“I don’t see efforts to dismantle sustainability, especially on climate action in the Philippines. Companies here are still committing to it,” said Gaudiano.
However, the US still wields massive influence in the Philippines – one if its oldest Asian allies. As such, the US could still be capable of “limiting growth and expansion” on local companies, he warned.
To avoid this scenario, the 41-year old lawyer believes in stepping up communication with stakeholders and employees on how sustainability is not just a “progressive idea” but a business strategy that benefits the bottom line.
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Sustainability has been on the rise, but now it is under attack. We need to be on the front line.
Christer Gaudiano, head of sustainability, corporate communications, and external affairs, MGEN
On this podcast, Gaudiano talks about the challenges he has faced in driving the sustainability agenda through a company which is still seeking to expand its coal fleet, despite striving to become coal-free by 2050.
Since he started in his role nine months ago, he was among those in upper management who pushed for quarterly townhalls, to make their sustainability strategy very clear: to lead the country’s energy transition towards a low carbon future with a diverse mix of renewables and fossil fuels. This year, liquefied natural gas (LNG) overtook coal as MGEN’s main energy source, while the firm is aiming to have more renewables than coal in its energy mix by next year.
“Coal will not be here forever. The world will transition to low carbon sources. But at present, we still need it to ensure that we will have affordable and reliable power,” he said.
Christer Gaudiano, sustainability head of MGEN, says stepping up communication to stakeholders and employees on sustainability may help local firms remain true to climate targets. Image: MGEN
“It is not coal versus renewables or renewables versus traditional fuels. We see that fossil fuels and renewables work together in a balanced and complimentary strategy, for us to be able to provide affordable energy.”
Tune in as we talk about:
- How Christer Gaudiano started out in sustainability
- MGEN’s sustainability ambitions: the biggest integrated solar and battery energy storage system in the world
- The main challenges faced by Philippine firms at a time of ESG backlash
- The role of sustainability in a company with an expanding fossil fuels portfolio
- Advice for young sustainability professionals
The edited transcript:
How did you start out in sustainability?
Sustainability is very new to me. Professionally, I was trained to be a lawyer. I’m still a practicing lawyer but we didn’t have sustainability subjects in law school.
There was an epiphany that came to me when I was working for a multinational cement company. It wanted to establish a sustainability department, because they have a global net zero agenda and it was something that they wanted to implement here in the Philippines. Given that I was performing a lot of advocacy work when I was still in the legal department of that company, they thought to correlate advocacy and sustainability.
Sustainability policies are not yet in place here in the Philippines compared to other jurisdictions so when my former bosses explained to me what sustainability was all about, I thought about my kids. They’re very young, aged nine and six years old. At that time when I took on the sustainability job, they were much younger, and I thought to myself – this is a job that I want to do that at the same time will benefit my children in the future.
From a multinational cement company, what prompted you to move to an energy company like MGEN?
MGEN now is totally different from the MGEN of two years ago. Meralco wants to beef up its power generation portfolio through MGEN. One of the things that made me make the switch to this company and this new role is the development of renewable energy projects across the country.
Currently we’re building the Meralco Terra Solar Project, a 3,500 megawatt (MW) peak solar PV with 4,500 MW hours of battery. Once this is completed, this will be the biggest integrated solar and battery facility in the world. When I was told that I will be a part of that project, I said to myself that I wanted to be part of history. The project is very important because it solves several issues here in the country, which is energy, reliability, renewable energy, and cleaner sources of energy.
At the same time, the general energy industry business is growing here in the Philippines. It’s also a niche kind of business and a very exciting industry to be part of at this time in the country.
The MTerra Solar project under construction in the province of Nueva Ecija. It will stretch across 3,500 hectares covering five municipalities between Nueva Ecija and Bulacan provinces, aiming to deliver 3,500 megawatts peak of solar power to the Luzon grid, with 4,500 MW-hour of battery energy storage by 2027. Image: MGEN
What are the main challenges you face at a time of ESG scrutiny?
I think one of the main challenges for sustainability right now is transparency and redefining what sustainability is all about. If all the reporting agencies really require substantial amounts of data to be able to communicate what you are trying to do and to avoid greenwashing, it will take a lot of time to collate all sustainability-related information. Some companies may have it, but for most companies in the Philippines, that will pose as a challenge.
What would complicate this further is that more companies want the reports to look good, creating a tendency to edit or to make the data look palatable for their stakeholders or to the public. That’s not something that we want to do.
The problem now is that there are just too many targets to handle on a given context. All these numbers are important, but I think we need to give value to each and every number and to every progress that is being made on a year to year basis. I think it’s important to highlight that companies do not need to excel on each metric year on year and to accept the reality that there will be fluctuations, that there will be a downward trend, and then there will be recovery later on. Practitioners or the auditors should not penalise companies for having fluctuating data, for as long as that company remains committed and can show actual progress.
For example, in Diversity, Equity and inclusion, companies tend to be punished for not hiring that many women, sometimes in the board or in their respective companies. But you have to realise that you don’t want this to be a gender game wherein you’re trying to reach the target for the sake of just reaching it by hiring more women, I don’t think that’s the objective of diversity. The objective of diversity is to give equal opportunities to everyone, regardless of race, gender or ethnicity. So in the event that the female candidate or a minority shows potential, you should hire them, but you should not be forced to hire on that basis alone.
How are local firms affected by the ESG backlash in the US?
You would see now there are a lot of efforts in the United States to actually dismantle DEI. There’s a need to push back on that and explain that DEI efforts are not for gender or ethnicity’s sake. It’s to protect minorities from bias. Those are the things that are posing challenges nowadays for sustainability.
I don’t see here in the Philippines, efforts to dismantle sustainability, especially on climate action. Companies here are still committing to it. You don’t see any announcement from any company that we’re not going to do diversity efforts anymore, at least not yet.
But the United States is a very powerful country, and there’s a lot of influence here in the Philippines, so that the effect of those policy decisions from the US now is to limit the growth or the expansion of these sustainability related efforts. Before, if a lot of companies are trying to become sustainable or expanding their sustainability strategies because of these new policies or directions from the United States. Some people are thinking otherwise – maybe we’re okay already with what we’re doing, or let’s not expand it anymore. Let’s just keep it up as it is. So that’s the problem that we’re facing now, and for me, the solution there is really to push back in the way of communicating the purpose of sustainability in our society.
You mentioned earlier that it is not possible for a company to hit all sustainability targets. Which one is most difficult for MGEN?
In almost all of the targets, we’re on track. The one target that will be very, very challenging, as far as the Meralco group is concerned, would be the emissions. We’re a growing country, and the main business is to support that growth by providing safe, reliable and affordable energy, that is technologically agnostic, so regardless of source, the energy that you need to produce must always be safe and reliable, because a family that will be having a dinner table tonight, when they check the Meralco bill, they will not care where that source came from, where the power came from, they will only look at the price of electricity, whether or not it’s affordable.
The balance between sustainability, affordability and reliability is always the trilemma of any energy company. But what is good about that is that before not so long ago, in the case of the Philippines, we were just exclusively fossil fuels. We were just exclusively coal for the longest time, and now we are seeing the resurgence of renewable energy, and other “transition fuels” such as gas. We need to undergo that transition. We cannot go overnight from coal to renewables, especially since renewable renewables that a lot of variability and cannot yet provide base load power.
The Philippines is already very aggressively pushing for renewable energy. Sooner or later, based on our plans for the next generation, more and more lower carbon sources will come online.
But don’t get me wrong. Coal will not be here forever. The world will transition to low carbon sources, but at present, we still need it no to ensure that we will have affordable and reliable power.
It is not coal versus renewables or renewables versus traditional fuels. We see that fossil fuels and renewables work together in a balanced and complimentary strategy, for us to be able to address energy which is affordable.
How are you ensuring that MGEN’s business units are motivated to ensure the company meets its sustainability targets?
Open communication with our employees and stakeholders has always been the key in delivering our growth.
The rest of the management team are all fairly new to MGEN. We introduced the concept of the town hall. We wanted to communicate what we’re going to do in the next five and 10 years in the company: our plan is to be the leader in the energy transition. We want to lead the country’s energy transition towards a low carbon future. We’re going to continue to provide reliable and affordable power. We’re going to invest in the largest renewable energy project the world has seen and we’re going to expand natural gas projects. With this diverse energy mix, we will hit these targets by 2030.
Every time we report to our stakeholders, we report it also to the employees. On top of that, we have special sessions for the coal plant sites, which are the ones producing power.
I don’t mind sharing that whenever we communicate we’re going to be coal free by 2050, employees of our coal plants ask: what’s your plan for us? Our answer is that we continue to support their growth and development in our other energy sources.
Before, an employee was only confined to coal-only or renewables-only. But now we’re going to invest your growth in other areas as well, whether that’s in our gas plant in Singapore or in Batangas, or whether that’s in a renewable energy project in Nueva Ecija. We’re opening opportunities to everyone so that the knowledge that they will have will not be limited to one energy source.
What is your advice to young people who want to get into the industry?
Don’t think twice. Go ahead and get involved in the sustainability agenda. Young people can become discouraged when they think that if they didn’t study a course on sustainability, then they may not be able to contribute or fit in that specific department. But that’s not the case. You are going do your own sustainability agenda, whether it is sustainability financing or waste management, emissions – there are a lot of things that you’re able to contribute to to make your company more sustainable, and all you have to do is actually take the cudgel for it.
We need young people now more than ever to keep the flame alive. Sustainability has really been on the rise, but now it is under attack. We need to be on the front line. If you really care so much about our planet, our single planet, we need to fight for it now.
