SM INVESTMENTS CORP. (SMIC), the country’s largest conglomerate, is planning to ramp up investments to bolster the resilience of its businesses as climate-related risks continue to rise.
“Some people view climate change as maybe an additional expense but for the group, we look at it more differently… It’s really not just the returns on profit. We look at it as an overall return on the entire ecosystem of the SM group,” SMIC President and Chief Executive Officer Frederic C. DyBuncio told BusinessWorld Editor-in-Chief Cathy Rose A. Garcia during an episode of BusinessWorld One-on-One online interview series.
Established in 1960, SMIC’s businesses span across various segments, including property, retail, banking and portfolio investments.
Following the lead of its late founder Henry Sy, Sr., the conglomerate is putting sustainability at the forefront of its businesses.
“Sustainability is something which is very dear to our hearts. It’s something our founder, Henry Sy, Sr. has started… Anything that we do to spend in terms of sustainability is something which we look at not as an expense, but it’s something which will help the (SM) Group move forward in a much faster clip,” Mr. DyBuncio said.
“We really believe that sustainability is something key for the growth of the group.”
SMIC is making these investments today to ensure future growth, he said.
“We spend today to help Filipinos be able to access better banking, better modern retail… And anything that we spend on climate change and sustainability is really something for us that will plant the seeds for the future,” Mr. DyBuncio said.
The Philippines faces one of the highest disaster risk levels in the world. Every year, the country grapples with extreme weather events such as typhoons, droughts and rising sea levels, as well as earthquakes and other natural disasters.
“For SM, we want to be known as a major climate champion. Being one of the larger conglomerates in the Philippines, we think it’s part of our responsibility to be able to be the champion for climate (action),” Mr. DyBuncio said.
Among its business units, the property group is seen as the most vulnerable to climate change.
“But it’s difficult to say that property group alone is the only sector that is vulnerable to climate change because from our perspective… every one of them (business units) is affected somehow by climate change,” he said.
SM Prime Holdings, Inc., the property arm of SM, is earmarking approximately 10% of its capital expenditure to sustainable and resilient designs to mitigate the impact of natural disasters.
“We make sure that even in times of calamity or crisis, our malls are able to be able to serve as community centers to help people who are displaced during times of typhoons,” he said.
RENEWABLE ENERGYAs part of its sustainability efforts, SMIC has committed to harnessing renewable energy as a long-term growth driver to help future-proof its businesses and the communities it serves.
SMIC’s property and retail segments are advancing clean energy adoption by installing solar photovoltaic systems to energize malls and stores.
“For us, renewable energy is very important because unless you can bring power costs down, it would be very difficult for foreign direct investments to enter the Philippines, right? So, we’re making a big push to be able to increase the amount of renewable energy that we produce,” Mr. DyBuncio said.
SMIC, through its unit Philippine Geothermal Production Co., is also expanding its renewable energy portfolio as it explores new geothermal energy resources.
Although still modest compared to its core businesses — banking, retail and property, SMIC is also focusing on renewable energy and logistics.
“That’s going to be our focus as well moving forward because in our mind, it’s something that will really help the country continue to prosper moving forward,” Mr. DyBuncio said.
MORE OPPORTUNITIESDue to its sheer size and extensive footprint, the SM Group is often considered a bellwether for the Philippine economy.
“As long as the Philippines continue to grow at like a 5.5-6% clip, I think we should be able to continue to grow. Our focus as a group continues to be in the Philippines because we believe that there’s still a lot more opportunities in the country,” Mr. DyBuncio said.
The conglomerate is mostly focused on Luzon but is looking to expand more into Visayas and Mindanao.
“We are still investing in Visayas, Mindanao, bringing some modern banking and modern retail there,” he said.
With the Philippines remaining a consumption-driven economy, the SM Group is well-positioned to capitalize its sustained growth.
“As long as the country continues to grow, as long as the economy continues to improve, we’re still very optimistic about the future of SM,” Mr. DyBuncio said.
“All of our businesses really touch the lives of the Filipino people. So as long as they continue to spend, they continue to bank with us, they continue to buy our properties. I’m very optimistic that the future of the group will continue to be very, very bright.” — Sheldeen Joy Talavera
Catch BusinessWorld One-on-One online interview series “Reconfiguring Business Amid Megatrends” on BusinessWorld’s Facebook page and YouTube channel. The interview with SM Investments Corp. President and Chief Executive Officer Frederic C. DyBuncio will be streamed at 11 a.m., Sept. 23 (Tuesday).
