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Gojek reapplies to enter PHL mart and challenge Grab’s monopoly

INDONESIAN ride-hailing start-up Gojek has reapplied to enter the Philippines and face off with Grab Holdings, Inc., which controls about 90% of the market.

Gojek’s filing is under evaluation by the Department of Transportation‘s franchising and review service, Assistant Secretary Goddes Libiran said in a mobile-phone message Saturday.

Regulators have rejected Gojek’s application twice this year for breaching the 40% foreign-ownership limit for public transport services, as its local unit Velox Technology Philippines, Inc. was wholly-owned by a Singaporean firm. Velox has since sold a stake and the company is now owned 60% by Filipino company Pace Crimson Ventures Corp., Securities and Exchange Commission documents showed.

Zalora Philippines CEO Paulo Campos, whose father Paulo E. Campos, Jr. is the largest shareholder in Pace Crimson through a 35% stake, said in a mobile-phone message that the online shopping platform partly owned by conglomerate Ayala Corp. “has no involvement in the investment” and “has no connection whatsoever to Gojek or their efforts to enter the Philippine market.”

Ayala Corp. was earlier said to be in talks with Gojek for a partnership. Nikkei, earlier this week, reported Gojek’s fresh application. — Bloomberg

PCSO donates 45 Nissan NV350 ambulances to gov’t hospitals, health facilities

WITH THE HELP of Nissan Philippines, Inc., the Philippine Charity Sweepstakes Office (PCSO) turned over 45 new ambulance units to various government hospitals and health facilities nationwide to enhance the delivery of emergency health services to the public.

PCSO Chairperson Anselmo Simeon Pinili and Vice-Chairperson and General Manager Royina Garma led the ceremonial turnover rites of the 45 brand-new Nissan NV350 Urvan type-2 advanced life support ambulance units held at the Philippine National Police (PNP) headquarters in Camp Crame, Quezon City.

“The PCSO has always been a firm advocate of efficient health services to the Filipino people, especially those who have little resources to spend on their medical and health care. We will never waver from this commitment as we reaffirm our dedication in providing free but quality assistance to the public,” Ms. Garma said.

Ms. Garma assured PCSO’s accessibility to families and individuals who require medical and social assistance from the government.

“The PCSO is on standby 24/7 to help those who need assistance, especially indigent families who rely on their government for financial relief,” Ms. Garma said.

New Ambulances. The Philippine Charity Sweepstakes Office (PCSO) turns over 45 new ambulances to various government hospitals and health facilities nationwide in a ceremony in Camp Crame, Quezon City. The move seeks to equip local government units, government hospitals, municipal health offices, and other health institutions/facilities all over the country with medical transport vehicles to immediately respond to the needs of patients especially from poverty-stricken areas.

The Medical Transport Vehicle Donation is one of the key programs of the PCSO to equip local government units, government hospitals, municipal health offices, and other health institutions/facilities all over the country with medical transport vehicles to immediately respond to the needs of patients especially from poverty-stricken areas.

The program underscores the importance of a reliable and functional ambulance for emergency transport of sick patients and stresses the value of quick access to health care.

Maj. Gen. Guillermo Eleazar, chief of the PNP Directorial Staff; Dr. Gerardo Aquino, Jr., Medical Center Chief II of the Vicente Sotto Memorial Medical Center; and Brig. Gen. Eriel M. Niembra, Commander of Presidential Security Group, accepted the keys of the ambulance units on behalf of their health facilities.

Also present during the turnover ceremonies were DoH Undersecretary Roger Tong-An representing Secretary Francisco Duque III as a guest of honor and speaker and Dr. Larry Cedro, PCSO Assistant General Manager for Charity Sector.

The new medical transport vehicles will benefit patients from Metro Manila’s government hospitals, which include Amang Rodriguez Medical Center (Marikina City), Dr. Jose Fabella Memorial Hospital (Manila), East Avenue Medical Center (Quezon City), Jose R. Reyes Memorial Medical Center (Manila), National Center for Mental Health (Mandaluyong City), National Children’s Hospital (Quezon City), Philippine OrthopedicCenter (Quezon City), Quirino Memorial Medical Center (Quezon City), Research Institute for Tropical Medicine (Muntinlupa City), Rizal Medical Center (Pasig City), San Lazaro Hospital (Manila), Tondo Medical Center (Manila), Lung Center of the Philippines (Quezon City), National Kidney and Transplant Institute (Quezon City), Philippine Children’s Medical Center (Quezon City), Philippine Heart Center (Quezon City), and Valenzuela Medical Center (Valenzuela City).

Vessels expected to avoid areas lacking cleaner maritime fuel

HOUSTON — Shortages of low-sulfur fuel oil could appear at some ports in Africa, South America and Southeast Asia next year, but most major ports around the world will have adequate supplies, panelists at a shipping industry conference said.

International Maritime Organization (IMO) standards take effect Jan. 1 that cap the sulfur content of shipping fuel at 0.5% unless vessels use exhaust-cleaning scrubbers. The mandate aims to improve human health by reducing air pollution from sea-going vessels.

Overall, supplies of the cleaner-burning fuel will be available at the start of the year, said panelists at a Mare Forum USA conference. However, shortages in some places force vessels to detour to ports with ample supplies, said Maria Burns, a supply chain specialist. She said any diversions would be costly for fuel sellers and ship owners.

Only about 6%, or 3,000, of the world’s 55,000 ocean-going vessels are expected to have scrubbers installed by 2020, far less than originally expected, said Burns, an assistant professor at the University of Houston. Global marine fuel oil consumption could reach 5 million barrels a day (bpd) by 2020 and rise to 8 million bpd by 2040, she added.

Compounding supply issues, global refiners have not been able to guarantee the quality and compatibility of the shipping fuels they supply, said Sean Kline, a director at industry group Chamber of Shipping of America.

“If something is keeping us up at night, it’s the quality and compatibility of the fuels. You can get a different blend with different components at the same port. If they get bad fuel, they have to deal with it onboard,” Kline said.

“Basically, if you can’t get the low-sulfur fuel, be transparent about it” with the U.S. Coast Guard, he said to an audience of marine executives. — Reuters

SSS collects P30.5M in delinquencies

STATE-RUN Social Security System (SSS) said it collected P30.5 million in contributions after 71 non-compliant employers settled their delinquencies.

However, SSS President and Chief Executive Officer Aurora C. Ignacio said they are still expecting more collections from 93 other employers with P200 million in contribution delinquencies.

The 71 employers complied after receiving preliminary assessment notices and final assessment notices before seizure under the process of serving Warrants of Distraint, Levy, and Garnishment (WDLG), Ms. Ignacio said in a statement.

She said the initial procedure of serving assessment notices allows delinquent employers to choose between settling their delinquencies, avail an installment payment scheme or give them the option to file a request for reconsideration.

As of September, the pension fund said two non-compliant employers with a combined delinquency worth P2.91 million are set for warrant execution.

“The SSS has allowed these employers to fulfill their obligations under the Social Security Act of 2018, especially by offering a Contribution Penalty Condonation Program (CPCP) from March until September this year, but they still failed to comply,” Ms. Ignacio was quoted as saying.

She said employers are mandated by law to remit the SSS contributions of their employees regularly.

“We would like to remind non-compliant employers to obey the law and remit religiously the SSS contributions of their employees. This is your obligation not only under the law but also show your empathy to your employees who have been your partners in business. Give them the social safety net they deserve,” she said.

So far this year, the SSS conducted 14 execution of warrants of arrest in coordination with the Philippine National Police. — BML

Stocks may drop on negative market sentiment

By Denise A. Valdez
Reporter

PHILIPPINE STOCKS are seen to trade lower this week amid negative sentiment caused by developments in the global scene.

The Philippine Stock Exchange index ended flat on Friday with a 5.7-point or 0.07% uptick to 7,824.59. The all shares index inched up 8.28 points or 0.17% to 4,679.04 at the close of last week’s trading.

On a weekly basis, the main index declined 1.65% to 7,824.59 mainly due to the hazy progress of the trade talks between United States and China. This is the second straight week the PSEi recorded a loss.

Value turnover last week climbed to P25.87 billion from P25.77 billion a week ago. Net foreign selling for the week increased to P3.22 billion from P2.43 billion previously.

Last week, Reuters reported that trade experts are flagging the unlikelihood of signing the “phase one” US-China trade deal within the year. US President Donald Trump himself said he finds China is not meeting his expectations in the trade talks.

“This market will not rally until we see a pick up in trading volumes and until investors start to look at economic and corporate fundamentals,” AAA Southeast Equities, Inc. Research Head Christopher John Mangun said in a market note sent over the weekend.

“Investors continue to focus on the sentiment which has been very grim due to external factors abroad and the uncertainty on the direction of our own economy since last year. Several companies are at multi-year lows which could encourage bargain hunters to start loading up and position themselves for the longer term,” he added.

Mr. Mangun said the Philippine market has been moving sideways all year long and investor optimism is “slowly fading away due to a lack of conviction that the market can go higher.”

“We may see it continue lower and test stronger support levels at the 7,500 area in the coming weeks,” he said.

Online brokerage 2Tradeasia agreed with Mr. Mangun’s thoughts on bargain hunting in the upcoming week.

“Several large caps have breached fresh lows during the week, and most are already trading oversold zones. With seasonal liquidity this December, it would be worth to consider shopping for bargain stocks,” it said.

“While equities may be in competition with the roster of bond issuances from both government and private sectors, not all will be awarded the fixed income float. As such, free cash should find its way into equities than stay idle,” it added.

However, it said foreign investors may remain bearish on the local market, noting the Thanksgiving holiday in US on Nov. 28 and the MSCI rebalancing. The Southeast Asian Games in the Philippines may also sidetrack investors this week.

“Within such lull, it would be good to gradually position on prime stocks ahead of an expected rebound. Immediate support is 7,700, resistance 7,900-7,950,” 2Tradeasia said.

Style (11/25/19)

San Mig Light partners with PURVEYR

IN CELEBRATION of its 20th anniversary in the Philippine market, San Mig Light partnered with local brand PURVEYR to produce a retail collection that features 20 different designs by Filipino artists and designers as part of a social creative campaign called 20 Light Years. The collection includes five types of merchandise — T-shirts, tote bags, scarves, beer mugs, and coasters — with designs inspired by four social topics that deserve a spotlight right now, namely Gender Equality, Arts and Creativity, Community Development, and Mental Health. Each social topic has a merchandise set of five different designs as each artist was assigned to one social topic and one type of merchandise, completing the 20-piece collection. The collections and the participating artists are: Gender Equality — Kita (T-shirt), TRNZ (tote bag), Gianne Encarnacion (scarf), BLIC (beer mug), Kris Abrigo (coaster); Community Development — Hey, Mady! (T-shirt), Jai Hernandez (tote bag), Anina Rubio (scarf), Sleek Shy (beer mug), Distort Monsters (coaster); Mental Health — Donsuki (T-shirt), Issabarte.art (tote bag), Ev.yu (scarf), Raise Hell (beer mug), Jill Arteche (coaster); and, Arts and Creativity — Chad Manzo (T-shirt), Bastinuod (tote bag), Strap (scarf), Tropical Futures Institute (beer mug), Revere (coaster). Launched on Nov. 14, the collections are available in PURVEYR Post Poblacion, online through PURVEYR.com, and in all the “20 Light Years: Usapan” panel talks that San Mig Light and PURVEYR will be hosting until the end of January. T-shirts cost P600, tote bags are P500, beer mugs are P400, coasters (a four-piece set) are P400, and scarves are P300. Four panel discussions will be mounted in four different locations in the country. For more details, follow @sanmiglightph and @purveyr on Instagram, and the San Mig Light x PURVEYR 20 Light Years campaign at purveyr.com/20lightyears.

Furniture inspired by Filipino music

MUSIKASANGKAPAN: Obra ng Pinoy Milenyal is a special exhibition of over 50 pieces of furniture which are interpretations of Filipino music, from the traditional to pop. The collection from the Interior Design Program of the De La Salle-College of Saint Benilde (DLS-CSB) includes outdoor lounges inspired by the Filipino courting harana; armchairs reminiscent of a classic vinyl record player; accent chairs inspired by wind chimes; furnishing that portrays indigenous instrument from T’boli; and hammocks and coffee tables inspired by the iconic songs of singers such as Rey Valera, Regine Velasquez, the Eraserheads, Moira dela Torre, and Ben & Ben. A special section celebrates the legacy of Philippine National Artist for Music Ryan Cayabyab. MusiKasangkapan: Obra ng Pinoy Milenyal is on view at the S Maison Main Atrium, Conrad Manila, Marina Way Seaside Boulevard, Mall of Asia Complex, Pasay City, until Nov. 28.

PHL Harvest focuses on Antique’s fashion and food

THE Department of Tourism’s (DoT) Philippine Harvest returns for its 7th edition featuring the province of Antique. It will be held from Nov. 29 to Dec. 1, from 11 a.m. to 11 p.m. (Friday-Saturday) and 11 a.m. to 10 p.m. (Sunday) at the Central Square in Bonifacio Global City. More than 10 weaving associations will feature the patadyong or multi-functional wrap-around cloth made of cotton blends in plaid pattern as well as handwoven scarves, shawls, bags, T-shirts, shoes, hand-painted pillows, bariw and banig bags, place mats, carpets, hot pods, runner, embroidered products, and accessories at the joint DOT-SSI Group, Inc. initiative. Antique’s food exhibitors will bring local products ranging from muscovado sugar, candies, virgin coconut oil products, roasted coffee, peanut, taro chips, sweet potato chips, ginger, turmeric, squash, monggo, kadyos, batwan, corn, gabi, canton squash, to moringga powder. Visitors can also enjoy a variety of kakanin, vegan food products, local coffee, organic fruits and vegetables, artisanal tuyo, and gourmet salted egg, among others. The Philippine Harvest is open to the public free-of-charge.

Nationwide Round-Up

DoLE to launch mobile app for worker, OFW concerns

THE DEPARTMENT of Labor and Employment (DoLE) will launch a mobile application in Dec., in time for its 86th anniversary, to provide better access to its services for locally-employed and overseas Filipino workers (OFWs). Labor Secretary Silvestre H. Bello III, in a statement on Sunday, said the app will serve as a platform for relaying concerns to the DoLE headquarters and its offices abroad. “This application is intended to provide a major channel for our workers and OFWs to get in touch with DoLE and the POLO (Philippine Overseas Labor Office). Through the use of modern technology, they can relay their labor related concerns and complaints,” he said. Through the app, DoLE will provide hotline numbers and point workers to the nearest DoLE office based on their location. The mobile app, which will be available for free on both Android and Apple devices, will also feature a “Wage Calculator” for computing overtime and holiday pay or deductions on top of daily wages. — Gillian M. Cortez

Seafarers’ group official recommends fewer maritime schools

THE PHILIPPINES needs less maritime schools as only an average of 20% of graduates get hired on board ships, according to Associated Marine Officers’ and Seamen’s Union of the Philippines (AMOSUP) Vice-President Eduardo Ma. R. Santos. “Only 20% are able to board a ship. Kawawa talaga (It’s really a pity for the graduates). That’s consistent, 19% to 20% per year,” Mr. Santos, also the president of the Maritime Academy of Asia and the Pacific (MAAP), told BusinessWorld in Manila on Nov. 6. He explained that this is likely due to the limited number of ships. He said the government should reduce the number of maritime schools, which have been “increasing” despite the low employment rate. He noted that there are currently at least 90 maritime schools that are accredited by the Commission on Higher Education. Asked if there are still good career opportunities for seafarer graduates, he said: “That’s what everybody says. That’s what schools say. Ginawang negosyo eh (It is being used as a money-making venture).” — Arjay L. Balinbin

Labor group reminds employers on Christmas seasonal hiring rules

WITH THE Christmas season drawing near, the Associated Labor Union-Trade Union Congress of the Philippines (ALU-TUCP) has reminded employers to follow labor guidelines in hiring seasonal workers. In a statement on Sunday, ALU-TUCP Spokesperson Alan A. Tanjusay said interviews they conducted with agency-hired workers indicate “an upsurge trend for cheap skilled and unskilled seasonal, temporary and on-call workers in the labor market in time for the Christmas and new year.” “Hiring of contractual, ‘pakyaw’ and seasonal jobs are allowed under existing law. However, these workers must be regular and directly-hired to middlemen manpower agencies and are paid with the mandated and lawful minimum wages and social protection benefits,” the group said. Pakyaw, as defined by the Government Procurement Policy Board, refers to a “system of hiring a labor group for the performance of a specific work and/or service incidental to the implementation of infrastructure project by administration whereby tools and materials are furnished by the implementing agency.” Mr. Tanjusay also noted that there are manpower service providers and agencies that do illegal contracting and sub-contracting. In Metro Manila, for example, female workers “are bidded and bought” for P300 a day while male workers for P400 daily despite the P537 minimum wage in the National Capital Region. — Gillian M. Cortez

Palm oil producers to set up fund to fight critics

KUALA LUMPUR — Palm oil producers will set up a joint fund to counter critics of the industry, a Malaysian government official said on Tuesday, amid growing scrutiny of a commodity which is accused of causing widespread environmental damage.

The cultivation of palm oil, which is used in everything from ice cream to lipstick, is blamed for mass deforestation in Southeast Asia and endangering wildlife such as orang-utans and pygmy elephants.

Tan Yew Chong, secretary-general of the Malaysian ministry of primary industries which oversees palm oil production, told a conference that the new fund will be run by the Council of Palm Oil Producing Countries (CPOPC), an industry body set up by major producers Indonesia and Malaysia.

“We want to go big on that (the fund) to overcome the anti-palm oil issue,” Tan said at the industry conference in Kuala Lumpur, the Malaysian capital.

The fund will implement a new communication and public relations strategy for the industry, among others measures, he said.

Palm oil has come under particular scrutiny this year as the European Union has launched efforts to introduce a law to limit the use of the vegetable oil in biodiesel.

The bloc enacted a law this year to phase out palm oil from renewable fuel by 2030 because of the commodity’s links to deforestation. It is also discussing increasing regulations on food — the palm oil industry’s main source of revenue.

Malaysia, the second biggest producer of palm oil, this year launched a global public relations and lobbying effort to boost the image of palm oil, especially in Europe, Reuters reported.

The campaign is propagated by platforms which say they represent small-scale farmers but is created and run by public relations firms hired by a government agency responsible for promoting palm oil.

Indonesia and Malaysia have been increasing biodiesel usage domestically to boost consumption of palm oil.

Malaysia increased the proportion of palm oil used in biodiesel to 10% from 7% last December, and aims to implement a ‘B20’ program with 20% palm oil content next year.

Tan, the government official, said that Malaysia would start implementing the B20 program in stages from early next year, and will aim to introduce B30 in a few years. — Reuters

Homegrown restaurant brands open opportunities for The Moment Group

By Denise A. Valdez
Reporter

THE Philippines’ appetite for celebrations is opening endless opportunities for the food and beverage (F&B) industry, as a young player such as The Moment Group is already seeking expansion outside Metro Manila and abroad seven years into the game.

The company behind 8Cuts Burgers, Manam Comfort Filipino and Ooma Bold Japanese is heading into 2020 with plans to set foot in Bacoor and Baguio and beef up its current roster of 12 restaurant brands.

Moment is targeting to open Manam in the two new locations within the first quarter next year and launch at least two new homegrown brands, including a new Filipino concept.

The company said it is motivated by the warm reception for its locally made brands such as Manam, which recently joined a pop-up in Singapore and sold out in 24 hours.

“These past few years, there’s been a lot of interest in Manam and this pop-up, our first outside the country, is our bid to really explore that…,” Abba S. Napa, co-founder for creative development in Moment, said in an email interview with BusinessWorld.

Aside from 8Cuts, Manam and Ooma, Moment also handles Manam Express, Shawa Wama, The Mess Hall, Mecha Uma, Mo’ Cookies, Phat Pho, Bank Bar and the local operations of Din Tai Fung. It also operates a catering and events business.

“We’re fortunate on two levels: that we love building our own brands and that we’ve found success in doing that. I think one of Moment’s strengths and something that makes the organization really special is the collaborative way we create a brand,” Eliza R. Antonino, founding and managing partner of Moment, said in the same email.

The company said it sees a low barrier to entry in the F&B industry in the Philippines, which Ms. Antonino dubbed as the “new fashion” as it started to attract even big retailers. “Our malls now have a bigger F&B footprint and I foresee the industry growing even more in the coming years,” she said.

Moment Co-founder for Strategic Partnerships Jon J. Syjuco said this trend is resulting in more astute consumers, and in return a more challenging scenario for new players in the F&B field.

But Ms. Napa said Moment is welcoming such competition with open arms, noting the company is maintaining its growth with near 3,000 employees at present.

“I find it apt that this point in time in the evolution of the Philippine F&B industry coincides with our seventh birthday… To us that represents striking a balance between maintaining our esprit de corps — our willingness to risk and be bold — with the reality that we are getting larger and we now have more responsibilities,” she said.

Since the three joined together in 2012 to form Moment, the company said it was able to open around 40 stores across town and record a double-digit growth year on year.

As it seeks further growth at the unfolding of a new decade, Ms. Napa said Moment continues to target the premium casual dining category, banking on customers’ pursuit of value for money.

“The majority of our portfolio is focused on the occasion of self-reward, and we’d like to hit all occasions for use with a core portfolio built with the DNA to scale,” she said.

Tradeoffs

There were 15.2 seconds left when the Rockets made a push for the final play of the match. They had just seen their five-point lead turn into a one-point deficit following the Clippers’ third basket in the last three-quarter of a minute, but head coach Mike D’Antoni elected not to call their last timeout all the same. They were down one, but confident nonetheless; among other things, they had the league’s most potent scorer in James Harden on their side. And the ball did get to him with 10 ticks to spare. So far, so good; he was poised to add to an extremely efficient 37-point, 12-assist outing.

Unfortunately for the Rockets, bad spacing had Harden facing double coverage as soon as he touched the ball. Not taking any chances, the Clippers enveloped him with defensive demons Kawhi Leonard and Paul George. He immediately made the right play, passing to a wide-open Russell Westbrook. He figured he would get the ball anew after his fellow All-Star, knowing well enough to trust him with the outcome of the set-to, created the requisite separation. He thought wrong; he never got the ball back. Instead, he saw his backcourtmate launch an ill-advised try from beyond the arc that sealed their fate. Why a 22-percent shooter opted to do so when a made two would have led to a win just the same is anybody’s guess.

Granted, Westbrook was free — make that extremely free — for the three-point attempt. Then again, there’s a reason the defense (and, in particular, former teammate George) practically dared him to shoot. He has a historically poor touch anywhere on the court except in the shaded area. And he was particularly atrocious the other day; prior to his hero heave, he was just one of six from trey territory. He even had an airball of a short open shot earlier in the contest. Yet, for all his failings, he thought best to decide the Rockets’ destiny by doing the one thing he shouldn’t have in the crunch.

And therein lies the rub. Westbrook is an asset; his whirling-dervish style has propped up the Rockets’ pace and improved their offensive metrics. That said, his effectiveness as a bulldozing baller has already been handicapped by his advancing age; his finishes at the rim have become less of a sure thing in recent memory. Meanwhile, and more tellingly, he continues to also be a liability. Harden’s singular skill set often has him stationed as a release valve, but he does not possess an adequate touch to at least make the think twice before leaving him alone in the perimeter.

By most accounts, the Rockets went for addition by subtraction in the offseason by unloading erstwhile starting guard Chris Paul, whose relationship with Harden had fractured beyond the point of repair. Meanwhile, Westbrook was a childhood buddy who promised harmony — and, by extension, productivity — on the floor. As the loss to the Clippers showed, however, the move came with tradeoffs. There will be plenty more instances when his defender will leave him alone, and what he does in these times figure to shape their campaign for the hardware. The good news is that the season is young; they still have time to improve. If they truly harbor title hopes, they would do well to help him do so, but sooner rather than later. Else, certain disappointment is in the offing.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

Are sustainability reports a fad?

Wider corporate reporting is being promoted as a means to improve corporate governance, as stated by International Accounting Standards Board (IASB) Chairman Hans Hoogervorst in his speech in Tokyo on Aug. 29, 2018. The IASB chair admitted that financial reporting has its limitations and cannot adequately capture certain elements that might be important to stakeholders, such as the intangibles that are vital to the company’s business model and its strategy for long-term value creation. Financial statements are essentially backward-looking reports that contain limited forward-looking information, which means that in their current state, financial statements do not address emerging sustainability issues that might impact a company’s future cash flow.

However, the IASB Chair made it clear that the Board is not equipped to enter the field of sustainability reporting directly. He recognizes in a speech about sustainability reporting in April at Cambridge University that the Board does not have the expertise required to set sustainability reporting standards. Additionally, he notes that there are already several standard setters in this space.

Mr. Hoogervorst also pointed out that regulators and stakeholders should not have exaggerated expectations that sustainability reporting will act as an agent of change and will be effective in forcing companies to “prioritize planet over profit.” That being said, clear public policies can certainly help effect change, and financial incentives are crucial to swaying companies to address material sustainability issues. The rise of sustainability reporting that focuses on stakeholders and provides information about the impact of sustainability issues on the future returns of the company is the most promising development in this space, according to the IASB Chair.

While the IASB will not directly participate in sustainability reporting, it is addressing the limitations of financial reporting through its “Better Communication in Financial Reporting” project. This initiative aims to improve financial communication not by creating new standards, but by providing guidelines on how to better present information that has already been collected. The project contains several strands of work, one of which is revising and updating the Management Commentary (Practice Statement) to include a report on how material sustainability issues may impact the business. The IASB is expected to publish an Exposure Draft of the Practice Statement in the second half of 2020.

On the local front, the Securities and Exchange Commission (SEC) has released a memorandum requiring publicly-listed companies (PLCs) to submit their Sustainability Report together with the 2019 Annual Report (SEC Form 17-A) in 2020. The memorandum issued early this year stated that the guidelines are to be adopted on a “comply or explain” approach for the first three years upon implementation. This means that “companies will be required to attach the template to their Annual Reports but they can provide explanations for items where they still have no available data. However, by 2023, PLCs will need to comply with the Sustainability Reporting Guidelines specified in the memo, or be subjected to the penalty for Incomplete Annual Report (under SEC Memorandum Circular No. 6, Series of 2005).

Like traditional financial reporting, rigorous climate-related financial disclosures do not happen overnight. The path from start to finish can involve twists and turns, as well as the coordination of many moving parts, thereby requiring the collaboration and expertise of a variety of corporate functions to achieve an organization’s ultimate reporting objectives. The following are key action steps companies can take now to prepare themselves for reporting non-financial information.

1. Secure the support of your board of directors and executive leadership team.

2. Integrate climate change into key governance processes, enhancing board-level oversight through audit and risk committees.

3. Bring together sustainability, governance, finance, and compliance colleagues to agree on roles.

4. Look specifically at the financial impacts of climate risk and how it relates to revenues, expenditures, assets, liabilities, and financial capital.

5. Assess your business against at least two scenarios.

6. Adapt existing enterprise-level and other risk management processes to take account of climate risk.

7. Solicit feedback from engaged investors about what information they need to know about climate-related financial risks and opportunities.

8. Look at existing tools you may already use to help you collect and report climate-related financial information.

9. Plan to use the same quality assurance and compliance approaches for climate-related financial information as for finance, management, and governance disclosures.

10. Prepare the information you report as if it were going to be assured, even if you decide not to do so right now.

11. Look at the existing structure of your annual report and think about how you can incorporate the information into your discussion of risks, management’s discussion and analysis (MD&A), and the governance section.

The recent pronouncements of the IASB and SEC on the need for reliable and accurate sustainability reporting underlines the necessity for companies to assess and manage its non-financial performance towards achieving the universal target of improved sustainability. However, for sustainability reporting to be effective and useful, companies should not only view it as an exercise in compliance, but actually a responsibility of every corporate citizen to measure and document their best practices towards achieving the goals of sustainable development to meet the needs of the present without compromising the ability of future generations to meet their own needs.

It would seem then that need for sustainability reporting is here for good. In which case, companies are encouraged not to wait for sustainability reporting standards, or a regulatory requirement, to be mandatory. The time to act for the greater good is now.

This article is for general information only and is not a substitute for professional advice where the facts and circumstances warrant. The views and opinion expressed above are those of the author and do not necessarily represent the views of SGV & Co.

 

Benjamin N. Villacorte is a Partner of SGV & Co.

Lane says ECB policies ‘in good shape’

THE EUROPEAN Central Bank’s (ECB) chief economist Philip Lane said policies are “in good shape” for the baseline scenario of improving conditions over the next one or two years, but further rate cuts can’t be ruled out.

“Under the most likely scenario, we think the current policies are in good shape,” he said in an interview broadcast on Saturday on Italy’s Sky TG24. The scenarios where “more dramatic policies” are required such as “a severe negative shock, a big recession” are not the baseline case, he added.

Earlier last week, Mr. Lane said the central bank is nearing a decision to launch a review of its policy strategy as officials struggle to boost inflation despite years of massive stimulus. In September, the ECB decided to cut rates deeper below zero and to restart the quantitative-easing program, pledging to keep buying assets until inflation is firmly within its target.

“If it is necessary to put the rate lower, we will be prepared to do so,” Mr. Lane said in the interview. “It’s a very important message and this goes back to the wider discussion,” he said, adding that “of course, everyone agrees at some level the negative rate will not be helpful. But our assessment is we are not at that level now.”

In her first major speech, ECB President Christine Lagarde called for a new policy mix, saying public investment should be stepped up to ease the burden on monetary stimulus and ensure the region can thrive in an uncertain world. — Bloomberg

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