FPH has identified a list of non-financial themes and indicators that it abides by in monitoring the progress of our ESG performance. This list of ESG material indicators is updated every 2-3 years to ensure that the organization’s focus on ESG matters stays relevant with the times and relevant to the state of the organization. Apart from updating the material issues at regular time intervals, FPH is also attentive to on-going developments in the ESG landscape and considers how these would apply to how we approach our material issues.

The FPH list of material issues was last updated in 2022. The methodology used to update our material issues is described in this section. Then in 2023, FPH began a process to further develop our ESG material issues to include SASB metrics. This is an on-going activity.

Materiality Assessment Methodology

In 2022, FPH commissioned the University of Asia & Pacific - Center of Social Responsibility (UA&P-CSR) to conduct the Materiality Assessment Process. In determining the material ESG topics that would guide FPH’s sustainability program and activities, UA&P-CSR used a pioneering method called the “Quadrilateral Materiality Assessment Tool” in combination with the Double Materiality Approach.

Double Materiality Approach

The Double Materiality Approach melds together a financial materiality analysis and an impact materiality analysis in order to give equal emphasis to how the company creates economic value for the benefit of its investors as well as the company’s impact to its multiple stakeholders. With this principle, the following standards and guides were referenced in the materiality assessment:

Quadrilateral Assessment

The Quadrilateral Materiality Assessment Tool developed by UA&P-CSR consists of two main processes: a) a process of surfacing, and b) a process of prioritization. The process of surfacing involves four main activities:

• Literature review, which involves gathering information on the critical risks and opportunities to FPH as viewed by secondary stakeholders such as commitment formers, stock exchanges, industry associations, and the like.
• Benchmarking with industry peers, which identifies the commonly reported ESG topics in the industry of FPH. The results from the literature review and peer benchmarking were then used to develop a double materiality survey.
• Senior Management Consultation, where the senior management committee of FPH answered the survey questionnaire on the current or potential impact of ESG topics.
• Stakeholder Consultations, as facilitated by UA&P-CSR, where priority financial and socio-economic environment stakeholder groups of FPH participated in a similar survey provided to the senior management of the company.

After the process of surfacing pertinent ESG topics, the process of prioritization is conducted. This consists of discussions and reviews with the FPH senior management regarding the results of the process of surfacing.

This methodology ensures that the material topics assessed are grounded on current ESG standards and best practices, local policies such as the ESG reporting requirement of the Philippine Securities and Exchange Commission (SEC); and international commitments. With FPH having multiple stakeholders, corresponding standards and frameworks were adopted in the report. With regard to internal and external stakeholders, the perspectives of customers, employees, vendors and partners, government, communities, and investors were sought out.

Assessment of Material ESG Topics

The materiality assessment of 2022 resulted in 37 material issues. In 2023, these were reviewed considering changes in the business environment. The list of material issues has thus been amended to 36, with the following changes:

• The COVID-19 pandemic was no longer seen as a threat and thus dropped from the list; and
• The time frame of the impact for 3 classes of material issues (procurement-related, talent-related and corporate governance-related) were amended from medium-term to short-term.

The relevance of each material issue is discussed below:

Industry-specific Material Indicators

To better incorporate the aspect of Financial Materiality in our material ESG indicators, as well as to better integrate with the IFRS standard, TCFD recommendations, and the upcoming SEC ruling, FPH is in the process of identifying the industry-specific material SASB indicators for each of our businesses.

In 2023, FPH ran a capability-building session on SASB across its business units. These workshops allowed the organization a deeper understanding of the SASB standards and aided in the identification of the material industry-specific issues each of the subsidiaries need to monitor. This process marks the beginning of having more specific ESG metrics to which FPH business segments can take action on.

Given the identification of subsidiary-specific ESG indicators, many of these overlap and link to the overall FPH ESG material issues identified through the double materiality principle. Pages 105-107 show the interface between the FPH overall ESG material issues with that of our business segments’ industry-specific SASB indicators. While these SASB Industry-specific topics were identified in 2023, this current report covers the FPH-Identified ESG Material Issues. FPH will be establishing processes in 2024 to gather data and monitor these new SASB metrics; each subsidiary will be monitoring both the overall FPH ESG material issues as well as its detailed SASB indicators in the next years.