First Gen Integrated Report 2020

FPH Group Mission and Strategy

OUR PAST FOCUS

Climate change is a creeping event that the FPH Group has been monitoring for over a decade. When FPH’s and First Gen’s Sustainability Reports were released in 2016, the FPH Group’s actions involved limiting GHG emissions in terms of the five climate pillars, namely the management of GHG footprint, energy use, waste generation, water use, and supply chains. However, with the acceleration of climate change effects, there has been harsher weather, scarcer material supplies, greater social disparity, and heightened demand from consumers for more responsible products and services. As Chairman Federico R. Lopez assessed, “In these past years we realized that everything must change. We are living through what will be history’s greatest paradigm shift like the world has never seen before. We no longer have a choice.” Amid this setting, he saw an opportunity to reexamine and rewrite how the world should work and resolved that it should start with the Group leading to the new FPH Group mission of “Forging collaborative pathways for a decarbonized and regenerative future”.

SCOPE OF THE NEW FPH GROUP MISSION

Because of today’s highly complex and interrelated world, the FPH Group mission deliberately covers actions beyond the business fence. Thus, the phrase used in the mission is “decarbonized and regenerative path”, together with all the responsibilities it carries. As Daniel Wahl1, a proponent of the concept of regeneration believes, “Being regenerative is understanding that the only way you can serve yourself is to serve the larger whole, because you are not separate from it, you are fundamentally dependent on it.” As a result, every decision that the Group makes considers the bigger systems it is nested in—the environment and society. The Group aligns its resources and capabilities toward a mission that seeks to elevate not just the shareholders but also the broader stakeholders. Lastly, the new mission with aspirations of upgrading the planet and uplifting lives more clearly links the businesses to the global Sustainable Development Goals (SDG). The Company’s various vital stakeholders are shown in the value creation page, and a detailed discussion is found on this page. Meanwhile, its contribution to the SDG are found on this page.

“In these past years we realized that everything must change. We are living through what will be history’s greatest paradigm shift like the world has never seen before. We no longer have a choice.”

STRATEGY FOR THE NEW MISSION

There is a massive transformation that must happen to fully decarbonize and to regenerate the businesses, the planet, and society. Thus, the Group’s strategy further considers the following principles:

  • The Company’s approach must be inclusive– giving equal attention to its financial and non-financial capitals to capture long-term values.
  • A long-term approach necessitates looking at the future and therefore, inter-generations.
  • The FPH Group has a common mission but differentiated approaches due to the peculiarities of each specific business.
  • The Company must be sensitive to the locality where it operates to effectively restore the environmental and social balance in the area.
  • The Company needs to create and nurture employees and enable them to become their best selves so they can help innovate ways to address the needs of the time.
  • The Company cannot go on this journey alone. It needs to collaborate with like-minded groups to scale climate actions.

Based on the above understanding of the bounds of the Group’s mission, First Gen continues to advance its strategy:

POWER SEGMENT

Climate Analytics2 assessed that South and Southeast Asia can make a fundamental difference for the world to meet the 1.5-degree Celsius limit to avert the climate catastrophe because of the dependence of these regions on coal. This boils down to the universal action of decarbonizing the country’s energy system. To First Gen and the FPH Group, this also means helping decouple the growth of the economy with carbon emissions. At the same time, the action must be fast as in 2018, the Intergovernmental Panel on Climate Change reported that there is little time to act. At 1.5 degrees Celsius limit, the world can only absorb GHG emissions equivalent to only 10 to 12 years at business as usual.3

FPH, through its power subsidiary First Gen, will do its share in progressing in the FPH mission through the following strategy:

  • The country’s pathway to a decarbonized future must strategically start with the electricity sector. Then, that transformation must subsequently spread across the infrastructure value chain—the transport sector, buildings, industries, and eventually in the metamorphosis of communities. First Gen will help enable all sectors of the economy to lower their carbon footprint by providing clean energy to the grid and other market platforms.
  • The Company will participate in the needed energy transition from fossil fuels today to renewables and other energy-efficient technologies in the future. In pursuing this pathway, First Gen’s natural gas is fulfilling its role as a transition fuel. Its fast ramp-up capability is addressing the issue of intermittency of renewables and accelerating their penetration of the grid. As part of its own natural gas transition, the Company is closely monitoring the developments in hydrogen fuel and other cleaner technologies and when they will become economically viable.
  • The Company partners with customers and networks to understand and embrace the need to shift in the way everyone should work. The Company hopes that they too can contribute to the clean energy movement to help scale up actions to mitigate climate change impacts as all these will add up for the betterment of everyone’s future.

The Company’s experience in addressing COVID-19 in 2020 is a good gauge of the Group’s momentum. Its adaptiveness and quick response sho w the Company’s capability to deliver on its mission. Chairman Lopez is optimistic as he sees a “new generation of business leaders who are learning, reflecting with deep honesty, absorbing the lessons wholeheartedly, then moving on and proceeding, always wiser”.

1 Olsen, M. (2020). The future of sustainability is regenerative (and covid-19 just gave it another nudge).
Retrieved from https://www.linkedin.com/pulse/future-sustainability-regenerative-covid-19-just-gave-mette-olsen/

2 Climate Analytics (2019). South and Southeast Asia can power ahead with renewables: report.
Retrieved from https://climateanalytics.org/latest/south-and-south-east-asia-can-power-ahead-with-renewables-report/

3 Intergovernmental Panel on Climate Change (2018). Global warming of 1.5C.
Retrieved from https://report.ipcc.ch/sr15/pdf/sr15_spm_final.pdf