Melody Padilla
De La Salle University Manila
Pia Manalastas
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Being in the water utility sector directly affected by climate change, Manila Water has long recognized its critical contributions in mitigating its impact and has formalized its Climate Change Policy in 2007. Since then, the company has adopted robust climate resilience measures and initiatives and has become the first water utility company in the Philippines and Southeast Asia to be recognized as a Climate Smart Utility by the International Water Association in 2022. (Manila Water recognized as IWA Climate Smart Utility, 2022)
The Philippines is not a major emitter of GHG as it is not a highly industrialized nation. However, being archipelagic and taking into account the geographic location along the natural path of typhoons that have grown stronger and more destructive, the Philippines is one of the most vulnerable nations. Therefore, it would be appropriate to prioritize climate adaptation and mitigation. (Climate change and the Philippines, 2022)
Manila Water realized the importance of climate change adaptation, mitigation, and leadership and has embedded it in its business. In 2007, the company formalized a Climate Change Policy and had been one of the pioneers in the Philippines. Sarah Bergado, Manila Water Sustainability Department Head, acknowledged that being in the water sector, the business will be heavily impacted by climate change that is why the company has strengthened its climate change adaptation measures and was recognized as a smart climate utility, “In responding to climate change, Manila Water initially prioritized climate adaptation - that meant fortifying your facilities, enabling it to adapt typhoons, flooding and other natural disasters that are aggravated by climate change. It also meant building water resilience and securing enough water supply for our customers. That is why we disclosed an ESG target of a 15% raw water buffer by 2025. It ensures the public and the customer that we serve that we will not run out of water despite the impact of climate change. It doesn’t stop there; we are also looking into how we can contribute to climate change mitigation. That is by reducing our greenhouse gas emissions and transitioning to renewable energy. So, these are all works in progress. I wouldn’t say it’s a success already because it’s still an ongoing issue that we have to think about as an organization”
Additionally, the company reinforced its sustainability goals through environmental, social, and governance (ESG) commitments to 2025, which include:
(Sustainability at Manila Water, n.d.)
By installing its own solar panels and purchasing RE from Open Access, Manila Water used 13.8 million kilowatt hours (kwh) of renewable energy in 2021. The snapshot shows the solar panels that were installed at Taguig's South Septage Treatment Plant.
Manila Water draws inspiration from its long-term sustainable growth ambition, driven by its commitment to customers, society, and the environment. Bergado emphasized the importance of strong communication from leadership and the alignment of sustainability ambitions with the core business, “Whenever we (employees) lack inspiration, we always put what the former Chairman mentioned during the privatization, that acquiring the water concession at that time was not just a business to run, but a mission to fulfill.”
Bergado also highlighted that acknowledging the importance of the job that each one performs to provide for the public's needs and protect the environment inspires the employees at Manila Water to work harder and do more. "Employees recognize that everything they do is for a sustainable future. It is for their children and for the next generation to benefit by doing the right things now."
The Philippines' first Nationally Determined Contribution, which targets to cut greenhouse gas emissions by 75% by 2030, has been authorized by former President Duterte in 2021. Manila Water aims to help achieve this national target mainly through expanding and improving its wastewater treatment facilities. Along with reducing and avoiding its carbon emissions, the company also aids in nature-based carbon capture.
Reduction in carbon footprint is achieved through more energy- and resource-efficient processes. The company's NRW was reduced to 10.2% from 63% in 1997 across the enterprise resulting from the collective efforts to increase leak detection and repair activities, replace outdated customer meters, and balance water pressure with demand. Meanwhile, the company innovated on energy-saving initiatives by using capacitor banks for power factor enhancement, enrolling qualified facilities in Meralco's Peak/Off-peak program, and disconnecting inactive facilities from Meralco. Also, onsite-solar panels were installed in its five facilities that generated 156,800 kWh RE. This resulted in a reduction in greenhouse gas emissions (GHGs) by 9,102 tons in 2021.
On the other hand, carbon avoidance is achieved by treating wastewater aerobically in sewage treatment facilities so that methane emissions from septic tanks are prevented, reducing carbon emissions by 51,814 tons in 2021. Sewer coverage in the East Zone of Metro Manila increased to 33.5% in 2021, or 2.3 million users, up from the 3% sewer coverage that served 45,000 customers in 1997. The company started building the Mandaluyong West Sewerage System Project and the Aglipay STP, to complement the existing 41 wastewater treatment facilities, which are set to be completed in 2025 and 2024, respectively. It would serve 652,000 people within a catchment area of 2,115 hectares.
Lastly, Manila Water's continuing watershed protection and reforestation projects in its main watersheds aid in natural carbon capture. Manila Water has planted and maintained one million two hundred fifty-five thousand six hundred twelve trees through programs and partnerships since 2006. (Sustainability at Manila Water, n.d.)
The water utility sector falls under the category of commodities where the need for the water supply is constant and ongoing. However, freshwater flows are being put at risk due to excessive water use for urban living, pollution, declining natural ecosystems, and extreme weather events brought on by climate change. The growing water-related threats to businesses and economies demand companies with water-dependent supply chains like Manila Water to develop sustainable water infrastructure and management resources.
According to Boston Consulting Group research, Strong ESG practices, as components of a company's "total society impact" (TSI), have been linked to better financial performance, including higher total shareholder returns. The TSI of a company's operations, core competencies, and activities is its benefit to society as a whole. (Tapping the Business Benefits of Sustainable Water Investments, 2018)
Despite the challenges to operations brought about by the COVID-19 pandemic, Manila Water still managed to maintain its earnings before interest, taxes, depreciation, and amortization (EBITDA) at 61% in 2021. The company believes that investments in sustainable water projects relevant to its core activities will progressively pay off. Consequently, Manila Water continues to scale up its capital expenditure (CAPEX) initiatives in water supply security, expanding service coverage, and adhering to regulatory standards for wastewater treatment.
Manila Water's Sustainability Framework is anchored in its vision of becoming a global leader in providing high-quality water and environmental services supportive of sustainable development. As a water utility serving more than seven million customers in 23 cities and municipalities in the provinces of Metro Manila and Rizal, the company is aware of the significance of its contributions to the environment and society in general. (Sustainability at Manila Water, n.d.)
One of Manila Water's main sustainability agendas is to contribute to local economies in terms of the CAPEX or crucial infrastructure it will build in Metro Manila and related communities to increase service coverage and offer customers water and wastewater services. In 2021, the East Zone concession spent P13.7 billion, which was a record high. Projects to develop new water sources, like Calawis, Kaliwa, and East Bay, received 65% of the funding. The rest was set aside for new wastewater catchment development and Biological Nutrient Removal (BNR) compliance. These investments lead to creating jobs within the company and opportunities throughout the supply chain. The company also believes that bridging access to clean water and wastewater services improves consumer health, making people more productive, fostering economic growth, and reducing poverty.
Moreover, Manila Water ensures that clean water and sanitation are accessible and affordable for customers while still being environmentally friendly; hence, the company continuously invests in initiatives that increase water efficiency and lower waste and carbon emissions. To supplement its measures for environmental protection, Bergado said that Manila Water has also established strong partnerships and collaborations with its key stakeholders. "As much as we can, we engage all our stakeholders - customers, government, regulators, supply chain, and the investing community in driving both our business and sustainability efforts. This is through partnerships in advocacies, information and education campaigns (IECs), forums, and joint projects." Bergado also mentioned that the company has also adopted a procurement strategy that integrated sustainability into its operations by including social and environmental considerations in the accreditation requirement of vendors to which she emphasized, "It is not enough that your company is doing good in terms of the environment, but you make sure also that your partners in delivering those services like your contractors and vendors are also part of the program." The organization believes collective efforts and collaborations with stakeholders will be vital to achieving its sustainable development goals.
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Sarah Bergado, Sustainability Department Head
Manila Water is a publicly listed company with vast knowledge in the Philippine water industry, from water treatment and distribution to wastewater management and sanitation services. The company caters to more than seven million people in the East Zone of Metro Manila, which is home to 23 cities and municipalities, including Makati, Mandaluyong, Pasig, Pateros, San Juan, Taguig, Marikina, the majority of Quezon City, parts of Manila, and the towns of Rizal. Manila Water has also expanded its operations in other areas of the Philippines, Vietnam, Thailand, and Saudi Arabia.