Pandemic reveals gap in risk consciousness in companies, says BPI
The Bank of the Philippine Islands (BPI) says many companies need to improve their sustainability risk consciousness to come up with better business continuity plans as new risks, such as the coronavirus disease 2019 (COVID-19) pandemic, become more likely possibilities in the future.
Jo Ann Eala, Head of BPI Sustainable Development Finance (SDF), said COVID-19, a rare but high-impact event, has opened the eyes of many, but there are existing, oft-ignored environmental, social, and governance (ESG) risks which also require urgent attention.
“Businesses must anticipate, prepare, and quickly adapt to the evolving global landscape. Sustainable and risk conscious businesses are those that will survive during trying times. Risk consciousness, risk preparedness, and risk mitigation are key to sustainability,” she said.
Ms. Eala explained that BPI’s programs have promoted the inclusion of sustainability as part of clients’ business models, harnessing the Bank’s experience as the sustainability pioneer and leader in the Philippines since 2008. But as the world is hit with a pandemic of this scale, companies must now learn how to make use of risk-mitigating tools such as those used by BPI SDF to adapt, mitigate, and recover amidst the new normal.
“We are navigating unchartered waters as a result of this global pandemic which no one was prepared for. We need to adopt a new mindset that will change the way we do business,” she said.
She added that managing daily operations going forward will likely include: 1) Saving resources and reducing costs: save electricity and water, maximize manpower, shift to less extravagant packaging and advertising, opt for local vs imported components of production, cut non-essentials, and reduce transport and logistics; 2) Choosing efficient ways of doing business: automate and go digital via secure platforms, adopt technological innovations, go paperless, shift to higher efficiency equipment, and choose virtual communications and marketing vs traditional channels; 3) Going back to basics: focus on simple products that meet basic needs, go natural, go local, and drive down your carbon footprint; and 4) Managing business risks and building hazard resilience: know your business risks – natural and man-made, identify your weaker links, mitigate organizational risks and set up business continuity plans.
“Remember that environmental and climate risk hazards like earthquakes, typhoons, flooding and drought will not stop because there is a pandemic outbreak. Natural calamities will not give humans a reprieve, just because we are already suffering. It took COVID-19 for us to realize that risk management is a necessary component of business strategies,” she said.
BPI is offering the SDF program as a risk management tool for its clients and other stakeholders, as the bank helps clients achieve climate resilience and preparedness, noting that most industries are affected by the economic downturn caused by the wide-spread lockdowns across the country and the world. The SDF program allows clients to benefit from experts in energy efficiency, renewable energy, and climate resilience through free technical and financial advice for both large corporates and SMEs.
In the 3rd quarter of 2020, when businesses hopefully get back to some semblance of normalcy, BPI will be offering fr-ee webinars for SMEs as well as larger companies to save on electricity, produce renewable energy, shift to green buildings and more resilient climate-controlled animal housing facilities, and implement measures for business continuity should another pandemic hit.
Ms. Eala said BPI has been reporting its sustainable finance initiatives in the Bank’s annual integrated report. Compliance to a Sustainable Finance Framework (SFF) has recently been made a requirement by the Bangko Sentral ng Pilipinas, compelling Philippine banks and financial institutions to incorporate ESG and sustainability principles into their corporate strategy, risk management, and bank operations framework.
She said this is a process and the pandemic may serve as the impetus for more businesses to start the journey. By helping clients include sustainability practices in their businesses, BPI is able to contribute to the UN Sustainable Development Goals, which are part of its own goals as a bank.
“Together with our clients and partners, we aim to harness our resources so we can bequeath a more sustainable world to the next generation, a generation that will be more conscious of the fact that good environmental, social and governance practices can no longer be ignored and should always be part of a short and long-term business plan,” she said.
May 21, 2020