Mr. Oscar Lopez
Chairman, Lopez Group of Companies
His Excellency Khun Anand Panyarachun, Former Prime Minister of Thailand, Senator Mechai Viravaidya and Mr. Ramon R. Del Rosario Jr., co-chairs of the conference, ladies and gentlemen, good morning.
I thank you for the invitation to speak before this prestigious gathering of CSR champions.
The social problems facing us are tremendous, daunting and, for the faint-hearted, possibly threatening and demoralizing. At the very outset, let me immediately add my voice to the call for expanding collaboration among government, business and civil society towards decisive and effective responses to these problems.
Let me make it clear that I will speak as a chief executive officer and not as an academician, historian, or social activist.
I will give a brief enumeration of major Lopez Group businesses and their CSR activities as basis for my reflections on tri-sectoral collaboration.
The Lopez Group Portfolio
Our major businesses are:
1. The ABS-CBN Broadcasting Corporation This is the largest broadcast media corporation in the Philippines today. In addition, the Group has Sky Vision, Inc., the dominant cable TV provider in the country.
2. The First Philippine Holdings Corporation, the holding company for power & energy
3. The Manila Electric Company, the largest electricity distributor in the country;
4. The First Generation Holdings Corporation, the largest private Filipino power generation company, which operates as a subsidiary of first Holdings.
You will note that the above companies are heavily involved in infrastructure and utilities. These are services much needed by society and basic to social and economic development.
Lopez Group CSR
We have included in the Lopez CSR kit information on the various CSR involvements.
The CSR activities of the Lopez Group is anchored on Eugenio Lopez Sr.s business and social philosophy which was articulated in the course of his colorful and multifaceted business career but especially after he acquired the Manila Electric Co. from its American owners in 1962. He spoke of the social responsibilities of big business long before it became fashionable to do so and before CSR became an accepted practice among Philippine business companies.
In one of his major speeches to the business community in 1958, he said:
"We sincerely believe that a greater proportion of the earnings accrued from business should be returned to the people whether this be in the form of foundations, grants, scholarships, hospitals or any other form of social welfare benefits.
We consider this a sound policy and a good investment which, in the long run will pay off because it will mean more business and goodwill for the company and would minimize, if not prevent, the social unrest and disorder which are prevalent nowadays."
In the succeeding ten years that he managed Meralco, he lived up to all the principles mentioned in his speeches. Employees enjoyed benefits never before seen in the companys history. In addition, within the sprawling grounds of Meralco, he also put up a tertiary hospital, sports facilities, and a world-class theater.
However, my father did not limit the benefits to employees; he also made sure the electricity consumers also benefited. By the end of the 1960s, Meralco had one of the lowest electricity rates not only in Asia but also in the world.
But the Lopez name and legacy will live on in another significant philanthropic donation, i.e., the building of the Asian Institute of Management. This is in line with his strong commitment to education.
The succeeding generations imbibed the CSR orientation of my father in various ways. My eldest brother, Eugenio, Jr., put up ABS-CBN Foundation, Inc. (AFI). In the initial phase, AFI focused on relief to flood and volcano eruption victims. Thereafter, a more significant development evolved. Gina Lopez, his daughter, guided AFI in expanding to the utilization of the media facilities and competence for championing the cause of the abused and the abandoned Filipino child. An important program concerns educational television projects. The Child Watch (Bantay Bata) program also evolved. An equally significant development was the use of cable television. Another Lopez foundation, the Knowledge Channel Foundation, run by my daughter, Rina Lopez-Bautista, utilized cable television to provide curriculum based TV programs to public elementary and high schools. The vital work of the Knowledge Channel Foundation which reaches an audience of 2.4 million students in 1250 schools in 33 provinces has to be seen in the context of the enormous problems faced by the resource-strapped public school system, which is short of classrooms, teachers and textbooks.
For better appreciation of the Groups CSR activities, let me give you a rundown of the various sectors covered:
Education and culture, environment, health and child, community development, and work place concerns. Examples of the wide range of these activities are as follows: museum endowments, a world-class theater, the AIM building, pioneering educational television programs, media advocacy and support for the Clean Air Law; massive reforestation, biodiversity conservation, child abuse intervention, integrated community development programs, microfinance, and corporate wellness programs.
Reflections of a CEO on Tri-sectoral Collaboration
With the above as background discussion, let me now share certain reflections as a CEO regarding CSR collaboration. By knowing how one CEO thinks, then government and civil society can then have some guidelines on how to relate to business, thereby enhancing collaboration.
1) A significant issue is getting the staunch commitment of the CEO to CSR. I believe that, if this is done, "half of the battle" is won. CSR must be part of the overall corporate strategy backed up by resources and management expertise, and not just an afterthought, a "feeling good" statement, or merely a supplemental undertaking. In the case of the Lopez Group, the strong support for education, culture, arts and health care and the spirit of volunteerism provided the impetus for major funds committed to these areas.
The CEO has to take on a "hands-on" style and not just be a "photo-op" CEO. By "hands-on" style, I refer to actual participation and monitoring of the CSR program, particularly planning, resource allocation, and review of performance.
2) Once there is a commitment, the next thing is to look into the nature of and participation in CSR. It is not enough that a major social ill is chosen for CSR involvement, the CSR activity also matters. What then are meaningful approaches in CSR participation? To answer this, let us first look at the nature of social problems.
I reviewed various major social problems and I discerned characteristics that must be appreciated by the CEO. These characteristics can guide possible CSR involvements:
a) Social problems are complex issues, e.g., operational framework, ethics / rules, rewards and penalties, quantifying social costs and benefits for globalization, pollution, urbanization, drugs, infectious diseases, and many more. Our CSR activities relating to abused children, air pollution, biodiversity loss, and watershed reforestation are clearly complex issues.
b) The scope of many social problems is regional or even global. In many instances, institutional relationships and governance on these levels still have to be worked out. As an example, we have partnered with Conservation International to provide us certain benefits, such as a global perspective and strategy, networking and funds generation.
c) Social problems usually entail public policy formulation and implementation. As case in point, our active involvement gave impetus to the passage of the Clean Air Act with 5 million signatures.
d) The foregoing features of social problems point out the possibility of disagreements among the three sectors. Compounding the situation is the aspect of emotionalism due to the widespread impact of negative effects. We were not spared these disagreements. Patience and dialogue were the attributes we exercised and enhanced in the various situations encountered.
e) Given the above characteristics of major social problems, I propose that the meaningful modes of CSR involvement can touch on the following:
i) application of management expertise to bear on the social issues - I refer to the basics of management, i.e., planning, organizing, directing and controlling. An important aspect here is rational, objective and ongoing discussions, which should culminate in collaborative action.
Setting a forum format for discussions will be helpful, i.e., problem, causes, alternative solutions and pros and cons, recommended solution and justification and action plan. Needless to say, in our case, since CSR is a corporate policy, corporate officers have to bring their management expertise to bear on CSR plans and programs.
ii) Resource generation - Major social problems are not normally pliable to the market mechanism. This means that social ills cannot be solved mainly by commercial demand and supply. Social programs cannot be supported by only governments and the market mechanism. Again, corporations can contribute to resources generation by way of financial planning and actual funds contributions. Important features of a financial plan include a formula for yearly financial contributions from the corporation and a trust fund for long-term sustainability. The downtimes of a business must be anticipated though. Finally, corporate resources include employee participation. One approach I have found useful is seeking the assistance of our foreign business partners for CSR support.
From the foregoing discussion, the CEO has to decide on the degree of the firm's involvement. Suffice it to say that CSR is not a picnic, not a social affair but participation in problematic issues. Needless to say, the CEO has to be a servant leader, and one requirement for such is to be exposed to the harsh realities of the underprivileged and oppressed.
3) After discussing the nature of CSR problems, I will now touch on the three sectors, particularly with respect to coordination.
a) Good governance is required for each of the three sectors. In this connection, benchmarking is an effective tool for governance, and this conference is exactly on benchmarking. More over, it will be ideal if self-governance and self-reflection are emphasized.
b) There will be areas of disagreement among the sectors. Let us not get bogged down in manipulation or confrontation. The resources of the three sectors are very limited compared to the social demands at hand. Alliances and partnerships will be more beneficial.
I would like to cite examples of collaborative actions specific to the Lopez Group.
Bantay Bata (child watch) works hand in hand with the Department of Social Welfare & Development and local government units and community-based organizations.
The Knowledge Channel Foundation collaborates with the Department of Education, local government units, private corporations and non-governmental organizations.
Paliparan Community Development Project is a partnership among local government units, community-based NGOs, schools and Philippine Business for Social Progress.
First Philippine Conservation International works with the Department of Environment and Natural Resources, the academe, NGOs, LGUs and private corporations.
Above are examples of collaboration among the 3 sectors.
At this point, I will touch on another matter, the issue of population. This is an issue that is close to my heart and which concerns mainly my country and may not necessarily be relevant to other countries. In the case of the Philippines, while it has decreased population growth in recent years, the decrease has not been as significant as those in other countries. As a result, the country doubled its population from 36.5 million in 1970 to 75.6 million in 2000. If the Philippines cannot reduce its population growth rate of 2.36%, there will be an estimated 150 million Filipinos in 20 years time. Where are we going to put all those additional millions? We are all going to be on top of one another and on top of treesassuming there will still be trees at that time. This is no longer just a religious problem. It will be a problem of physical survival.
As a highlight, total fertility rate (TFR) declined slightly from 4.1 to 3.7 children between 1991-96 and was expected to go down further to 3.2 in 2002. However, this figure of 3.2 is still much higher than those of other countries, such as Thailand, Vietnam and Indonesia, who are all now in the category of replacement fertility of 2.2 children per woman.
Needless to say, a relatively high population growth rate puts much greater demands starting with the bare necessities of life, i.e., food, clothing, shelter and education. Compounding the situation, a lethargic economic growth, which the Philippines exhibited over the past years, has not significantly helped in poverty alleviation.
This is clearly a major issue that must be adequately attended to not in the future but right now. It is clear that the Philippines can learn from the experiences and successes of other countries. It is fortunate that we are in Thailand, which has successfully tackled the population growth issue, thanks to the efforts of Senator Mechai, whose work in this area is impressive and laudable. Since this conference is looking at collaboration, this then can be a good area and challenge for inter-country tri-sectoral collaboration.
In fact, I was just talking to Senator Mechai about it last night at the dinner given by the organizers of this Forum. Senator Mechai says he is willing to help but obviously only from the sidelines since it is not his problem. It is still the Filipinos responsibility to solve this problem in his country.
This is a problem which requires the efforts of all sectors of our society, government, civil society, the business sector, as well as the Church itself. And yet there seems to be a conspiracy of silence about this issue in the Philippines today. There is no public discussion or debate about this issue. There is no outcry that unless we reverse our course the country could be headed towards a demographic disaster.
We have all seen the movie, "Titanic". Well, I feel like I am on the Titanic right now. I just do not know how far we are from that fateful iceberg that will crush and sink our ship.
As I come to the end of my speech, I would like to honor the value of the work and achievements of the organizations and people in this forum. You have created partnerships beyond the bounds of the familiar and have invested in solving pressing social problems in their communities.
You have been a source of the tremendous good will among your clients, employees, and shareholders by building the business case of your projects and programs.
To many, these have been driven, like the Lopez Group of Companies by their innate value to change social behavior for what will serve the greater interest of all.
Like our companies, you have engaged in advocacies for effective public policies and contributed to the quality of the debate.
I hope my reflections with you this morning are taken in this light. It has been an honor and pleasure to be with you today.
I will end with a quotation from the one who started it all for the Lopez Group:
"We must forge ahead, and no amount of obstacles will deter us from our goal. But first and above all, we have sworn eternal allegiance of service to the communities, which we serve."