CEO challenge to sustainable CSR
September 24, 2006
CEO challenge to sustainable CSR. Check it out:(Philippine Daily Inquirer Via Thomson Dialog NewsEdge) THANK YOU FOR THE OPPORTUNITY TO speak to you today. It is heartening to see the participation of so many companies. Clearly, this is an indication of the collective awareness, consciousness and desire of everyone in the private sector to work together and take a more active role in the national development process.
Like many of the companies represented here, the Ayala group is committed to corporate social responsibility. This is a commitment that has increasingly grown over time, especially in more recent years, and has evolved in approach, methods and platforms.
At the heart of this is our firm belief that indeed, the private sector must play a greater and much more involved role as a corporate citizen, given the enormous social and economic disparities that exist in a developing country like the Philippines. As a company that has over time attained some scale and size, we believe we are, just like many of you here, in a good position to make a meaningful impact particularly in the lives of the marginalized sectors of our society.
Throughout our history, we have endeavored to incorporate elements of corporate philanthropy in our business tradition. As we evolved in business, we also constantly transform and reshape our corporate philanthropy programs to meet the needs of the times. Initially, these tended to be stand alone in nature, involved dole-outs or donations, which responded pragmatically to immediate needs. This is not to say these were not effective programs, in fact they were, but the scale and reach were naturally limited and narrower in scope.
It was not until the formation of the Ayala Foundation in the 1960s where our corporate philanthropy programs started to crystallize in a much bigger way. As we institutionalized and formalized our CSR efforts under the foundation, we have been able to engage and participate in different platforms for corporate philanthropy. This has led us to develop projects where we felt we could create most value and make the most impact, which are in the areas of education, culture and the environment.
Education
An example of this is Centex (Center of Excellence in Public Elementary Education), a laboratory school which offers the brightest children of the poorest families top quality education within the public education system. It offers the latest curriculum technologies complemented with a total support package (books, uniforms, transportation and nutrition) to ensure that the children do not drop out and that they achieve their full potential. There are currently two Centex schoolsone in Tondo and one in Batangas which are fully endowed to ensure the continuity of the program. Since it started in 1998, Centex has enrolled 1,058 students and last year graduated its second batch of grade school students.
Culture
In the area of culture, we have constructed a new building for the Ayala Museum in Greenbelt which has started to showcase various art forms and crafts that depict our rich cultural heritage and history. The museum serves not only as an important venue for learning but a means to cultivate among Filipinos a greater sense and appreciation of their own history in an atmosphere that is both entertaining and educational.
We have also increasingly worked on projects that promoted causes for the environment in collaboration with other groups such as the World Wildlife Fund.
Literacy
Beyond our involvement in these stand alone efforts, the foundation has also been able to build momentum in recent years to increase the scale and scope of its CSR programs through collaborative endeavors with other entities that shared its vision. With education at the center of this, we have engaged a multi-sectoral group in a project called Gilas or Gearing-up Internet Literacy and Access for Students which aims to connect to the Internet all of the 5,500 public high schools nationwide in the next five years. This is its largest program to date and perhaps the most ambitious. It is being carried out in conjunction with all the major hardware, software and telecommunications companies in the country, many of whom are members of the League of Corporate Foundations. It serves as an interesting example of what a collaborative effort can achieve. To date, about 780 schools have been connected, reaching about 350,000 underprivileged youth. We believe Gilas is not only strategic for these young adults as they develop their skills, but important as well for our country as we build our capabilities in the ICT sector.
Another example is Text2Teach, an Ayala Foundation-led project in partnership with Nokia, USAID, and other global and local companies including Globe Telecom to beam interactive learning modules via satellite to 200 under-resourced public elementary schools.
By working together and engaging in a cooperative effort with other groups that have a commonality of vision for the future, we are better able to make use of resources, achieve scale, reach out and make a substantial impact in the lives of a much broader segment of our population.
I believe, however, that the most significant and by far most effective way the Ayala group has been able to contribute to the upliftment of the lives of the marginalized sectors in our society is in the way we have been able to progressively align our business objectives with our sustainable development and socio-civic goals. By increasingly tailoring our business models to create products and services that respond and cater to the needs of the lower income groups, we believe we are able to help create sustainable solutions to basic socioeconomic problems.
Two businesses particularly stand out as an example. One is Manila Water, the other Globe Telecom.
Prior to the privatization of MWSS, only 26 percent of the households in the East Zone of Metro Manila, which is Manila Waters concession area, had access to 24-hour uninterrupted water supply. Often, women and children, particularly from the low income families had to stand in line for hours to get water from a public faucet and the water cost them nearly 10 times the commercial rate. This resulted in lost productivity, poor accessibility, less money for other basic needs, high incidence of water-borne diseases and poor sanitation.
Since the privatization, Manila Water has been recognized as one of the most successful privatization endeavors in the region. It was able to transform a poorly performing public sector company into a profitable, financially stable and socially responsible private company.
Today, it delivers more water to more customers with a current customer base of over 600,000 households from only 325,000 nine years ago. Significantly about half of the newly served population comes from the marginalized communities within its concession area.
Billed water volume has constantly grown to 887 million liters per day (mld) as of March this year from only 440 mld when it started in 1997.
Through its flagship program, Water for the Poor, Manila Water recognized that the delivery of potable and safe water to the low income communities must be a strategic priority, and in fact, a strategic necessity. Uninterrupted access to potable water at lower cost results in better hygiene, improved health, higher productivity, more money for other basic needs, and improved livelihood opportunities. Through the program it has provided potable water to more than 860,000 residents in various poor communities in the East Zone and as the health and well-being of its customers improved, so did Manila Waters commercial efficiency. New connections from this segment contributed about 1/3 of the incremental billed volume and have helped reduce system losses from leaks and pilferage, allowing the recovered water to be sold to high margin customers.
One of the breakthrough innovations put in place is the collective installation, metering, and billing using cooperatives. The collective billing scheme has proven to be incredibly powerful. Not only did it help lower the cost of acquisition for the customer, it effectively gave the service provider group insurance coverage on bills payment. About 70 percent of the urban poor now bill through this mechanism and the collection efficiency in communities that use it is 100 percent. An offshoot of this is that it has allowed cooperatives to buy water at bulk rates and resell these at retail for some profit, creating a steady source of livelihood for many of these communities.
Manila Water has also helped develop other livelihood opportunities for many small entrepreneurs in the local communities. Many of the pipe-laying work in small roads and districts were sub-contracted to smaller contractors who have the appropriate scale to work on these projects. As a direct result of the companys capital investment program, it has generated more than 10,000 jobs through small and medium scale accredited contractors. To assist in their financing needs, Manila Water links its contractors and suppliers with its own relationship banks to help in their working capital requirements. Complementary to this is its micro-financing program for communities, enabling them to establish livelihood projects that augment their families incomes.
Telecommunications
Globe is another example that has touched the lives of a cross section of the population. With the industrys shift to the pre-paid model several years ago, barriers to access to telecommunications no longer exist. By offering SIM card packages as low as P100 and loads as low as P1, combined with low handset cost, virtually anyone can have access to mobile communications. The accessibility and affordability of mobile phone service has allowed us to reach a much larger number of people who had virtually no access to proper communications in the past.
Electronic loading also opened up tremendous livelihood opportunities for enterprising individuals and sari-sari stores. With the auto-load system, Globe now has 500,000 retailers nationwide, helping enhance incomes of these micro-entrepreneurs.
Globes latest innovation in m-commerce, GCash, is also opening possibilities for microfinance institutions to disburse microloans and receive micropayments. If successful, this will have a beneficial impact on this important global program to empower people who have no access to capital and credit.
We feel that by tailoring their business models they have effectively provided vital services to poor communities, improved the quality of their lives, and offered livelihood opportunities. They have created jobs and businesses by engaging many of the poor in operationalizing their distribution and collection systems. The key lesson is clear: doing business at the bottom of the pyramid can be a sound business strategy.
We continue to explore ways through our core businesses to see where else we can find business solutions to the problems of poverty. The Bank of the Philippine Islands, for instance, is now looking into microfinance as a possible area of expansion. It is studying the needs of the sector beyond credit such as capacity building, financial literacy programs for overseas Filipinos and their families, and technical assistance. Ayala Land is also seeking to engage the local communities in each of its developments and bringing them in as a partner within a larger community. It is also working with Habitat for Humanity to see how it can collaborate to bring basic housing to a larger segment of our population.
What we at Ayala find so exciting about these developments is that we truly feel that we may have found viable business solutions to the problems of poverty. While we have corporate social responsibility programs that have been part and parcel of the way we do business, Globe and Manila Water have found a sustainable and profitable way of improving the quality of life of millions of our countrymen. This has in turn allowed them to commit a much larger amount of resources to uplift the lives of people that had limited access to these basic services in the past.
I believe that at the end of the day, the fulfillment in running our businesses lies in the way we have tangibly affected and improved the lives of the public we serve. In the same way we measure ourselves with business, financial and operating metrics, we hope to come to a level where we can measure our CSR involvement in a way that is integral to our assessment and evaluation of how we as an enterprise have done as a whole.
Often, we feel that the many social problems and challenges that face us appear intractable. But perhaps by working together in a collaborative spirit, taking an innovative view and an entrepreneurial approach in the same manner we pursue our financial investments, we may find more viable and sustainable ways to help address the enormous social and economic challenges we face as a nation.
(Excerpts from the speech delivered by the author during the recent CSR Conference of the League of Corporate Foundations. The author is president and COO of Ayala Corp.. Feedback at [email protected])
Copyright 2006 Philippine Daily Inquirer. Source : Financial Times Information Limited (Trademark)
Related Tags: manila water, livelihood opportunities, corporate philanthropy, water, business, Manila
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