Measure the success of a business not only by the financial and economic value it creates for shareholders, but also the impact it makes in the lives of the people and in the communities it operates
Businesses cannot simply operate in societies that are plagued with extreme poverty and where the environment is severely degraded. It is important for businesses to build in solutions to these challenges in their business strategies for their long-term viability and survival.” That’s according to Fernando Zobel de Ayala, who is President and Chief Operating Officer of Ayala Corporation, and concurrently Chairman of Ayala Land, the largest real estate company in the Philippines.
“We measure the success of our businesses not only in terms of the financial and economic value we generate for our shareholders, but also in terms of the impact we make in the lives of the people in the communities wherein we operate,” he says.
The key is to do business on a wider spectrum but allow the lower income groups to have access to goods and services and, ultimately, achieve a significant social impact. Zobel illustrates this by highlighting the practices of Manila Water, the Ayala Group’s water distribution business. Manila Water took over water distribution from the Philippine government in 1997. Prior to the takeover, a majority of the population of Metro Manila’s east zone vied for rationed water or bought water from other sources at a much higher price than the cost of piped water. Only a quarter of residents had access to water day in, day out. Today, the company is supplying water to 99 per cent of the residents in the area, mainly in low-income communities, while simultaneously providing direct and indirect employment to small- and medium-sized enterprises and community cooperatives. “By achieving operating efficiencies and developing creative metering and billing systems, (Manila Water) has been able to reach low-income communities, including public schools, markets, and hospitals that previously had no reliable access to clean water,” says Zobel.
As the company helps to build communities such as these, Manila Water continues to deliver some of the best returns among the businesses in the portfolio. At the end of September last year, the company reported net income of 2.27 billion Philippine pesos (44 million US dollars) in the first nine months of the year, up 14 per cent from 1.99 billion pesos in the same period a year earlier. Profits for the third quarter came in at 809.5 million pesos, on revenues of 2.39 billion pesos, up from 2.25 billion a year earlier. While the company continues to post growth in the country, it is looking to expand in the region. Manila Water, together with Vietnam-based Construction Technology Development JS Company is currently working on a World Bank-funded project to reduce Ho Chi Minh’s water losses by 125,000 cubic metres a day and channel this as additional supply to the city.
In short, Manila Water and other operating companies of the Ayala Group are looking to grow revenue while having an impact on society. Along with Manila Water, Globe Telecoms, the telecommunications arm of the Ayala Group, generates some 520 million dollars in revenue a year.
Globe is working with hundreds of thousands of small retailers and convenience stores which are reselling cell phone airtime credit. As the retailers make money, so too does Globe.
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