cenSEI T H E
Report
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Sustainability reigns at Ayala Corporation and Manila Water You don’t have to do much convincing about sustainability at real estate, telecoms, water and banking conglomerate Ayala Corporation. The 177-year-old company has published sustainability reports since 2007 to tell shareholders and the public how its enterprises serve both shareholders and society. The 2010 report has sections on economic sustainability, environmental sustainability and social sustainability, as well as future issues and initiatives. Plus videos on shared values last year and Ayala’s sustainability push in 2010. As the concessionaire of the Metropolitan Waterworks and Sewerage Systems, the Manila Water Company brings clean water and wastewater services to more than six million residents of eastern Metro Manila and Rizal Province. In 2010, it received a number of awards, including the International Water Association Awards for reducing water loss in Manila. In 2011, global business strategy adviser Boston Consulting Group and Geneva-based international organization World Economic Forum recognized it as one of the new champions of sustainability. Says the report, by engaging in an innovative mix of natural resources conservation, physical pipeline and sewage infrastructure, and micro-businesses via the Water for the Community Program, Manila Water brings affordable water to its clients, especially the urban poor, and cuts water loss. Its commitment to social and environmental sustainability has reaped rewards, and the increased access to clean water by low-income households has translated to fewer illegal connections and less contamination in the water system. Water loss due to leaks and illegal tapping dropped from 63% in 1997 to 11% in 2010, and the number of people in eastern Manila with access to clean water rose from three million in 1997 to more than six million today.
CONTENTS
NATION
WORLD
Green is the color of money. An analysis of sustainability’s role in innovation and growth is encapsulated in a 2009 Harvard Business Review study (registration required) authored by management guru C.K. Prahalad, Ram Nidumolu, and M.R. Rangaswami. The researchers found that “sustainability is a mother lode of organizational and technological innovations that yield both bottom-line and top-line returns. Becoming environment-friendly lowers costs because companies end up reducing the inputs they use. In addition, the process generates additional revenues from better products or enables companies to create new businesses.” According to the report, companies go through five distinct stages in their journey towards more sustainable practices: 1. Compliance as opportunity. The first stage involves complying with environmental laws complicated by geography and industry. To stay ahead of their sectors, companies follow the most stringent regulations or anticipate future standards, rather than just satisfy current minimum requirements. Hewlett-Packard, for instance, predicted a lead ban two decades ago and began exploring alternatives. Thus, HP could immediately comply with the European Union’s 2006 Restrictions of Hazardous Substances Directive. 2. Sustainable value chains. After legal compliance, organizations tend to become more proactive about environmental concerns. They reduce resource use and
BUSINESS
TECHNOLOGY