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Trash and burn: Big brands’ new plastic waste plan

JAKARTA — The global consumer goods industry’s plans for dealing with the vast plastic waste it generates can be seen here in a landfill on the outskirts of Indonesia’s capital, where a swarm of excavators tears into stinking mountains of garbage.  

These machines are unearthing rubbish to provide fuel to power a nearby cement plant. Discarded bubble wrap, take-out containers and single-use shopping bags have become one of the fastest-growing sources of energy for the world’s cement industry.  

The Indonesian project, funded in part by Unilever PLC, maker of Dove soap and Hellmann’s mayonnaise, is part of a worldwide effort by big multinationals to burn more plastic waste in cement kilns, Reuters has detailed for the first time.  

This “fuel” is not only cheap and abundant. It’s the centerpiece of a partnership between consumer products giants and cement companies aimed at burnishing their environmental credentials. They’re promoting this approach as a win-win for a planet choking on plastic waste. Converting plastic to energy, these companies contend, keeps it out of landfills and oceans while allowing cement plants to move away from burning coal, a major contributor to global warming.  

Reuters has identified nine collaborations launched over the last two years between various combinations of consumer goods giants and major cement makers. Four leading sources of plastic packaging are involved: The Coca-Cola Company, Unilever, Nestle S.A. and Colgate-Palmolive Company. On the cement side of the deals are four top producers: Switzerland’s Holcim Group, Mexico’s Cemex SAB de CV, PT Solusi Bangun Indonesia Tbk (SBI) and Republic Cement & Building Materials, Inc., a company in the Philippines.  

These projects span the world, from Costa Rica to the Philippines, El Salvador to India. In Indonesia, for instance, Unilever is partnering with SBI, one of that country’s largest cement makers.  

The alliances come as the cement industry — the source of 7% of the world’s carbon dioxide emissions — faces rising pressure to reduce these greenhouse gases. Consumer brands, meanwhile, are feeling the heat from lawmakers who are banning or taxing single-use plastic packaging and pushing so-called polluter-pays legislation to make producers bear the costs of its clean up.  

Critics say there’s little green about burning plastic, which is derived from oil, to make cement. A dozen sources with direct knowledge of the practice, among them scientists, academics and environmentalists, told Reuters that plastic burned in cement kilns emits harmful air emissions and amounts to swapping one dirty fuel for another.  

More importantly, environmental groups say, it’s a strategy that could potentially undercut efforts spreading globally to boost recycling rates and dramatically slash the production of single-use plastic.  

Such thinking is naive, said Axel Pieters, chief executive of Geocycle, the waste-management arm of Holcim Group, one of the world’s largest cement makers and partner with Nestle, Unilever and Coca-Cola in plastic-fuel ventures. Mr. Pieters told Reuters that burning plastic in cement kilns is a safe, inexpensive and practical solution that can dispose of huge volumes of this trash quickly. Less than 10% of all the plastic ever made has been recycled, in large part because it’s too costly to collect and sort. Plastic production, meanwhile, is projected to double within 20 years.  

“Thinking that we recycle waste only, and that we should avoid plastic waste, then you can quote me on this: People believe in fairy tales,” Mr. Pieters said.  

Unilever would not comment specifically on the Indonesia project. It said in an e-mail that in situations where recycling isn’t feasible, it would explore “energy recovery initiatives.” That’s industry parlance for burning plastic as fuel.  

Coca-Cola, Unilever, Colgate, and Nestle did not respond to questions about the environmental and health impacts of burning plastic in cement kilns. The companies said they invest in various initiatives to reduce waste, including boosting recycled content in their packaging and making refillable containers.  

Cemex, SBI, Republic Cement and Holcim’s Geocycle unit told Reuters their partnerships with consumer goods firms were aimed at addressing the global waste crisis and reducing their dependence on traditional fossil fuels.  

Exactly how much plastic waste is being burned in cement kilns globally isn’t known. That’s because industry statistics typically lump it into a wider category called “alternative fuel” that comprises other garbage, such as scrap wood, old vehicle tires and clothing.  

The use of alternative fuel has risen steadily in recent decades and already is the dominant energy source for the cement industry in some European countries. There’s no question the amount of plastic within that category has increased and will keep climbing given a worldwide explosion of plastic waste, according to 20 cement industry players interviewed for this report, including company executives, engineers and analysts. Reuters also reviewed data from cement associations, individual countries and analysts that confirmed this trend.  

For example, Geocycle currently uses 2 million tonnes of plastic waste a year as alternative fuel at Holcim plants worldwide, according to Geocycle CEO Mr. Pieters, who said the company intends to increase this to 11 million tonnes by 2040, including through more partnerships with consumer goods companies.  

Pieters said the cement industry has the capacity to burn all the plastic waste the world currently produces. The United Nations Environment Programme estimates that figure to be 300 million tonnes annually. That dwarfs the world’s plastic recycling capacity, estimated to be 46 million tonnes a year, according to a 2018 estimate by the Organisation for Economic Co-operation and Development (OECD), a global policy forum.  

Plastic pollution, meanwhile, is bedeviling communities whose landfills are reaching capacity and despoiling the Earth’s wild places. Plastic garbage flowing into the oceans is due to triple to 29 million tonnes a year by 2040, according to a study published last year by the Pew Charitable Trusts. This detritus is endangering wildlife and contaminating the seafood humans consume.  

“The cement industry is definitely a solution,” Geocycle’s Mr. Pieters said.  

TOXIC EMISSIONS  

Consumer goods giants are turning to cement firms for help in reducing plastic litter as other initiatives stumble. Reuters reported in July that a set of new “advanced” plastic recycling technologies promoted by big brands and the plastic industry had suffered major setbacks across the world.  

Cement-making is one of the world’s most energy-intensive businesses. Fuel – mainly coal – is its single-biggest expense, industry executives said. In the 1970s, producers looking to reduce costs began stoking kilns with rubbish such as tires, biomass, sewage sludge – and plastic. Those materials aren’t as efficient as coal, but are virtually free. Some local governments even pay cement makers to take this waste.  

In Europe, refuse now makes up roughly half the fuel used by the cement industry. In Germany, the bloc’s biggest producer, the ratio is 70%, according to 2019 data from the Global Cement & Concrete Association (GCCA), a London-based trade organization. The United States uses 15% alternative fuel in its kilns, according to the Portland Cement Association, a US industry group. Spokesperson Mike Zande said its members have the capacity to catch up with Europe.  

While cost-cutting remains the primary driver, the industry in recent years has begun touting its garbage fuel as a way to reduce the “societal problem” of plastic waste, said Ian Riley, CEO of the London-based World Cement Association (WCA), which represents producers in developing countries.  

So it was logical that cement makers would team up with consumer goods companies, the largest source of single-use plastic packaging, in the recent partnerships to burn discarded plastic in their kilns.  

In emerging markets, big brands sell a slew of food and hygiene products packaged in plastic sachets, typically single-serving portions tailored to the budgets of poor households. Billions of these flexible pouches are sold each year. Sachets are nearly impossible to recycle because they’re made of layers of different materials laminated together, usually plastic and aluminum, that are difficult to separate.  

Indonesia, an archipelago of more than 270 million people, is the second-largest contributor to ocean plastic pollution behind China, partly due to its widespread use of sachets, according to a 2015 study published in the journal Science. Plastic garbage can be seen everywhere around Jakarta, the sprawling capital of more than 10 million people. It clogs storm drains, litters its teaming slums and mars its shoreline.  

Developing countries have generally welcomed assistance with waste management. Thus Indonesia was a natural location for Unilever’s waste-fuel venture with cement maker SBI and the local Jakarta government. At last year’s launch, Andono Warih, head of Jakarta’s environment service, praised the initiative and expressed hope that it would spark other such collaborations.  

The project uses plastic that’s already been buried in the region’s Bantar Gebang landfill, one of the largest dumps in Asia. Waste excavated by earth-moving equipment is transported to a warehouse at the landfill site. There, it is shredded, sieved and dried into a brown mix resembling manure. That material, known as Refuse Derived Fuel (RDF), is then fed into the kiln at an SBI cement plant in Narogong, just outside Jakarta.  

SBI currently uses 20% RDF at that plant, a figure that could increase to 35%, according to Ita Sadono, SBI’s business development manager. The operation still relies primarily on coal, she said, but she contends RDF is “significantly helping to reduce plastic waste.”  

Unilever is helping to fund a second RDF project in Cilacap, an industrial region in Central Java, according to SBI and a 2020 sustainability report by Unilever’s local Indonesian unit. The two facilities could send 30,000 tonnes of plastic waste per year to SBI’s cement plants, according to a Reuters analysis of data provided by SBI.  

Unilever did not respond to detailed questions about these projects. Ms. Sadono said in a text message that Reuters’ calculations were “OK,” without giving further details.  

About two kilometers from SBI’s cement plant near Jakarta, Dadan bin Anton, 63, runs a roadside stall selling plastic sachets of soap, washing powder and instant coffee, including brands owned by Unilever. He said he often has trouble breathing and blames the cement plant.  

“People here are breathing dust every day,” he said.  

SBI has invested in mitigation measures to cut dust at its plants, Sadono said. And it isn’t clear whether the cement facility has anything to do with Mr. Dadan’s burning chest. Jakarta boasts some of the dirtiest air in Asia. Pollutants from industry smokestacks, agricultural fires and auto exhaust routinely blanket the city.  

But some scientists say incinerated plastic is a dangerous new ingredient to add to the mix, particularly in developing nations where air-quality rules often are weak and enforcement spotty.  

Plastic releases harmful substances like dioxins and furans when burned, said Paul Connett, a retired professor of environmental chemistry and toxicology at St. Lawrence University in Canton, New York, who has studied the poisonous byproducts of burning waste. If enough of those pollutants escape from a cement kiln, they can be hazardous for humans and animals in the surrounding area, Mr. Connett said.  

Such fears are overblown, said Claude Lorea, cement director at GCCA, the industry group representing big cement firms including Holcim and Cemex. She said super-heated kilns destroy all toxins resulting from burning any alternative fuel, including plastic and hazardous waste.  

But things can go wrong.  

In 2014, a cement plant in Austria released hexachlorobenzene (HCB), a highly toxic substance and suspected human carcinogen, after the facility burned industrial waste contaminated with the pollutant. Cheese and milk sourced from cattle raised near that plant in southern Carinthia state were tainted, Austria’s health and food safety agency found. And blood samples drawn from area residents also contained HCB, which can damage the nervous system, liver and thyroid.  

An investigation commissioned by the state government found multiple failures by local regulators and the cement plant, including that the kiln was not running hot enough to destroy contaminants like HCB.  

The Austrian cement maker which operates the plant, w&p Zement GmbH, told Reuters that it had worked to eliminate all the environmental pollution from the incident and that it had provided help to the community such as replacing contaminated animal feed.  

Carinthia province spokesperson Gerd Kurath said in an email that the government’s continued monitoring of air, soil, and water samples in the area shows that contamination levels have declined.  

The cement industry, meanwhile, is heralding waste-to-fuel as a way to fight global warming. That’s because burning refuse, including plastic, emits fewer greenhouse gases than coal, the GCCA trade group said.  

Burning garbage “reduces our fossil fuel reliance,” spokesperson Lorea said. “It’s climate neutral.”  

The European Commission, which sets emission rules in Europe, told Reuters that plastic does emit fewer carbon dioxide emissions than coal but more than natural gas, another fuel used by the cement industry.  

The US Environmental Protection Agency, which regulates environmental policy in the world’s largest economy, reached a different conclusion. It said in a statement there is no significant climate benefit to be gained from substituting plastic for coal, and that burning this waste in cement kilns can create harmful air pollution that must be monitored.  

Measuring plastic’s CO2 emissions against those of coal, the world’s dirtiest fossil fuel, is not the benchmark to use if the cement industry is serious about fighting global warming, said Lee Bell, advisor to the International Pollutants Elimination Network, a global coalition working to eliminate toxic pollutants. Reducing the industry’s massive carbon emissions, he said, requires a switch to fuels such as green hydrogen, a more expensive but low-polluting fuel produced from water and renewable energy.  

“The cement industry should leap-frog the whole burning-waste paradigm and move to clean fuel,” Mr. Bell said.  

The GCCA told Reuters the industry is improving energy efficiency and is considering the use of green hydrogen.  

EVER MORE PLASTIC  

While cement plants in industrialized countries are gearing up to burn more plastic, explosive growth is anticipated in the developing world.  

China and India together account for 60% of the world’s cement production in facilities whose primary fuel is coal. Over the next decade, these countries have set targets of using alternative fuel to stoke 20% to 30% of their output. If they reached just a 10% threshold, that would equate to burning 63 million tonnes of plastic annually, up from 6 million tonnes now, according to SINTEF, a Norwegian scientific research group. That’s more plastic waste than the United States generates each year.  

In 2019, 170 countries agreed to “significantly reduce” their use of plastic by 2030 as part of a United Nations resolution. But that measure is non-binding, and a proposed ban on single-use plastic by 2025 was opposed by several member states, including the United States.  

Thus the waste-to-fuel option may well become an unstoppable juggernaut, said Matthias Mersmann, chief technology officer at KHD Humboldt Wedag International AG, a German engineering firm that supplies equipment to cement plants worldwide.  

Plastic waste is quickly outstripping countries’ capacity to bury or recycle it. Burning it eliminates large amounts of this material quickly, with little special handling or new facilities required. There are an estimated 3,000 or more cement plants worldwide. All are hungry for fuel.  

“There’s only one thing that can hold up and break this trend, and that would be a very strong cut in the production of plastics,” Mr. Mersmann said. “Otherwise, there is nothing that can stop this.”  

That momentum has some environmentalists worried, including Sander Defruyt, who heads a plastics initiative at the Ellen MacArthur Foundation, a United Kingdom-based nonprofit focused on sustainability. The foundation in 2018 worked out waste-reduction and recycling targets with Coca-Cola, Nestle, Unilever, Colgate-Palmolive and hundreds of other consumer brands.  

Mr. Defruyt said the foundation does not support its partner companies’ pivot towards incineration. Burning plastic for cement fuel, he said, is a “quick fix” that risks giving consumer goods companies the green light to continue cranking out single-use plastic and could reduce the urgency to redesign packaging.  

“If you can dump everything in a cement kiln, then why would you still care about the problem?” Mr. Defruyt said.  

Coca-Cola, Nestle, Unilever, and Colgate-Palmolive said their cement partnerships are just one of several strategies they’re pursuing to address the waste crisis.  

‘PLASTIC PRAYERS’  

In the central England village of Cauldon, residents have complained in recent years to the local council and Britain’s environmental regulator about noise, dust and smoke coming from a nearby cement plant owned by Holcim. Those efforts have failed to derail the expansion of that facility to burn more plastic.  

When completed next year, alternative fuel, including “non-recyclable” plastics such as potato chip bags, will account for up to 85% of the facility’s fuel, according to planning documents filed with local authorities on behalf of Geocycle, which will manage the project.  

The move will recover energy from plastic waste otherwise destined for landfills, the documents said.  

Cauldon resident Lucy Ford, 42, said the cement maker’s plans have only added to some villagers’ fears about emissions. “They say they are the answer to all of our plastic prayers,” she said. “I don’t like the idea of it.”  

Geocycle’s Mr. Pieters said he understood the community’s concerns. He said the company complies with all local regulations and that it carefully monitors the plant’s emissions, which would be lowered by the upgrades.  

Britain’s Environment Agency said in an e-mail that it took all complaints about the plant seriously. It said the Cauldon facility has a permit to burn waste and that the plant has to comply with its regulations.  

Back in Indonesia, Unilever and SBI told Reuters that using plastic for energy was preferable to leaving it in a landfill.  

Local environmentalists say they are alarmed that cement kilns could be shaping up as the fix for a nation flooded with plastic waste.  

It would allow consumer brands to continue business as usual, while adding to Indonesia’s air-quality woes, said Yobel Novian Putra, an advocate with the Global Alliance for Incinerator Alternatives, a coalition of groups working to eliminate waste.  

“It’s like moving the landfill from the ground to the sky,” Mr. Putra said. — Joe Brock, Yuddy Cahya Budiman, John Geddie and Valerie Volcovici/Reuters

Insurance growth amid uncertain times

After experiencing some decreases in the year of the coronavirus disease 2019 (COVID-19) crisis onset, the local insurance market is seeing growth.

Data from the Insurance Commission (IC) showed that the premium income of insurance companies and mutual benefits associations (MBA) dropped by almost 4% from January to September last year, generating P216.5 billion from P224.97 billion in the same period in 2019. Net income also decreased by 9.85%.

Nonetheless, by the end of 2020, total premiums have registered a 1.18% increase from that of 2019. Though net income still dropped by 8.60%.

Premiums then surged in the first quarter of the present year. Gross premiums jumped 27.81% to P99.89 billion from P78.15 billion a year earlier. 

In the same period, the life insurance sector reported a total premium income of P83.2 billion, increasing 36.62% from the previous year. MBAs, meanwhile, saw an 11.53% growth with its P3.18 billion of total premiums. But non-life insurance companies earned 10.33% lessened premiums and have a 7.95% decrease in gross premiums written as well.

The total net income grew by 45.64% in the first quarter, with life and non-life increasing their total net income to 38.16% and 626.2%, respectively.

Insurance penetration, which is the industry’s contribution to the economy, is also up from 1.76% to 2.3% in the first quarter.

According to IC Commissioner Dennis Funa, this growth in the insurance market can be attributed to growing number of Filipinos enrolling in insurance policies given the crisis situation. However, at the same time, the economy registered a decline.

“The data is a bit warped nowadays. It does not reflect a normal situation. The reason is that the [gross domestic product] has gone down from the previous years. So, the denominator does not reflect a continuity of growth,” Mr. Funa was quoted as explaining in a report last month.

“[Clientele] has also been increasing, but it would not be at 2.3 [percent] if under normal times the growth is still real,” he added.

Mr. Funa also credited IC’s push to shift products to digital and the policy to consider insurance providers as frontline workers for the first-quarter growth in the insurance sector.

As the economy reopened and heightened the demand for life and non-life insurance policies, premiums ballooned more than 37% to P187 billion in the second quarter of 2021.

Based on a report by The Philippine Star earlier this week, IC said that insurers posted a combined profit of P24.63 billion in the said period, over a 29% increase from P19.03 billion a year ago.

The industry has also increased its investments, now having P1.75 trillion, which was a 12% increase from P1.56 trillion.

Life insurers have sold premiums that swelled almost 44% to P155.17 billion on on increases in single premiums, first year, and renewal premiums for traditional policies. Net premiums written was up by 13% to P25.51 billion for the non-life, which is attributed to the hikes in automotive policies, among others. While MBAs grew their premium income by 19% to P6.46 billion.

“The growth of the life and non-life insurers’ and MBAs’ aggregate premiums and contributions earned and their aggregate net income in the second quarter of 2021 are indicative of economic recovery amid the COVID-19 pandemic,” Mr. Funa was quoted as saying in the report.

Furthermore, insurers have expanded the released amount of benefits to P69.94 billion from P44.26 billion or almost 47%. For the IC Commissioner, this year-on-year increase in benefits paid during the quarter showed the responsiveness of life and non-life insurers as well as the MBAs to the people amid the challenges of the pandemic.

During the first half of the year, according to another report, IC shared that the insurance industry has paid P4.35 billion in COVID-19 insurance claims, about half of which, P2.06 billion, was given by the health maintenance organizations (HMOs), while life insurers provided P1.98 billion. MBAs accounted for P191.7 million, while P119.1 million from non-life insurers.

According to Mr. Funa, the insurance industry has issued P8.25 billion of COVID-19 claims since the pandemic started in the first quarter of the previous year. P3.98 billion came from HMOs, while life insurers released P3.44 billion. MBAs followed with P546.6 million, and the non-life paid P279.3 million.

Global outlook

The insurance industry, in the global perspective, likewise saw paradigm shifts with the heightened risk awareness among consumers and businesses. Digitalization has also transformed sales and services for both life and non-life insurers. These are drivers of insurance market growth, according to the Swiss Re Institute.

In its publication sigma 3/2021 — World insurance: the recovery gains pace, the Swiss Re Institute shared that global health and protection-type insurance premiums gained respective increases by 1.9% and 1.7% in 2020. Meanwhile, it expected a strong recovery in global life insurance premiums to above-trend growth of 3.8% this year and 4% in 2022, seeing a benefit as the pandemic triggered risk awareness.

Swiss Re Institute observed that the global insurance industry is resilient as it weathered the pandemic crisis. It reported that premiums dipped milder compared to the situation during the Global Financial Crisis of 2008-2009. 

Expecting a faster recovery for life and non-life insurance, it presumed an above-trend growth of 3.3% and 3.9% for 2021 and 2022, respectively, taking the total global direct premiums written this year to 10% higher than the pre-crisis levels in 2019.

Drawbacks to these forecasts might include protracted recovery due to soft demand around the world; ineffective stimulus as debt burdens constrain policy; the likelihood of COVID-19 variants emerging; and slow recovery in the labor market. — Chelsey Keith P. Ignacio

Changed perspectives on insurance among Filipinos

The pandemic has changed many aspects of the consumer’s life, most significant of which is a natural reassessment of priorities to favor health and well-being. The Insurance Commission (IC) found that Filipinos are putting more money on insurance, from an average of P723.43 per individual a year ago to P912.2 this year, up 26%.

As a result, insurance penetration, or the contribution of the insurance industry to the economy, soared to an all-time high of 2.3% of the gross domestic (GDP) in the first quarter from 1.76% in 2020. And while Insurance Commissioner Dennis Funa said that while the data does not reflect a normal continuation of growth because of a number of factors, membership in the industry has seen an increase during the duration of the health crisis.

Similarly, more Filipinos are seeking microinsurance coverage under the pandemic. According to unaudited quarterly reports from microinsurance providers such as mutual benefit associations and life and non-life insurance companies, the IC said the total estimated number of lives covered by microinsurance products ending the fourth quarter of 2020 reached 50.35 million. This marked an 11.56% increase from the 45.13 million lives covered the fourth quarter of 2019.

“The data is a bit warped nowadays. It does not reflect a normal situation. The reason is that the GDP has gone down from the previous years. So, the denominator does not reflect a continuity of growth,” Mr. Funa had told reports.

The surge in demand for insurance, however, reflects a change in the consumer seen by other studies such as that of Manulife Philippines’ research on “Understanding Filipino Sentiments Towards Health and Critical Illness.” The study found that while many Filipinos still face barriers in embracing better financial and lifestyle habits, many recognize the increased importance of prioritizing their health. Many Filipinos according to the study are reprioritizing health out of concern for their families’ welfare, especially in the face of the financial burdens of illnesses.

“These evolving times have opened our eyes to the importance of health and wellness, and importantly, made many Filipinos appreciate the value of insurance protection,” said Melissa Henson, senior vice-president and chief marketing officer of Manulife Philippines.

“While Filipinos are universally aware of the importance of staying healthy, we saw that their behaviors are largely influenced by fears and worries, including concern for their family and feeling financially unprepared for illnesses.”

Furthermore, during the pandemic, health, safety and family make up the top three worries of Filipinos, followed by concerns about work, well-being, savings, investment, home and community, insurance, friends, me-time, and love.

Another study by Pru Life UK found that more Filipinos — the younger generation in particular — have been making wise decisions with regard to finances especially in terms of insurance coverage.

According to the latest research from the AI and Data Analysis Center, the advanced technology solutions division of Pru Life UK, the market for health riders or additional benefits attached to life insurance policies remain resilient in spite of the country’s disrupted and slowing economy, suggesting that Filipinos are allocating more of their hard-earned incomes away from other options in favor of health protection.

“This finding validates our assumption that health protection has become a necessity for a growing number of Filipinos, even in these challenging times,” said Pru Life UK President and CEO Antonio De Rosas.

“The resilience of health protection in the Philippines is in line with the trend we are observing across the region, where health insurance has shown a steady growth in most of our markets despite local lockdown restrictions. This is likely due to an increased awareness of the importance of health protection in facing the pandemic,” Prudential Corporation Asia Chief Health Officer Andrew Wong said.

“Addressing this reality is a matter of making insurance products more accessible to meet the growing needs. The pandemic has taught us that the mode of delivery is as important as the price for customers. In this respect, our industry has been fortunate in the sense that we have been able to continue with our operations despite unprecedented restrictions,” Mr. De Rosas added. — Bjorn Biel M. Beltran

Finding the ‘next normal’ of business

By Bjorn Biel M. Beltran, Special Features Writer

Nearly two years into the pandemic has left many businesses in the world unsure of their prospects. Uncertainty reigns in an environment where most major economies are expected to lose anywhere between 2.9% to 4.5% of their gross domestic product — or up to almost 3.94 trillion US dollars of lost economic output, according to Statista.

Yet things are looking up. The World Bank projects the global economy to stage a robust 5.6% recovery this year, even if the rebound is expected to be uneven across countries. This recovery is mostly reliant on the strength of major economies such as the United States and China.

Coronavirus disease 2019 (COVID-19) will cast a very long shadow. While growth for almost every region of the world has been revised upward for 2021, the World Bank expects many continue to grapple with COVID-19 and its ramifications. Many countries will be unable to regain their lost momentum for an extended period, and this will largely shape the path of global economic activity.

“A lot of companies are waiting to see how much longer this pandemic will last. Some of them have made early decisions, downsizing, rightsizing, but many are on a wait-and-mode before committing to business decisions related to their real estate,” Christophe Vicic, country head of JLL Philippines Inc., told BusinessWorld in an interview. JLL is a global real estate services firm specializing in commercial property and investment management.

“But overall, the challenges remain. I think we need to understand that the real estate landscape will not go back to normal any time soon,” he added.

Mr. Vicic noted that all businesses across industries have had to adapt to the pandemic’s challenges. Indeed, many of these changes are visibly apparent, from the adoption of work-from-home business models to accelerated digitalization. In the Philippine real estate industry where JLL Philippines operates, many developers are readjusting their strategies to take advantage of BPO firms looking to create more smaller offices in the provinces to reduce business risks.

“One of the challenges that many Metro Manila-based companies had when the region was in lockdown was that all their operations were centralized in Metro Manila. You can’t operate as easily as those companies that have three or four smaller offices spread in other regions,” he said.

Furthermore, sustainability, which was once considered a “nice to have” bonus, is now viewed as the only way forward by many consumers and organizations across the globe. With the built real estate environment contributing to around 40% of total carbon emissions, many real estate companies are making sustainability pledges, shifting their priorities towards green buildings.

This further feeds into the growing trend revolving around employee wellness, safety, and security.

“As an employee, when you go out to work, eat at a restaurant, shop, or whatever activity you go outside your home for, you want to have a sense of safety and security. And I think this will influence the real estate of the future. To reinforce safety and security, there will be bigger offices with less people to allow physical distancing, which might mean organizations spreading their offices into more diverse locations closer to the homes of the employees,” Mr. Vicic said.

“In terms of workplaces, the new purpose of the office has transformed to support the working life of employees: to preserve their engagement, emotional well-being, and mental health. Historically, the workplace allocates majority of its area to individual spaces, but JLL believes that the future of office will be about collaboration and socialization. New workplace investments will be required to enhance human experience to support the working life of employees, and in turn, drive their performance. The wellbeing of the individual will remain one of the major trends that have emerged from the COVID pandemic,” he added.

When more than 19 million workers in the United States have quit their jobs since April, a phenomenon exacerbating industry-wide disruptions due to COVID-19, the value of employees in business has never been more relevant. Global management consulting firm McKinsey and Company highlighted the importance of understanding and creating a meaningful employer-employee relationship in the new normal.

“If the past 18 months have taught us anything, it’s that employees crave investment in the human aspects of work. Employees are tired, and many are grieving. They want a renewed and revised sense of purpose in their work. They want social and interpersonal connections with their colleagues and managers. They want to feel a sense of shared identity. Yes, they want pay, benefits, and perks, but more than that they want to feel valued by their organizations and managers. They want meaningful — though not necessarily in-person — interactions, not just transactions,” McKinsey wrote.

“By not understanding what their employees are running from, and what they might gravitate to, company leaders are putting their very businesses at risk. Moreover, because many employers are handling the situation similarly — failing to invest in a more fulfilling employee experience and failing to meet new demands for autonomy and flexibility at work — some employees are deliberately choosing to withdraw entirely from traditional forms of full-time employment.”

If left unaddressed, issues in employee experience will further contribute to what the company dubs as “The Great Attrition.” According to McKinsey’s research, 40% of surveyed employees said they are at least somewhat likely to quit in the next three to six months, while 18% of the respondents said their intentions range from likely to almost certain. These findings were found to be consistent across all five of the countries surveyed (Australia, Canada, Singapore, the United Kingdom, and the United States) and were broadly consistent across industries.

Businesses in the leisure and hospitality industry — which have already suffered the brunt of the pandemic’s impacts — are the most at risk for losing employees, but many healthcare and white-collar workers say they also plan to quit. Even among educators — the employees least likely to say they may quit — the study found that almost one-third reported that they are at least somewhat likely to do so.

Good leadership is essential in this crucial period of transition. And for Mr. Vicic of JLL Philippines, good leaders today need to do more than keep business performance and profits in mind.

“The need for compassion and understanding of the individual has redefined what I would call a good leader. Yes, we still have performance, targets to achieve, bottom line revenues to generate, but it has to be linked to well-being,” the country head said.

“The old days of performance at any price and any cost have gone. And if we want to ensure that we can continue to do business, I think the individual employee voice will have to be heard much more than it was pre-pandemic.”

Advising with technology and sustainable solutions

JLL Philippines recently achieved WELL pre-certification for its Head Office at the NEX Tower in Makati, embodying its commitment to sustainability through its own facilities.​

Throughout the crisis, the words technology and sustainability come into mind among businesses. For one, the pandemic has compelled them to digitalize as a response to travel restrictions and safety priorities, while green and inclusive developments have been more and more significant to be part of their agendas.

JLL is among those businesses. Yet, being a provider of end-to-end real estate advisory services, the firm has also supported others in boosting their technologies and sustainability.

JLL is a technology-driven global consultancy firm committed to building a better tomorrow through its sustainability program, which thus becomes more highlighted these times.

The objective of the firm since day one of the pandemic is simple: “It was not about making a sale, it was about giving advice on real estate to investors, developers, and tenants,” shared Christophe Vicic, country head of JLL Philippines.

An advocate of PropTech, JLL does real estate with a data-driven approach that allows them to get the relevant market intelligence on various types of properties, as well as gauge the happiness and productivity of occupiers. The firm utilizes technologies for various real estate services, whether it is for scoping investment opportunities, finding the right place and size to lease, building efficiency and transparency in executing real estate projects, and increasing asset value in properties through an end-to-end facilities management tool.

Among these tools is MapIT, JLL’s proprietary location intelligence service technology, which allows clients to get the right data — such as snapshots of key real estate indicators and market and competitive scan — to make the right business decision.

The firm also has a separate division called JLL Technologies that has different pillars. One of which is JLL Spark, an investment fund looking for real estate-related companies, small companies, and startups around the world that have products or services that could benefit the firm and its clients.

JLL Philippines seeks to be recognized as a technology company working in the real estate sector. “Whatever we do, we want to ensure that it’s done with the latest updated data and technology,” said Mr. Vicic. “Because we believe that one of the tools that can create sustainability and a greener world [is] technology.”

As part of its purpose, to build the future of the real estate for a better world that is more sustainable, the firm became a signatory of the World Green Building Council’s Net Zero Carbon Buildings Commitment in 2020. It is also a founding partner of Bloomberg Green, a new multiplatform editorial brand focused on climate change news, analysis, and solutions.

JLL’s sustainability strategy centers on bringing long-term value to stakeholders by creating resilient buildings, healthy spaces, and inclusive places. And to drive towards that sustainable change, the firm entrenches sustainability in each of its endeavors through the four pillars of its program: Clients, People, Workplaces, and Communities. These are supported by the firm’s commitment to its values of teamwork, ethics, and excellence.

JLL Philippines recently achieved WELL pre-certification for its Head Office at the NEX Tower in Makati, embodying its commitment to sustainability through its own facilities.​

A key pillar of its sustainability strategy is to guide its clients towards achieving net-zero carbon emissions. JLL commits to reaching this net-zero in all its areas of operations and the sites of clients by 2040.

Its advisory service on energy and sustainability helps its clientele in their sustainability strategy and reporting; renewable energy supply; building assessments and optimization; portfolio energy and sustainability management; and ratings and certifications.

“This will be all the advice about the future real estate that has to be green and the construction to be sustainable. It’s everybody’s work, not only the real estate advisors, developers, and construction companies. It’s also the tenants,” Mr. Vicic said.

Sustainability and technology are among the several consulting services offered by JLL. It has fully integrated services that can attend to various real estate advisory needs of property owners, investors, and occupiers. The firm covers capital markets; office leasing advisory; workplace strategy; logistics and industrial; supply chain; hotels and hospitality; property and asset management; work dynamics; research; strategic consulting; and valuation.

“The approach will always be holistic,” said Mr. Vicic, adding that this was what the firm has done for the past two years and would continue doing beyond the crisis. “There will be more listening to our client and providing a solution by putting a team of experts from all our service line together.”

JLL has been operating in the Philippines since 1997 as a 100% wholly owned entity and currently manages about 4.4 million square meters of real estate with a workforce of over 1,100 employees. With more than two decades of local expertise working hand-in-hand with its global legacy, JLL provides to the Philippine real estate market an unparalleled synergy of services with a strong commitment to achieve real estate ambitions through future-ready approaches. For further information, visit www.jll.com.ph.

 


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Fast-tracking trends in the insurance industry

Photo from freepik

Several transformations have disrupted the traditional operations and perspectives towards the insurance industry, being compelled by the implications of the current pandemic.

As the crisis persists to affect the industry and its consumers, some major trends that emerge in the insurance sector over the year would likely stay or accelerate in the following year.

Technologies and digitalization are developments that almost every industry has implemented to adapt to the new normal. Insurance companies are no different.

“Cutting-edge technologies are quickly maturing. While AI (artificial intelligence), IoT (Internet of Things), and big data have been buzzwords until recently, today, it is difficult to imagine the future of insurance without these technologies,” Tal Daskal, CEO of EasySend, wrote in an article published by Forbes.

From this widespread digitalization in the insurance sector came a shift to a culture focused on innovation.

“Digital transformation is no longer something to be proud of; rather, it is a matter-of-fact force that drives the industry forward. The need to innovate as a matter of strategy becomes increasingly apparent to insurance leaders,” Mr. Daskal said.

“This digital culture empowers insurers to innovate when it comes to age-old insurance problems such as risk assessments, claims processing, and policy sales,” he added.

This ongoing digital transformation across the insurance industry would indeed carry on for some years, according to an article by Artificial, a London-based company providing an integrated insurance platform. Citing data from management consulting firm McKinsey, Artificial added that insurtech funding has consistently grown year on year since 2017.

Along with digitalization, a trend among consumers in the insurance sector is personalization. 

“Customers are well aware that digital communications mean that their insurer collects their personal data — anything from behavioral data to their location or any information they have submitted. In return, customers expect a business to use this information in order to improve and personalize their experience,” Mr. Daskal explained.

In a report titled “Guide insurance customers to safety and well-being,” Accenture showed that consumers are more willing to share personal data for more personalized pricing, offers, and discounts in return. But they expressed no increased willingness to disclose their data without those incentives as exchange.

“They are increasingly demanding to be charged based on behavior and habits — and they’re willing to allow insurers to collect and use their data in exchange for that value,” the professional services firm added.

Accenture’s study also presented that millennials and younger consumers, aged 18-34, value sustainability. 67% of them want digital experiences that promote sustainable travel and shopping practices.

Some insurers seemed to have already positioned on ethical and sustainable business practices, as 71% of the said demographic in the study shared that their insurers deliver so.

“Personalization is the name of the game,” said Mr. Daskal of EasySend. “Laser-focused personalization capabilities are the new competitive edge when it comes to acquiring and keeping customers in 2021 and beyond.”

Mercer, a management consulting company, also saw the increasing pressure on employers to speed up their environmental, social, and governance (ESG) initiatives in its “2021 Global Talent Trends — Insurance Industry Outlook.” Insurance companies are now 1.4 times more likely to make sure that every executive has shared obligations for ESG metrics and 1.2 times more likely to bind ESG goals with the company’s purpose.

In 2022 and beyond, Artificial also considered that ESG issues have wide-ranging implications for insurers. “A growing number of providers will consider ESG risk factors when undertaking risk assessments and underwriting,” it said in its article. “And industry standards across multiple ESG issues including human rights and climate change are evolving every year.” — Chelsey Keith P. Ignacio

An exciting new phase for WESM

Advocating innovations and advancements in the electricity market to support nation-building

The Independent Electricity Market Operator of the Philippines (IEMOP) is currently studying and establishing several market-driven strategies to advocate developments in the power sector. Market developments, such as the continuous lowering of threshold for the Retail Competition and Open Access (RCOA), Green Energy Auction (GEA), Green Energy Option Program (GEOP), Reserves Market, Forwards Market, among other initiatives are all on track to make the country’s sole electricity market more dynamic, competitive, and transparent. The ultimate objective of these initiatives is to ensure a reliable, stable, and economical supply of power to support nation-building.

Foremost, among these advocacies, is the implementation of the Reserve Market. Reserves or Ancillary Services are commodities which are intended to ensure the reliability and security of the grid in an event of a contingency, such as when a generator suddenly went on outage. Currently, reserves are being contracted by the System Operator, the National Grid Corporation of the Philippines (NGCP), and are scheduled on a day-ahead basis. These reserve capacities are then reflected in the WESM during real-time scheduling.

With the Reserve Market design approved by the DOE through its Department Circular DC2019-12-0018 and DC2021-03-0009, reserve capacities shall be traded in the WESM. Hence, upon the Reserve Market implementation, reserves shall be scheduled in the least-cost basis through a more competitive and transparent landscape. In WESM, transparency is ensured by publication of all data and information relevant to the trading of energy and reserves. In this environment, investors and existing generators shall be incentivized to build new or enhance their current facilities which are technically capable of providing ancillary service.

IEMOP is also currently preparing to launch an alternative trading system for forward contracts. Forwards contracting provides a solution to the capital-intensive nature of building a power plant by providing generators a way to manage their risks in supplying power to their consumer counterparties. These forward contracts guarantee that there will be steady return-of-investment to recover capital expenses over the generator’s lifespan, thus, ensuring its financial viability. Currently, the mode of securing these contracts is bilateral in nature, and the time and costs associated in closing such contracts is challenging, especially for new players in the industry.

Through a central platform, industry players and future investors can buy and/or sell forward contracts faster and in a more transparent manner. This in effect also speeds up the process of determining the financial viability of new generation capacity and hastens the time to construct the power plants. Other benefits of establishing a forward market include market-based price discovery, significant reduction of transaction costs, and more stable WESM prices.

IEMOP is also studying the feasibility of integrating a Capacity Market to the WESM. A Capacity Market enables customers to buy “capacity” in the Electricity Market to ensure adequacy of supply in the long run. In comparison to other common commodities in an electricity market, which are (1) energy and (2) ancillary services, “capacity” is a commodity wherein the seller offers “commitment” to either (a) supply power or (b) reduce consumption, when the buyer requires it. As seen in other jurisdictions, the benefits of having a Capacity Market are (1) long-term adequacy of supply, (2) reliability of supply, and (3) more accurate pricing signals.

The implementation of these advocacies will ensure the Philippine’s security and reliability of supply in the most economical way possible. Encouraging new investments requires a long-term and thorough evaluation and analysis of all sectors of the society, not only within the energy industry. As such, IEMOP continues its commitment in supporting the nation’s advancement by implementing the policies of the Department of Energy, proposing developments that will benefit the stakeholders and the public, and studying innovative ways to ensure stable and economical power throughout the future. — Andrea May T. Caguete

 


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‘Hot money’ continues to exit PHL

REUTERS

By Luz Wendy T. Noble, Reporter

MORE SHORT-TERM foreign investments left the Philippines in September, as investors remained wary amid the Delta-driven coronavirus surge.

Foreign portfolio investments — commonly referred to as “hot money” due to the ease by which these flows enter or leave an economy — posted a net outflow of $24.16 million in September, based on data released by the Bangko Sentral ng Pilipinas (BSP) on Thursday.

This is 95% lower than the net outflow of $493.65 million a year earlier but a reversal from the $11.51 million in net inflow seen in August. It was also the smallest net outflow since the $21.58 million seen in March 2015.

For the nine-month period, hot money yielded a net outflow of $459 million, 89% lower than the $4.4 billion in net outflow logged in the same period in 2020.

Inflows in September doubled to $1.188 billion from $594.02 million a year earlier and was higher by 47% than the $806.99 million seen in August.

Meanwhile, gross outflows rose by 11.5% to $1.212 billion from the $1.087 billion in September 2020 and by 52% from the $795.48 million in the previous month.

Top five investors in September include the United Kingdom, United States, Switzerland, Hong Kong, and Singapore, which accounted for 84.4% of the investments.

Two-thirds of these funds went into securities listed on the Philippine Stock Exchange, including holding firms, property, telecommunication, food, beverage and tobacco, and utilities. The rest were channeled into peso government securities.

The hot money net outflow in September showed investor sentiment continued to be clouded by uncertainty caused by the pandemic, Asian Institute of Management economist John Paolo R. Rivera said.

“September was still volatile in terms of COVID-19 cases and economic conditions, inflation was surging, interest rate is still low — investor sentiment in September was still low,” Mr. Rivera said in a Viber message.

Meanwhile, international developments including more signals from the US Federal Reserve on its upcoming reduction in asset purchases as well as the debt crisis of China’s Evergrande Group were also areas of concern for investors, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

Mr. Rivera is hopeful investor sentiment could improve in the coming months as the country sees a decline in COVID-19 infections.

“The story may change in October onwards as restrictions are relaxed, COVID-19 cases have been decreasing, the economy is more active than before given the new alert levels implemented which is more calibrated than the old system,” Mr. Rivera said.

For this year, the BSP expects hot money to yield a net outflow of $4.3 billion.

Further lowering alert level in NCR to boost economy, says Chua

PHILIPPINE STAR/ MICHAEL VARCAS
The government has yet to decide on the alert level for the National Capital Region for November. — PHILIPPINE STAR/ MICHAEL VARCAS

By Jenina P. Ibañez, Reporter

DOWNGRADING Metro Manila’s lockdown restrictions to Alert Level 2 could add P3.6 billion to the national economy each week, according to the National Economic and Development Authority (NEDA) whose top official is pushing for the further easing of restrictions to spur more business activity.

Employment in the capital region could go up by 16,000 each week under the looser lockdown restrictions, NEDA said in a statement on Thursday.

If moved further to Alert Level 1, another P10.3 billion would be added to the economy every week, along with 43,000 jobs.

The National Capital Region (NCR) is under the stricter Alert Level 3 until Oct. 31. The government has yet to announce the alert level for November.

Socioeconomic Planning Secretary Karl Kendrick T. Chua at a forum on Thursday said continued strict lockdowns would provide little opportunity for spending.

“My position has always been to safely reopen the economy,” he said.

“That will create an effect to create more sales turnover, hire more people, provide more taxes to the government, and use that virtuously to provide more targeted support to the sectors that really need it.”

The NEDA chief prefers this strategy to a closed economy that does not allow the bulk of the population to go to work.

Mr. Chua declined to share his estimated third-quarter gross domestic product (GDP), but noted how more sectors were able to operate during the strict two-week lockdown in August compared with the more  stringent community quarantines in 2020.

“I think there will be strong potential for growth because mobility data from Google, trade data, production data, labor force data all show very different positive change compared to last year,” he said.

The Philippine economy exited recession in the second quarter as it grew by 11.8% after five straight quarters of decline, data from the Philippine Statistics Authority (PSA) showed. For the first half, GDP rose by 3.7%, still below the government’s downgraded full-year growth target of 4-5%.

Third-quarter GDP data will be released on Nov. 9.

Philippine economic growth projections have been slashed amid a Delta-variant outbreak that further dampened consumer and business confidence.

The International Monetary Fund lowered its 2021 Philippine GDP forecast to 3.2%, from the 5.4% projection set in June.

Fitch Ratings downgraded its projection to 4.4% from 5%, while the ASEAN+3 Macroeconomic Research Office cut its forecast to 4.3% from 6.4%.

Mr. Chua is also supporting the gradual reopening of schools, noting that the school closures’ cost to the Philippine economy — which now stands at P11 trillion over the next four decades — could be doubled.

The NEDA estimate is based on potential wage losses due to the one year lost in face-to-face classes.

“I think we should treat this virus now as part of our lives, move from pandemic to endemic mentality and manage,” he said.

The Education department is set to begin the pilot test of face-to-face classes in areas with low number of COVID-19 cases next month.

The Philippines is now considered at low risk from the coronavirus amid a drop in daily infections, the Health department said earlier this week.

Gov’t to borrow P200B from local market in Nov.

BW FILE PHOTO

THE GOVERNMENT plans to borrow P200 billion from the domestic market in November, as it takes advantage of the excess market liquidity.

In an advisory posted on Thursday, the Bureau of the Treasury (BTr) said it would borrow P60 billion in Treasury bills (T-bills) and P140 billion in Treasury bonds (T-bonds) next month.

The November borrowing plan is the same as the October program, which in turn was smaller than the P250-billion borrowing plan in September.

The Treasury will offer T-bills worth P15 billion on Nov. 2, 8, 15 and 22, or P5 billion each in 91-, 182- and 364-day debt papers. Since Monday (Nov. 1) is a special nonworking holiday, the auction was moved to Tuesday (Nov. 2).

For the long-term tenors, the government will offer P35 billion in T-bonds every week, auctioning off five-year notes on Nov. 3 and Nov. 16, seven-year securities on Nov. 23 and 10-year T-bonds on Nov. 9.

A bond trader said that the mix of five-, seven-, and 10-year tenors are somewhat expected.

“We think BTr will be able to get better results this month given the amount of excess liquidity,” the trader said in a Viber message.

National Treasurer Rosalia V. de Leon told reporters in a Viber message on Tuesday that going into November, the government has sufficient financing buffers as it took advantage of the low rates seen previously.

Improving revenue collections and additional official development assistance inflows will also support the government’s cash position, she added.

The Treasury raised a total of P129.89 billion in October, falling short of the P200-billion program set for the month. Broken down, it raised the programmed P60 billion in T-bills and just P69.89 billion for the long-term tenors.

The BTr rejected all bids during the Oct. 19 T-bond auction as investors asked for higher returns due to lingering inflation concerns. The government also made partial awards of P15.58 billion on Oct. 5 and P19.315 billion on Oct. 26.

The government borrows from foreign and local sources to plug its budget deficit. The gap has reached P1.1 trillion in the nine months to September this year, or 29.56% higher than the shortfall last year.

The government plans to borrow P3 trillion from domestic and external sources this year to help fund a budget deficit seen to hit 9.3% of gross domestic product.

The government runs on a budget deficit as it spends more than the revenue it generates to support economic growth. It borrows from both local and foreign lenders to plug this fiscal gap seen to hit 9.3% of gross domestic product this year. — Jenina P. Ibañez

BSP tells banks to manage environmental, social risks

BW FILE PHOTO

THE CENTRAL BANK wants lenders to keep a close eye on environmental and social (E&S) risks in their credit exposure, in line with the Philippines’ sustainable financing goal.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno signed BSP Circular No. 1128, which directs banks to adopt procedures that will take into account E&S risks that emanate from borrowers and their portfolio. It also mandated banks to set out targets and limits to control these exposures and to assess creditworthiness of borrowers.

“Banks shall consider environmental and social risks in defining credit risk appetite. The type, quantity and severity of E&S risks shall be evaluated taking into account different factors such as the type of loan, location of the borrower, project, and or collateral, and the industry of the borrower, among others,” the circular stated.

Under the circular, banks should engage in a “constructive dialogue” with clients that may pose significant E&S risks. A bank should conduct E&S due diligence on the borrower from the start and on an ongoing basis.

The circular said banks may also require borrowers to provide additional documents such as environmental permits and third-party certifications, especially those involved in the extraction of natural resources, emission of carbon and poisonous gases or substances, and other activities that deemed harmful to the environment.

Lenders should also look into the ability, willingness, and track record of borrowers in implementing measures to reduce their E&S risks.

A bank’s board of directors should also set environmental and social objectives, which may include “progressively increasing targets on the proportion of the loan portfolio allocated for sustainable financing.”

The board should “approve the risk appetite on specific risk areas that the bank is willing and capable to manage, results of stress testing exercises, and assessment of the timing and channels through which E&S risks may materialize.”

Banks should also assess annually the impact on E&S risks on their operations. This would include assessment of a bank’s capability to withstand disruptions, resume operations and continue to provide services.

“For instance, severe weather events could adversely impact business continuity, including branch networks, offices, infrastructure, processes, and staff that could lead to financial losses,” it said.

The Bankers Association of the Philippines (BAP) pledged support for the regulatory framework. BAP Managing Director Benjamin P. Castillo noted seven local banks have already issued more than $1.15 billion of green, social, and sustainability bonds since 2017.

“Incorporating sustainability is not only just about protecting the environment, but is a key factor in the promotion of long-term social and economic growth,” Mr. Castillo said in an e-mail.

“This E&S risk management framework will further enhance bank operations and risk management tools, delivering value to shareholders and uplifting the communities we serve,” he added.

In April 2020, the BSP launched its sustainable finance framework and gave banks a three-year transition period to adopt its provisions.

The government last week launched an interagency sustainable finance framework to address the country’s policy and regulatory gaps in promoting sustainable investments. — Luz Wendy T. Noble

MPTC sees 32% increase in traffic volume next year

THE Metro Pacific Tollways Corp. (MPTC) on Thursday said it expects a 32% increase in the average daily traffic volume on its expressways in 2022.

“We expect an additional 32% of vehicles on our roads by next year,” MPTC President and Chief Executive Officer Rodrigo E. Franco said at a virtual forum on Thursday hosted by the Economic Journalists Association of the Philippines.

MPTC holds the concession rights for Cavite–Laguna Expressway (CALAX), Manila–Cavite Expressway (CAVITEX), Circumferential Road 5 (C-5) Link Expressway, North Luzon Expressway (NLEX), NLEX Connector Road, Subic-Clark-Tarlac Expressway (SCTEX), and Cebu-Cordova Link Expressway (CCLEX).

“Currently, we serve more than 700,000 vehicles per day on all our expressways,” Mr. Franco said.

The company aims to build an “urban ring road” to help manage economic losses from city traffic by providing “unimpeded” traffic flow for goods and people.

Mr. Franco also said that for 2022, the company expects to open the CCLEX project to motorists in the first quarter, complete the NLEX Connector Phase 1 in the second quarter, the CALAX Cavite Segment and the NLEX Segment 8.2 Section 1A in the third quarter, and the NLEX Connector Phase 2 and CAVITEX C5 Link projects in the last quarter.

“We hope that the bottleneck in terms of awarding projects will be addressed so we can have new projects and help in the economic recovery,” he also said, referring to the next administration.

MPTC is the tollways unit of Metro Pacific Investments Corp., one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Arjay L. Balinbin