

Focus on climate action through TCFD

Climate change is a defining issue of our time. The United Nations exhorts the world to act with urgency because it touches all aspects of life— environmental, societal, economic, political, regulatory, and technological. Its effect on the global economy is potentially devastating. This effect varies from one country to another. Studies show that impact is higher than the global average in Southeast Asia, one of the most complex seismic zones in the world.

The Philippines, being one of the Southeast Asian nations, is thus highly vulnerable. It stands to lose six percent of its GDP annually by 2100 if no action is taken on climate-related issues, according to a study by the Asian Development Bank. The country is expected to face an increase in extreme weather events, rising sea levels, rising temperatures, and severe rainfall. Moreover, its level of vulnerability is aggravated by its geographical location, which has high exposure to tropical cyclones and earthquakes. The Ayala group recognizes that climate change poses risks across its business units and has long since been an advocate of environmental stewardship, ensuring that its companies and subsidiaries operate responsibly.

The Ayala group recognizes the implications of climate change:
  • 1Governments and businesses will have challenges in securing resources domestically and internationally;
  • 2Changes in food, water, and energy patterns could lead to increased conflict over resources and eventually lead to political tension;
  • 3As disputes over resources heighten, national survival will be more critical and will undoubtedly lead to potential regional or international confrontations over water, oil, fishing, and other mineral rights;
  • 4The lack of resources and increasing climate change impacts could force existing industries to be revolutionized or could pave the way for new ones. These changes will be accelerated by innovation and technology, and nations must ensure that the workforce is not displaced; and
  • 5There will be increased levels of regulations, both directly on environmental changes and indirectly through taxation and similar types of incentives/disincentives.

With these climate change implications in mind, Ayala promotes a risk-aware culture and recognizes the climate-related risks classified by the Task Force for Climate-related Financial Disclosures (TCFD) into two types:

Transition Risks

These are controlled and have lower economic damage, but pose aggressive change. Their initial impact can be severe but reduces over time.
  • Policy and Legal Risk
  • Technology Risk
  • Market Risk
  • Reputation Risk

Physical Risks

These have higher economic damage and cause accelerated change. Their initial impact may or may not be severe, but it definitely increases over time.
  • Acute Risk
  • Chronic Risk

Ayala believes that such risks can be turned into opportunities if preemptive action is taken.

With the results of the Natural Catastophe modeling undertaken out of the risk management bursary in May 2019, Ayala was able to determine the potential financial impact of such calamities to its businesses. The modeling used common return periods of 250 years for earthquake and 200 years for typhoon, considered top historical events like typhoon Haiyan, and included worst case scenarios. The results yielded the following:

a. For earthquake 250-year Ayala group modeling loss is about US$591 millionb. For typhoon 200-year Ayala group modeling loss is about US$278 million

Climate change has been identified as a risk driver of Business Resiliency Risk, one of the top five risks of Ayala Corporation in the last three years. The importance given by Ayala’s business units to the environment and their awareness of the impact of climate change is notable.

In responding to the call for a more effective climate-related financial reporting, Ayala set off its voluntary disclosures guided by the Task Force for Climate-related Financial Disclosures standards. Focus was given to four key pillars—governance, strategy, risk management, and metrics and targets— with 11 widely adoptable recommendations that consider the physical and transition risks associated with climate change.

Results of the initial phase taken by Ayala show its strength in its GHG emissions disclosures. It has eight disclosure areas that are present and needs significant enhancing, and two disclosure areas for development.

To obtain these results, Ayala’s performance was assessed against the four key pillars and their disclosures. The process included public resource reviews, management-level interviews, and a gap assessment.

Governance

Disclose the organization’s governance around climate-related risks and opportunities.

Strategy

Disclose the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning where such information is available.

Risk Management

Disclose how the organization identifies, assesses, and manages climate-related risks.

Metrics & Targets

Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.

Current State Assessment of Ayala

AYALA’S CURRENT APPROACH

WHAT AYALA IS TRYING TO ACHIEVE

GOVERNANCE

Ayala’s disclosure on governance around climate-related risk and opportunities

  • Ayala Board leads the governance system
  • The Board and the Management review, evaluate, and improve governance structures, systems and procedures
  • The Board meets six times a year with relevant Board Committees to gain insights and review, and ensure proper implementation of internal control mechanisms and risk management process for good governance
  • The Board discusses key risks and updates on business resiliency, sustainability, and the UN SDGs
  • CRO meets the RMRPT Committee semi-annually or as often as required
  • The CRO is supported by the Group Risk Management and Sustainability Unit that leads the Enterprise Risk Management (ERM) and Sustainability Councils, composed of representatives across the Ayala group who are risk management or sustainability experts
  • To educate the Board, and have a Board Committee specifically assigned to oversee climate-related risks and opportunities
  • For the CRO, through the Risk Management and Sustainability Unit to assess and manage group-related issues, following a defined reporting timeline

STRATEGY

Ayala’s disclosure on the actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning where such information is available

  • The Ayala Sustainability Blueprint, launched in 2018, identifies business units as SDG champions, committing to specific targets across three identified journeys
  • Ayala institutionalized the SDGs as a non-financial performance category under the CEO scorecard to promote sustainable business practices and support long-term profitability
  • To review the Sustainability Blueprint every two to three years to ensure relevance in the fast changing business and societal climate
  • To chart targets on a time horizon, ensuring proper metrics for their achievement
  • To conduct further studies to determine risks and opportunities, ensuring they are prioritized based on a time-horizon (these will eventually increase disclosures related to potential financial impacts)
  • To conduct a scenario analysis (i.e. 1.5° and 2° climate) to observe and evaluate the impact of these different climates on businesses, strategies, and financial planning

RISK MANAGEMENT

Ayala’s disclosure on how the organization identifies, assesses, and manages climate-related risks

  • Ayala’s risk management strategy includes strengthening its resilience and adaptive capacity to climate-related hazards and natural disasters across all its sites, ensuring minimal casualtiess
  • In championing SDG Goal 13: Climate Action, Ayala has developed a three-step strategy: Mitigation > Adaptation > Innovation
  • Ayala monitors its group-wide consumption and use of natural resources to manage its own environmental impact, ensuring it stays true to its commitment on environmental stewardship, aligned with its SDG 12 targets
  • The Group ensures that the long-term outcomes of its initiatives contribute to global warming abatement, biodiversity protection, and life preservation
  • For Ayala’s risk management framework to further elaborate how to enhance resilience and adaptive capacity to climate-related hazards
  • For the risk management framework to include an assessment of the size and scope of climate-related risks the Ayala business units face
  • To design a framework that outlines processes* on managing climate-related risks (*including increasing capability of officers on risk management, crisis management, and sustainability, among others)
  • To formulate a strategy to integrate climate risk adaptation and mitigation measures

METRICS & TARGETS

Ayala’s disclosures on the metrics and targets used to assess and manage relevant climate-related risks and opportunities is available

  • The company’s integrated reports provide extensive and detailed information on water, energy, emissions, non-hazardous and hazardous waste, and biodiversity.
  • Ayala has been disclosing group-wide GHG Emissions Scope 1, Scope 2, and Scope 3 following global standards. Currently, the computation for GHG Emissions is based on equity ownership and the GHG Protocol Corporate Accounting and Reporting Standard.
  • The Ayala Sustainability Blueprint’s third journey, Responsible Growth and Innovation, highlights environmental stewardship.
  • To quantify the risk exposure and impact of climate efforts
  • To set targets for its GHG Emissions, enabling the effective management of sustainability performance and climate-related risks and opportunities
  • To have science-based targets and align them with the third journey in the Ayala Sustainability Blueprint

The first phase of the TCFD journey paved the way for Ayala to include climate-related risks and opportunities in the upcoming 2020 risk assessment exercise. It has prepared the group for future actions that involves boardroom education and transition strategy, risk and opportunity mapping, and reporting and communication. These actions are aimed at ensuring the company meets all 11 disclosures of the TCFD recommendations.

Prioritization of Future Actions

Boardroom Education and Transition Strategy

  • Establishing Board and Management Committees to ensure there is board oversight of climate-related decisions and management actions specific to climate-related risks and opportunities
  • Including Strategy and Risk Management Committee members to ensure synergies across the group and in turn, consistent messaging and action
  • Redefining the roles and responsibilities of the Board and Management Committees to ensure that there is an apparent line of reporting and dedicated team addressing climate-related risks and opportunities

Risk and Opportunity Mapping

  • Prioritising the Environmental aspect and including a climate change agenda in the Corporation’s strategy to ensure the capture of climate-related opportunities
  • Charting the climate change agenda on a time horizon with measurable quantitative targets (i.e. annual, mid-and long-term targets)
  • Integrating climate-related risk in the current risk management process and highlighting climate risk as a material topic
  • Conducting of climate scenario analysis and decarbonisation planning

Reporting and Communications

  • Completing disclosures meeting of all 11 of the TCFD recommendations, done with senior management, this includes:
    • Defining board oversight and providing a framework for internal climate risk governance
    • Drafting report-ready documentation
    • metrics that clearly communicate progress against climate-change adaptation and mitigation targets
  • Become a TCFD Supporter and join over 930 organisations in pledging their support to take action against climate change

Ayala extends its efforts to bring all its business units on board and united in going beyond the bottom line. As it sets its eyes on the goal to draft report-ready documentation, Ayala commits to be a TCFD Supporter, ensuring that our declarations come with tangible results with a meaningful impact.

Stakeholder Engagement

Ayala embraces a stakeholder-inclusive approach to value creation. We take into consideration the influence our stakeholders have in our business decision-making process and consult, involve, or collaborate with them, articulating the value we seek to deliver through various platforms. By understanding their requirements and meeting their value expectations, we strengthen trust in our organization.

stakeholders

  • Investors and Shareholders
  • Employees
  • Government Agencies and Regulators
  • Business Partners and Affiliates
  • Creditors and Suppliers
  • Customers
  • Communities
  • Media
  • Industry Associations

Engagement Strategy

  • Participate in industry activities relevant to our business units

How We Engage

  • Membership
  • Special events such as conference, forums
  • Webinar
  • Face-to-face meetings

Key Concerns Raised

  • Continuing support and long-term relationship with key stakeholders
  • For speaking engagements, they request presence and content contribution
  • Request for feedback/insight on their research or publications

Our Strategic Response

  • Evaluate sponsorship requests which includes an alignment of interests and values
  • Provide the speaker or attend the event
  • Contribute to the discussion / give additional content for consideration

Engagement Strategy

  • Optimize the use of various media channels to reach more stakeholders
  • Make sure of the accuracy and clarity of disseminated information materials

How We Engage

  • Media conferences and briefings
  • News advisories, fact sheets available through the corporate website
  • Emails and phone calls
  • Social gatherings
  • Informal media huddles
  • One-on-one meetings
  • Sponsorship of media-initiated events aligned with our principles and advocacies

Key Concerns Raised

  • Follow-through questions are typically based on the press releases issued
  • Questions asked that are based on the cases of the business units or Ayala

Our Strategic Response

  • Answer as the questions arise
  • Connect them to the business unit’s corporate communications team. For Ayala, they are directed to the relevant department/s

Engagement Strategy

  • Keep a strong relationship with the communities by understanding their needs and appreciating their contribution to society

How We Engage

  • Face-to-face meetings, school visits, workshops, lectures, mentoring sessions, and trainings with stakeholders
  • Online communication—Facebook (FB) messenger chat groups with stakeholders, FB page closed group, emails, phone calls, online reference service, online library of digitized materials, social media, website
  • Community events and activities—program/ project launch, book launch, film screenings, exhibitions, lectures, concerts, project showcase, alumni gathering, volunteer engagement, and others

Key Concerns Raised

  • Domestic/personal/professional concerns affecting participation in and implementation of projects (e.g., some youth groups fell behind in their project implementation due to competing responsibilities at home, in school, at work; young mothers had to bring their children during sessions)
  • Need for livelihood training and parenting workshops for young mothers (for Sari-Saring Aralan participants)
  • External environment affecting community projects of LeadCom participants (e.g., drought has affected the projects of youth leaders in one municipality)
  • Program enhancement (e.g., educational assistance and employment opportunities for out of school youth [OSY])
  • Due to renovations, the Ayala Museum and the physical library (FHL) are inaccessible

Our Strategic Response

  • More frequent LeadCom teach visits, communication, and contact with youth groups in coordination with LGU champions
  • To help young mothers and students focus on learning sessions, AFI developed literacy, art, and play sessions for children and young siblings of participants
  • AFI raised funds to support OSY in its Sari-Saring Aralan education pathway and partnered with industries to accept OSY for work immersion
  • FHL set up its Online Request/Reference Service program that accepts requests for its digitized materials and for reproduction of library materials, strengthened its travelling exhibits and other programs through unified Ayala Museum On-the-Go branding, and launched online channels such as Ayala Museum Youtube channel

Engagement Strategy

  • Understand customer concerns in the areas of quality of service, convenience, affordability, and reliability
  • Respond to issues with urgency
  • Engagement strategy differs per company and is relative to the business industry.

How We Engage

  • Face-to-face interactions through front line services
  • Email, website, mobile phones, social media, customer portals, and other technology platforms
  • Periodic surveys
  • Whenever applicable, designate a dedicated account officer
  • Consultation and/or FGDs
  • Engagement with local government units such as monthly meeting with barangays (particularly for Manila Water)
  • Caravans and displays in different areas with promos
  • Flyers, newsletters, and other marketing collaterals
  • Loyalty and appreciation programs

Key Concerns Raised

Our Strategic Response

Ayala Land
  • Processing of documents for residential buyers
  • Established buyers’ portal that allows buyers to monitor status of their documents and a sales information system that provides consolidated customer information
  • Difficulties with property management processes for residential owners
  • APMC’s @Home is an online platform that residential owners can use to conduct their day-to-day tasks and management requirements easier
  • Customers look for an enhanced customer experience
  • Conducted continuous communication and feedback gathering from end-users through regular satisfaction surveys, loyalty and appreciation programs, e-newsletters, and social media posts

    Launched Z!ng app to provide shoppers with incentives and special rewards when shopping at Ayala Malls
BPI
  • Undispensed ATM withdrawal
  • Conducted periodic maintenance of the machines and replaced older machines to address hardware concerns

    Ensured regular coordination with partner suppliers for reliable and secure access to the network
  • Uncredited Cash Accept Machines (CAM) Deposit
  • Implemented regular machine and systems maintenance. Reminded clients about use of undamaged bills
  • Queries on the processing of express online enrollment
  • Implemented an enhanced version of the registration form
GLOBE
  • Increasing demand for data/internet use
  • Continued network rollout (>2X site build) and upgrades
  • Network downtime while upgrading
  • Mitigated impact of downtime from network upgrades through proactive recovery
  • Concerns on unwanted load charges
  • Implemented the Silence Means No policy for all video-as-service or content subscriptions
  • Concerns on lost/inaccessible rewards
  • Addressed system issues and seeded rewards unsent due to system issues
AC Energy
  • Multiple Red/Yellow Alerts in the Luzon Grid
  • Cascaded in real-time advisories from distribution utility to our contestable customers via emails, SMS, and calls
  • Seeking updates on regulatory issues specifically about lowering of threshold in Retail Competition and Open Access
  • Conducted a regular account update or business review with each of our contestable customers, providing them with relevant information and keeping them abreast of power industry related topics
Manila Water
  • Water security and water supply reliability
  • Organized regular coordination meetings with the regulators, government agencies, and potential private sector partners on new water resources Provided real-time update to customers via social media, face-to-face interaction, and press briefings
  • Raw water and drinking water quality
  • Tested water samples regularly
  • Improvements on customer policies, communications, and billing
  • Performed door-to-door visits and responded via service hotline to explain and update on new developments such as billing and water interruptions
  • Wastewater services delivery (sewer connections, septic tank, desludging)
  • Broadcasted regular desludging activities in coordination with leaders and communities
AC Motors
  • Service quality complaints on unavailability of parts and timeline management
  • Sent regular updates concerning part availability and service timeline

    Assigned dedicated teams to handle customer feedback resolution
  • Product quality and warranty complaints
  • Implemented quality control and directly coordinated with manufacturers for warranty complaints
  • Limited Products and Services
  • Identified expansion areas for its dealership network and product line-up
IMI
  • Logistical delays and lack of coordination
  • Increased capacity by improving overall equipment effectiveness and automation of Advance Shipping Notice (ASN) generation in SAP system upon invoice release
  • Concerns over recurring complaints
  • Shared lessons learned and best practices across its groups
  • Readiness to implement ISO 26262 for Functional Safety (Automotive Customers)
  • Established the Product Safety Board (PSB) to deploy all Functional Safety system requirements
AC Infra
  • Quality of logistics and transportation services
    • Lack of coordination with customers in delivery services (Entrego)
    • Train schedule and experience (LRMC)
    • Queuing and traffic build-up concerns (MCX)
  • LRMC and Entrego maintained a customer-centric feedback mechanism to address queries and complaints

    MCX recalibrated its equipment and revisited processes to facilitate a more efficient traffic management scheme
  • Limited loading facilities and on-site support for transportation partners (AF Payments)
  • AF Payments expanded its unattended loading facilities and provided more load options via mobile phone application
  • Safety concerns along MCX
  • MCX coordinated with community officials to increase surveillance of the road’s perimeter
iPeople
  • Concerns on processes and policies
    • Queries regarding processing records and enrollment
    • Student concerns on existing policies and programs
  • Streamlined its processes and implemented an online enrollment system in select schools to lessen waiting time

    Involved its students through regular correspondences with student leaders in the formation of programs
  • Quality of facilities and lack of space
  • Constructed new buildings and spaces and implemented upgrades to existing facilities across its different campuses
  • Tuition fee payment difficulties
  • Scholarships (externally and internally funded), discounts, and partnerships with benefactor companies were available across iPeople’s schools/universities
AC Health
  • Value of Services and Products
    • Professionalism/lack of skills of medical professionals (AIDE)
    • Medicines with best price (Generika)
    • Availability of medicine (FamilyDOC)
  • AIDE held seminars on basic health, new born care, and elderly care for its medical professionals

    Through Actimed generics, Generika customers could save up to 95 percent versus branded counterparts

    FamilyDOC sourced its medicine directly from principals
  • Customer Experience
    • AIDE app crashing or not being user-friendly
    • Customers look for a meaningful drugstore experience (Generika)
    • Better coordination between pharmacy frontline staff and clinic (MedGrocer)
    • Long queuing time and turnaround time of lab results (FamilyDOC)
  • AIDE app was upgraded to create a more user-friendly interface and to remove/fix bugs

    Generika launched the Mobile Generikard which provides customers with a cardless digital rewards program

    MedGrocer designed an integrated collaboration platform through Facebook Workplace and Zendesk for its corporate wellness and retail customers

    FamilyDOC engaged new lab providers and hired additional manpower to address customer concerns on queuing time
  • Wholesale clients wanted a one-stop shop (MedGrocer)
  • Expanded the portfolio of products and services offered to wholesale clients beyond medicines (e.g. oxygen refills)
  • Concerns on improving customer welfare (Generika)
  • Conducted patient counseling with the use of the Gamot Guide in order to educate them on proper intake of medicines, possible side effects, and contraindication of their medicines

Engagement Strategy

  • Maintain an ecosystem of reliable, competent, and responsible creditors and suppliers
  • Ensure that our business strategies are aligned to what is material to them
  • Remain committed to integrity, transparency, and accountability in both our policies and practices

How We Engage

  • Meetings
  • Conference calls to provide guidance for creditors and investors on borrowing plan and issuances
  • Economic Briefings and Client Appreciation events
  • Roadshow presentations
  • Regular correspondence with creditors on financing requirements, market updates, and credit developments especially during the loan management cycle and credit servicing
  • Invitation to company forums and access to quarterly and annual earnings releases and analyst briefings

Key Concerns Raised

  • Clarification on the Ayala’s plan for its 2014 ₱13.5 billion preferred shares that had a call option in November 2019
  • Balancing pricing expectations, timing, and successful execution of recent issuances amid an uncertain market backdrop
  • Ayala as an issuer is viewed as a proxy to Philippine Sovereign Credit
  • Limited Ayala paper for international credit investors

Our Strategic Response

  • Ayala communicated the plan to redeem existing preferred shares and follow up with a re-issuance of preferred shares
  • Regular updates and communication considering the timing and execution of each transaction
  • Maintaining strong credit reputation
  • Clear communication that its international issuances are opportunistic in nature, taking advantage of international capital markets due to low interest rate environment in 2H of 2019

Engagement Strategy

  • Perform due diligence through an internal team or a third-party assessor prior to partnership
  • Share complementary strengths and expertise to enhance capability and create share value
  • Conduct business professionally
  • Adhere to high standards of governance

HOW WE ENGAGE

  • Dialogues with business organizations and/or clubs (Asia Business Council, Makati Business Club, MAP, APEC)
  • Meetings (Board and Executive Committee level)
  • Transparent and timely disclosures
  • Roadshows
  • Ayala organized/ sponsored conferences (i.e., Healthcare conference, Ayala Finex Finance Summit, Ayala-Ateneo partnership, Ayala-UPSE)

Key Concerns Raised

  • Management team succession plans, compensation, diversity
  • Governance
  • Financial performance (i.e. balance sheet)
  • Business outlook and risk
  • Commercial viability (i.e. growth opportunities)
  • Network and relationship (international partnerships)
  • Value that Ayala brings to the partnership
  • Political environment

Our Strategic Response

  • Transparency and timeliness of disclosures and reporting
  • Risk management activities and strong governance processes
  • Risk management activities and strong governance processes
  • Joint strategy sessions (e.g., Mitsubishi, Temasek)

Engagement Strategy

  • Provide channels so that concerns of regulators, as well as our own, are heard
  • Help create and maintain a fair and transparent regulatory environment

How We Engage

  • Compliance with laws and regulations
  • Policy dialogues and consultations
  • Required reports, regular briefings, and updates
  • Support legal lectures whenever requested
  • Face-to-face meetings (as needed)

Key Concerns Raised

  • Continuous compliance with laws and regulations, especially the Data Privacy Laws
  • Contribution to policy directions on areas of national interest (e.g., inclusive growth, healthy competition)
  • Proposed measures on tax, labor, health, water, and education

Our Strategic Response

  • Constant discussion with national government agencies
  • Updating of company policies and rules to keep abreast with the changing policies and regulations, aligning the procedures and reporting, and eventually publishing these in the company website
  • Annual training of the company officers and employees (mandatory for both old and new employees) on the Data Privacy Law
  • Continuous legal gap assessment
  • Participation in policy dialogues and consultations

Programs/Activities for the Stakeholders

Policy research initiatives through partnership with the academe—intended to provide evidence-based recommendations to policymakers includes (1) Ayala-UP School of Economics Forums that focus on key economic aspects of public policies (two to three forums per year), and (2) Ayala-Ateneo School of Government policy research on developmental conglomerates and inclusive markets (once per end of Memorandum of Agreement)

The Liveable City Playbook

In collaboration with experts and other stakeholders, Ayala created the Liveable City Playbook, a practical resource for imagining tailored solutions for issues in specific localities, enhancing local competitiveness, and strengthening the capacity of local government units (LGUs) to provide public goods and services to their constituents.

Drawing from global and local good practices, the five-volume series tackles issues identified by local leaders and experts as critical elements for development today. Each brief presents issues and opportunities, and illustrates effective solutions local leaders from the Philippines and around the world have successfully deployed.

  • E-Government (volume 1) discusses how LGUs can leverage information and communication technology to enhance public services and encourage citizen participation.
  • Financing (volume 2) reviews the LGU project cycle and provides data on financing options as well as other sources of support for project planning and implementation.
  • Basic Services (volume 3) highlights the LGUs’ role in delivering basic services such as water and sanitation, health, and solid waste management.
  • Mobility (volume 4) seeks to improve mobility of people and goods and increase accessibility of public services through effective land use policy, sound transport infrastructure, and proper spatial integration.
  • Resilience (volume 5) puts forth best practices from which LGUs may model their own system to effectively respond to natural calamities, climate change, and long-term stresses.

Many local governments have raised the living standards of the communities they serve. However, implementing critical, long-term projects for sustainable development remains a challenge due to limited resources and support. There is vast untapped potential for local governments to enhance economic growth, encourage innovation and development, and build tourism hotspots. The Liveable City Playbook series supports the work of LGUs toward realizing these possibilities.

Engagement Strategy

  • Active engagement through various channels to ensure proper information dissemination
  • Regular, consistent, and regulatory-based reporting of the company’s pertinent plans and results to ensure the investing public is always updated
  • Bridge the gap between management and the investing public to aptly address all concerns

How We Engage

Primarily through its Investor Relations team, Ayala encourages active participation and regular dialogues with all investors and other external stakeholders through numerous channels:

  • One-on-one meetings
  • Teleconferences and videoconferences
  • Email correspondences
  • Live and call results briefings
  • Regulatory disclosures
  • Company website
  • Integrated Report
  • Investor Conferences
  • Deal and non-deal roadshows
  • Annual stockholders' meeting
  • Investor perceptions audit

Key Concerns Raised

  • Softness in share price
  • Susceptibility to regulatory challenges given exposure to multiple industries

Our Strategic Response

  • Support value creation for investors through the company’s most recent share buy-back program of ₱10 billion, which commenced in December 2019
  • Active engagement with the investing public through conferences and non-deal roadshows
  • Spearhead group-wide investor relations events to provide a top-down view of the conglomerate and enable each business unit to sufficiently address specific concerns
  • Conduct special analyst and investor briefings to announce key developments and address issues on prevailing situations as they arise

Stockholder Meeting and Voting Procedure

Stockholders are informed at least 28 days before the scheduled date of meeting. The notice of regular or special meetings contains the agenda and sets the date, time, and place for validating proxies, which must be done at least five business days prior to the annual stockholders’ meeting. Each outstanding common and voting preferred shares of stock entitles the registered stockholder to one vote.

In support of greater transparency and improved shareholder involvement, the company provides multiple voting options such as appointing a proxy, voting in-person, or through electronic voting in absentia. There is a secure, easy-to-use Electronic Voting in Absentia System accessible to all stockholders, allowing stockholders to exercise their right if unable to attend the Annual Stockholders’ Meeting. Equal effect is given to votes whether cast in person or in absentia. The company also provides non-controlling or minority shareholders the right to nominate candidates for board of directors.

Engagement Strategy

  • Ensure that employees know they are our primary customers
  • Guarantee a healthy and safe work environment
  • Operate on the conviction that engaged employees perform to their utmost potential
  • Operate on the conviction that engaged employees perform to their utmost potential

How We Engage

Professional development

  • Annual performance appraisal to determine capability/skills gap
  • Online learning tools and other learning sessions
  • Career development and succession plans
  • Email communication

Employee Grievances

  • One-on-one discussions between staff and line managers
  • Employee surveys

Holistic growth

  • Special wellness events
  • Sports tournaments
  • Holidays or season celebrations
  • Quarterly staff activities

Compensation and Benefits

  • Email communication
  • Employee town hall meetings
  • Quarterly financial briefings

Key Concerns Raised

  • The need for a centralized portal where employees can access various HR Forms and certificates
  • Health coverage of overage dependents
  • Rising cost and best fit executive check-up packages for employees

Our Strategic Response

  • Launched the Employee Self-Service portal to improve employee experience in accessing various HR Forms and for online requests of Certificate of Employment (COE) and PhilHealth Claims Forms
  • Teamed up with the health care provider to offer a Health Insurance Cover for Extended Dependents for the medical needs of overage dependents like spouse, parents, and children taking continuous education

Rewards and Recognition

  • Ayala provides market-competitive executive compensation and benefits, which are aligned with corporate goals, annual targets, and long-term strategic plans. It also adopts a performancebased variable compensation scheme using the Key Result Area scorecard accomplishments as metrics.
  • For senior executives and key talents, Ayala offers a long-term incentive program. From the three percent of the company’s authorized capital stock allocated by the stockholders, the Board approved the grant under the stock ownership program to eligible executives in April 2019. The basis for the grant is consistent outstanding performance record over a period of three years.

    The grant price is based on the rounded-off volume weighted average prices of the stock at the Philippine Stock Exchange over the last five-day trading from April 17 to 25, 2019.

The New and Improved Ayala Clinic

To provide quality health services to its employees, the Ayala Clinic underwent renovations to improve its facilities, enabling it to provide basic laboratory test services. Inaugurated on July 1, 2019, the new clinic on the 25th floor of Tower One in Makati is managed by FamilyDOC@Work. This joint project of Ayala, ALI, and AC Health also extends its services to employees of AC Infrastructure, AC Industrial, Ayala Group Club Inc., AG Legal, and Sonoma.

The partnership delivers better service and guarantees availability of doctors and nurses during office hours. Recognizing the importance of mental wellness, a psychologist is available every 2nd and 4th Friday for consultations and mental health awareness programs are promoted.

Moreover, the clinic now implements full digitization of medical records through Electronic Member Record (EMR). The system logs check-up, test, and prescribed medication records, making them available via mobile app that can be accessed by doctors in all FamilyDOC clinics nationwide.

Cashless Transactions

As part of the Ayala Group Synergy efforts, Ayala Corporation partnered with Mynt and introduced GCash e-wallet to Ayala employees. To jumpstart the employee experience, some employee incentives— traditionally credited to bank accounts or gift cards—were credited to GCash. Other Ayala companies followed suit in introducing GCash to their employees.

Planning Forward

To help employees plan for the future, Ayala created a Multi- Employer Retirement Plan for AC Cluster, a Defined Contribution Retirement Plan aimed to improve retention strategy of small and startup Ayala companies. AC Health and Ayala Group Club Inc. are the pioneer member companies.