For large, complex organisations with diverse operations and subsidiaries, committing to a net zero emissions target can be challenging. In this blog, South Pole's Ajit Padbidri speaks to Albert de. Larrazabal, Chief Sustainability Officer of Ayala Corporation, one of the largest conglomerates in Asia, about Ayala's commitment to achieving net zero greenhouse gas emissions by 2050.
With the need for climate action so urgent, stakeholders are demanding ambitious action from the largest organisations. For companies with complex structures, global operations and diverse business units, measuring their footprint and setting emission reduction targets can be a challenging exercise that requires strong commitment from the top down along with company-wide engagement.
One company setting the example for how large conglomerates in Asia should take climate action is Ayala Corporation, one of the largest conglomerates in the Philippines. Founded in 1834, Ayala Corporation has core interests in real estate, banking, telecommunications and power in the nation. It also has a growing presence in healthcare and logistics and investments in water, industrial technologies, and infrastructure. In October 2021, Ayala Corporation
announced its commitment to achieve net zero greenhouse gas emissions by 2050 and is currently working with South Pole on developing a decarbonisation roadmap.
"As a country, we [the Philippines] emit half of the per capita emissions compared to the global levels and yet we are ranked amongst one of the highest as far as climate risk is concerned. The Philippines suffer disproportionately from the consequences of climate change. This is our home, it is where we built our business for the last 188 years, and it's time to step on the gas.""
- Albert de. Larrazabal, on why sustainability is important to Ayala Corporation
Ayala Corporation's net zero target was a major milestone for the company when it was announced in 2021. It was built on an already-strong focus on environmental stewardship and many existing initiatives across its business units. But the company and its shareholders felt it was critical to align with the latest climate science and set a net zero target to galvanise their efforts.
"We are at a point in time where it's necessary to make sure that all of those individual efforts are contributing to the goals that are necessary to reach net zero by 2050 and align ourselves to the Paris Agreement. And that's why we've engaged you [South Pole] to help us in that definition, to go beyond what we are currently doing, specifically as it relates to scope 3 emissions, help us develop the interim targets and the programs to get there. This has to happen now. There are many concerns that 2050 is going to be extremely, extremely challenging as it is. And I don't think we have the benefit of time to waste."
- Albert, on the driving force behind making the net zero commitment
Being the oldest and one of the largest conglomerates in the Philippines, Ayala has an extremely diversified portfolio across multiple businesses which requires a multitude of approaches when it comes to achieving net zero.
"The commitment was top-down, it started from our boards and senior management but the programmes are being developed bottom-up. We have to realise the nuances of the different industries we work in and the particular circumstances with regards to emissions that impact the different industries."
- Albert, on Ayala's approach to net zero across their different companies
In particular, reigning in the corporation's emissions together with external partners and across entire supply chains poses a particular challenge.
"The real challenges have yet to unfold. For most of the work that we've done, it has been around scope one and scope two emissions. In many respects, it is something that we have a greater degree of control over. However, scope three emissions are a huge challenge for us given the many parties that we have to contend with."
- Albert, acknowledging the challenges of scope 3 emissions for complex organisations
Albert himself plays a unique hybrid role at Ayala Corporation - he is both the Chief Finance Officer, the Chief Risk Officer and the Chief Sustainability Officer. Connecting finance and risk to sustainability so directly sends a strong message to the organisation and ensures that climate action is always considered in business decisions.
"I don't believe that the two roles are exclusive. I think they form part of the overall equation. What is missing today in the equation is the manner by which we measure - we never thought of emissions as a cost because it is not obvious. But the reality is that it is there - every time we get hit by floods and typhoons, there is a cost to it."
- Albert, on balancing climate action and shareholder's interest as both the CFO and CSO
We recently interviewed Albert about Ayala's climate journey to date and their future ambitions for our Climate Chatter podcast. For a large conglomerate starting out on their climate journey, Albert's insights into securing support from stakeholders and balancing stakeholder interests' and sustainability efforts are incredibly valuable for other businesses about to embark on their own climate journey. He also provides updates on some of Ayala's next steps and shows how exciting the journey ahead will be for the company and its partners.
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