UNDER normal circumstances, we are entering the time of the year when most of the Philippines's private corporations will be conducting their annual shareholders' meetings (ASM). However, with the Covid-19 pandemic causing typical operations to slow down or stop, so do opportunities to push towards sustainability.
For many shareholders, they would lose their usual chance to voice their concerns about the corporations, such as inquiring about their activities or challenging the direction they are headed. Without a platform for these individuals and institutions, there is a loss of a checks-and-balances mechanism for the investments and other ventures of corporations, especially those that are detrimental to the environment.
Despite the global trend, phasing out coal and the growth of renewable energy have yielded mixed results in the Philippines. On one hand, no new coal plant has been built in the Philippines since 2018, leading to the delay or cancellation of up to 4054 MW of coal power. President Rodrigo Duterte has also publicly issued a directive for accelerating the development of renewable energy resources in his last State of the Nation Address.
On the other hand, the share of coal in the country's power generation in 2018 has more than tripled since 2008, the year the Renewable Energy Act was passed. Furthermore, the share of renewables has decreased from 33.9 percent to 23.4 percent during the same period.
This is partly influenced by the financial support provided by Philippine banks. From 2017 to 2019, around P320 billion were given to developers of coal power projects by 13 banks; BPI and BDO accounted for more than half of the funding.
The uncertainty caused by the pandemic would push governments and businesses to increase the resilience and security of their systems to avoid losses from future similar threats. However, this should not be used as an excuse to increase the Philippines's reliance on coal.
Investors must not be fooled by the low price of coal. Not when it worsens the impacts of climate change, which would incur long-term losses for corporations and externalities that are felt by communities and ecosystems. Not when coal assets are becoming stranded assets and rendering them financially unviable. Not when renewable energy, especially wind and solar, becomes more cost-competitive and achieves technological improvements.
The pandemic has shown the implications of neglecting the environment on global and national economies. Yet per the projections of experts, the worst is still yet to come. While the world is struggling to address Covid-19, climate change and environmental degradation continue to be looming threats whose impacts would be on a similar or greater magnitude than the current crisis.
Without drastic shifts in the strategies of banks and other corporations, the same impacts will emerge in future occurrences: productivity decreases, profits and income decrease, and jobs are lost. In the case of coal, investing further in dirty power plants, mining operations, and other activities would result in more losses than gains for banks, shareholders and depositors alike.
With almost all business activities affected, vast resources would be used to revitalize the economy during and after dealing with Covid-19. This provides an opportunity for shareholders to reflect on and reevaluate their priorities, especially regarding their investments. The notion that a business's bottomline should only be maximizing its profit no longer applies in a world that would likely be more motivated to genuinely enact reforms towards sustainability.
Given the environment of the energy sector, the climate imperative, and increased public awareness and pressure for the welfare of the people and the planet, now is the time to divest from coal and other environmentally-destructive activities and invest in renewable energy development and other sustainable practices.
Investors must ask themselves: is this investment what is best for the future of my family? Will this truly be the least-costly measure in the long run for all parties involved? Will this prevent similar crises from happening in the future?
Even without the platform provided by the ASM, both shareholders and depositors can still influence the investment policies of their banks. With the current pandemic highlighting the need for us to redefine our relationship with the environment, many areas for eco-friendlier investments such as renewables would likely be opened.
As individuals or institutions, they can initiate the necessary shifts in their portfolios and relevant endeavors not only to survive, but thrive moving forward. They can also demand that the banks and other corporations establish specific targets and timelines to implement a just transition from coal to renewables, aligned with the Paris Agreement and existing national laws.
In many ways, our perception of "business-as-usual" has been changed by Covid-19. Yet it still needs a stronger paradigm shift on our collective priorities and values, and that also applies to corporations. Never has there been a more appropriate time to invest in our sustainable future.
John Leo is the program manager of Living Laudato Si Philippines and Climate Action for Sustainability Initiative (Kasali). He has been a citizen journalist and feature writer since 2016. He earned his MS Atmospheric Science degree from the Ateneo de Manila University in 2018.