At the INSTITUTE OF CORPORATE DIRECTORS BREAKFAST ROUNDTABLE
“Giving Back to Society: Business Community Partnership”
Held at the The Tower Club, Philam Life Tower
Paseo de Roxas, Makati City
Last March 20, I gave a talk before the Employers Confederation of the Philippines on the Lopez experience on corporate social responsibility. Shortly after my talk, I met Ambassador Cesar Bautista who requested if I could give the same talk to this Institute of Corporate Directors. I told Cesar I would be willing to do so, but only after I got back from my trip to Europe. Well, I arrived last Saturday from that interesting 2 weeks trip to Vienna, St. Petersburg and Moscow, but that is another story in itself. So here I am, Mr. Ambassador, ready and willing to give that talk.
In the invitation I received, I have been requested to share with you our experience and learnings in the Lopez Group with the community and my perspective in other areas that private companies can explore in reaching out to communities. I will begin by emphasizing what for me must be the first learning I should impart this morning. This is the importance of values, beliefs and tradition. These are the pillars by which business builds the trust of long relationship with communities. For us in the Lopez Group, our values are what we strive to live by all the time.
At the same time, these values are formed through time by the interaction of the Lopez family with the various communities we operate in over the past 200 years of our recorded family history. From its very inception, the Lopez family was an entrepreneurial family whose roots go back not to Spain nor to China but right here in the Philippines to a small town called Jaro in the province of Iloilo in Panay Island. Through the centuries, our entrepreneurial activities have taken us from native textile manufacturing and trading to sugar plantation and milling, then to land, sea and air transportation and newspaper publishing in Iloilo during the 1930s onward and after World War II, to multi-media, then electric power industry, manufacturing, urban renewal project, industrial park, tollroads, etc.
When you follow the course of the Lopez family businesses during the past 2 centuries, you realize there were many peaks and valleys in that family business, and twice during this period, the family lost practically everything. The first time was during World War II, when the hard assets of the Lopez business were completely destroyed during the 3 ½ years of war. The second time was during martial law, when most of our businesses such as ABS-CBN, Manila Chronicle, Meralco and its holding company Meralco Securities Corporation (now called First Philippine Holdings Corporation) were either shut down or taken over by the government or the cronies of the Marcoses and Romualdezes, mainly due to the strong stand which my father and his newspaper, the Manila Chronicle, took against the graft and corruption of the Marcos regime.
And yet, after each major debacle, the family business managed to come back bigger and stronger than before. I would now like to take this occasion to reaffirm our commitment to the core values that have sustained us through all our crisis years and difficult times in the past. This is part of the rich legacy my father left us.
First and foremost is our commitment to family and corporate unity, coupled with a strong work ethic and a strong spirit of enterprise. In essence, this means that the family must, relative to its businesses move as one and with one voice. We also maintain certain rituals aimed at continually communicating and building consensus within the family. Corporate unity is nurtured in much the same fashion as we nurture family unity.
Our second most important core value is our commitment to our employees. My father said it all in a speech to Meralco employees: “Human values are above and far superior to material values … our success should be measured not by the wealth we can accumulate, but by the amount of happiness we can spread to our employees.”
By living up to this principle, he never had any strikes in any of his companies. And our companies continue to live and abide by this principle. In 2005 Meralco was awarded the Grand Kapatiran sa Industriya Award by the Employers Confederation of the Philippines for the highest level of achievement in industrial peace and harmony, productivity and social accountability, and this award was partly a tribute to my father who had engrained these values in the Meralco culture early on.
Our third core value is public service and its corollary, corporate social responsibility. These twin values go back deep into Lopez history. The founder of the Lopez family, Basilio Lopez was long in public service, as cabeza de barangay and mayor of Jaro for over 20 years in the 19th century. His son, the first Eugenio Lopez , after carving out a very successful career as a pioneer and big time sugar planter and miller during the 1860’s up to mid 1870’s, he came back to Jaro to follow in the footsteps of his father as cabeza de barangay and gobernadorcillo or Kapitan of Jaro. As Kapitan, he pioneered the implementation of a free elementary public school system for the poorer classes. He also went after the widespread practice of debt peonage in this town, in defiance of the very landlord class to which he belonged. Then in 1878, a severe drought and locust infestation devastated Panay Island’s rice crop, resulting in widespread famine. Eugenio took it upon himself and his wife to lead a Lopez family relief operation, together with his brother Claudio, distributing rice and money to the countless famine victims who flocked to their homes for assistance. This gesture of magnanimity and humanity on the part of the Lopez brothers had such an impact on the people of Iloilo province that it elicited comments from the famous Iloilo propagandist Graciano Lopez Jaen, who wrote an article in “La Oceania Espanola”, which said in part : “I wish to say that the brothers in question are Mr. Claudio Lopez, the Vice-Consul of Portugal in Iloilo, and his brother Don Eugenio, exgobernadorcillo of the City what grateful memories awaken in the hearts of the poor at the mere mention of their names. They (the Lopez brothers) used all their resources to remedy the penury of those unhappy souls who flocked to their homes, demanding in the name of God protection from the hunger that was mowing them down with its fierce scythe.”
This must have been one of the earliest CSR initiatives in our family history, and it was from Kapitan Eugenio that the Lopez family’s sense of social responsibility must have originated. Incidentally, he was also the first member of the Lopez family who obtained a university education. He spent 6 years studying philosophy and law at the University of Santo Tomas during the 1850’s, which was the reason he was so enlightened in his social outlook in life.
But it was during the time of my father, who was Eugenio the 2nd, and grandson of Kapitan Eugenio that the principles and philosophy of corporate social responsibility were clearly articulated by him for the Lopez group of companies.
In 1956, when receiving his award as Businessman of the Year from the Business Writers Association of the Philippines, before a big group of businessmen and President Magsaysay, he said: “Times … have changed. The old business tenets have given way to the modern concept which is not based on profits alone but rather on the service it can render and the contribution it can make to the prosperity and progress of the nation as a whole. Thus, a commercial firm which can hardly make both ends meet but which gives service and real satisfaction to the community is, in our estimation, more successful than a multi-million corporation which reaps huge profits and keeps them to itself completely neglecting the community which sustain its life.” My father further elaborated on his CSR theme in these words: “We sincerely believe that a greater proportion of the earnings accrued from business should be returned to the people, whether they are 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.”
Thus early on, in such a concise manner, my father spelled out the business philosophy of corporate social responsibility, at least for the Lopez group, long before the phrase was coined and its principal tenets widely understood, and he meant every word he said. One of the biggest donations he gave in his lifetime was to build the main edifice of the Asian Institute of Management, but he also gave substantial donations to his 2 alma maters --- U.P. College of Law and Ateneo. He also left a priceless legacy of Filipiniana books, paintings, manuscripts, maps and artifacts, in the Lopez Memorial Museum for scholars and the public to enjoy and benefit from.
But it was on his employees that he poured his largesse. He gave his Meralco employees and executives the highest compensation and benefits they have ever received in that company. He also built them a tertiary hospital, a sports complex and world-class cultural theater in the new Meralco grounds in Ortigas Ave., Pasig during the 1960’s.
In the post martial law period, when my brothers Geny, Manolo and I took over the task of reconstructing and rebuilding the Lopez group of companies, my father’s way of personal philanthropy gave way to the development of CSR functions by the Lopez business corporations either through Foundations or directly by the Companies themselves. A total of 9 Foundations were established from 1968 onward, namely the Eugenio Lopez Foundation, which funded the AIM donation and the priceless Filipiniana collection in the Lopez Museum, ABS-CBN Foundation, ABS-CBN Bayan Foundation, Meralco Millennium Foundation and Meralco Management and Leadership Development Center Foundation, First Philippine Conservation, Inc., Knowledge Channel Foundation, Phil-Asia Assistance Foundation, and Gabaldon Foundation.
In 2004, a 10th Foundation was established called Lopez Group Foundation, Inc., but its function was merely to coordinate the work of the 9 other foundations as well as all the other CSR activities of the Lopez companies without Foundations.
In general, our CSR activities fall into the following categories: 1) education and culture; 2) child care, health and family planning; 3) environment; 4) poverty alleviation and micro-business and finance; 5) community programs; 6) disaster and relief work. I would also like to point out that there are 3 outstanding Lopez women of the 6th generation who are fully dedicated to our CSR work today. They are Gina Lopez, the daughter of my late brother Geny, who is in-charge of the whole ABS-CBN Foundation Group which has 5 or 6 different activities including micro-finance, disaster relief work, care of abused children, education TV, and reforestation at the La Mesa Watershed area; the other outstanding CSR worker in our 6th generation is my daughter Rina Lopez Bautista, who created Knowledge Channel as a full curriculum support for public elementary and high schools and so far, she has connected 1,700 public schools including 124 public schools in Moslem Mindanao, with a total audience of 2.7 million students and 6 million home viewers. And I don’t think she will stop until she connects all 40,000 public schools to the Knowledge Channel.
A third outstanding Lopez woman of the 6th generation is my eldest daughter, Mercedes Lopez Vargas, who has done wonders in revitalizing the Lopez Memorial Museum as its Director in the past 5 years.
It is because of the multi-generational character of Lopez philanthropy that our family was given a Distinguished Family Business award in Monaco last September 2006 together with 2 other families from Canada and Spain by the private investment bank Lombard-Odier, Darier & Hentech of Zurich and the international educational institution IMD in Lausanne; these 2 Swiss institutions operates under the auspices of the Family Business Network, a very active family oriented business association in Europe But the direction the Lopez Group companies’ CSR is taking now is towards applying the business talents and resources of our different companies in addressing specific issues of CSR while demonstrating that these are part of the business strategies and makes good business sense. This is the next area I would like our business group to be conscious about.
Again, I would like to cite the experience of Meralco. In Metro Manila, the Meralco employee volunteers do outreach to communities by rehabilitating basic electrical and lighting services, including assessing the electrical installations of public schools, providing equipment and furniture improvement of barangay halls, roads, bridges that have all strengthened the Company’s system loss reduction campaign while at the same time providing needed services to the community.
Consider how employee volunteerism efforts can blossom into meaningful projects for the community. Two years ago, the Meralco employees had wanted a unique gift for the birthday of their Chairman, my brother Manolo, so they contributed and volunteered their week-ends and built a school in one of the depressed areas to complement a Gawad Kalinga shelter program. This gestured developed into a full blown CSR program of building a Sibol school in the different depressed franchise areas of Meralco. To date, Meralco has put up 10 Sibol schools. In the Sibol school in Marilao, Bulacan the schedule of three shifts accommodates about 100 pre-schoolers.
Another social problem the Lopez Group Foundation is trying to address, and which I have pointed out in various fora here and abroad, is arresting our rapid population growth, which is the highest impediment to get our economy to move faster. Today, the country’s average per capita income and labor productivity are at about the same level as it was in the early 1980’s, because of our rapid population growth. With the help of USAID and PRISM (its family planning arm), we have installed in some of our companies with 200 employees or more, like Meralco, ABS-CBN and Sky Cable, a family planning program, which looks at establishing cost-sharing schemes with employees willing to pay for various family planning services and equipping the capacity of our Cotton Hospital in Meralco and accessing service providers like Friendly Care Foundation. We will soon expand this family planning program to all the other Lopez Group companies.
I will not have time to describe all the many other CSR activities our Foundations and companies support because of your very tight schedule today. I would refer you instead to our Lopez Group Foundation publication called ‘Bridges’. We have brought some copies for those interested in reading about our CSR work in greater detail. But the lesson is clear at least from my perspective in the Lopez Group, that our role in business is to demonstrate not only that we serve our shareholders well, but that we understand and engage our societal concerns, and that we are doing more and more about them, for only then do we satisfy the “implicit” terms of our contract with our communities as a business, and importantly as a brother to our countrymen, our kapamilyas.
The generations of the Lopez family and the Lopez Group will continue to apply the same innovation, creativity, and commitment it has demonstrated over the many generations of our family history to the concerns of our communities. For we believe and walk our talk in recognizing, appreciating and nurturing our roots. This has been our mission. This is our way of seeing a better life for all Filipinos.