The Secret Sauce to Profit

By Chit U. Juan

When one thinks of a company’s sustainability, usually we just think of the business case, especially for micro-, small- and medium-sized enterprises (MSMEs). How profitable is the business? How sustainable is the model? But do we also give some thought to what makes companies last?

A study on Publicly-Listed Companies (PLCs) in the Philippines was launched by the Institute of Corporate Directors (, led by its Board Diversity and Inclusion (BDI) Committee Chair Helen de Guzman and Dr. Conchita Manabat. It revealed that diversity in boards does contribute to a positive return on equity (ROE).

While the Philippines reported on having more women in boards as a key development, two other ASEAN member-states contributed their studies at the forum: The Singapore Institute of Directors (SID) and the Institute of Corporate Directors Malaysia (ICDM). It was a welcome realization that there are striking similarities among the three institutions’ findings.

Diversity is often thought of as having women on boards, because the traditional composition of boards are men in dark suits, usually the family patriarch and his sons. But the ratios of women and men are no longer the only measure of diversity. Here are other factors mentioned by the speakers:

1. Age. Although having seniors and a higher average age (at 62-65 years old range) on boards is recommended, this means having more than one generation at the table. They recommend a 15-year difference or getting Baby Boomers, Millennials, and Gen Z together to reach this sweet spot of average age recommendation.

2. Skills and Expertise. There must be a variety of specialties, not just business management or financial prowess. In today’s age of technology, experts in other disciplines make a board more agile to respond to today’s challenges.

3. Tenure. The Singapore experience emphasized a maximum term of nine years for a board independent director, and a board composition where three members are new every three years. This, of course, presumes a board of nine or more members.

The ICDM also shared that they have a pool of over a thousand candidates, including first time directors, whose expertise in a field may be useful to most old companies who want to be in step with new trends in business. This pool may be what we need and will be addressed by our organization, the NextGen Organization of Women Corporate Directors ( who will now invite C-suite women to think of corporate directorship as a career move.

We have a NOWCD member who was recruited by surprise because of her experience in retail. She had never been an independent director until recently. And she brings to the table her vast experience in specialty retail. Another member sits on an Advisory Board of one of our Armed Forces. She brings marketing expertise to an otherwise traditional service organization, whose work is never appreciated because the public does not know what they do. So, these are examples of women who are recruited to join boards for their expertise in their field (e.g., Marketing, Retail, etc.). It also counts a lot that they are women, because the sweet spot for boards to be profitable is to have a 50:50 ratio as observed by the Singapore Institute experience.

In the same forum, however, a gentleman reacted about having women, pushing women all the time. The panelists then explained that there are other dimensions to diversity but that having women seems to be the most popular in the Philippines as traditional companies do tend to have all-male boards. Even to us ICD fellows, we found new ideas in what Mr. Shai Ganu of SID shared. It is not just diversity in gender. The other factors are: age, tenure, board independence, cultural ethnicity (especially in international companies), international experience, domain or functional expertise, and industry expertise.

For functional expertise, the speakers suggest more than five areas of expertise in a board to prevent groupthink. So, this also means Independent Directors need not be only business and finance experts; there is room for diverse persuasions like marketing, technology, retail experience, sustainability expertise and maybe even experience in a relatively new field like blockchain and cryptocurrency, AI and ChatGPT.

Other tips from Mr. Shai Ganu: Conform, Perform and Transform. This means that Board directors must help in addressing legal issues, moral issues, and, of course, business issues. The role of the Board is increasingly focused on three areas: Conformance, Performance, and Future-Proofing the company.

The ICD did well in inviting Michelle Kythe Lim of ICDM to give another ASEAN perspective, and this time suggesting that even first-time directors must be encouraged to contribute their expertise even if they do not yet have the experience of serving on Boards. They gather over a thousand candidates ready for deployment as subject matter experts, and many are in new fields of expertise. In yesteryears, we always thought board seats were reserved for finance experts, business management experts and auditors. Not anymore. Today, we need diversity in age, gender, and even international exposure or experience.

With ICD giving the Professional Directors Program (PDP) and NOWCD gathering more women, Philippine PLCs will very soon have a good selection of candidates to season their otherwise traditional boards. And C-suite professionals may find a career after retirement or even as an alternative route while still young and employed. This could be a side hustle in the terms of today’s youth, and a learn-while-you-earn kind of move for most subject matter experts.

Remember the points raised by Shan Ganu and test your board composition against it. It will be fun looking for new directors and giving your company a jolt to adapt to the future.

Chit U. Juan is co-vice chair of the MAP Environment Committee and is a member of the MAP Diversity, Equity and Inclusion Committee. She is president of NOWCD and chair of the Philippine Coffee Board, and a councilor of Slow Food for Southeast Asia Advocate for organic agriculture.

Directors’ Duties on Climate Change

By: Atty. Euney Marie Mata-Perez

I was just inducted as a member of NOWCD, the NextGen Organization of Women Corporate Directors,  the Philippine chapter of Women Corporate Directors International.

Incorporated on September 24, 2021, NOWCD seeks to bring together a trusted community of experienced and engaged directors across the Philippines, looking to continue to increase representation of women across publicly- and privately- held boards, from 17% to 23% by 2025. The organization is driven by the belief that diversity and representation is central to ensuring success for any organization.

At the induction, Mr. Federico “Piki” Lopez, the Chairman and Chief Executive Officer of First Philippine Holdings Corp (FHPC), as the speaker, shared his very interesting and relevant thoughts about climate change, under the FPHC’s mission to “foster collaborative pathways for a decarbonized and regenerative future”.

His talk spurred interest and awareness to the NOWCD members on the obligations of directors with respect to climate change.  This led me to review the legal opinion entitled “Directors’ Duties & Responsibilities and Disclosure Obligations Under Philippine Law On Climate Change Risks” (the “Opinion”), which was published by the Commonwealth Climate and Law Initiative (CCLI), together with ClientEarth and the Institute of Corporate Directors. The Opinion was authored principally by my esteemed law school professor, Atty. Cesar Villanueva.

It is hoped that the Opinion will lay the basis for our regulators to formally adopt rules which outline directors’ duties with respect to climate change.  This article will briefly summarize the contents of the Opinion in light of directors’ legal and fiduciary duties.

  1. The Philippines’ 1987 Constitution recognizes the citizens’ “right to health” and “right to a balanced and healthful ecology”. The Supreme Court has affirmed this right in the case of Oposa v. Factoran, G.R. No. 101083, 20 July 1993.
  2. The Constitution, while guaranteeing the principles of private ownership, also decrees the “social function of private property and economic enterprises”, and, in this regard, provides that “the use of property bears a social function and economic agents (which include corporations) should contribute to the common good”.
  3. The foregoing means that the fiduciary duties of directors of “for-profit” corporations of obedience and diligence, not just to the shareholders but to other stakeholders, as well their duty to abide by the rules of good governance, “include within the scope of responsibility a stewardship role to ensure that company operations do not degrade the environment or contravene environmental laws”. 
  4. It recognized that the Climate Change Act (Republic Act No. 9729), while providing opportunities where private sector may have the opportunity to fulfill their social responsibilities towards meeting climate risks, does not define or impose an institutional responsibility on the private corporate sector to address climate change beyond the legal parameters set out in our environmental laws.
  5. However, under Section 30 of the Revised Corporation Code (RCC),  directors can be personally and solidarily liable with the corporation for “willfully and knowingly assenting to patently unlawful acts of the corporation” or at least for “gross negligence or bad faith in directing the affairs of the corporation”.   In this regard, the Opinion states that, while prohibited acts under various environmental laws provide limited areas where directors may be held criminally liable, Section 30 of the RCC can provide legal basis for such a liability especially “when the commission of such prohibited acts is egregious”.
  6. Directors also have the duty to ensure that material climate change issues should be properly disclosed.  The RCC includes certain duties of directors to “inform or disclose” to shareholders material or relevant information relating to corporate transactions.
    1. Under the Securities and Exchange Commission’s Code of Corporate Governance, publicly-held companies are mandated to ensure that material and reportable non-financial and sustainable issues are disclosed.
    2. The Philippine Stock Exchange disclosure rules require publicly-listed companies to disclose any material fact which may materially affect investor’s decisions, which would include disclosure on climate-related risks.

If shareholders are able to prove that a director’s failure to identify and monitor climate change risks constitute a breach of their fiduciary duties, a derivative suit may be filed against erring directors.

  • The Opinion did state that under the current disclosure rules for publicly-listed companies which adopt the “complain or explain” approach, the obligation to disclose and submit the sustainability report, including material climate-change disclosures, is primarily a corporate responsibility.  Thus, directors are not directly and personally liable for corporate disclosures, unless they make false or misleading statements of material fact in required SEC filings which are tantamount to “market manipulation” or “fraudulent transactions”, under the Securities Regulations Code.

In summary, the emerging role of directors in addressing climate change includes, not just the duty to refrain from harming the environment based on the “prohibited” acts which may be imposed under existing laws, but also includes the directors’ stewardship over the company’s long term success with due regard to climate change risks.

Euney Marie J. Mata-Perez is a CPA-Lawyer and the Managing Partner of Mata-Perez, Tamayo & Francisco (MTF Counsel). 

Women on boards revolutionizing ESG governance

By: Ma. Aurora “Boots” D. Geotina-Garcia –

Last May 6, I had the privilege of speaking at the Global Summit of Women in Dubai on the role of women on boards in promoting environmental, social, and governance (ESG) practices. The session highlighted the importance of diverse board memberships, and I was able to share our best practices—the efforts made in the Philippines—to improve gender parity in corporate governance. It was an opportunity for all of us to explore innovative ESG initiatives that work for our respective contexts.