Timothy Daniels: SM’s sustainability standard bearer

SM Investments Corp. (SMIC), a conglomerate led by the Sy siblings, is allocating a portion of its resources to facilitate crucial discussions on climate action and establish partnerships to support the country’s commitment to addressing climate change.

At the forefront of the conglomerate’s push to save the planet is Timothy Daniels, SM Investments consultant and head for investor relations and sustainability. 

The SM Group’s campaign aims to prioritize promoting a low-carbon economy through nature-based solutions. 

Nature-based solutions involve the protection, sustainable management, or restoration of natural ecosystems to tackle challenges such as climate change, human health, food security, water security and disaster risk reduction.

“At SM, our vision is to be a catalyst for responsible development in the communities we serve. This involves careful decision-making and integrating sustainable practices into how our business is done,” Daniels said.

“The Philippines is one of 18 mega-biodiverse countries in the world. We only contribute 0.3 percent of global greenhouse gas emissions and yet we are among the top 3 most vulnerable countries to the effects of climate change,” he added.

The SM Group has created a Sustainability Management System that concentrates on climate action and resource management. 

The climate action strategy includes both mitigation and adaptation measures that are in line with national policies and the country’s agreement to the Paris Agreement on Climate Change. 

On the other hand, resource management aims to reduce the extraction of natural resources, encourage nature-based solutions, and promote circular systems to create a more sustainable process.

SM Prime Holdings Inc., the property arm of the SM Group, recently entered a joint venture with GUUN Co., a Japanese-based material recovery and environmental solutions service company. 

The venture aims to reduce landfill impact and develop an infrastructure for systemic waste management and resource recovery.

SM Retail Inc., the retailing arm of SM, promotes a circular system among its partners and suppliers through the SM Green Finds program. The program introduces more sustainable ways of manufacturing goods and product designs while instilling a green lifestyle for producers and customers.

Philippine Geothermal Production Company (PGPC), one of SM’s portfolio investments, helps boost the group’s advocacies toward renewable energy. PGPC operates two steam fields producing around 300 megawatts of steam, converted into electrical energy.

SM is one of the first supporters of the Carbon PH Coalition, which aims to actively participate in advocacy, capacity building and collaboration. 

The group is also involved in reviewing House Bill 7705, which promotes a low-carbon economy and aims to ensure fair implementation of regulations on carbon emissions among businesses.

Currently, the coalition comprises 48 companies, including SM Investments Corporation and Aboitiz, among many others.

Daniels as the ecology champion of the conglomerate described the impact of climate change as very much at the center of the Philippine narrative.

The inequity in the climate crisis where the burden is stacked high against developing nations is known to Daniels.

“We all know that while the Philippines only contributes 0.3 percent of global green house gases but it is among the top three most vulnerable countries to the effects of climate change,” Daniels said.

Thus, he explained that the SM Group is working at nature-based solutions for most of the problems besetting the corporate giant.

“We work with nature to find solutions and we incorporate them into programs in our businesses as part of how these are run,” according to Daniels.

The Philippines is one of 18 mega-biodiverse countries of the world. It is endowed with two-thirds of the earth’s biodiversity and between 70 percent to 80 percent of the world’s plant and animal species.

The Philippines also ranks fifth in the number of plant species while it maintains 5 percent of the world’s flora.

Such biodiversity is supported by a large variety of ecosystems, landscapes, and habitats — most of which are also greatly threatened by human activities, he explained.

Its presence in practically all parts of the country gives SM Group the potential to be a catalyst for responsible development in communities.

SM Group, thus, developed a Climate Action Policy that incorporates both mitigation and adaptation backed by a Resource Management Policy that manages the use of natural resource.

Nature-oriented development

Among the examples of the sustainability strategy are the Hamilo Coast, SM’s eco-resort in Batangas, which is a marine biodiversity home within the Coral Triangle.

The Coral Triangle also supports large populations of commercially important tuna, fueling a multi-billion-dollar global tuna industry.

Over 120 million people live in the Coral Triangle and rely on its coral reefs for food, income and protection from storms.

“We are responsible for protecting the ecosystems that comprise the tip of this Triangle that faces the Philippines,” according to Daniels.

As such, the SM Group worked with WWF to name 3 areas as Marine Protected Areas.

It then worked alongside the fishing community — equipping them with more sustainable ways of fishing and engaging them to be marine protectors from water pollution, “Also we invite our hotel guests at the Pico de Loro resort development in Hamilo to be co-protectors of the Coral Triangle through our sustainable tourism efforts,” according to Daniels.

SM Group’s broad presence throughout the country also presented opportunities to pilot solutions that promote circular systems such as SM Prime’s joint venture with GUUN Co. Ltd. (GUUN), headquartered in Yokohama City, Japan, for the operation of material recovery and recycling facilities, along with environmental solution services.

Invited by the government of Cebu in 2014, GUUN initiated the production of fossil alternative fuels called “fluff fuel” from non-recyclable waste materials.

“SM Prime partnered with GUUN to actively participate in developing infrastructure for systematic waste management and resource recovery, following the best practices of Japan,” Daniels related.

SM Retail Group also have a program called “Green Finds” that promotes circular systems among suppliers, incorporating greener ways and the use of natural materials as part of their product design and manufacturing.

The group also invests directly and indirectly in renewable energy sources.

PGPC produces some 300MW of geothermal steam used to create clean energy from two operating steam fields.

“Our partner on our current fields is Aboitiz, and the energy produced is used by our own companies in the SM Group in a win-win-win relationship,” Daniels said.

He added PGPC has expansion plans being actively worked on in 6 other geothermal concession sites around the country, as the energy arm aims to double the number in the medium term.

He cited the increase in the group’s exposure to a 29 percent stake in CREIT, which operates as a listed REIT vehicle for solar energy production.

According to Daniels, since the SM Group is growing and expanding nationwide, it needs more RE to address its energy needs in a sustainable way “as we move away from carbon even as our businesses grow.”

The group’s seven commercial buildings in the NEO Group, part of the SM ecosystem, use RE.

SM Prime also committed to use more RE and be net zero by 2040. Apart from sourcing renewable energy sources, the retail operator installed solar panels on the roof tops of SM malls and other buildings.

“We aim to scale this approach with our group across other buildings and to drive sound carbon management objectives,” he explained.

The group’s banking arm BDO is also actively driving a Sustainable Energy Finance initiative since 2010, in partnership with the World Bank’s International Finance Corp.

To date, BDO has funded 59 RE projects across the country.

“In my role at SM, I get to speak to hundreds of investors around the world each year and hear different points of views on Nature-Based Solutions and Setting Net Zero Targets, as a climate action strategy,” Daniels shared.

Daniels said in the long run, the investments on sustainability initiatives will be a major profit driver.

The hypothesis about sustainability driving higher returns was tested during the pandemic.

“Indeed, companies classified as sustainable did outperform conventional stocks globally. In large part this was because of their exposure to healthcare and digital rather than manufacturing businesses… in the last couple of years they have underperformed more traditional sectors and non-ESG investments though… this is something to be tracked over the longer term,” Daniels stressed.