Editor's Note: Ayala Corporation chairman & CEO Jaime Augusto Zobel de Ayala recently participated in an online panel on “Corporate Social Responsibility Revisited” last September 10 arranged by The University of Chicago Booth School of Business. Zobel shared his thoughts on the private sector’s evolving responsibility towards society, its shareholders and employees especially amid the pandemic. Below is an excerpt of Zobel's panel responses.
What is the best division of labor between governments and the private sector in the face of a challenge like the pandemic, which seems to have overwhelmed every government on the planet—whether developed or emerging market?
We built, I’d like to think, a high degree of trust. And so there was a lot of collaboration early on in this process, both from a discussion point of view and an action point of view.
I think what was clear is that there was no playbook in a time like this.
We all kind of could smell where this was going. And we could sense that there was gonna be the possibility of a lockdown, but I don’t think ever in my history in business had I ever seen a situation where not only was the country locking down, but all revenue flows globally, in every other business was also going through the same thing.
I think we just looked internally first, and our first instinct was just entrepreneurial... put an emphasis on our employees and the economic structure and systems around us.
We instinctively felt, and I think empathy was needed in a time like this. That was the one that kicked in. And we said, “what [must] the people who are part and parcel of our ecosystem be feeling now?”
And we said that the first ones would be our employees. The insecurity level must be so high with respect to their financial well-being, their health well-being.
Day one after something like this, I mean if I’m worried and I’m worried for my institution, imagine what a person in the organization (is feeling)… So the first thing we did is, we can’t do anything unless we have an organization that feels safe in every sense of the word.
So we basically gave them the assurance at that point that we would not be laying off anyone, that we would keep everyone as is, that we would use our resources as an institution to try, for as long as possible, to ride out this crisis and keep everyone safe. So that built an esprit de corps right up front.
The next community were the people who were part of our ecosystem. We’re a multi-business group in the Philippines, and we in turn gave them comfort that—you know, I said, our capitalist system and our ecosystem as a series of businesses work because we all work together.
There are tenants in our malls, we have suppliers. I mean, the ecosystems live because it is integrated. That is the beauty of the capitalist system. But that same ecosystem starts to fray at the edges when you have a major pandemic of this nature.
So we then gave them comfort and said, look, we can’t guarantee this forever, but for the next couple of months, let’s cancel all tenant payments, let’s slow down on interest rate that is owed. On bills that need to be paid, let’s cancel those as well.
In a way, symbolically hold hands, ride this out together, rebuild together.
And finally, my brother Fernando and I that run the company together said you know, this is a time when for the government to start readjusting its budgets and reacting to what is needed is a laborious process. You’ve gotta go, you know, to our congress, to our senate, reallocate budgets. And I said, this is gonna take a while.
And I said we have a problem from day one of this pandemic. A city of Manila with about 14 million people, and all the day laborers we have will be without a job and without food right up front. So we made some phone calls and within 48 hours, we were able to harness 270 of the largest institutions in the Philippines and come up with a structure to basically start a program to put food in people’s hands during this period.
It was an instinct that followed a little bit the thought process I’d given. We talked a lot during that time and the ADB quickly sensed an entrepreneurial verve of the private sector and said, you know, let’s just latch on to this and see how we can all work together.
So I think, one important idea that came out of all of this is sometimes, problems that are more overarching, that are more global or more national, sometimes cooperation is more needed than competition. And these are moments when harnessing a collective force becomes a very powerful thing. And that is not something that traditional economists or traditional business schools would teach.
Competition of course is the ultimate mantra. But here you have a situation where the broader problem can only be addressed by a sense of unity, a sense of cooperation, and a sense of common purpose. I feel that agenda should be put a little bit higher, I guess, in academic circles in the future, particularly as we tackle global issues, issues of climate change, issues of health—these need overarching answers.
In retrospect, what can the private sector do better? What can governments do better to prepare for the next emergency?
The definition of where our responsibility lies, it’s a gray area. I don’t think there’s any kind of a black or white system here. But if we become too narrow, in our definition of our responsibilities, then we all end up just sitting on the side and watching problems happen or not addressing solutions.
I think the moment you have a broader point of view where we are part of civil society, the business sector has a role to play in building trust and addressing some of the pain points that we have in our development needs, then you begin to start changing a philosophical mindset that your institution has a bigger responsibility than just to the shareholders.
It has a responsibility to the society it’s working in, and societies are all different. A developed economy is very different from a developing economy. Trust gets built in different ways, the needs are different.