Good day to all of you. Welcome to the CYPE Manila webinar series. I would like to thank the De La Salle University Jesse Robredo Institute of Governance for co-hosting our event.
This month's webinar focuses on the importance of sustainable development as a holistic enterprise development goal. For businesses to thrive in the future, sustainable development means adopting business strategies and activities that meet the needs of the enterprise and stakeholders today while protecting, sustaining, and enhancing the human and natural resources that will be needed in the future. At this juncture, let SDGs and ESG work together. The 17 Sustainable Development Goals established by the United Nations reinforce the traction for enterprises and organizations to achieve sustainable practices, while on the other hand, ESG provides the benchmark to measure breakthrough results and impact environmental, social, and governance practices of enterprises. As companies, investors, customers, regulators, and other stakeholders increasingly focus on the positive contributions that businesses can deliver to society, ESG standards should be seen beyond compliance and therefore offer a clearer lens into the solutions we need to achieve the SDGs.
In today's webinar, we're joined by very distinguished thought leaders, champions, and advocates of SDGs and ESG. And I'd like to thank Vicky, Fabian, and Michelle for your time and expertise and being a part of our panel. We look forward to learning from you the latest developments and best practices in sustainability and how success in this endeavor will require cross-collaboration.
innovation, local engagement, and mainstream awareness. Furthermore, we will explore the critical value of SDGs and ESG in the supply chains of businesses, particularly micro, small, and medium enterprises. It is now my pleasure to introduce our guest moderator, Dr. Francisco Magno, Senior Fellow and Founding Director of the La Salle Institute of Governance. I have personally known Dr. Magno for over two decades now.
Dr. Magno served as my professor in development participation. and governance when I pursued my graduate studies in development policy at De La Salle University Manila. Having been nurtured by Dr. Magno's excellent academic guidance and gained confidence and inspiration on charting my future path to development work, transitioning from merely an observer to a highly passionate collaborator and advocate of social justice, stakeholder engagement, and economic inclusion, the very same principles that we champion in sustainable development.
Dr. Magno served as chair person of the Political Science Department and former director of the Social Development Research Center at De La Salle University. He obtained his BA and MA in Political Science from the University of the Philippines and his PhD in Political Science from the University of Hawaii on an East-West Center Fellowship. In 2000, he received the Outstanding Young Scientist Award from the National Academy of Science and Technology of the Philippines.
He's also listed as one of the top 200 scientists. based in the Philippine institutions of the WIBO Metrics Ranking of June 2016. He has taught and conducted research at the Florida State University, the University of Relyang, Waseda University, Hiroshima University, University of Hawaii, the University of the Philippines, Development Academy of the Philippines, and St. Scholastica's College. Most recently, he was a recipient of the 2021 St. Jaime Hilario Pilar Vanzayan Excellence Award in Community Engagement. Please welcome Dr. Magna, who is going to moderate today's proceedings.
Strictly, I pass on to you. Thank you very much, Ryan, for that generous introduction. You just got an A for that introduction. It's very nice to be part of this webinar, and it's really great to reconnect with you, Ryan, and the rest of SAIP. De La Salle University is very...
proud to be part of this webinar. A lot of our faculty and students are right now here in this webinar. So before I proceed to introduce our stellar list of panel speakers, let me provide a brief introduction of why we are having this panel discussion.
We have to take note that in recent years, the role of business has shifted from purely maximizing profit or shareholder value to talking. taking into consideration the sustainability of a company's policies and operations. The management of environmental, social, and governance issues, or ESG, has moved beyond corporate social responsibility departments to a core strategic priority throughout organizations.
The shift is backed by evidence that ESG factors are becoming valuable to a company's resilience and success, both in the short and long term. More recently, we have seen more evolution as companies also switch their operations. towards producing a positive impact to society, directly supporting the achievement of the SDGs, or the Sustainable Development Goals, which at its core is a broad recognition that companies have an outsized role in delivering solutions to global problems.
As companies, investors, customers, regulators, and other stakeholders increasingly focus on the positive contributions that businesses can deliver to society. ESG standards should improve, expand, and offer a clearer lens into the solutions we need to achieve the SDGs. This webinar will look into the critical value of ESG in businesses, particularly for MSMEs. Ryan and I have talked a lot about how to move forward this agenda, and in the future, we shall have more discussions and more webinars. especially the role of MSMEs because our university is very interested in developing a partnership with city governments as well as key stakeholders in local governments and MSMEs and their adoption of ESG and the SDGs are very important in this regard.
So I would now like to introduce our panel members. But before doing so, I would like to remind our audience and participants that you can ask your questions. There is a Q&A box in our Zoom platform. So we'll have an open forum after the five rounds of questions that we shall have for this morning that we'll ask of our panel speakers. So let me start with our...
introducing our first panel speaker. She is the chairperson of the Global Network Philippines and the head of Group Risk Management and Sustainability of Ayala Corporation. As executive director of Ayala Corporation's Group Risk Management and Sustainability Division, she provides leadership in the embedding of risk management processes and sustainability strategies and practices of Ayala Corporation.
and oversees its overall sustainability reporting, or GRI 4.0. I know her as Vicky. Great to see Vicky again after a few years. She is a seasoned professional in the areas of enterprise risk management, auditing, financial accounting, operational accounting, call center operations, and administrative operations.
She had worked within the region when she was employed as international auditor by USAID Manila and in Indonesia and Brunei when she was employed by the Janti Group of Indonesia. Welcome to this forum, Vicky, and nice to see you again. Thank you, Dean Magno, and good morning to everyone.
It's my pleasure to be part of this panel. Thank you, Vicky. So I will now introduce... our second panel speaker. She is the program officer with the Anti-Corruption and Governance Center, where she works on a variety of global transparency and integrity initiatives.
The center focuses on developing nimble, evidence-based anti-corruption programming for countries with new pro-reform leadership. She has an integral role in a pioneering approach to corporate compliance that supports companies seeking to manage corruption. Prior to joining SAIP, she worked as an investigative attorney ensuring US Foreign Corrupt Practices Act compliance for multinational companies based in Mexico, Brazil, and Peru. She also developed rule of law and human rights programming in the Philippines, Fiji, and Vietnam as a program manager with the American Bar Association's rule of law initiatives. She also managed USAID-funded anti-corruption and rule of law programs in Colombia, East Timor, and Central America for Washington, D.C.-based management sciences for development.
She holds a JD from Wisconsin Law School as well as an MA in International Relations and Politics from Marquette University. Ladies and gentlemen, I'm very proud to present Michelle Crimes. Good morning, Michelle. Good morning and actually good evening from here in Washington, D.C. Yes, good evening, Washington, D.C. That's right. So wonderful to be here and to participate in this panel today.
Thank you so much for that wonderful introduction as well. Thank you, Michelle. We'll hear more from you in a little while. Our third and, of course, not the least panel speaker is the Director of SDG Impact, a flagship initiative of the United Nations Development Program, UNDP, focused on mobilizing private sector capital in support of the achievement of the SDGs. SDG Impact emphasizes experimentation, innovation, and partnerships as it focuses on developing prototype products that are being tested, refined, and brought to market.
These products include standards for how investors and enterprises integrate impact management and contributing positively to the SDGs in their internal practices and decision-making, an assurance framework, and SDG Impact seal. for enterprises and investors to have their impact management practices assured against the standards by independent accredited assurers and SDG investor maps that translate relevant country level SDG gaps and priorities into private sector investment opportunities. Fabian or Fab joined the SDG impact team 2019 and is the lead developer of the SDG impact standards.
She is the co-chair of the Australian Advisory Board on Impact Investing and recently co-chaired the Australian Sustainable Finance Initiatives Working Group on Making Better Decisions, and was a contributing author of the final report called Australian Sustainable Finance Roadmap, a plan for aligning Australia's financial system with a sustainable, resilient and prosperous future for all Australians. Fab previously enjoyed a 30-year executive career, including 22 years with S&P Global in the Global Ratings Division, where in her final role, she was the Australian Country Head and Head of Developed Markets Asia-Pacific. She is also an experienced non-executive director who holds and has held numerous board positions in the housing, education, financial and arts sector, and is a part-time professor of practice at Deakins. Business School. Good morning, Fab.
Happy to be here. Thank you very much. Good morning to you, and thank you for having me.
Really looking forward to today's session. Okay, now we have this excellent panel speaker, so let me now ask the first question. This is for all panelists.
The question is, from your perspective, why are the SDGs and ESG important to business? Let's start off with Vicky to be followed by Michelle and Fab. Okay.
Thank you for that, Dean Kiko. But let me interchange the sequence of the question. Why ESG and SDG should matter to business? Because I think ESG is about management of risk.
It is about addressing the business negative impact such as GHG. footprint, the ways the social impact, the human rights impact, and the broad issue of governance. So ESG actually is the foundation of a company's social license to operate, and it is a guide for most companies to how to become a responsible corporate citizen.
So on that note, it is something that's foundational, so it should come first before the SDG, whereas SDG, on the other hand, it's... It presents opportunities on how companies can create shared value. By looking at the societal issues and within the company's resources and capabilities, companies can actually create or develop innovative business solutions and put a business model into it and bring it up to scale. So for us in Ayala, sustainability is ESG first.
That's it. keeping your house in order and SDG is your opportunity to create shared value to your stakeholders and these two should be embedded in your strategy so that you will achieve your sustainable or sustainability objectives. In a nutshell, that's why ESG and SDG is very important to the business. Over to you, Dean Kiko.
Thank you. Thank you, Vicky, for sharing with us how Ayala Corporation looks at the relationship between ESG and SDGs. Let me now ask Michelle, what's your take on this question?
Great. Thank you for throwing things over to me. I think that...
Increasingly, what we're seeing is that there is a movement just for accountability, and not just from governments, but also from businesses. So that means if you're a business, no matter where you're operating in the world, the community that you're operating in is asking you more and more to be accountable. And I think that ESG is exactly one of the ways that we're sort of getting at that accountability by asking you to take in consideration your impact on the environment.
to take into consideration whether or not you are sort of creating social accountability, whether that's to those who have been marginalized in the communities who work with you, whether you're ensuring that you're working on pay gaps within your organization. And then, of course, there's the G, I think, which is the goal, the one that's the most, I think, recognizable to many people, governance, right? Making sure that you're not creating or perhaps.
making worse corrupt systems that might be, which might be already sort of in place, maybe where you're working or sort of taking advantage of those. I think the type of accountability that we're seeing is happening sort of all over the world, where it's not just sort of you can be a business and you can operate. And even if you have an impact, that doesn't matter.
You are having an impact on the communities where you are operating as a business. And now those communities are starting to ask for accountability. So I think that's why it's important.
And I think we're perhaps seeing a bit of a shift in terms of the way that businesses are operating. It's not just about your spreadsheet any longer and sort of what's happening, losses and gains. It's about more than that. It's a multilateral approach to the way that businesses are sort of seen and perceived within the communities that they operate. So accountability really operates at different levels.
And Vicky already said that... businesses are very responsive to these responsibility challenges. So let me now go to Fabian of course who will share with us about the global interest in ESG and of course she's coming from the perspective of SDGs.
Yeah thanks, thank you for that. I think first of all one of the things I would say is I think we need to be careful about the use of language in these terms and what they mean to different people. You know what we're all talking about is really the impacts that organisations are having on people and planet, but you know a large proportion of people when they're actually thinking about ESG, they think about it in context of financial materiality and the impact they think it will have on enterprise value rather than on the impacts on people and planet. And I think that that's one of the things we really need to unpack and understand that going forward, because of a whole lot of shifts and megatrends that we're facing into, that increasingly those impacts that organisations have on people and planet will have a flowback effect on future business performance.
So from our perspective, you know... we really think that sustainability is becoming a major business disruptor and exposing risks as well as opportunities. You know, we're seeing that, you know, because of some of the mega trends I'll talk about, but that's also translating into shifting, you know, preferences and expectations of society at large, of consumers, and increasingly of governments and policymakers regulating to you know, to improve sustainability practices and performances. So I think that, you know, my view of that is that that really reflects that at the base of this shift there's a lack of sustainability at the root of many of the megatrends that we're facing into.
And a lot of them have been a long time in the making, but they're starting to come home to roost, which means that... you know, if we continue to operate and make decisions on the basis that we have in the past, we're going to have challenges because the environment we're facing into is very different from what we've experienced over the last, you know, potentially. few hundred years. So, you know, that's things like obviously climate change, biodiversity loss and environmental degradation, population growth and importantly changing demographics with ageing populations and urbanisation, the digital revolution and what that means for the future of work, rising wealth inequality and of course increasing levels of social and geopolitical instability. And those megatrends are affecting societies and businesses in...
unprecedented ways and at a scale that we haven't seen before. And given my UNDP hat, I've got some stats here because I think it helps to really sort of frame the conversation about why we need to change and why we need to change now. So, you know, according to the World Economic Forum, COVID-19 and climate change are the two most likely long term risks to the world economy.
And climate change is also the... likely to be the most impactful long-term risk to the world economy. So the physical damage from climate change alone is expected to reach 10 to 20 percent of global GDP by the end of the century or 8 to 17 trillion US dollars a year if we don't successfully arrest climate change.
More than 50 percent of global GDP relies on high-functioning biodiversity and ecosystem services and yet we're experiencing biodiversity loss at an accelerating pace which will only hasten more with climate change. Obviously the real and destructive impacts of climate change have also now been compounded by the devastating effects of the COVID-19 pandemic. The Ukraine-Russia situation has also reminded us that there is a growing undercurrent of global geopolitical instability which carries with it really very real and intertwined and increasingly tangible social, economic and environmental impacts and costs for us all. And, you know, if we look at markets generally, these are risks that markets have pretty much been ignoring to date. On the humanitarian front, the UN's annual global humanitarian overview has estimated that 274 million people will need humanitarian assistance and protection, and that's the highest figure in decades.
And we know, obviously, that inequality is increasingly a constraint on economic growth. So there's a lot of reasons why it makes sense for the private sector to be part of the solution in terms of driving sustainability and sustainable outcomes and is really needed to actually make that happen. You know, the pressures of the pandemic on government balance sheets has been significant.
governments and development capital are insufficient to help achieve the SDGs. And ultimately, all of our future prosperity relies on actually addressing, increasingly addressing these issues and at a faster pace than we're currently on. Thank you, Fab, for locating this discussion with the megatrends and the data that you've shared, the global impact. of all these mega trends. But one of the mega trends, we are now living with COVID-19 and the context of the COVID-19 pandemic.
I'll return to you, Fab, regarding how achievable are the SDGs since we only have eight years remaining to achieve the sustainable development agenda 2030. Let me turn, yeah, Fab, I'll turn first to Michelle. Michelle, in your view, will the pandemic be a catalyst for responsible and sustainable investments? And what are the key trends you are seeing in relation to SIPES work across the world?
Thank you for that. I think that we have seen that ESG and SUD have sort of driven certain types of investment. I think I try to read as much as I can. And for all of those who are sort of immersed in this world, you know, there's something new and different. probably every single day that we could talk about.
But I think in 2021, it was something like $35 trillion worth of ESG sort of investments that were happening all over the world. And so I think that happened in 2021. And to me, that's just a big signal that despite the pandemic or during the pandemic, there has been a shift that it's become important. And I think why, maybe because we're all home and we're all had an opportunity to pay attention and to sort of...
witness what has been happening all over the world and whether that's related to the environment, whether that's sort of things that were happening. You could even look at what was happening in the United States and now we can even take a look and see sort of what's happening in Ukraine and see how that is prompting all of us to think a little bit deeper about ESG. I think some of the interesting things that I've seen in my work in terms of SIP and what's happening, I think there's certainly been an increased interest in governance. of course, and holding businesses accountable and talking about anti-corruption and understanding corruption and the impact it has on any particular country.
And then I also think the S, which I think is really, which is interesting, right? There's a lot of sort of upheaval in the United States, other parts of the world around particular social issues, again, marginalized communities, those communities sort of wanting to hear their voices be heard. and not just sort of you know, being tampered down. So I think to my eye, and perhaps that's because that's what I'm the most interested in, those are the two of the areas where you're seeing increasingly sort of more and more discussion.
Of course, I think environment is happening all the time. I think it's where we are the most comfortable in certain ways. It's something we can all sort of talk about, but increasingly over the last couple of years and the work that I'm engaging in, I'm seeing more interest in talking about the social part of it and also talking about governance and sort of how we can move the needle a little bit on those things. Yeah, Michelle, that's very interesting what you said about investment increasing because people are investing from home.
So work from home kind of thing. The other thing is, is there really an increase in corruption risk with the pandemic? I think, of course, the pandemic made it increased risk, I think, for corruption, because one, a lot of the systems that we had in place to sort of talk about, right, if you're talking about in terms of business, a lot of the systems that you have in place, we weren't contemplating being able to be able to do that remote. I think there are businesses and companies that operate probably in high risk situations, and they probably had.
had more systems in place and part of the work that I engaged in a lot was figuring out so how do we do that what's the translation we know that because of the pandemic we just don't have as much of an opportunity to engage in controlled in the way we might have in the past um and then I think uh on top of that there was a rush right um it was correct to get PPE to get medicine there was a lot that needed to happen so of course procurement became an area of concern, right? There was a lot more risk there because of the need, because of the big push that everyone needed to be able to accommodate, it just becomes a lot easier for corruption to sort of seep into operations of not only just businesses and those who are trying to provide goods and services around the pandemic, but then of course of governments who are trying to also procure those goods. So I think there was ample opportunity on both sides of the exchange. So there are more funds available.
But then those who engage in corruption are also innovating in the context of the pandemic. And they're probably also working from home right now. So those who are fighting corruption should innovate and create better systems.
Thank you, Michelle. Now, Vicky, what do you think are the ESG practices and how will it evolve? in 2022 and beyond, still within the context of the COVID-19 pandemic? I think I'll summarize it nicely, the different mega trends that will actually shape how businesses and other stakeholders will operate in the future. The pandemic actually gave us an idea how Our systems are inadequate and this pandemic, as we have seen it, it has snowballed into a big societal issue.
So we know how some people that didn't have access to health care, it's quite difficult not to have anything because of mobility situations or lockdowns. And then it's snowballed also into something like an economic issue. So aside from this, I think Fab mentioned about the other megatrends, the climate change and biodiversity loss, and everything else is about social inequality. So with these global trends that's shaping the way we will be, we are now currently working. and operating in our own spaces.
There will be more requirements or demands for transparency, accountability, disclosures. Some stakeholders would probably ask for specific targets on how are we going to manage the negative impact of our businesses and there will be some discussions about these strategies. So I believe ESG will be given more focus in the years to come.
either to the regulators. Our STC is already asking us to come up with all this sustainability reporting, right? And the deadline was April 15. So we really have to make sure that all the material topics that are very relevant to our stakeholders are given focus.
So ESG will be critical and it will be embedded to the different strategies of an organization. So it is now part of the things that we do on a daily basis. I think that's how ESG will be in the future and how it will impact the reporting as well.
And I think on that note, I would like to mention also that there is an ongoing harmonization of the different frameworks. So I think through the web, the World Economic Forum, they actually asked. IFRS to come up with the global standards in relation to sustainability reporting so that everyone like the investors, the insurers, the regulators and even the lenders and other stakeholders can actually look into a comparable way of analyzing the different sustainability reports of the various companies.
So I think that's why there is that movement to harmonize all of these standards is because ESG is still becoming a forefront or part of the investment or the decision-making process. Ovid, do you think? Yes, so a lot of strategic thinking is really required on the part of the business sector, not only to comply but to be really a responsible and accountable stakeholder in this whole enterprise. And certainly alignment and harmonization issues are also very important. But the data is there.
The important thing is how to manage the data and how to make it really effective and how to do monitoring systems well. And now talking about monitoring, Fab, as I said, there are eight years remaining and we are in a COVID-19. pandemic situation. How are we going to reach that goal, the SDGs in 2030?
Yeah, well I think the SDGs were always aspirational. So, and unfortunately with COVID-19 and you know other issues, they're becoming more aspirational and further from our reach. So the COVID-19 pandemic has put down, has put the global sustainable agenda back. probably about a decade from where it was and conceivably on our current trajectory it would take us to the end of the century to realise the SDGs and of course some of those SDGs can't wait that long without putting us on a very different path.
The OECD estimated that in terms of the annual financing gap for the SDGs that that increased to 3.7 trillion US dollars a year up from 2.5 trillion dollars a year. before the COVID pandemic. I think it's also important to focus on the fact that these issues are, those that can least afford it are feeling the brunt the hardest.
So if you look at 2021, global total wealth reached $431 trillion. So it increased, but the debt burden of the world's low-income countries rose by 12% to a record of $860 billion. And external debt stocks for low and middle income countries combined rose by $5.3 and $8.7 trillion. And I think, you know, we're seeing, you know, in the region at the moment, the perfect storm that the pandemic, along with the Ukraine-Russia situation, has caused for Sri Lanka, which is now in a major economic crisis.
And, you know, looking to, needing to... restructure its sovereign debt and call in support from the IMF and others. So, you know, I think that overall, you know, we've gone backwards, but I think the comment made.
around the fact that COVID has actually done a really good job at shining a spotlight on how interdependent social, economic and environmental factors can be and I think is really serving as a harbinger for the looming climate crisis and I think has raised sustainability as an issue much more, you know, made it much more prominent than it was before the pandemic. I think one of the challenges we have is, you know, the statistic around the amount of, you know, investment assets or assets under management that are now classified as ESG being $35 trillion. I think, you know, sort of reinforces my earlier point about the need to understand, you know, what that means to different people. Because, you know, frankly, if $35 trillion US of capital was really, you know, targeting.
reducing harm and potentially creating solutions, then I think that we wouldn't be going backwards against the SDGs. So we really need to challenge ourselves in terms of whether or not the things that we're currently measuring, the ways we're going about doing things, whether that's really working. And you know I'm very supportive of reporting, external reporting and harmonisation of reporting. You know it's really important, it's necessary, but it's not sufficient on its own. And we need to remember that IFRS is about reporting enterprise value, not reporting impacts on people and planets.
So I think one of the most important announcements in recent times was the MOU between GRI and IFRS to really bring in that overarching view of organisations'impacts on people and planet first, and then understanding from there what the... consequences are for enterprise value? Yes, certainly we report performance and the question now is, are there additional policies that are needed to drive further private sector engagement in SDGs and ESG? Of course, we have champions like Vicky here is a champion of and is the president of the Global Network Philippines.
But how about other businesses? There are lots of MSMEs. So I would like to ask Michelle, are there policies that would drive further private sector engagement in ESG and SDGs?
Well, a lot of times when I have a conversation around ESG and why it matters and why it's important, one of the things that I... specifically say is that ESG, I think, and even Ryan in his open remarks, sort of, ESG is sort of a bit of a roadmap, and it helps us to get someplace. Where we're getting to is sort of what the standards are, right?
That sort of speaks to what Vicky and both Fab have sort of really have mentioned, that there are a lot of different standards, and that we're sort of in a phase where we're harmonizing those standards, and then I think we'll probably move into the next phase of exactly what Fab was saying. So what does that mean if it's really if it really is $35 trillion? So what happened? We're sort of where's the impact there?
And we need to understand that. I think that ESG standing alone, it needs policy and it needs action. Right. And so one of those and those policies and actions could be a number of different things. I think on the human rights aspects of things we see sort of in Europe, there's been a shift right towards human rights to diligence.
And if you sort of. engage in those laws and read in them and sort of understand what they're attempting to do. It's pretty broad, right?
And I think the idea there is to create some sort of system of actual accountability on the part of the government that would sort of push businesses to really take into consideration how they are impacting those who are their employees and whether that is violating their human rights. And that could be on a number of different things. Under some laws, it goes as far as environmental harm, and it includes, of course, different types of social harm.
So I think what we could see are policies that actually really support the ESG standards in a number of different ways. Imagine, if you will, something that looks similar to, I think, when we think of governance, which is, again, a very comfortable, I think, an easy place for many of us to think. We have things like FCPA.
We have the UK Bribery Act. We have lots of compliance laws that attempt to address the issue of corruption. I could foresee in the future, we have lots of frameworks, agreements in place around social issues, around environmental issues.
But we really need to see more teeth being sort of sunk into those issues to help also create the actual accountability that needs to happen. Right. The community, it's not just sort of community holding businesses accountable.
it actually needs to be a flow in both directions, where now there's some sort of system of accountability on the other side of that, which would really need to be the policies that are coming from governments and local communities to sort of make it a really strong and robust system. Thank you, Michelle. Fab, are there policies at the national level from UNDP side? What are additional policies do you think are needed to drive further private sector engagement in SDGs and ESG? Well, I think one of the major issues is we now live in a very financialised world and system.
And we still have a number of... externalities that aren't priced into our core financial and economic systems. So I think that one of the, you know, the biggest contributions to creating an enabling environment that governments and policy policymakers can take is to start closing the loop on externalities in the system. And that affects the S, especially in terms of economic, social and environmental outcomes, because, you know, we've got millennia of actually exploiting.
the S to create short-term profits. And so that's, I think, a really big gap. I think we need to look at policies that provide an appropriate response to countering increasing short-termism and reducing of capital to unlit exchanges. You know, part of the problem with regulating is that oftentimes that pushes money outside the regulated system.
And I think that we really need to address some of those things. Technology has been an enormous enabler of short-termism. One of the stats I think is really interesting is looking at the New York Stock Exchange equity markets. After the Second World War, investors held assets on average for six years. In 2017, it was seven months.
And today, with high-frequency trading and algorithmic trading, um, that's down to an average hold time of a few dozen seconds. So, you know, it's very hard to think about sustainability in that context. I think we need to have as big a focus, and certainly our work on the SDG impact standards has really been to focus on embedding sustainability and managing for impact into internal decision making and practice. So I think we need as much of a focus on...
practice as we do on external reporting and performance. And I think we also need to look at regulating the practices of ESG rating providers. And given you reading out my bio earlier, no surprises that I think that needs to look very similar in terms of how credit rating agencies are regulated, including making transparent the methodology assumptions and limitations of those ratings, which is just as important. I think, as making the ratings themselves transparent.
From a governance perspective, I think one of the other areas we can look at is making boards accountable for sustainability practice and performance and looking at listing requirements of exchanges in terms of sustainability practices. And I think finally, especially as we... we're talking about a lot of these system changes at a global level.
I think we really need a strong focus on creating a system that doesn't reinforce existing inequities and the status quo and is inclusive of developing markets and SMEs, which are incredibly important drivers in terms of sustainable development. And we really need to look at what we're requiring companies to do and make it. easy for organizations to start embedding this into their practices and decision making and not overburden companies unnecessarily with data that ultimately doesn't necessarily drive different outcomes or better decision making of those who receive the information.
So much more work is needed to be done and to ensure that nobody's left behind. Let me now turn to Vicky with Ayala Corporation at the forefront. of integrating sustainability at the core of its enterprise development strategy. What is your advice to other firms on facilitating corporate governance, financing, and capacity development for sustainability reporting?
Vicky. I would like to comment to what Fab mentioned. Really, there's a long list of which list, right?
There's a lot of things that we want to happen or things that we desire. But. As Ayala Corporation, we have been working with different stakeholders, we've been working with the ACCA team on how are we really going to promote sustainability. first of all on the reporting side what's happening in that area so we can actually put that in in the discussions internally and how are we going to address these issues i think those are the things that we are doing at for the last how many years but we started off with the reporting and that actually give us a glimpse of what's happening out there and how can we really improve our non-financial performance. These ESG issues, these ESG risks, if these are not managed very well, it will actually impact the financial performance of the corporation.
So it will probably impact the brand, the reputation, then you can lose your customer, and then there will be compliance issues as part of the G. And on that note, of course, you have to pay penalties and... probably the franchises and the licenses will not be available to you to operate as a business. So my wish list, actually, for the firms helping us in this regard, for example, for the corporate governance service provider or consultants, probably it is a good time to engage with the regulators and be involved in the policymaking. We have a lot of laws, but what...
And I don't know if Dean Magno, you can correct me if I'm wrong, that in this space, we have a lot of laws, but we do not have a good housekeeping. If those laws are still effective, we still need that or it's already outdated. So I don't know if we have that process in the Philippines. It's something that we also wanted to have a view of what are the existing laws.
We know what will be the upcoming laws because that's part of our engagement with the... policy regulators on those issues, right? But how about the outdated laws? So things that we, probably the corporate governance people will help us also have a view.
And because of these laws, some laws are sometimes conflicting and it's quite difficult to operate in that kind of environment. And then probably on the financing side, it will be good for our friends on the financing side to provide assistance. to the corporate so that we know also how to access those. I think my pub mentioned about trillion dollars of possible financing available to the corporates and probably to the private sectors to the SMEs especially if we want to make sure that we are doing something in the areas of the SDG so no one will be left behind. if we can develop a sustainable financing framework that everyone can use to be able to access that financing.
On the capacity development, as I mentioned, there is that ongoing harmonization, but it would be good also locally if we can invite our MSMEs, our SMEs to be part of these trainings. Probably a good program will be... a big brother, a small brother kind of thing, right?
The big corporations can you actually sponsor the other SMEs or the SMEs in your supply chain to be part of this training. And then of course the capacity development companies or the service firms can actually get themselves abreast of what's happening in this space. There's a lot of sustainability frameworks that are available to us and to name a few which are also the frameworks that's being suggested by our SEC. We have the GRI, the SASB, we have the integrated reporting by IRRC, that's another framework on how can you communicate the shared value stories of your companies and then the other one and this is related to climate change is the TCM. And I know upcoming in the horizon will be the TNFT, and that is about the biodiversity loss.
So there's a lot of frameworks. Then how are we going to help other people or other organizations to understand all of this framework? And I think that's where the capacity development service firm can really help us through all of these standards.
Over to you, Dean. Yeah, Vicky, with all the things that you mentioned, I think universities can really help and knowledge partnerships can be developed. private sector in a kind of a co-production kind of initiative. Now that you mentioned Dean Magno, sorry you're the academic, I really believe that this kind of topics should be part of the syllabus right?
It should be part of the undergrad syllabus so that when this is personal, so that when we need people who can help us in this space we can also connect with the academe, hey guys, can you help us develop this more too? So that the graduates will be ready to help us in this corporate space in relation to sustainability. And now you know what's my pain is that where can I find this talent to help me out in this sustainability space? Yeah, the academe is a good place to look for new talent. But for that to happen, the academe should also evolve and to innovate and to really take on real world problems.
And although I'm not a panel speaker, I'm a moderator, let me just share with you that I'm also coordinating an SDG city project at De La Salle University, where we want to integrate all the efforts looking at SDGs. And hopefully. integrated in the planning process, the localization of SDGs in the city of Manila, where we are located.
Now we go to the few remaining questions that I have for our panelists. Let us go to tracking and measuring sustainability impact. As sustainability has become a top value indicator for investors and a key decision-making factor for consumers, Companies are searching for effective ways to measure and prove their sustainable contributions.
What is the best way to track and report sustainability? Let's start with Pham. That's a rather big question.
So, you know, I think the, you know, I think for me, there's some really important aspects of reporting, particularly in the context of giving. stakeholders and decision makers using company information to make their own decisions such as consumers need. The first is, you know, I think we need more focus on reporting all material impacts and positive as well as negative impacts.
I think that there is a bias in reporting towards, you know, picking a couple of SDGs or impacts that organisations can report positive performance. against rather than all material impacts. I think it's also really important because, you know, overall, we're not on track to achieve the SDGs, we're not on a sustainable path, and we need the whole system to change and become more sustainable. So we really need to focus on the rate of change and the change relative to where the organisation is starting from, and the change relative to the thresholds we're trying to reach.
And, you know, the most developed part of that from a reporting perspective is really around climate, but we need to take the same approach, you know, against the other SDG targets and really start looking at whether or not organisations are moving fast enough towards those goals rather than reporting things in isolation. The, you know, I think the other aspect is, you know, we're very focused on reporting performance, but often sustainable development, it takes a long time and it's very... diffused.
There's a lot of contributing factors that lead to performance. So I think that, particularly in terms of being a leading indicator, one of the other things that we should be reporting on more is how the organisations are actually embedding sustainability and managing impacts into their business practices across strategy, their management approach. their disclosure practices and importantly their governance practices.
So they would be some of the areas that I think we need to focus on. So it's really about internalizing all these things, so it's not just something that you do because it's required or it's externally driven. Yeah, and I think that's the compliance mindset issue, isn't it?
That compliance often drives a form over substance response. What we really need is for, you know, organisations to be part of that mindset shift where they realise that, you know, this is at the heart of creating value. And once you do that, you know, you've got an intent to actually create impact rather than just a compliance monitoring reporting response.
Yeah, that's right. Michelle, what is your take on this? Oh, I was just thinking, I thought about this question.
And of course, because my background is compliance, I always think about sort of how compliance would sort of approach this. And I think the issue, the problem perhaps that you might run into with this is that you sort of get into sort of checkboxing, right? We've done this and now we've done, we've checked our little box and we can sort of move on to the next thing. And so. My concern when I think about this is that it has to be more than just checkboxing culture.
It has to be sort of very similar to what I try to advocate for, and especially the anti-corruption and governance space, that we're not sort of creating, right, like sort of a fabrication. There we go. Creating a culture of fabrication where we're saying that we're doing something and we're not, because of course the impact of- sort of creating a ESG SDG sort of fabrication culture will have tremendous impact on our communities and sort of going back to what you're talking about before fab uh sort of relating back to so if it is that amount of money that has been connected to ESG investment what is it what is it doing and how do we know what it's doing so um when I think about this I think about the ways that I think about and the governance uh sort of how we move from that checklisting culture, how you create more than just sort of a top-down tone about it, how you incorporate important report, how you make sort of something you report onto a value, right, for your corporation and for your company. And I also think about in the context of my work, small and medium enterprises, particularly those who are in emerging markets, they are vulnerable in a certain sense.
And I'm not sure that... all of the standards that are being created take into consideration their needs, their ability to sort of be able to comply if that's language we want to use in the same way. So I think when we start thinking about reporting, we have to start thinking about it in the same way that sort of, you know, businesses are not just operating from a spreadsheet only, it's multilateral. We need to have sort of multifaceted sort of reporting standards that take into consideration everyone's capacity because everyone is sort of contributing in different ways. And we need to understand that and ensure that the standards and the reporting and the way we think about it really reflects that.
So it's really important that there is real impact. It's not just a press release, right, Michelle? Right. And that's the issue, I think, why people feel skeptical about this, why there's a lot of sort of, well, is this just sort of the new trend?
I always say maybe it could be the new trend. I don't think we don't right now know as we're living through it, but we could certainly have, it's within our power to sort of make sure that it's not to actually make this something that improves our planet and improve social equality for those who haven't had it and ensures that corruption isn't sort of taking away resources from community. This is a real opportunity that many of us are sort of can engage in right now. And yeah, I think it'll be really important going forward. How about you Vicky?
What's your take on this question? Same question. Yeah, I think coming from the sharings of our two other panelists, I think report should be springboard for action. It will start off with compliance because everyone will get to be more comfortable with all the things that they have to collect data on and then report on it.
So that's compliance. But then it should come. it should be something that will help you move forward. That's why a report should be a springboard for action. If it is just like a coffee table book, then don't do it.
There's nothing into that. There should be value in the things that you are reporting on. So how do we do that? So I have two tracks.
The first one is about ESG reporting and the other one is SDG reporting. On the ESG reporting side, there should be a stakeholder engagement. So we ask our stakeholders, what are the things that concerns you?
What are the things that matters to you the most? And that's part of our materiality assessment. And this is where the standards would come in and help us identify the different metrics, the things that we need to collect data on, and then prioritize it.
There's a lot. probably if you look at the standards, there's a list of the different materiality topics and the indicators. But again. You want to be more purposive, you want to be more deliberate, so let's prioritize all of this issue and then let's collect the data and then from the data let's analyze are we doing something great or are these are the areas that can we still improve on. So that's part of the ESG report and that data will actually help you to set some targets.
I think what is important is now that you have the data, do you have now the target, and then we have a roadmap for you to achieve those targets. And then the other one on the other side is the SDG reporting. I think everyone knows that we have 17 goals. We have 169 targets, and I think we have 200-plus indicators on net business.
And if you look at all of these 17 goals, there is one goal that probably will... you can relate with it is something natural to your business you don't need actually to change your whole business model because if you do you you will lose a lot of time in addressing those sdgs look for a target that is natural to your business and then amplify and see how you can actually improve or how can you really contribute to those 17 goals And because, you know, if you look at these 17 goals, there is really one that will resonate to the corporate, to the private sector. There is really one that will resonate to the private sector, to the public sector, to the academy, to the government. And because the whole thing is that the whole approach, I think, is this is a whole of society approach that no one will be left behind. We need to work cohesively.
We need to collaborate. we will achieve the 17 goals. And I don't want to be accused of SDG washing. So back in 2018, when we developed Ayala's sustainability blueprint, we looked into these 17 goals, we looked into the 169 targets and see where we can contribute meaningfully or where we can really move the needle.
So those are the two tracks that we are looking at at Ayala Corporation, ESG reporting and SDG reporting. I think we have different approaches, but the main idea is to come up with a report that will become a springboard for action. I like what you said that it shouldn't be a coffee table with all these nice and glossy pictures. Although I like looking at those glossy pictures when taking my coffee.
But you're perfectly right, Vicky. This report should provide actionable points. And I think, well, talking about academe, action research is one of the important tools. I think that can be a good instrument as a part of a knowledge partnership. So let me now go to our last round of questions.
We'll talk now about sustainability beyond compliance. I think we touched a lot on this matter. So in the case of the Philippines in 2016, the Philippine Securities and Exchange Commission approved a new code of corporate governance requiring publicly listed corporations to abide by reporting procedures. In fact, by October 2021, over 90% of these publicly listed corporations have submitted sustainability reports, but how about small and medium enterprises?
How are they to be engaged in reporting their sustainability footprint and adopting SDG principles and ESG practices? Fabian, as a director of the SDG Impact Hub of UNDP, what's your take on this matter? Well, you know, again, I think, you know, I'd start with saying that, you know, while reporting is important and necessary, in our view, it's not sufficient to drive change at the pace we need it to. And, you know, I think that, you know, transparency is really important. But, you know, I also think, you know, after 30 years in markets that reporting and transparency has been very successfully used as a ruse to slow down the pace of change.
report on things where there isn't enough action and I think that we need a really strong focus on moving from using the SDGs as another filter to report what we already did differently to using them as a strategic tool to make different decisions and drive different capital allocation. as a consequence. In response to the issue around SMEs in particular, I think that we're creating a very complex system because we're bolting things on to what's already there and what we need to do is redesign the system as a whole.
We don't need ESG, SDGs, sustainability. We need to focus on sustainability and all of those things come in underneath that and I think that if we can unpack that. and make the system simpler, it is helpful to smaller organisations in terms of their load. I think we also need to think very carefully about what information do we actually need to report, because we're very metrics driven and it is a very long list of things that is coming through these standards. And I don't think that every investor that gets all of those reporting on metrics uses them in their decision making.
So I would challenge that. particularly with the SDGs and sustainable development, there are some metrics that we need to collect as a whole system because we need everybody's contributions to achieve the goals. And we need a way to actually bring that together and look at that at an aggregated level using comparable data.
But I think that oftentimes what we're doing is we're making comparability the goal rather than decision useful information. We're burdening companies with a lot of reporting that... that doesn't actually drive decision making.
And, you know, our focus with, you know, with looking at the SDG impact standards is if we're actually providing organisations with the tools to improve their sustainability practice, putting an assurance framework around that, wouldn't that as a single indicator be enough for external providers to say this company's on the right way, rather than requiring a company to report on, you know, umpteen gazillion? um comparable metrics so you know i think that um i think that there's a lot of opportunity to to improve i think one of the other important things we need to focus on is is creating net positive impact so i hear you know the uh um the uh allure of focusing on one target or one sdg but you know the the reality is that impacts um are often interdependent and impact other things. And if we're not actually taking a holistic view and thinking about what impacts our material in a holistic way, potentially we're reporting on positive impacts against one target or one indicator, but actually creating that negative impact because we're not taking into account those interdependencies properly. So I'll leave it there. I could talk about this for hours.
Yeah, yeah. That's your cup of tea, SDGs. But yeah, I agree because SDGs, they're devised in such a way that they're supposed to be seen as integrative and transformative.
So each of these goals are interconnected. So yeah, I think the other thing that I left out, which I think is really important, is our need to disaggregate data to the appropriate level. Because when we're talking about sustainable development, it's typically a subset or community that is left out.
And at the moment, you know, we use data at an aggregated level and averages and we actually don't gain those insights in terms of where the needs are. So we need to really focus on that. And as has come through with, you know, with the other speakers, a focus on actually including the stakeholders that experience the impacts at all stages of designing and evaluating the impact on them and as they experience it.
Because, you know, I think that. will, A, improve the impact, but also improve the level of accountability of the system as well when they're part of the process. Yeah, multi-stakeholder engagement is really a key factor in this process.
And I myself am very deep in the work on SDG localization. So that is what you shared, Fab, is very important. So let me now turn to Michelle, your thoughts, and you may also want to share Sipes. upcoming initiative on ESG in the Philippines and what does the upcoming project entail?
I would like to hear about that. Fantastic. I think one of the things I think maybe I'll just maybe agree with some of the things that Bob was saying that I think part of this conversation when we talk about the standards that there's so many that there's so many that we're not sure what they mean and specifically they mean different things.
So of course when we first started you should have said let's talk about what we're talking about and how other people might understand it, right? Investment community understands something very different than perhaps what businesses are understanding, than perhaps what communities who are being impacted are understanding. And so I think, to your point, we have to really start thinking about how do we how do we all get on the same page and how do we all start talking about the same thing?
Or how do we signal that sort of what the investor is looking at is not what someone in a community might be looking at? I think this will be really, really important because, of course, that is how we can perhaps be one approach to sort of, or one of many approaches to ensuring that we're not greenwashing or, you know, standard washing and we're just, again, creating that checklists fabrication culture. I think it's going to be really important. So I just wanted to sort of build off of that because that is something that's really important to me is that we want to, I think we're, again, we're at a moment where we can actually do something to impact our communities and hopefully make our world a better place. But it really takes having, taking a real and hard look at the standards and say, is this really something or what are we actually doing here?
And being critical of it. So whenever I hear critiques of ESG. sustainable development goals. I like that because I'm like, yes, let's be critical.
That's the lawyer in me that says we need to think deeply about the things that we're doing. In terms of the work that SAIF is doing, I'm really excited about it. If you can't tell, it's almost 11 p.m. here where I am and I'm getting animated because we're doing some really great work, I think, leveraging some of the laws that the Philippines Security and Exchange Commission have put in place around sort of this reporting standards.
not that we're looking necessarily to ensure that companies can report and can comply. We're really interested in figuring out if you're a small and medium enterprise, how do you do that? What is it?
What does it actually look like? Because I think and I'm sure that some of my colleagues will agree, we need to have some sort of insight into what it looks like. We have ideas about what those complexities might be, how it might be difficult, in particular for a small or medium enterprise. to engage and sort of ensuring that they're reporting their goals.
And we want to know what it looks like. So that's part of the work that we'll be doing. We'll be partnering with Makati Business Club and sort of looking to create toolkits to help small and medium enterprises understand what the reporting means to sort of help create mentorships between larger and smaller corporations so that the smaller corporations and the smaller businesses and sort of, I think we can even get down to the mom and pop shop at some point in time.
are not getting left behind in all of this and that they have some sense of how this relates to their work because ultimately it does become very very important again i like to think about sort of communities and ecosystems that are working on all of this together and we can't have pockets where just sort of people aren't well i mean we can but it it becomes an issue we have pockets and we have communities who can't engage in the standards and sort of get on the same page and talk about the issue along with everyone else. So that's the work that's upcoming in the Philippines. Really excited about that work and hope to be able to come back and have a community like this and talk more about this. Yeah we're looking forward to that Michelle. Vicky, what is sustainability beyond compliance?
So probably, I give you my chair as the hat of a chair. person of the Global Compact Network Philippines. So sustainability and compliance, there's a lot of values that we can unpack into.
We have to do that. And then that's the only time that you can create value. Now, how can we help you in the Global Compact Network? First of all, join us.
become a member. Over the years, I think the UN Global Compact as one of the agencies under the UN, they have developed programs and they have curated resources that will really help us into this ESG and SDG journeys. We actually have SDG accelerator program so that it will actually help our members to really look into the SDGs and see how we can contribute meaningfully.
As Fab mentioned, we need all of this data. So things that we do, probably for you, it's not something that will move the needle, but if we can collect those data, it will actually create a report and it will make that meaningful contribution to the SDGs. Aside from the resources, being a member of the Global Compact Network Philippines, you have access to the other members as well. So it is a form of networking.
And in that networking, you can do benchmarking, you can ask questions. probably someone can help you out in the things that will help you to be on this journey or to move the needle in this impact reporting. I think for the climate ambition alone, which also have a program, the climate ambition program under the UN Global Compact, it will help us look into It will help us help the SMEs or the MSMEs in the climate reporting because that will be part of the scope 3. Most companies, we are a big company, we have the supply chain.
It is part of our reporting is to look into that scope 3 and that's where the SMEs are actually part of the scoping. So it will help us if we move into the journey. We also have to move.
with our suppliers or with the supply chain. So for me, sustainability beyond compliance, but as to what Michelle mentioned, compliance should be there because that is the foundation. And then sustainability is really creating value to all the stakeholders that we serve.
And there's a lot of things that we can do together. So join us in the UN Global Compact Network for the Peace. Thank you, Dean. Thank you, Vicky. I think people will acknowledge your invitation.
Let us now go to the open forum. I can see very excited participants here asking very nice questions, good questions. But let me read the question of Warren de Guzman of ABS-CBN News. We have ESG, SDG, the World Bank's grid approach. all in place or being put in place?
Have this given the smallest stakeholders more power, capability to hold large organizations accountable? Do you have any concrete examples of this? Fab, would you like to answer this?
Yeah, it's a really good question. I think that there's still a long way to go. And I think that, again, you know, focus on reporting doesn't necessarily drill into how stakeholders inform that process.
So again, I think going back to what I've been saying throughout this session, there is a need to focus on the internal management practices, not just the external reporting and think about things in terms of ISOs, definitely the SDG impact standards we've been developing. You know, they're a free public good. You can go and get them off the website. You know, they focus a lot on including and involving stakeholders in the decision-making process.
So, you know, I think that that's, I think that it's a really important accountability measure. Also, you know, looking at, and the standards do this as well. We've worked with Accountability Council to look at the nature of the... the grievance mechanisms in place to ensure that there is recourse. But ultimately, I think that it's a really big mindset shift.
I think a lot of stakeholder involvement is still better described as marketing and giving your message to stakeholders. It's not truly bringing stakeholders into the net and giving them agency in the decisions that impact them. So you know I think that needs to be a focus going forward. Thank you Fab. Here is another question from Indra Klein.
To what degree has social media helped change the landscape in raising awareness with respect to ESG goals? Any thoughts on how governments can develop programs that can better promote impacted stakeholders and consumer involvement? Attorney Dulce Punzalan has, maybe I just read her question because this also refers to information technology.
How can ICT combat global inequalities? So social media and ICT, information and communications technology. Michelle or Vicky, would you like to answer this?
I have a short answer to this. I think a lot of what we're seeing is because of social media. We sort of had the, we saw it happening a bit before the pandemic, but then suddenly everyone was home and on social media, you know, we were all sort of quarantined.
And so I think everyone had insights into sort of things that are happening around the world. Of course, right now, what we're seeing is what's happening in Ukraine. And I think part of the reason that you sort of saw businesses shift there are of course, other reasons is that do we want to be the company who is, we think, maybe supporting, you know, an authoritative regime, right?
Do we want to be a company seen as supporting that sort of behavior? And that was immediately, I think, immediately because it's on social media far more than maybe would have been in the past, right? It was a flag to companies to think about.
There is visibility into what we're doing and how we're doing it. And we need to think about that. So I certainly think that social media plays a role.
I think that social media has played a role. We saw that even here in the United States, sort of around things that happened with Black Lives Matter and sort of George Floyd. We saw immediately, right, there were all sorts of social media campaigns around this and direct and it had direct impact on businesses.
Immediately, people were feeling, you know, we don't want to support that company because they do. this in that situation. So I do think that social media is playing a role here in the sense that it has, it's a very powerful tool and you don't have, and lots of people have access to it and it's creating, I wouldn't say transparency, but it's creating, I think, an uncomfortable for many accountability, sort of informal accountability mechanisms, which I think is quite powerful because it puts a lot of power into the hands of folks who might otherwise be marginalized. There's a lot of disinformation also circulating through social media.
So I guess you fight disinformation with correct information. Thank you, Michelle. Vicky, there is a question here from Madel Estabilio, who is a faculty from the LSU School of Economics.
According to her, she is currently working on her dissertation on sustainability practices of businesses. and understanding investor behavior towards sustainability practices and investments. Fabian mentioned that there are currently $35 trillion of AUM of sustainable investments.
We know that to help incentivize these companies to continue to engage in sustainability, investor support is very much needed. However, traditional finance theory states that individuals tend to be rational and simply look for ways to maximize profits when investing. How do we bridge the gap between companies who engage in sustainability and the retail institutional investors?
So Vicky, I think this is very related to ESG. Yeah, I think currently, yeah, there is the traditional financing route, but at the same time, we have available sustainability in financing solutions, I think. available from the different banks.
There is what they call a sustainability bonds and also sustainability link financing. So there are two types of sustainability financing. The first one is you can use the funds to the sustainability funds will be used to do something in relation to the SDGs. That's what we have in Ayala. We actually raised 100 million in social funds and that is actually to finance our healthcare business.
So that's one way of accessing the financing, sustainability source funding. The other one is sustainability link fund and that is in relation to the targets that you will set. I have not seen it yet here in the Philippines, but we are working something around this area.
It's related to our target, for example, a target to reduce the greenhouse gas emissions in the future by how many percent. So that is what we call a sustainability link financing. So I was not able to get the name of the person who asked that question, but there are actually developments in the areas of the financing. And I think what Fab mentioned, there is a lot of money going into that direction. So the financing community, they are developing these solutions for the corporates and even for the MSMEs to avail of.
And that is all founded or anchored on sustainability. It's either the reason why we have that one, so that is a sustainability source financing, and the other one will be a sustainability-linked fund or equity or anything. And that is related to the target that you will set along the way, for example, in the reduction of your GHG.
So it's available. And I think UNDP also has a project or a program related to sustainability financing. I was able to talk to PAB.
I think it's your counterpart here in the Philippines. And they said that they have the sustainability financing framework. And actually, I'm excited to understand more. that sustainability financing framework and how can we help the large corporation and even the MSMPs on that point on how can we access this.
Yeah, Vicky, I think it's actually quite interesting. The SDG Impact Initiative sits under the Sustainable Finance Hub, the UNDP Sustainable Finance Hub, which was established about three years ago, recognising that in terms of achieving sustainable development, the flip side of every sustainable development outcome is financing and funding that outcome. So, you know, a different space for UNDP to come into, but recognising that...
that it's just so critical. There's a lot of, you know, I would recommend to anyone to go to the website and have a look at what the Sustainable Finance Hub is doing. It's doing some really good work.
It's working with governments on SDG budgeting and creating integrated national financing frameworks for financing the SDGs. Obviously, the SDG Impact Initiative is very focused on activating the private sector and accelerating. private capital towards the SDGs on a number of fronts. There's a really terrific initiative around insurance and other risk-based approaches to, you know, to increasing financing towards the SDGs as well.
So, you know, I think it's really important. One of the things that we've really tried to focus on is, you know, the individual, there's two key things that we really need to achieve. We need all capital, the whole system.
to become more sustainable and responsible in how capital is deployed and the activities that it finances. And then we need a specific portion of that capital to be really targeted towards delivering SDG solutions. And there we need a lot more partnership and collaborations to bring capital across the system, because oftentimes those gaps exist because of existing market failures and the market is not going to be able to solve it on its own.
You're going to need to bring in development capital and other forms of capital to create blended finance solutions. But I think that behind that, we really need a focus that the whole system needs to be more sustainable because otherwise we're just seeding the problems that are going to need solutions in the future. And the overall system is, you know, well over a hundred trillion dollars a year.
And if we're focusing on something that's less than 5% of that, it's going to be a losing battle. We're pretty much trying to dig ourselves out of the ocean with a teaspoon. Thank you, Fab. I'd just like to read this final question.
We're running out of time. I noticed that the other questions have been answered. Let me read this.
It's more like a comment from my friend, Jose Cortez from the Asian Institute of Management. For Michelle, you may want to check this study conducted by UNDP Fair Bees. on adoption of ethical business practices by MSMEs in the value chains of Philippine large companies including members of Global Compact Network and he sent a link in the Q&A box. No, thank you for that. We're focused on working on this issue very specifically and I'm always looking for more information to help inform our work so we'll certainly be sure to take a look at that.
Thank you so much. I'm sorry to cut this conversation. I enjoyed it very much.
As a professor, I can continue, but we are limited by time. And at this point, I would like to thank Vicky, Maria Victoria, Vicky Tan, Michelle Crimes and Fabian Michaud. So thank you very much for your wonderful insights and observations.
Thank you. And at this point, I would like to call the director of SIPES Anti-Corruption and Governance Center to provide us with the closing remarks. Frank.
Thank you very much, Dr. Magna. It's been a real pleasure to sit in, to listen to the back and forth, the dialogue. And I just wanted to highlight three comments that I picked up on over the course of the event.
So, Michelle, at one point. was talking about how it's really important to look at communities and ecosystems and keep in mind that it's not okay to leave communities behind. And I think what she was pointing at there is something that attracts a lot of us to ESG issues, and that is questions of and commitment to justice and fairness, because ultimately that's what we're all talking about using different words, different kinds of languages, different phrases, justice and fairness.
And Vicky, at one point, was very early in the presentation, was talking about ESG being the license, the social license for a company to operate. And I think that captures very eloquently. the degree to which the private sector is very much part of the social fabric and the sort of compact that as human beings we have with each other as we perform different functions in society. And so the notion that ESG is the social license for a company to operate really resonated with me and set a great tone at the beginning of the presentation. And then one of the things that that Fab said that captured our interest in moving into the Philippines in the way Michelle described.
Fab was saying that organizations need to understand that ESG is at the heart of creating value. It's not just compliance. So that idea that the world's priorities and the way it puts a price on different dimensions of business activities has changed to the point where ESG is now a real value add rather than just some sort of...
obligation, that touches upon the market-driven nature of much of CYPE's work and how we see, in the Philippines especially, those market drivers being especially strong and especially well-positioned to move forward ESG in a way that it benefits the entire population, we hope. So on that note, I'd like to close out the presentation, the event, say thanks to everybody who came. It's been a privilege to be here and it's been a real privilege and an education. to listen in for the last 90 minutes.
Thank you.