SUSTAINABILITY

SUSTAINABILITY – ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS

At the core of MPIC’s Sustainability Framework is our Mission to create long-term value for our stakeholders through six Core Drivers of our business that reflect the main roles, responsibilities and activities of the Parent Company — 1. Investment Selection and Portfolio Management, 2. Strategy Management and Leadership Selection, 3. Risk Management, 4. Good Governance and Ethical Business Practices, 5. Employee Welfare and 6. Social Responsibility.

In accordance with our Sustainability Framework, we monitor and evaluate our operating companies’ performance with respect to four pillars of sustainability: 1. Operational Efficiency, 2. Service Excellence, 3. Engaged Employees and Safe Workplaces, and 4. Social Responsibility.

GOVERNANCE: RELIANCE ON A STABLE REGULATORY ENVIRONMENT

In evaluating our investment prospects, MPIC seeks to add value for customers and communities by improving the quality of infrastructure assets, enhancing the efficiency with which they are run, extending their coverage to more people and working closely with regulators to achieve shared goals. With life cycles of 20 years or more, our infrastructure projects are by their very nature long-term. This means that our investments are intended to survive many political and economic cycles, and in managing our assets we expect to experience various regulatory and funding challenges from time to time.

For our business to be sustainable, we need to be able to apply a certain degree of reliance on the regulatory environment we operate in. Our franchise and concession agreements provide for fair and transparent price increases in order to recover the significant capital costs required for the development and maintenance of high-quality infrastructure. However, just as the physical infrastructure in which we invest is underdeveloped, so, occasionally, are the political and economic institutions that support them. In our water, toll roads and light rail businesses, for example, regulators have in the past been reluctant to approve various tariff adjustments. We have worked our way through some of these issues with the current administration and have been pleased with the partial implementation of tariffs, thus far.  We remain cooperative with Government and believe that a mutually beneficial outcome can be achieved that will allow us to continue serving the public together as partners.

CLIMATE CHANGE

Globally, it is no surprise to note that the most urgent area for action is climate change.  Risk areas that are most relevant to our Company include rising greenhouse gas emissions and exacerbating disaster risk.

RISING GREENHOUSE GAS EMISSIONS (“GHG”)

For a country like the Philippines, energy security remains to be a threat. Data from the Department of Energy showed that coal power provides the single-biggest source of electricity for the country at 52%. Oil-based and coal power sources are expected to continue to dominate the supply mix to cater to baseload requirements.  Coal-fired power plants remain to be viewed as the most cost-efficient way to address the Philippines’ growing energy needs.

Under the Electric Power Industry Reform Act of 2001, a distribution utility like MERALCO has the obligation to supply electricity in the least cost manner to its captive market, subject to the collection of retail rate duly approved by the Energy Regulatory Commission.  Operating under this mandate, in 2019, MERALCO commissioned its 500 megawatt San Buenaventura Power Limited Co. (“SBPL”) Supercritical Coal-Fired Power Plant in Mauban, Quezon.  Although SBPL is the first in the Philippines to use high efficiency, low emission technology and the most advanced operating coal-fired power plant in the country, it was still the primary reason why aggregate carbon emissions from MPIC’s portfolio companies increased faster than system-wide revenues year-over-year.

We are mindful of this and have begun intensifying our efforts to reverse this trend through various renewable energy initiatives across the group.

EXACERBATING DISASTER RISK

Increasing disaster risk is of significant concern to our portfolio companies because the services we provide are deemed essential to the daily lives of our customers.  Throughout our business, we adopt a precautionary approach to implementing cost-effective measures to manage and mitigate environmental and disaster risks in accordance with our long-term business objectives. Subject to the cost considerations reflected in relevant concession and franchise agreements, our operating companies have business interruption and environmental risk insurance in place to mitigate the risks of destruction to life and property. We are also continuously reviewing and enhancing our business continuity processes, disaster recovery programs and crisis management capabilities.

Details about MPIC’s management approaches to ESG issues are outlined in our Sustainability Reports where we have disclosed key performance indicators that help us quantify and evaluate our impacts in these areas. 

10th Floor, Makati General Office Building
Legazpi corner Dela Rosa Street
Legazpi Village, 0721 Makati City
Philippines

+632-8888-0888
info@mpic.com.ph

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10th Floor, Makati General Office Building
Legazpi corner Dela Rosa Street
Legazpi Village, 0721 Makati City
Philippines

+632-8888-0888
info@mpic.com.ph

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