Value Creation

FPH is always guided by its mission and purpose. We emphasize the importance of a seamless execution of our strategy as it constantly reflects our mission and purpose in our action plans, in the transformation of our capitals and resources, and in the responsible businesses we pursue. Our businesses are always tied by a common pursuit to create value for our stakeholders and our planet. The next discussion explains our value creation process.

FPH Value Creation Process

OUR PURPOSE

FPH is a diverse Filipino conglomerate driven to improve peoples’ lives and futures. We aim to build a decarbonized and regenerative world through our investments in key industries, namely, energy, real estate, and construction. At FPH, we define responsible investment as the interplay of our lowcarbon operations, protecting nature’s integrity, social inclusion, and robust economic growth.

OUR MISSION

Our mission, “Forging collaborative pathways for a decarbonized and regenerative future,” affirms our belief that our path to responsible investment must recognize that we are nested in bigger systems—nature and society, where we need to build mutually beneficial relationships.

We aim for regeneration because we realize that our environment and society urgently need repair and that business can be a force to nurse and restore these systems. If we can contribute to their renewal, we can have a world that is healthy, resilient, and adaptive to the disruptions of today and in the future. We give urgent attention to decarbonization as it is a main enabler of regeneration. Decarbonization is the solution to climate change, the mother of disruptions that brings multiple difficulties today, stemming from the overlapping disruptions we described in the section on our external environment.

There are four factors that help us deliver our mission:

• committed leadership that initiated the pivot in 2019 as the degraded state of our world called for a quantum change;
• our guard rails composed of the government regulations, the company’s environmental and social safeguards policies, and the performance standards of our investors and funders that help us stay the course;
• alignment of our people’s purpose with the corporate mission assisted by our embedding programs; and
• collaboration with all segments of society to drive our goals.

Upon the launch of the mission in late 2019, the company initiated deepening sessions across all subsidiaries for everyone to understand the mission and to find convergence between their purpose and the company’s mission. We also had embedding programs so the employees find and live their interests and values in their work in the company (in the Human Capital section here and in the Policy Embedding section here). This enabling process, which started in 2020, will be completed in mid-2022. After this systematic assimilation of ESG skills and knowledge, we shall be ready to set our targets on our regeneration pillars by the third quarter of 2022.

Our progress on executing our mission

In line with our mission, we continued to collaborate with others to encourage them to join the journey. In 2021, we engaged 3,616 people in 15 events to share our experiences and knowledge on climate change, sustainability, and regeneration. Details to these engagements can be found in the annexes of this report.

If we can achieve our mission, the planet and society, with strong institutions, will give our business, stakeholders, and everyone the opportunity to thrive and prosper amid the current and emerging disruptions.

OUR STRATEGY

At FPH, we invest our various forms of capital, develop conscious leaders, and cultivate capabilities for long-term value creation to support businesses that are catalysts for the transition towards a regenerative and decarbonized future. By fostering collaboration and building trust, we aim to influence and join various stakeholders in creating pathways to regeneration and decarbonization.

As a parent company, we maximize synergies among our businesses to ensure that they all deliver toward the group’s unified strategy. Thus, the FPH business model creates value through strengthening our business ecosystems and flywheels. Three key elements underpin our model.

• Systemic and ecosystem approach

  Aligned with being regenerative, we seek to develop holistic solutions that address systemic issues through our integrated platforms. We aim to maximize the benefits to the planet and society while balancing our aspirations for profitable growth. Given these, FPH naturally gravitates towards business models that exhibit the characteristics of ecosystems (interconnected set of services that form a coherent solution) and flywheels (ecosystems with both substantial demandand supply-side economies of scale, resulting in positive feedback loops).

• Talent Centricity

  Talent and leadership are critical components of our business as it is the people who run the business after all. That is why FPH must attract, retain, and develop high-potential talents that believe in the Group’s mission to lead across the organization’s businesses at different levels.

• Organizational Agility

  Our governance, structures, and systems allow for the flexibility to adapt to the changing business environment and create optionality. The organization thinks ahead strategically and distills the insights from emerging trends. We use the information to generate our response to the various scenarios we may face to better position our business platforms for future growth.

As a holding company, we manage various business platforms across different industries. We ensure that these business units have strategic alignment to our mission and purpose. In line with our mission to assess our business as part of a bigger system, in 2021, we reviewed the Philippines’ climate commitments in its Nationally Determined Contribution (NDC) to determine where our business segments can contribute to the country’s decarbonization based on their knowledge and skills. We realized that decarbonization would, in turn, lead to the regeneration of the country as climate change is the main driver of the alteration in structures and functions of the environment.

The country has set its climate objectives and sources of GHG reduction, namely agriculture, waste, industry, transport, forestry, and energy.9, 10 The company can play a role in the sectors of waste, industry, forestry, and energy. In connection with this, the strategic decarbonization pathways of the FPH business segments include:

• Energy

  Our energy companies, First Gen Corporation and its subsidiary, Energy Development Corporation, shall lead the transition to a decarbonized energy future. It shall enable all sectors of the economy to lower their carbon footprints by providing clean energy to the grid and other market platforms. In the process, they contribute to the reduction of the carbon intensity of the country. Low carbon is derived from our renewable energy (RE) and natural gas portfolio. In addition to our own RE generation, our natural gas plants facilitate the penetration of variable REs, like wind and solar, by balancing their intermittency as they are not available throughout the day. This role of natural gas as a transition fuel to smoothen the country’s transition to RE is aligned with the Philippine Energy Plan 2020 to 2040.

  Another subsidiary under the energy segment is First Philec Inc., which supports the FPH mission by developing energy solutions for a smarter and more efficient grid. They accomplish this by providing our customers with products, services, and systems that reduce energy losses, increase asset life, and build a digital infrastructure that leads to a low-carbon and resilient future.

• Real Estate

  Our real estate subsidiaries, namely, Rockwell Land Corporation and First Philippine Industrial Park, shall contribute to the FPH mission by nurturing inclusive, well-tempered, and creative spaces that elevate the experience of the property owners or locators, surrounding communities, and the environment.

• Construction

  In the construction segment, our subsidiary First Balfour, Inc. shall build infrastructure that creates resilience, enhances the quality of life, and improves social inclusiveness to protect the public and support the government in preparing for a complex, climatechanged world.

In 2021, FPH conducted a study on the carbon reduction levers that will support the country’s commitment to the Paris Agreement. This was done to determine our meaningful contribution to the country’s decarbonization goals. In 2022, we will develop the corresponding plans per our TCFD road map.

BUSINESS MODEL

As the parent company, we assist our business platforms in the following ways:

Strategic Management

Relaying overall direction and expectations to the subsidiaries through strategic plans and various forms of communication

Guided by the Lopez values and the FPH Mission and Purpose, we provide overall direction and strategic guidance to our businesses to enhance their competitive advantage and ensure their sustained success in creating value for our stakeholders. Our robust strategic planning process provides an avenue for us and our businesses to jointly assess opportunities that allow us to achieve our mission while maximizing the group’s core capabilities and strengths.

Portfolio Management and Capital Allocation

Translating strategy into action by allocating resources, thereby determining the long-term asset, on which value creation depends

We translate our strategy into action by allocating financial resources to our businesses based on our investment criteria that seek to maximize value for all stakeholders and reduce the risk of our portfolio. We ensure that our process promotes objectivity, accountability, and clear feedback communication to help our businesses achieve the desired outcomes and overall strategy of the group.

Corporate Entrepreneurship

Creating, developing, and sustaining innovative businesses and expanding portfolio

As key sector pioneers in the Philippines, FPH continues to create, develop, and sustain innovative businesses that are platforms for regeneration and decarbonization. As the parent company, we pursue opportunities that allow us to execute strategic decisions, such as acquiring new capabilities, entering new markets, and restructuring businesses that complement our existing portfolio. Our project excellence standards and operational processes are continuously adapted to support new businesses that can face novel challenges in the market. Decarbonization and regeneration are the core principles in the businesses we sustain and develop, while agility is continuously embedded in our way of doing things.

Performance Management

Aligning the interests of subsidiaries and driving their strategic and financial performance

Strategic Performance Management:
We seek to drive excellence and top performance among our businesses through strategic, financial, and non-financial performance management. Apart from monitoring the execution of the strategy and initiatives of our subsidiaries through various management practices, FPH upholds the highest standards in governance and strategic performance management through our active board of directors. We also hone talents and integrate them well into the corporate culture to carry the Lopez values as they take various leadership roles. FPH highly believes in shaping a culture that develops natural leaders and guides the entire organization in delivering the group strategy.

Financial and Non-Financial
Performance Management: We manage and measure our performance with a balance of financial and nonfinancial outcomes that we believe truly reflect the accomplishment of our strategy. Our integrated approach on strategic management, financial management, sustainability, and risk management shapes how we govern the performance of our subsidiaries and define the success of the group, which always hinges on long-term value and aligns to our mission and purpose.

Managing Synergies

Combining and leveraging internal knowledge and resources between multiple business units

We recognize the multitude of capitals, capabilities, and other resources that our businesses possess create greater significance when combined. FPH, as a parent company, is committed to developing all these to further capacitate our businesses in achieving their goals. We provide financial synergies to reduce the cost of capital for our subsidiaries. We consolidate our business needs to create scale and reduce the overall cost of doing business. Most of all, we identify opportunities within our businesses to enable them to derive value from synergies in their business models.

Providing Corporate Support

Sharing corporate resources and sharing capabilities among the different businesses in the portfolio

We envision an agile organization in each of our businesses, which is highly supported by well-integrated corporate resources that tailor-fit services for our businesses depending on their maturity, size, and nature of certain transactions. We believe that serving the basic needs of our subsidiaries allows them to focus more on strategic aspects of operating and growing our businesses and serving our customers.

VALUE CREATION DIAGRAM

In summary, the Value Creation Diagram demonstrates how all the elements of the FPH value creation story come together to deliver values for our business and our stakeholders. The process starts with our inputs in the form of our six capitals. The business model defines how the capitals are transformed into our responsible products and services. Beyond these business outputs, we generate outcomes from the transformation of the capitals that serve the business and our stakeholders.

Our financial capitals are the sources of funds we draw upon to produce our goods and services, ultimately creating value for our customers, stakeholders, and investors. Our approach to managing our financial capital adopts strategies that increase financial returns while avoiding, mitigating, or remediating risks. Our financial capital management involves a cycle of: a) identifying FPH’s long-term growth targets; b) developing and refining our strategies; c) regularly identifying and quantifying our risks and measures; d) implementing our action plans; and e) continuously monitoring our results. Our detailed disclosure on the management approach for this capital can be found in our 2020 Integrated Report uploaded on our website at https://www.fphc.com/investor-relations/reports, while related information on our risk management and strategies can be found in their respective segments of this report.

FINANCIAL PERFORMANCE

FPH’s consolidated revenues for the year ended December 31, 2021, increased to PHP125.2 billion or up by 16.7 percent since 2020’s revenues of PHP107.3 billion. The RNI was PHP10.1 billion, up by PHP649 million or 6.9 percent from 2020.

Our increase in revenue was driven by the recovery in operations of our business segments following the gradual re-opening of the economy, continued easing of community quarantine restrictions, and the significant growth in some business units. We had record-high revenues from our segments in Construction and Energy Services, Energy Solutions, and significant recovery of the Real Estate segment’s operating results.

DISTRIBUTION OF FINANCIAL CAPITAL

In 2021, FPH as a consolidated group returned about 85.6 percent of our total generated value to the economy. This value was distributed as employee wages and benefits, taxes and payments to the government, capital provider payments, operating costs, payment of dividends, and assistance to communities. Throughout the business segments, value distributed varies between 83.9 percent to 90.6 percent of their respective generated values.

(in millions, PHP)

* Figures for FPH consolidated includes financial items on the part of the parent company and is not the sum of figures of the business segments.

80% the value of our supplies are from within the country

■ PHP42.2 billion was spent on local suppliers
■ PHP10.3 billion was spent on foreign suppliers

FINANCIAL IMPACT OF CLIMATE CHANGE

In 2020, we began working on the recommendations of the TCFD to aid us in the systematic assessment of our climate risks and opportunities. Last 2020, we established the necessary governance policies and processes and completed a climate scenario study for all our business locations. In 2021, we discussed the specific risks and opportunities of each business segment. With these discussions, we can further investigate the impacts on each business, how we can prepare against these risks or capture opportunities, and work on determining their financial implications based on our TCFD roadmap.

More information on our progress on the TCFD recommendations can be found in the Responding to Major Disruptions section here.

IMPACT AND FINANCIAL MATERIALITY

Financial capital increased as most subsidiaries recovered their operations in 2021, following the easing of restrictions against the pandemic and the subsidiaries’ ability to establish health protocols and processes. Relative to impact materiality, more financial resources were available to support business initiatives.

Our manufactured capital is the physical assets, infrastructure, and equipment that we and our business segments use to provide our customers with our products and services, ultimately creating value. Manufactured capital also includes infrastructure projects our businesses work on for their respective clients. We manage our manufactured capital through activities geared toward the optimum use and upkeep of our assets to maintain their high quality, efficiency, and resilience. More details on our approach to managing manufactured capital can be found in Annex 3 of our 2020 Integrated Report, uploaded on our website at https://www.fphc.com/investor-relations/reports.

The following are updates to the operational capital performance of each of our business segments.

ENERGY

POWER GENERATION

2021 INTEGRATED REPORT 87 The following are major updates with regards to our power plants:

To ensure the resiliency of our power stations, we have a Resiliency Compliance Plan (RCP) for the natural gas plants. Key points of the plan include having emergency procedures such as for typhoon preparedness and business recovery; an Emergency Response Plan and drills; having a well-trained Emergency Response team; fire protection systems and fire fighting equipment; keeping a regular inventory of spares, consumables, and emergency supplies; and projects to strengthen the infrastructure. The RCP is reviewed periodically to ensure uninterrupted operations.

For the geothermal plants, which are in mountainous areas, there is a Natural Catastrophe Resiliency Plan in place. In 2021, the focus was the mitigation of high risks against typhoons and earthquakes. The typhoon-proofing of six buildings has been completed, and these buildings have proven themselves resilient against the onslaught of Typhoon Odette. The programmed landslide mitigation projects were also completed. The plan covered proactive measures for expansion projects, such as the application of the risk identification and mitigation process to ensure that roads and pads are low-risk before construction activities begin. During summer, to prepare for possible wildfires, we have fire incident protocols, fire lines, water stations, patrols, watchtowers, firefighting training, and firefighting and communication equipment. All measures are continuously being improved.

Heavy investments have ensured the resiliency of the geothermal assets and their surrounding areas; we have not had any natural catastrophe-related insurance claims for these assets in more than four years.

From 2022 to 2023, the natural catastrophe resiliency program will focus on remaining earthquake engineering controls, especially on our older assets, and on studies that will refine our risk assessments.

Projects in development under the power generation segment are:

• Santa Maria Natural Gas-Fired Combined Cycle Power Plant
• 100- to 120-MW Aya Pumped-Storage Hydro Power Project
• Run-of-river projects in Mindanao:
  • 32-MW Bubunawan
  • 33-MW Tagoloan
  • 30-MW Puyo
  • 49-MW San Isidro
• 29-MW Palayan Binary Geothermal Project
• 3.6-MW Mindanao 3 Binary Geothermal Project
• 20-MW Tanawon Geothermal Power Plant
• 36-MW Mahanagdong Geothermal Brine Optimization Plant

ENERGY SOLUTIONS

2021 was a turning point for FPI as product manufacturing breached a production milestone. The rampup in production began during the second quarter of the year as FPI’s customers increased their volume of demand, particularly for transformers for residential use. Some of these customers secured contracts to cover a full year’s requirement of transformer units. We anticipate this strong demand to continue to rise in 2022.

To cater to this demand, FPI prioritized the availability of raw materials by stocking enough to support their operations and by continuously sourcing and partnering with local and foreign suppliers.

FPI’s workforce faced the challenge of increased demand. But with the appropriate production systems and processes and good workforce management, they pulled through and increased productivity by at least 20 percent while maintaining headcount.

FPI had a continuous increase in production throughout 2021

Beginning the second quarter, FPI had higher volumes of demand from customers. Production is measured in KVA/unit.

In 2021, FPI also launched its green transformer. This design is made with 100% recyclable and biodegradable materials and runs on ester—a vegetable-based oil product from sustainably sourced and grown crop seeds. The green transformer is made of more sustainable materials than its traditional counterparts and is also more efficient. It allows each customer to save 876kWh per year on power avoidance than the traditional transformer, thereby reducing their carbon footprint as part of an electrical grid.

Moving on to 2022, FPI will be expanding with the construction of a new facility. The subsidiary will continue to innovate products and services, anticipating new needs of customers that may come with distributed energy such as solar, more use of electric vehicles, and the impacts of increasing ambient temperatures caused by climate change that may put stress on current transformer design.

REAL ESTATE

RESIDENTIAL AND COMMERCIAL REAL ESTATE

The pandemic’s impact on various economic sectors and the lockdowns in 2021 affected Rockwell Land’s schedules for project construction and turnover. In particular: restrictions on construction activities, disruptions in supply chains, and financial liquidity. Regarding continuing operations, these impacts have been managed by careful planning of construction and other activities, judicious decisions regarding cash flows, deployment of employees and workers under stringent health and safety protocols, close engagements with suppliers, and stocking enough materials and supplies on-site.

Beyond managing the continuity of operations, we acknowledged that the main drivers of these impacts are the health concerns of society at large and their resilience against the pandemic. To contribute a positive impact, Rockwell Land led an aggressive vaccination campaign for its stakeholders. The coverage of their program included employees and their households, their construction workers and service providers, office and retail tenants, and residents of their projects. By end-December 2021, close to 15,000 individuals were vaccinated under this program. To complete the overall management of the health and safety of their community, stringent health protocols and processes remain in place and adapt to new challenges brought by the pandemic. More information on FPH-wide efforts toward the pandemic is discussed in the Human Capital and Social and Relationship Capital sections here.

Apart from the impacts of the pandemic on operations, there have also been impacts from natural disasters, particularly by Typhoon Odette. Damages were sustained at the projects in Cebu. 32 Sanson had damages only to its landscaping, while Aruga Mactan had slight damages to its structure and the beach development. These have undergone rehabilitation.

In alignment with FPH’s mission for decarbonization and regeneration, and considering the heightened emphasis on health and well-being brought into consciousness by the pandemic, Rockwell Land has rethought how they can further enhance their projects through sustainable design and develop more horizontal projects with the market preference for more open spaces.

In 2022, Rockwell Land is preparing to launch four new projects: The Cabrera at Rockwell Center Nepo in Angeles City, Terreno South Phase 4 in Lipa City, Rockwell Center Bacolod Residential Lots, and a high-end condominium in a recently acquired property near Rockwell Center Makati.

Residential and Commercial Real Estate Properties

INDUSTRIAL REAL ESTATE

The way FPIP plans, designs, and develops their manufactured capital are informed by their following goals:

• Be the manufacturing location of choice, and elevate the overall locator experience;
• Be an employment hub of choice, thereby creating a manufacturing-centered community; and
• Be a thriving, inclusive, resilient, regenerative, and decarbonized job-centered community.

With this in mind, the following projects were completed in 2021, along with their respective contributions to FPIP’s ESG goals:

These projects aside, FPIP completed 46 out of 74 (62%) construction projects by the end of 2021. They added 12,408sqm of RBF space, bringing the total RBF area to 151,981 sqm. The remaining projects are scheduled to be completed in 2022.

Continuing with the thrust for more renewable energy updates, future RBFs will be designed to be solar power-ready, and the Consuelo Park Pavillion will be fitted with solar panels and rainwater harvesting features.

As the industrial park grows, FPIP is expected to grow its physical asset base through the infrastructure construction necessary to support the envisioned park and township, considering the overall goals for a decarbonized and regenerative park community.

CONSTRUCTION AND ENERGY SERVICES

First Balfour had some operations hobbled by COVID-19 infections. This resulted in reduced worker capacity and project delays. They also experienced challenges in their supply chain, particularly for items with long lead times due to lockdowns on manufacturing and shipping.

Disruptions and delays in operations were managed by strengthening their COVID-19 Response Team Protocols. Critical projects had special procurement meetings bi-weekly to address supply issues on a real-time basis between the Head Office and the Project Management Team. First Balfour also undertook continuous revisions to their COVID-19 testing decision tree and other protocols related to case management and safety measures.

With these measures, more than half of First Balfour’s projects remain on time, ahead of schedule, or are experiencing only minimal delays.

Some of First Balfour’s sites were not spared by Typhoon Odette. At the Cebu-Cordova Link Expressway Project, the project site offices were badly hit by the typhoon, and the team has since relocated its office. There were no major damages to permanent structures; a detailed investigation of the possible impact on the project was conducted. There were also minor damages to the equipment fleet on site. First Balfour experienced a momentary handicap related to transportation logistics as some of the marine transport fleets were damaged. This was mitigated by fast-tracking the concreting of some remaining structures that would allow safe passage using the bridge carriageway, so workers and materials may reach all areas of the site.

Projects in EDC’s sites in Leyte and Negros Island had no major damage to facilities, but one area in Leyte sustained damages to its slope protection structure, resulting in a short stretch of half a road being scoured. Corrective actions were planned and executed as soon as possible.

In all sites hit by the typhoon, all personnel were accounted for. Some suffered damage to their households and were assisted by the company.

SUMMARY

• We continue to maintain our physical assets to their utmost integrity and quality
• Some of our assets were impacted by force majeure events, mainly by Typhoon Odette
• Our business segment’s ability to create Manufactured Capital for others (via their projects and services) continue to be impacted by conditions brought about by the pandemic

IMPACT MATERIALITY

• There have been some erosion of manufactured capital due to force majeure events and impacts of the pandemic. However, some segments maintained and even built up capital during the pandemic.

FINANCIAL MATERIALITY

• Delays in project activities meant some delays in incoming revenue, giving rise to a tight cash flow situation. These were managed respectively by each business unit with guidance from FPH.

Our natural capital is composed of the renewable and non-renewable materials and resources we use to develop our products and services that create value for our customers and stakeholders. In taking stock of the changes in our natural capital, we look into our company’s interactions with the different facets of nature: land, air, water, and healthy habitats.

The following section discusses our performance about the use of and care for our natural capital in 2021. For our general strategy and management approach to natural capital, please see Annex 3 of our 2020 Integrated Report, uploaded on our website at https://www.fphc.com/investor-relations/reports.

ENERGY MANAGEMENT

As we settled into the second year of the pandemic, our business units brought back most of their operations while adhering to the necessary health protocols. Hence, our non-power subsidiaries generally reported increases in energy consumption. For our power generation subsidiary, energy consumption decreased due to less energy used by some power plants. Our business segments also continued their steady transition to using renewable energy.

Power Generation

Energy consumed is proportional to energy generated as power plants consume energy for their houseload. In 2021, there was less geothermal steam to produce energy.

Real Estate

Sharp increase in energy consumption due to an expansion in the scope of activities included, particularly the inclusion of the water pumping and distribution system of FPIP. More RE use was also recorded as more units transitioned to procuring RE.

Construction and Energy Services

Increase in energy use as operations recovered in 2021, following stringent health protocols. First Balfour also began their pilot to procure RE for a project site.

Energy Solutions

Steady use of electricity, with a transition to using RE. In 2021, First Philec set up solar panels and began purchasing electricity from an RE source.

Head Office

There was a decrease in energy use as we continued our hybrid work-from-home setup.

Total FPH Energy Use

GREENHOUSE GAS EMISSIONS AND MANAGEMENT

Our group's GHG emissions directly relate to how much energy we consume and where we source that energy. Overall, our 2021 emissions increased as our power generation subsidiary needed to use liquid fuel to augment natural gas due to fuel use restrictions resulting from the Malampaya Gas Field depletion.

More of our energy use across the non-power business segments was sourced from renewable energy sources. Trends in their emissions generally show decreasing Scope 2 emissions or increasing Scope 2 emissions, but decreasing Scope 1 emissions as fuel use is replaced with RE. Complete Scope 3 emissions are not yet captured, and this protocol will be studied in 2022.

Power Generation

Increase in emissions was due to the use of liquid fuel (gas condensates) in the natural gas plants due to fuel restrictions resulting from the depletion of the Malampaya Gas Field.

*Scope 2 emissions data was corrected due to the inclusion of in-house consumption in the computation last year.

Real Estate

Sharp increase in emissions was due to an expansion in the scope of activities included, particularly the inclusion of the water pumping and distribution system of FPIP.

Construction and Energy Services

Emissions increased as operations returned in 2021, following stringent health protocols. There was an uptick in Scope 2 emissions as First Balfour pilots procured RE for a project site.

Energy Solutions

Scope 2 emissions decreased considerably as First Philec shifted to using more RE.

Head Office

Emissions were zero as our building’s electricity was wind- and hydropowered while messengerial services were contracted out. Scope 3 emissions are yet to be captured.

*Scope 2 emissions from 2019 and 2020 were corrected as they used erroneous emission factors in previous reports.

Total FPH GHG Emissions

To further reduce our GHG footprint, we reviewed various carbon levers for decarbonization that will be helpful to the country. A sixmonth study was conducted to identify how the conglomerate can meaningfully contribute to the decarbonization of the country. It will also guide our group in defining our decarbonization plan in 2022.

OTHER EMISSIONS AFFECTING AIR QUALITY

Apart from GHG emissions, our business segments also monitor other air emissions related to their operations. Other air emissions include carbon monoxide, nitrogen oxides, sulfur oxides, and total suspended particulates. These are emitted by the power plants of our energy segment; generator sets of our real estate segment, which are used to provide backup power in case of emergencies; and the generator sets of our construction and energy services segment to provide power during construction and geothermal drilling operations. All sources of air emissions are duly monitored and emission concentrations are within allowable limits prescribed by the national government.

MATERIALS USE

Our overall material use across the business segments decreased in 2021, primarily due to the energy sector having less steam and water run through the geothermal and hydro plants, respectively. Further, the geothermal plants expectedly generated less energy compared to last year (see Manufactured Capital section, page 85), but were still able to meet all demands of power customers. The decrease in steam output was due to drilling and optimization operations being delayed due to the pandemic early in 2021, but steam output stabilized in the second half of the year. Drilling and optimization activities will catch up in 2022. For the Pantabangan- Masiway hydro power plant, the decrease in water throughput did not affect power generation. For most other subsidiaries, except industrial real estate, material use increased as operations came back in 2021.

SOLID WASTE MANAGEMENT

Solid waste by all our business segments is hauled and treated by DENR-accredited waste haulers. Hazardous waste is appropriately treated according to the requirements of each specific waste type by the same DENR-accredited contractors. For waste oil, we continue to partner with ABS-CBN’s Bantay Langis for its recovery and recycling.

The increase in solid waste we disposed in 2021 indicates the return to operations of many of our business segments, compared to 2020. We plan to revisit the low progress in our waste management activities. The subsidiaries will undergo a deepening session with external experts to develop a waste management plan.

WATER USE AND MANAGEMENT

The major water use across all our businesses is water that flows through the hydro power plants to produce electricity, seawater used by the natural gas plants for cooling, and groundwater if the geothermal brine used to cool the geothermal plants needs to be augmented. Apart from those, most other subsidiaries use water from water utilities for domestic purposes (comfort rooms and pantries). Water for hydro plants merely passes through the turbines, while seawater used for cooling only passes through the natural gas plants (non-contact cooling process). Both water throughputs are returned to the environment after use with little change in water quality.

In 2021, our overall water use generally decreased as there was less water going through the Pantabangan-Masiway hydro plant. This did not affect the plant’s ability to generate power. For the other hydro power plant, more surface water passed through it as 2021 was a La Niña year. Other notable trends across the subsidiaries are zero use of recycled water from the real estate segment as the commercial operations that make use of this had limited operations in 2021 and zero rainwater use as the head office of our construction segment operated from a hybrid work-from-home setup.

Also in 2021, our businesses in power generation and industrial real estate concluded a Water Management Study and Hydrology Study, respectively. These studies will help them better assess their current water use practices and inform how they can manage their water resources. To continue this momentum, we will roll out a new program on water use and management for all business segments. With this program, we hope to establish a better understanding of our water resources across all business units and to have each one develop a water management plan.

Water Use

(in Mega Liters (ML))

WASTEWATER MANAGEMENT

All wastewater produced by our businesses is treated appropriately before release, compliant with national regulations.

All of our business segment’s offices produce domestic wastewater, which is collected and treated within the wastewater management system of the building each respective office resides in. For the real estate sector, each property has its wastewater management system that treats the wastewater before release into the nearest bodies of water, in compliance with the national regulations and pertinent local regulations on effluent water quality. Under the construction and energy services segment, wastewater is managed by their clients.

One operational upset was recorded in our nonpower group. Sampling was done which showed return to compliant status after several days. Additional control measures were discussed with the local regulator.

For more details on how we manage wastewater per business segment, please refer to our 2020 Integrated Report on our website https://www. fphc.com/investor-relations/reports/.

HABITAT PROTECTION AND REHABILITATION

We endeavor to give back to nature as many of our operations are quite intensive in using materials from our environment. We continue to have strong projects in the area of habitat protection and management. Our updates on this front during 2021 included:

Mangrove Forest Protection

• In the FGCEC, we continue to maintain and enhance the ten-hectare mangrove forest as part of the natural buffer zone of the complex.

Freshwater Protection

• We continue to maintain our long-term partnership with DENR under the Adopt-a- River or Water Body Program, specifically protecting and enhancing the Cabubulag River in Brgy. Sta. Clara, Batangas City through regular water quality monitoring and clean-up activities.

Marine Conservation

• Continued to support Bantay Dagat (marine patrols) in conserving 2,072 hectares across 43 Marine Protected Areas (MPAs). The Bantay Dagat Network works to increase its coverage of MPAs.

Terrestrial Forest Protection

• In our geothermal reservations, forest patrols plans were formulated in 2021 to enhance the forest stands.
• The forest patrols conducted resulted in eight apprehensions with the DENR, including the confiscation of 659 board feet of Lauan (Dipterocarpaceae) lumber and four hunting guns in Leyte.
• Increased patrol activity also helped prevent forest fire occurrences; no forest fires within the geothermal reservations were reported for the year.

Terrestrial Forest Restoration

• 570 hectares of new plantations were established in project sites in Bacman, Leyte, Negros, Mt. Apo, Pantabangan, and Ilocos Norte.
• To date, 88 forest communities became partners to plant more than 10,000 hectares nationwide.
• Eleven new partnerships were entered for ex-situ and in-situ forest conservation. Ex-situ conservation involves establishing arboreta and tree parks dedicated to house threatened native trees, while in-situ conservation focuses on conserving the threatened Philippine native tree species in their natural habitats.
• Seven new arboreta were established for a total of 22 arboreta and 163 tree parks nationwide.
• Six new propagation protocols for threatened tree species were developed. In total, there are now protocols for 34 threatened tree species to date, which accounts for 35% of its target (34 out of 96) until 2025.
• Continued partnership with the Botanic Gardens Conservation International (BGCI) of the International Union for the Conservation of Nature (IUCN). In 2021, a Memorandum of Agreement was issued that extended our partnership with BCGI for two more years and expanded the scope of collaboration to include 200 additional endemic species and 470 near-endemic species.

SUMMARY

• More of our business segments have shifted to using renewable energy, for a total of 50.2GWh of RE from solar panels and procured from retail energy suppliers.
• Our greenhouse gas emissions continue to increase as our businesses grow.
• Some of our businesses have concluded studies regarding water use and management. This will better inform their water management practices in the coming years.
• We continue to have strong projects for habitat protection and restoration.

IMPACT MATERIALITY

• Varying impacts increased and decreased natural capital in 2021 per environmental aspect.

FINANCIAL MATERIALITY

• In general, our current practices supported our operations to create products and services for our stakeholders in 2021.

Our human capital is composed of the knowledge, expertise, and experience brought by the employees of our businesses. Empowered by our culture, we strive to provide our employees with the proper arsenal to deliver their best at the workplace. We are compliant with national labor laws, general labor standards, and international labor conventions entered by the Philippine government. Additionally, we ensure that our employees have a safe and conducive working environment free from discrimination and providing value-adding training and development opportunities across our ranks.

More details on our approach to managing human capital can be found in Annex 3 of our 2020 Integrated Report, uploaded on our website at https://www.fphc.com/.

EMPLOYEE PROFILE

Employees are the backbone of our business operations, and we are giving significant attention to hiring, maintaining, and enriching talents that support us in delivering our mission and purpose to our stakeholders.

Despite the ongoing threats of the COVID-19 virus, we remained resilient in keeping our operations afloat to accommodate business demands in the new normal. This resulted in a robust employee roster comprising 3,787 talented individuals across our business segments, represented by a 9 percent increase from our employee count last year.

New Hires vs. Employee Turnover

Permanent Employees Per Business Segment

There are 673 employees, which represent 17.8 percent of the employee population, who resigned or retired in 2021. There were no layoffs related to the prevalence of the pandemic and locallyimplemented lockdowns. We understand the importance of a livelihood source during these difficult times. To keep the lights on, we also needed to adjust the workforce. This year’s turnover prompted us to re-evaluate, repurpose, and strengthen our human resource programs while keeping up with hiring new talents. We ramped up our hiring to accommodate the required manpower for new projects and expansion plans in our construction, real estate, and energy businesses. With this, we welcomed 855 employees across the group, a 53 percent increase from our new hires last year.

On-boarding of new hires across the group was mostly conducted virtually. New hires underwent a two-day Corporate Onboarding program to ensure they are oriented on the company’s culture and mission for a regenerative and decarbonized future. It also provided an avenue to equip them with knowledge on core corporate processes (Human Resources, Occupational Health and Safety, Information Technology tools, Data Privacy, etc.) before joining their respective teams. The program was well-received by new hires, as 92 percent felt that the program helped them to adapt quickly to our company culture and processes. Most even expressed their excitement to work for the company, given our mission and purpose.

EMPLOYEE ENGAGEMENT AND WELL-BEING

To ensure that employee concerns are heard, we engage them regularly through annual surveys, pulse checks, one-on-one meetings, monthly on-site Kumustahans (check-ins), and town hall meetings. As we continue to rely on digitalization, most of our engagements with employees are done virtually. This year, we conducted pulse surveys and targeted one-on-ones to evaluate our existing policies related to working during the pandemic and how employees cope during these times.

Our recently concluded Resilience Survey showed 86 percent of the respondents indicated high resiliency during the COVID-19 pandemic, which meant they can cope very well with the impacts brought by the virus. To continue our support, we maintained and strengthened our wellness and mental health programs. Employees were provided the needed communication tools for their use at home.

In the energy segment, we conducted regular sessions on well-being and personal development in the form of Wednesday Wellness, as well as the EDC Boosters Program. We also encouraged our employees to maximize our Employee Assistance Program (EAP), Reach Out, to talk about their concerns on mental health and well-being. Similar initiatives are also being conducted across our construction, real estate, and energy solutions businesses. Employee benefits were also repurposed in 2021 to align with the needed adjustments brought by the pandemic.

GENDER EQUALITY AND DIVERSITY (GED)

Full collaboration plays a crucial part in attaining our mission and purpose of being a regenerative business. As an employer, we offer a conducive working environment free of harassment and discrimination.

To promote equality and diversity in the workplace, we conducted additional webinars to complement our existing policies on anti-sexual harassment, gender equality and diversity, and human rights across our businesses. These policies serve as our guidance in conducting our responsible business while being mindful of our stakeholders regardless of their gender orientation. Employees across all of our business segments attended the live virtual sessions. Recordings were available on-demand through our HR platforms. Participation in the policy cascades was made mandatory to our workforce to ensure the accountability of our employees, so they may also report violations made by colleagues. Grievance mechanisms, as employee feedback, are available through various HR units across the group. Our whistleblower protection mechanisms protect the identity of employees raising such concerns.

Women are considered to be underrepresented in the energy sector. To empower women to take on roles in energy, we partnered with USAID for the ongoing Enhancing Equality in Energy for Southeast Asia (E4SEA) project. The three-year program aims to engender diversity in South East Asia’s energy sector by capacitating companies within the region while piloting best practices and strategies to attract and retain female talents. We hope to apply the practices learned from the energy sector to the rest of the business segments.

Gender Diversity

TRAINING AND DEVELOPMENT

We strive to equip our employees with the proper arsenals for them to cope with industry trends and deliver only the best to our stakeholders. One way of doing so is by strengthening our training and development programs.

Average Training Hours

Given limited face-to-face interactions brought by the pandemic restrictions, we held most of our training and development offerings this year online, affecting our recorded average training hours across the group. Initiatives across our businesses were already piloted to ensure that our employees get high-quality training through formal and informal means, including learning and development platforms, targeted development plans, work exposure, and learning from peers. We also continued our partnership with two local academic institutions in rolling out management and executive programs for our employees. Aside from career-oriented development programs, we also offered leisure sessions to cater to employees’ hobbies and interests.

Our energy and construction businesses recently launched a self-paced learning-ondemand platform to complement our instructorled webinars and existing training offerings. This granted employees the flexibility and liberty to access training related to technical skills, leadership and strategy, organizational management, and personal interests and wellbeing at any given time. The program was also piloted across our other business segments, and temporary and contractual employees were also invited to partake in these courses. Our energy solutions business regularly conducts a Training Needs Assessment to optimize learning and development for its employees. Along with the technical-related training offered this year, they also focused on upskilling their employees to accomplish their digitization roadmap.

To further promote our employee’s career development, we have made significant efforts to build on our existing Career Development System (CDS). The system explains our company’s job leveling structure and career paths to equip our employees with the proper tools for progressing and advancing their careers within the group. This system also empowers our employees to take on different yet challenging roles within the ranks of our organization.

EMPLOYEE EMBEDDING

We continue to improve the execution of our mission by making sure all officers and employees are on board and exploring ways to develop customized embedding programs to deepen everyone’s understanding and appreciation for the mission. These embedding programs help employees find the connection between their values and purpose with their work and live out that connection. When this happens, the result is the substantial alignment of the employee’s purpose with the corporate mission.

In addition to ongoing embedding initiatives through our corporate social responsibility and personnel engagement programs, in 2021, we began a systematic approach using the selfassessment method of the Embedding Project.11 The Embedding Project is a research project that helps companies embed social and environmental factors across their operations and in decisionmaking. The self-assessment process is anchored on four approaches to choose from that would best fit the organization, namely, a) fostering commitment, b) clarifying expectations, c) building momentum for change, and d) instilling capacity for change. Each FPH business segment developed its own playbook to embed the mission using these criteria, based on the nature of its business and employee profile.

EMPLOYEE HEALTH AND SAFETY

We continued to improve on our robust Occupational Health and Safety (OHS) capacities to be competent in dealing with health and safety concerns within our areas of operation. Due to the ongoing impacts of COVID-19, most of our OHS activities are geared towards addressing the threats of the virus.

Our energy business coined the tagline “HSE is Malasakit” (translated to HSE is Compassionate) to encourage workers to continuously incorporate health and safety practices in their workstreams while being accountable to those around them. Our construction, real estate, and energy solutions businesses formed a coalition to monitor safety issues rigorously within the group. Training and re-orientation on safety practices are regularly conducted on our on-site operations, while office-based employees are required to attend the annual mandatory OSH training as a support to the National OSH law or Republic Act (RA) 11058. These materials are easily accessible on our human resources platforms.

As a result of our initiatives, we attained a total recordable incident rate (TRIR) within the industry benchmarks.12

MANAGING COVID-19 WITHIN OUR WORKFORCE

To help mitigate the spread of the COVID-19 virus, we abided by our risk-based strategy, which enabled our businesses to dance with the virus and reduce its impacts. Shelters-in-place (SIP) and shuttle services were still offered for employees required to report on-site, while most are still encouraged to work from home. As quarantine restrictions eased up in various locations across the country, we established stringent return-to-work protocols to ensure that our employees were safe from the threat of the virus.

In safeguarding our on-site employees, we followed health and safety protocols prescribed by our local government and proactively communicated these to our workforce. As a testimony to this commitment, multiple sites across our business segments received Safety Seal certifications from the Department of Labor and Employment (DOLE). This is a voluntary affirmation that workplaces are compliant with minimum public health standards set by the national government.

To complement these initiatives, we worked with local health providers in inoculating our employees and their families through the Vac2Normal program. We vigorously communicated the program through our human resource channels, resulting in 99 percent of our workforce being vaccinated by the end of the year. As our employees are in constant contact with multiple stakeholders, we extended the program to our employee’s families, contractors, third-party providers, and community members surrounding our local operations. The initiative inoculated at least 25,000 doses of AstraZeneca and Moderna vaccines, even vaccinating those between 12 to 18 years of age at the latter part of the year. As we progress to the new normal, we are now aiming to vaccinate more stakeholders by catering to children of ages 12 and below, reaching more communities, and providing booster shots to those who previously benefited from the program.

SUMMARY

• Despite our businesses enduring the impacts of the "Great Resignation" trend, we had 855 employees added to our workforce in 2021. We ramped up hiring to accommodate the required manpower for our new projects. This led to a 3,787 employee-strong workforce across the group by the end of the year, a 6 percent increase from our 2020 figures.
• We piloted new ways of learning and development. Although our recorded average training hours plummeted compared to previous years, we ensured that our employees could optimize their development by granting them liberty and flexibility.
• We continue to ensure our employees are safe, respected, and treated fairly in the workplace. We continue to inform them about workplace policies accessible to them.
• We teamed up with USAID to close the gap between our male and female employee count by empowering women to take on roles in the energy industry.
• To guide our employees in our journey to regeneration and decarbonization, our subsidiaries developed playbooks on embedding our mission.
• We maintained and continued to strengthen our health and safety initiatives, which resulted in our total recordable incident rate being within the industry benchmarks.
• We managed the impacts of the pandemic and continued to adhere with our stringent COVID-19 protocols. To complement these initiatives, we launched our vaccination program Vac2Normal, which inoculated 25,000 doses of vaccines for our key stakeholders.

IMPACT MATERIALITY

• Most human capitals were preserved in 2021 (in terms of employee profile, employee well-being, and OSH).
• Capital for gender equality and diversity was created due to the USAID project and improvement in the GED ratio.
• Capital for training and development was created due to the promotion of an on-demand learning platform across energy and construction segments.

FINANCIAL MATERIALITY

• The increase in employee count will support the number of ongoing and new projects across our business. In turn, this will drive profit for the business.

Our intellectual capital arises from our organizational knowledge, systems, procedures, intellectual properties or licenses, and research. This capital helps us achieve the successful development of our projects and new businesses, the effective and efficient management of existing assets, and streamlined operations of the various companies.

More details on our approach to managing intellectual capital can be found in Annex 3 of our 2020 Integrated Report, uploaded on our website at https://www.fphc. com/.

As a conglomerate with investments in energy, construction, and real estate, we ultimately rely on our intellectual capital to provide best-in-class products and services to our consumers and clientele. We leverage our talents, technical competencies, processes, and systems into creating value for all of our stakeholders and be stewards of nation-building consistent with the FPH purpose.

Following our intellectual capitals and performance last year, we continued and improved our initiatives in digitalization, process improvements, and human capital development while leveraging our skills and competencies in our various business segments. Building on our momentum, adjustments were made in our business functions’ processes this year to expand the scope of our existing initiatives.

Our Finance Group recently welcomed our industrial real estate and energy services businesses to the Center for Finance initiative. The initiative aims to achieve a Centralized Finance Structure, aligning the seven finance standard business processes (i.e., procure-topay, order-to-cash, record-to-report, planning, budgeting and monitoring, tax reporting and compliance, treasury management, and finance and capital management) across our energy, construction, and real estate businesses by the end of 2022. Along with their entry into the initiative, these businesses were also introduced to the group’s existing online transaction capabilities.

Our Procurement Group established a Central Receiving Team to complement the procureto- pay process. The team is in charge of the verification and receipt of payment documents for all purchase order-related transactions. This allowed our procurement group to still abide by local regulatory requirements despite our workforce working remotely from our head office and sites of operation.

Our Human Resources Group leveraged new ways to make learning and development more accessible to our employees. This year, our head office and energy businesses launched a learning-on-demand platform to provide employees the flexibility to access technical courses and personal development courses at any given time. Our construction business recently launched First Balfour University (FBU), which provided employees with selfpaced on-demand learning materials. Similar to the energy business, technical courses and personal development courses are available for our employees and workers to use. Additionally, FBU offered microlearning or lessons that were condensed into two- to ten-minute video content.

To strengthen our existing information technology (IT) and data security initiatives, we have restructured our IT team, covering our head office and energy business now. For smooth execution, the Chief Digital Officer created five specialized teams: Service Management, Solutions Management, Project Management Office (PMO), IT Planning, Finance, and Governance (ITPFG), and Business Relationship Management (BRM). The new roles and teams address process and capability requirements and provide better coverage across our stakeholders. In the future, the team envisioned having an IT Resourcesas- a-Service arrangement, wherein they can be leveraged to provide guidance, support, oversight, and on-demand services to their IT counterparts across our subsidiaries. Although data privacy and security are still prevalent concerns as our employees are still working from home, our businesses did not encounter data breaches or leaks for 2021.

Digitalization efforts are being done in our energy solutions segment in our digital transformation road map. This enabled the business to rethink its previous processes and adapt to the everchanging demand of technology and its potential impact on the business and stakeholders. Aligned with their roadmap, they upskilled their existing workforce on digitization while hiring information technology experts to join their ranks. We created employment positions, such as software engineers, systems administrators, solutions architects, and business solutions leaders, to support the acceleration of this roadmap.

On the next page is a table explaining our core competencies and how these relate to our business and our non-financial impacts:

SUMMARY

• Our departments made continuous improvements to strengthen their existing initiatives on process improvements. Most of these existing practices were brought by our respons
• We optimized and leveraged our existing processes and systems, which in turn provided exponential values to our stakeholders (customers, clients, and employees).

IMPACT MATERIALITY

• We preserved and optimized our existing intellectual capital, and we created value through our continuous process improvements in IT and digitalization.

FINANCIAL MATERIALITY

• We continue to leverage and optimize our existing processes, core competencies, and relationships with our clients and consumers. This, in turn, will drive profit for our business segments.

Our social and relationship capital relies on our relationships with our customers, host communities, and other external stakeholders. We believe our social license stemmed from our mindful engagement with stakeholders, which led to public acceptance, collaborative supply chain, government support, and customer loyalty. Anchored by the Pentad Stakeholder framework of Carol Sanford, we are guided as a business in creating our intended values. Our discussion on our stakeholders and our relationships with them can be found in the Stakeholder Management section here.

More details on our approach to managing social and relationship capital can be found in Annex 3 of our 2020 Integrated Report, uploaded on our website at https://www.fphc.com.

VALUE FOR OUR CONSUMERS

As a conglomerate focused on empowering industries related to nation-building, we are committed to providing topcaliber products and services to execute our purpose and serve our stakeholders.

In solidifying our commitment, customer satisfaction (CSAT) surveys are conducted regularly across our business segments to understand the perception and opinion of our customers and clients. Our power generation, energy solutions, construction, and industrial real estate businesses annually conduct these surveys and checkins. Our residential and commercial real estate business conducts their surveys biennially.

Consistently, our business segments received favorable reviews for the products and services they provide. We use these metrics not only as a motivation to continue delivering on our best, but also to study pain points and work on areas for improvement.

Aside from delivering the best-in-industry products and services, we also ensure their affordability and accessibility to consumers of all markets.

In our power generation business, we ensure that our power generation prices are competitive with local market rates while consumers can enjoy the premium of benefitting from our renewable energy offerings. We also provide value-added services that customers may request in terms of knowledge or skills for them to understand the power we deliver and how to use it efficiently.

As a result, our Burgos wind farm received a special citation from Philippine Electricity Market Corporation (PEMC) for compliance with spot market prices. We recently offered Tradable Instruments for Global Renewables (TIGR) certificates, an equivalent of the Renewable Energy Certificates (REC) outside America, for our customers and clients, which certifies them as users of renewable energy to meet their personal goals.

In our residential real estate business, we continue to expand our affordable housing segment through Stonewell in Sto. Tomas, Batangas. Our industrial real estate business is considered as one of the top-ranking industrial parks accredited by the Philippine Economic Zone Authority (PEZA) based on investment values for locator expansion projects in 2021.

VALUE FOR OUR PARTNERS AND HOST COMMUNITIES

Contribution of FPH Companies

Given the nature of our business segments, our operations are in various locations around the Philippines. This prompted our group to be mindful of our community interactions to garner a social license in our areas of operation. As corporate citizens, we consider them as our partners in scaling up our capitals and values, therefore we safeguard and provide support to them to the best of our abilities. Aside from our local community partners, we also collaborate and support organizations that share our mission and advocacies.

Across our business segments, we invested PHP161.8 million in donations, community activities, and environment-related projects. These investments enabled us to build on our existing initiatives while piloting new Corporate Social Responsibility (CSR) activities that catered to the needs of our community beneficiaries. Managing the impacts of COVID-19 in 2020 allowed us to focus again to our key initiatives in education, environment, livelihood, and disaster resilience.

To support our local communities, we supplied educational materials, provided technical support, and supported Brigada Eskwela in at least 67 schools benefitting 46,237 students across the country for our education front. We also gave 649 students scholarship grants, 42 of whom come from indigenous communities. As part of the sustainable livelihood projects supported by our power generation business, 31 indigenous families earned PHP280,000 in net revenues from coffee farming.

Aside from contributing to our host communities, we also had a chance to share our knowledge and expertise with other organizations that share our values and advocacies. In 2021, we participated in at least 15 different external engagements to discuss various issues related to sustainability, climate change, social issues, and ESG reporting, which had at least 3,616 direct participants. The statistics do not include the videos uploaded online. Our energy business, led by EDC, recently launched the Net Zero Carbon Alliance, a network of eight local companies spearheading the movement to achieve carbon neutrality aligned with the country’s goal to reduce carbon emissions by as much as 75 percent. Aligned with our mission, we hope to continue working with partners who will aid us in our regeneration journey.

Our Contributions to Fight COVID-19

Due to the ongoing threats of COVID-19, we continued to provide health and medical support to at least 12,290 individuals across the country. To date, our energy business constructed seven molecular laboratories across the country to expedite COVID-19 testing. As we usher into the new normal, we encouraged vaccinating our stakeholders as a mitigation measure against COVID-19.

We expanded our vaccination drives across our business segments to include our third-party contractors, local community members, and other local government units. Our real estate, construction, and education businesses supported #KaVac, a communications campaign to encourage stakeholders to be vaccinated. Our energy businesses also donated thousands of vaccine doses to their local community partners. Combining these with our groupwide vaccination effort, Vac2Normal, we allocated at least 385,000 doses of COVID-19 vaccine to the local government.

To further promote vaccination, our industrial real estate business sponsored the cost of syringes used in inoculating COVID-19 vaccines to the residents of its partner LGUs. Our residential and commercial real estate business lent The Fifth at Rockwell as a vaccination site to the Makati LGU, which lead to the inoculation of 15,000 local residents.

LOPEZ GROUP FOUNDATION INC.

To harmonize and synergize the environment, community, and nation-building corporate social responsibility (CSR) projects of our business segments, we worked with the Lopez Group Foundation Inc. (LGFI) in 2020 to launch the seven advocacy clusters, namely Environment, Education, Humanitarian Action, Sustainable Livelihood and Social Entrepreneurship, Child’s Rights, Health and Wellness, and Arts and Culture. By linking the CSR programs of the FPH subsidiaries with those of our foundations, we are able to pool together our talents, resources, and efforts that deliver a holistic approach to conducting corporate social responsibility.

For a pilot program, the LGFI signed a Memorandum of Understanding with Lobo, Batangas to pilot the Clusters Area Development program in June 2021. Aligned with our mission of forging collaborative pathways to regeneration, the program aims to build resilient and regenerative communities by using an integrated approach in CSR through the incorporation of our advocacy clusters. For the case of Lobo, the focus is on advocacy clusters Child Rights and Development, Environment, Education, and Social Enterprise.

SIKAT SOLAR CHALLENGE FOUNDATION, INC.

The Sikat Solar Challenge Foundation, Inc. (SSCFI or Sikat) is a non-profit organization whose mission is to uplift the lives of Filipinos in rural communities without electricity. Sikat works through various organizations and helps them deliver innovative and sustainable renewable energy (RE) systems and solutions.

Assisted by our power generation segment, Sikat provided electricity to 54 households and a health center in its five pilot communities in Mindoro. Electrification helped the residents of these pilot communities. Through the solar-powered health center, 166 patients were attended and treated. Residents were also introduced to new activities due to the electrification, such as using electric razors for haircuts, students can now attend online classes, and a readily-available charging station for the community and neighboring communities.

OSCAR M. LOPEZ CENTER FOR CLIMATE CHANGE ADAPTATION AND DISASTER RISK MANAGEMENT FOUNDATION, INC. (OML CENTER)

The Oscar M. Lopez Center for Climate Change Adaptation and Disaster Risk Management Foundation, Inc. (OML Center) is a non-profit organization born out of a private sector initiative to enhance support for research and innovative solutions toward climate change adaptation and disaster risk management. It is rooted in the principle that science must play a role in building the resilience of communities through actionable knowledge. Founded in 2012, the OML Center was established in response to an apparent research gap that was alarmingly disproportionate to the climate-related risks and vulnerabilities of the Philippines. The first of its kind in the country, the OML Center continues to be the only privately funded grantgiving non-governmental organization (NGO) doing research-based climate change programs and initiatives.

In 2021, OML Center released 18 publications concerning climate change and environmental sustainability. The center was also active in communicating its mission and purpose to a broad range of stakeholders, including the youth, government, international arena, media, and private sector.

In partnership with the Department of Environment and Natural Resources - Climate Change Service (DENR-CCS), the center conducted an internal training on the Climate Responsiveness Criteria to assess the agency’s plan and programs. This led to the release of Department Administrative Order (DAO) 2022-21: Guidelines on Mainstreaming, Cascading, and Institutionalizing Climate Change Concerns in the Environment and Natural Resources (ENR) Priority Programs, which endorsed the Climate Responsiveness Criteria studied by the center in 2019. To promote sciencebased communication and media strategies in communicating climate change, the center also launched the Balangay Media Project, which enabled media practitioners to participate and receive grants under the Umalohokan Fellowship.

For more information on OMLC’s initiatives, you can visit their website at https://www. omlopez center.org/.

ANG MISYON, INC

Ang Misyon, Inc (Ang Misyon) is a non-profit organization that supports the musicallytalented, less-privileged youth. The organization believes that social change is sparked through learning orchestral music. Since 2012, it has helped over a thousand scholars and continuously provides programs that focus on orchestral training and instrument support. Scholars are also given the opportunities for local and international performances and serve as mentors to their younger members. Through Ang Misyon, they can share the values and skills they have learned from their mentors and peers.

Ang Misyon offers music programs that aim to develop music skills and talents at an early age. Children and youth are introduced to the world of music and its possibilities, preparing them to progress to professional levels eventually. The values of commitment, discipline, and community are ingrained in their orchestral training, which empowers them to become responsible members of society.

The Orchestra of the Filipino Youth (OFY) is Ang Misyon’s flagship music program and main performing arm. Under the baton of Gerard Salonga and the guidance of professional mentors, the OFY curriculum is specifically curated for a high-quality youth orchestra. One-onone lessons, sectional workshops, and masterclasses allow them to learn challenging pieces ranging from classical and pop music. Members of the OFY have also grown to become mentors to the younger generation, sharing their learnings and experiences from Ang Misyon as a way of paying it forward.

Given the constraints of the pandemic, most of Ang Misyon’s lessons and performances were conducted virtually. Partnerships and collaborations with local institutions paved the way for OFY to elevate its online presence in 2021. Virtual performances were opportunities for the OFY to engage their audience and fulfill the goal of expanding the reach of orchestral music. These also showcase how far the scholars have come in the music program and bring more awareness to the advocacy of Ang Misyon. These pathways forged strong and generous support from individuals, small groups, and organizations who believe in empowering the youth through music.

SUMMARY

• We ensure that our products and services are priced competitively by continuously being compliant with government regulations.
• Our clients and consumers are highly satisfied with how we do business. This leads to favorable responses in the customer satisfaction surveys (CSAT) conducted by our business segment. On average, we garnered 94.9% out of 100%.
• Our CSR investments totaled PHP161.8 million, and given the improvement of the COVID-19 situation, our CSR activities were heavily focused on our key advocacies in education, livelihood, environment, and disaster response.
• We also strengthened our foundations by continuously supporting their projects and advocacies.

IMPACT MATERIALITY

• Social Capital was preserved in 2021 by maintaining engagements with stakeholders and created through the improved performance of FPH foundations.

FINANCIAL MATERIALITY

• We provided unwavering support to our key stakeholders despite the threats of the pandemic. Given this, we can maintain our social license to operate in our local communities for the continuous generation of revenues.

Our past reports disclosed the values we created for the planet and society in qualitative terms and partially in quantitative values, through how much we have invested in the different capitals. However, these past quantitative values do not yet capture the complete picture of how much we can invest in each capital. In 2021, we endeavored to better estimate these values by refreshing how we look at investments toward the many different activities in our businesses.

Some indicators will remain qualitative, either due to no available method to ascertain their economic cost and impact or because presenting them qualitatively best describes the company status and its context. Meanwhile, we are seeking new methods to quantify them.

VALUES FOR THE ENTERPRISE

The overall financial value for FPH is the generation of PHP125.2 billion in revenues and a Recurring Net Income of PHP10.1 billion. Another set of values comes from the manufactured capital composed of investments in new facilities established or those being constructed as our new potential sources of revenues. They also include existing facilities that were maintained and improved for resilience to enable the continued operations at optimum level despite their age and the disruptive environment discussed in earlier sections of the report. For the past three years, we have seen the positive effects of our natural catastrophe program. We were visited by the same number of typhoons this year, some stronger than past typhoons, but they had minimal impact on our assets.

From our human and social investments, we obtained the continued trust of our various stakeholders. Our clients and consumers continued to patronize our roster of products and services as most renewed their contract agreements with the FPH business segments. We also received favorable customer satisfaction feedback from our clients, which drives us to deliver our best service from our projects. We also implemented pilot developmental initiatives for our host communities resulting from our steadfast engagements, which allowed us to maintain the integrity and ease of our business operations. As we ensure the well-being of our employees, we maintain a robust roster of talents that will motivate us to meet our purpose and mission.

OPERATIONAL COSTS AND INVESTMENTS PER CAPITAL AND VALUES CREATED FOR OTHERS

In determining our investments in the various capitals, we developed a financial tagging method in 2021. Stepwise, the financial officers of the head office and all the subsidiaries identified the ESG elements of the 2021 budget then tracked the expenses at the end of the year. The group developed a common ESG glossary referenced on the GRI, SASB, and TCFD standards for the guidance of the group. As we continue to hone this new method, our information coverage will improve for the next few years.

Financial tagging covered the business’ operational costs and investments. This included costs to avoid any adverse impact and promote the welfare of our planet and communities. These are the spending for monitoring activities to ensure compliance with standards, studies on resource use and efficiency, investments in habitat protection and conservation, and support to communities. Below are our spend and investments per capital in 2021:

Summary of ESG Expenses from January 1 to December 31, 2021

NATURAL CAPITAL

Natural capital amounted to 59.5 percent of our operational costs and investments. This capital includes categories such as: procured material resources, acquisition and maintenance of land, water-related costs including studies for efficiency and conservation, projects for material efficiency and waste management, environment-related CSR projects, and GHG management.

Nature provides materials and water, controls the climate, and offers spiritual and educational services to everyone. Our lowest impact value for the planet came from our GHG emissions in terms of value creation. To address this, in 2021 we studied the feasible carbon levers we can adopt and we will develop our decarbonization plans in 2022. Our environmental effects are beyond emissions. We are doing well in conserving and restoring the biodiversity of the tropical forest, mangrove, and marine areas around our project sites. We will continue our initiatives in building up the ecosystem services of nature in our worksites as they have far-ranging benefits to our business, the public, and the climate. More details on how we are doing with our environmental parameters are discussed in the section on Natural Capital here.

MANUFACTURED CAPITAL

Our businesses are capital intensive by nature. Thus our investment in this capital ranked second highest of our expenses at 28.4 percent. The highest expenses were on the construction of facilities or infrastructure, followed by equipment procurement and the maintenance of our existing equipment, renovations and improvements made for building asset resiliency, and the shelterin- place infrastructure for our workers. Our new infrastructure investments led to job generation and now serve the basic needs of society, while other investments are for safe operations to protect our employees and the nearby communities.

SOCIAL CAPITAL

0.9 percent of our costs and investments are Capital on page 106. our contributions to social capital. From the highest to the lowest cost, the investment for this capital includes adherence to local and national regulations (e.g., permits, licenses), education and livelihood projects for host communities, donations to social causes, customer relations, networking with associations, co-projects with other organizations, and investor relations activities. Together with our subsidiaries, our values to our host communities are our contributions in education to prepare the youth for employment in the future, environmental protection for their well-being, livelihoods for their needs, and disaster resilience initiatives.

The economic impact of our operations has a multiplier effect that leads to additional economic activities on various parts of the local economy to benefit other communities beyond our host areas. In line with our mission of regeneration, the economic values we created result from collaborating with our stakeholders for our mutual benefit.

More information on how we support our communities are found in the section on Social and Relationships Capital here.

HUMAN CAPITAL

Our support for our employees ranked third in our investments and spending, comprising 10.3 percent of our spend and investments. Consistent with our policy of respecting and treating our employees fairly, the amounts were spent on their salaries and benefits; our COVID-19 vaccination program; medical, health, and psycho-social support and programs; occupational health and safety; training programs and learning platforms; employee engagement events; and tools to better enable them to work from home. We did not have any incident of underpayment of employees, forced labor, and child labor which contributed to the favorable results.

More information on how we supported our employees are found in our section on Human Capital here.

INTELLECTUAL CAPITAL

Expense items for this capital include IT software and tools, intellectual property, IT systems, cybersecurity measures, research and special studies on issues, and ISO certifications. These activities make up the remaining 0.9 percent of our expenses. The values created include protecting the information of the business and its employees as well as the continuation of operation for all the stakeholders that benefit from the business.

We are grateful for the resources generously provided by the earth, our co-creators, network, host communities, and funders. Our focus on the values we created other than for the enterprise helps us better understand our wider impacts. With continuing attempts to valuate our impacts, we also hope to assess—with our Group’s unique capabilities—where the key areas we can contribute the most impact are. We hope that with this new knowledge, along with our mission and ambition, we can also give generous returns to our pentad stakeholders.

Our commitment to sustainable development is the first step in achieving our mission of regeneration and decarbonization. To understand our contribution to the Sustainable Development Goals (SDGs), we looked into how we do business, evaluated our environment and socioeconomic contributions to our local communities, and determined the values we bring that stem from the six capitals.

We aligned our performance with the Nationally Determined Numerical Targets provided by the National Economic Development Authority (NEDA) to the SDGs14 to ensure that our impacts attribute to the Philippines' SDG targets. We then categorized our direct and indirect effects to the five core pillars of sustainable development, namely People, Planet, Prosperity, Peace, and Partnerships, to illustrate further the values provided to our multiple stakeholders.

Based on the process above, the contributions of FPH are mapped against the five core SDG pillars and specific indicators. FPH can contribute to 14 out of the 17 SDGs and 37 indicators.