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
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.
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.
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:
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.
The other component that defines the way we do business is our commitment to sustainability. Our non-financial management strategy revolves on:
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.
Strong financial position including:
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.
Strategy development & execution
Continuous process
Assurance on the adequacy, effectiveness, and efficiency of the system
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.
| Rank | Risk Category | Impact Criteria Parameters | Overall Impact | Likelihood | Risk Score | Change | ||||
|---|---|---|---|---|---|---|---|---|---|---|
| Environmental | People | Financial | Reputational | Compliance | ||||||
| 1 | Brand and Reputation Risk | 0 | 5 | 5 | 5 | 4 | 5 | 5 | 25 | 4 |
| 2 | Political and Regulatory Risk | 0 | 2 | 4 | 5 | 2 | 5 | 4 | 20 | 1 |
| 3 | Business Resiliency Risk | 3 | 4 | 3 | 3 | 2 | 4 | 4 | 16 | 1 |
| 4 | Information Security and Cyber Risk | 1 | 2 | 3 | 5 | 2 | 5 | 2 | 10 | 2 |
| 5 | Innovation and Technology Risk | 0 | 2 | 3 | 3 | 1 | 3 | 3 | 9 | 2 |
| Portfolio Management Risk | 3 | 1 | 3 | 3 | 2 | 3 | 3 | 9 | 3 | |
| 6 | Partnership and Alliance Risk | 0 | 1 | 3 | 4 | 3 | 4 | 2 | 8 | 6 |
| 7 | Funding Risk | 0 | 1 | 3 | 2 | 1 | 3 | 2.5 | 7.5 | 4 |
| 8 | Competition Risk | 0 | 3 | 3 | 2 | 1 | 3 | 2 | 6 | 4 |
| Talent Risk | 0 | 3 | 3 | 3 | 2 | 3 | 2 | 6 | 1 | |
| Capital Markets Risk | 0 | 1 | 3 | 3 | 2 | 3 | 2 | 6 | Retain | |
| 9 | Governance and Controls Risk | 1 | 2 | 3 | 2 | 3 | 3 | 1 | 3 | 1 |
| 10 | Synergy Risk | 0 | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 3 |
*Risk score was arrived at by multiplying the overall impact grade by the likelihood score
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.
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:
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 millionClimate 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.
Disclose the organization’s governance around climate-related risks and opportunities.
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.
Disclose how the organization identifies, assesses, and manages climate-related risks.
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.
Ayala’s disclosure on governance around climate-related risk and opportunities
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
Ayala’s disclosure on how the organization identifies, assesses, and manages climate-related risks
Ayala’s disclosures on the metrics and targets used to assess and manage relevant climate-related risks and opportunities is available
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.
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.
Key Concerns Raised | Our Strategic Response |
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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.
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.
Primarily through its Investor Relations team, Ayala encourages active participation and regular dialogues with all investors and other external stakeholders through numerous channels:
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.
Professional development
Employee Grievances
Holistic growth
Compensation and Benefits
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.
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.
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.