Statement from the Chairman

Dear Stakeholders,

Contribution to the national development agenda has always been a core objective of Ayala’s business philosophy. Our long history as an institution is inextricably linked to the country’s economic history. Over the past 177 years, we have seen the Philippines undergo major social change. Reflecting on our history has helped us emphasize an important truth: Ayala is part of a larger economic system and our expertise and undertakings can be a major driver of national progress. This opportunity to contribute to a broader national agenda is a source of pride among our corporate team.

While the problems of the Philippines remain as daunting as they are urgent, we believe that the country can address these problems effectively over time. But business, with its experience in taking intelligent risks and its practice of management and good governance, has to be a prime contributor. Everyone, business and industry included, has more to gain from a society that works along progressive lines.

Our commitment to help build the Filipino nation is the foundation of what the Ayala group is all about. We have been practicing aspects of sustainability long before the triple bottom line approach became a business trend. It is an important value of Ayala that each business acknowledges its role in social and economic development. Each of our businesses seeks to define which actions and investments uphold the goal of creating shared value for the broadest base of stakeholders possible. We all aim to protect and enhance the entire value chain of our companies while contributing to the national development agenda in a progressive and constructive way. This briefly explains the essence of our report.

Committing to the Business of Sustainability

The last two years have seen our companies progress in their respective sustainability journeys. Each one innovated on products and systems, strengthened policies, reached out to stakeholders, raised the bar on performance targets, and broadened their exposure to new markets. We aimed to improve profitability while simultaneously building greater accountability to our society. Companies that have been practicing sustainability longer, like Manila Water and Ayala Land, were shining examples to those new to the practice. Our sustainability champions, especially members of our Sustainability Council, have been instrumental to the marked improvement you will see in this report. This year, we cover the performance of 8 companies on 30 economic, environmental, and social indicators, a substantial increase from 11 indicators in 2008.

Ayala’s contributions to helping eradicate social inequities and arrest environmental degradation stem from a strategic business imperative. Efficiency efforts improve our profit margins. Excellent work packages add to our competitive advantage. Transparency and accountability enhance our brand and our reputation. Our presence and contributions to local and national economies boost social services, infrastructure, and productivity. Apart from these benefits, there is global pressure from international investors, funding institutions, and the general public for businesses to respond to sustainability issues. In our changing world, the importance of performance measures that move beyond the financial bottom line cannot be underestimated. Integrating sustainability into our business operations ensures our long-term viability and is a great value driver for the company.

Leveraging Our Size and Scale

Experience has taught us that when we leverage our entire group’s size and scale, we can come closer to achieving our goals. Our experience in sustainability and reporting as a conglomerate affirms this. At the same time, we faced a number of challenges given the number of subsidiaries reporting this year and their different levels of performance. On a practical level, we saw it as a chance to share best practices as various initiatives evolved according to each company’s goals and limitations. It also allowed us to improve the standards of our data gathering as a way of achieving better comparability. On a strategic level, it gave Ayala Corporation, the holding company, the opportunity to underscore key sustainability strategies and priorities. These have to drive our individual efforts so that when implemented as a community, their end result is more widespread, more meaningful, and has significantly more impact.

In this report, we also feature our management approaches to economic, environmental, community, labor, human rights, health and safety, and product responsibility issues. We have aligned them within the broader context of our national priorities and international development goals. Our management approaches, in turn, provide context to our selected key performance indicators. This allows our various stakeholders to understand the impact and contributions of our group on various levels.

Sharing the Value of Sustainability

Sustainability is important to our companies because we have always wanted to integrate and align our business strategy more formally into the social development fabric of the nation. The entire Ayala group is committed to improving the life and well being of every Filipino.

Creating shared value is an ambitious goal, but the challenges that our company and our country face at this time are numerous. They include climate change, erosion of profits and resources, deterioration of productivity, health and well being, and even an erosion of trust, national pride, and human dignity. Finally, we face the challenges of an increasingly interrelated global economic system. We have no choice but to meet these challenges head on, with imagination and rigor, while aiming to be a positive contributor to the broader goals of civil society.

This report discusses in detail all that I mention above and captures the stories that currently underpin our growth. Because Ayala considers you, our stakeholders, as an important partner in achieving our national development goals, I invite you to read our commitments carefully and let us know how we can improve on both our reporting and our practice by emailing us at sustainability@ayala.com.ph.

Thank you for your time and attention.

Sincerely,
Jaime Augusto Zobel de Ayala
Chairman and Chief Executive Officer