Coal departure pays off for Lopez energy unit

MANILA, Philippines — There was no regret on the part of First Philippine Holdings Corp. (FPH) to abandon coal as power source 4 years ago, a decision that had since been followed by a broader government push to stay away from fossil fuels amid catastrophic disasters.

“I was already at the helm during the devastation wrought by Typhoon Yolanda and our defining response to this and other subsequent natural disasters,” Federico Lopez, chair and chief executive, said on Monday.

“This led us to firming up our group’s definitive ‘no-to-coal’ declaration’ in 2016 which was not easy to explain to shareholders and analysts…Despite the doubters, let me say we never wavered and never once regretted the decision, especially today,” he added.

Lopez was awarded Management Man of the Year by the Management Association of the Philippines, an industry group. The award cited his push for “transition to a low-carbon economy” demonstrated by FPH's growing portfolio of renewables that last year reached 3,492 megawatts, accounting for 21% of the country’s power output.

That move had since been replicated on the broader economy. Last month, the energy department decided to stop accepting application to build coal power plants and focus on renewables. That new policy came in tandem with the easing of foreign ownership restrictions for new large-scale geothermal powerplants. Around 33% of the Lopez’s energy portfolio are in geothermal.

In his acceptance speech, Lopez stressed that while abandoning coal at the time meant “walking away from profit opportunity,” it likewise reflected the company’s realization of a bigger corporate responsibility to contribute to fight against changing climate.

“Millions of Filipinos were sequentially pummeled and thrashed by Rolly, the world’s most powerful typhoon this year, and Ulysses, one that surpassed Typhoon Ondoy’s wrath in 2009,” he said.

“The destructive power of these formerly 100-year events has no doubt been intensified by the accelerating climate crisis and now hit us with greater frequency and regularity,” Lopez explained.

That said, growing climate change awareness this day also made FPH’s clean energy focus pay off business-wise. Over the past decade, the holding firm’s recurring net income recorded a compounded annual growth rate of 29%, Lopez said.

At the stock market, shares at First Gen Corp., the energy unit, has surged 11.4% as of Monday since October 27 when the energy department announced a halt in coal plant building and investing more in renewables.

FPH shares are trending down 1.89% to P28.50 apiece as of 11:53 a.m. Tuesday. 

“Businesses need to align themselves, their resources and their capabilities towards a mission that seeks to elevate everything they touch— their customers, employees, suppliers, contractors, the environment, communities and, of course, their investors,” Lopez said.