Lopez Holdings


Federico R. Lopez Remarks
Annual Stockholders Meeting
Lopez Holdings Corporation
05 August 2021

Good morning.

We’ll remember 2020 as a bizarre and tumultuous year largely because of COVID-19. Today we’re living through a global pandemic that is not unique to history, except that it came upon us during a period where globalization and interconnectedness are in full swing. Thus, the effects on our lives and our economies were both instant and devastating. At Lopez Holdings, our financial performance was adversely affected by ABS-CBN’s loss of franchise, as well as the lower sales volume and income from the various operating units of First Philippine Holdings (FPH) that was due to the extended government-imposed lockdowns to curb the spread of the virus.

As the saying goes, “History never looks like history when you’re living through it. It always looks confusing and messy, and it always feels uncomfortable.” I agree that this is how all “extraordinary times” look and feel like when one is in the eye of the storm.

Today it’s a pandemic we’re living through, and the rollout of vaccines have given us hope for a return to normalcy. However, gathering force and momentum as we speak is this even greater emergency called the climate crisis. We can already see its effects in recent news every night: from the record high temperatures in the Arctic and Antarctic (which will accelerate sea level rise in all coastal cities); the retreat of 90% of the world’s glaciers (which will impact major river systems, water supplies and food production for Billions of people worldwide); the yearly wildfires in the US Pacific Northwest and Australia; to now the one-in-a-thousand-year floods that swept through Belgium, Germany and the Netherlands just last month.

Once the full effects of the climate crisis are upon us, however, there will be no vaccine and herd immunity to look forward to, “just the relentless pounding of the herd” as Thomas Friedman of the New York Times describes it. So, though we live in extraordinary times today with the world having warmed just 1.1 degrees Celsius from pre-industrial times, it looks like it’s going to get even weirder as we depart from conditions that all life on this planet have been accustomed to over the past thousands of years. More so if we fail to limit the planet’s warming to the 1.5 degrees. But make no bones about it: both the struggle to adapt to climatic changes and the heroic mobilization of efforts to keep warming to within 1.5 degrees will change every industry over the next 5 to 10 years---which is the time we have left to keep the climate crisis and its vicious feedback loops from becoming irreversible.

To halt global warming to less than 1.5 degrees Celsius, the world needs to recognize that we have a Carbon Budget of 500 or so gigatons remaining before we blow past that point of no return. Since global emissions are 51 gigatons per year, we have less than ten years before we use that up. We need to get this number down to zero before 2050. Not just by 20 percent or 30 percent but down to ZERO, otherwise the Earth’s warming just continues with all the terrible consequences. The COVID lockdowns have only brought down global emissions by 7-8 percent. So we need COVID-scale emission reductions every year till 2050 if we are to achieve that. That is the magnitude of the task. This is bigger than anything man has ever done in the history of this planet. The world either fragments and quarrels for their fair share of what’s left (which will surely be catastrophic) or we take the high road as a global community, prioritize, constrain what we do, and make the hard choices of where that remaining emissions budget gets used.

As the world comes to grips with this reality, we will see paradigms shifting drastically. We will go back to basics. Consumerism will hopefully be anchored less on our wants and more toward our needs. Hopefully, we focus on prosperity for all, especially those left behind, rather than on simply aiming to raise gross domestic product (GDP) growth per se. Then very importantly, we begin to reimagine and redesign our infrastructure and way of life for a changed world: decarbonized, resilient, and socially inclusive.

Thus, last year we took great pains to crystallize our Mission at the FPH group, and I strongly believe it should be shared across the Lopez Group of Companies, and that is: “To forge collaborative pathways for a decarbonized and regenerative future”. It’s a deliberately high bar and we’re nothing short of humbled by it. Let me share a few points about this short phrase. First, the mission was hotly debated internally for months and finally crystallized our role in the transition to a decarbonized energy system. Secondly, we didn’t feel it was appropriate anymore to use the word “sustainable” in a world that’s so badly in need of healing and renewal. So we took on the challenge of using the word “regenerative” instead with all the responsibility it carries. We are not a full-on “regenerative” company today; maybe no one is yet. But we chose it deliberately to signal to people who work here that they have a license to adopt this new mindset as our inherent way of doing business. And third, another deliberate word we used was “collaborative” as we believe we cannot do this alone. We (includes our PR and CSR professionals) all have to stop seeing this as a competitive beauty contest. I keep stressing to our people that if we find ourselves ahead and alone at the finish line, we will have failed in our mission. This is a massive undertaking and we know we cannot possibly succeed if we go the journey alone.

Central to our new Mission is the Stakeholder Pentad Framework.* This powerful lens captures a lot of how we want to move forward. Applying this mindset means all decisions should revolve around balancing the needs of all five stakeholders, in a specific sequence: first, your customers; then your co-creators which are your employees, suppliers, contractors; then the Earth; then the communities; and finally, your investors. The pentad necessitates that we think in systemic wholes and not in fragmented parts. Reversing the sequence, which unfortunately has permeated the thinking of most businesses in the past, just doesn’t work when your primary goal of maximizing shareholder value leaves little room to benefit anything else.

That model of shareholder primacy above all else no longer fits with the extraordinary times we live in. It’s resulted in the mindless pursuit of growth, unbridled consumption, the overshoot of our planet’s environmental limits and widening inequalities. For these reasons capitalism today is under attack. Although traditional CSR has been good, it has its limits and may never be able to scale enough in time to reverse the damage done. There is an urgency for all of us to go beyond incremental sustainability and transform into regenerative forces that align our profit engines with the need for a better world and a safer planet. Collectively, we have the creativity and innovative energy needed to solve the world’s greatest problems.

Unlocking these will be the foundation to some of the greatest business opportunities in the coming century.

I hope that you all share my excitement and optimism as we move along our journey to a decarbonized and regenerative future for all. I look forward to your full support.

Thank you.

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Lopez Holdings Corporation 
16/F North Tower, Rockwell Business Center Sheridan, Sheridan St. corner United St., 1550 Bgy. Highway Hills, Mandaluyong City, Philippines

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