FEDERICO R. LOPEZClose to two years today and we’re still living through a global pandemic that has severely impacted our daily lives and all the world’s economies. The effects were both instant and devastating, and highlighted our interconnectedness in ways that means we all sink or swim as one human race.

The development and rollout of vaccines has given us hope for an eventual return to normalcy even as we battle the uncertainty of the virus’ new variants. In the middle of 2021, we started our own “path to recovery” with the vaccination rollout for our employees and their households, and also to our contractors. We have also donated vaccines to our 26 host communities and to the Department of Transportation in support of the government’s target to achieve herd immunity.

However, gathering force and momentum as we speak is this even greater emergency called the climate crisis. The latest news images of record heat waves, drought, wildfires in North America and Australia, record flooding in the Eastern US, Western Europe and Central China have all been terrifying precursors to the UN IPCC Sixth Assessment Report (AR6) issued last August. This latest report, produced by 200 scientists with thousands of volunteers from 66 countries, has UN Secretary General Antonio Guterres warning that this is a code red for humanity. It’s undeniable that our planet’s climate is changing, primarily from human-caused emissions of fossil fuels, and it’s changing faster and more dangerously than we thought just a few years ago. Once the full effects of the climate crisis are upon us, there will be no vaccine and herd immunity to look forward to, “just the relentless pounding of the herd,” as Thomas Friedman of the New York Times describes it.

COP26 Glasgow has just concluded and the general feeling was that the conference overdelivered given the political headwinds, but underdelivered in relation to what the science still demands of us. Now remember that at Paris COP21 in 2015 the world applauded soft agreements that pledged actions toward a 2.0 degrees Celsius global warming target. Hardly any of those pledges are being met today, which still puts the world on course for a planet that’s 3-4 degrees Celsius warmer by the end of the century. Clearly, catastrophic and uninhabitable. However, even the 2.0 degrees Celsius target applauded in Paris will change our planet beyond recognition: close to 99% of coral reefs will disappear, and extreme heat and 1-in-100-years flooding events will become regular occurrences, existentially threatening all coastal cities.

So what does keeping to 1.5 degrees Celsius really mean? The science tells us we have anywhere from 300-400 gigatons of greenhouse gases left to emit before we exceed that number. Since the world currently emits 51 gigatons of greenhouse gases each year, we have anywhere from 6-8 years remaining before we lose any chances of hitting that goal of 1.5 degrees Celsius and will be left with having to contend with a harsher 2.0 degrees Celsius world or worse. The latest UN IPCC AR6 makes this very clear: the window for limiting warming to 1.5 degrees Celsius is closing fast.

All that may sound terrifying, but just last December 2020 came a sliver of good news. Leading IPCC scientists also revealed something described as “game-changing” and new in the scientific understanding of climate change. To quote noted climate scientist Dr. Joeri Rogelj, lead author of the latest UN IPCC AR 6: “It is our best understanding that, if we bring down (GHG emissions) to net zero, the warming will level off. The climate will stabilize within a decade or two.” I was elated and personally filled with hope when I read that pronouncement of the latest scientific consensus, which is a huge paradigm shift from the idea that decades and centuries of additional warming were already baked into the planet as suggested by previous IPCC reports.

As the world comes to grips with this reality, we will see paradigms shifting drastically. We will go back to basics. Consumerism will hopefully be anchored less on our wants and more toward our needs. It is essential too that we focus on prosperity for all, especially those left behind, rather than on simply aiming to raise GDP growth per se. Then very importantly, we begin to reimagine and redesign our infrastructure and way of life for an already changed world: decarbonized, resilient and socially inclusive. Make no bones about it, this will change every single industry on the planet in the next 5-10 years.

Amidst all the chaos and uncertainty of the COVID pandemic last year, we set about recrafting our mission and purpose for the FPH Group, and I strongly believe it should ultimately be adopted across the Lopez Group of companies, and that is: “To Forge Collaborative Pathways for a Decarbonized and Regenerative Future.” Since we launched it at the annual shareholders meeting last year, the recasted mission achieved so much traction internally and has become a beacon of sorts, reorienting our strategy and choice of capabilities and businesses as we move forward. The power of those ten words to inspire and provide direction surpassed my expectations and I can say all the executive hours we spent hammering it out last year were well worth their weight in gold.

Central to our new mission is the Stakeholder Pentad Framework. This powerful lens captures a lot of how we want to move forward. Applying this mindset means all decisions should revolve around balancing the needs of all five stakeholders in a specific sequence: first, your customers; then your cocreators which are your employees, suppliers, contractors; then the Earth; then the communities; and finally, your investors. The pentad necessitates that we think in systemic wholes and not in fragmented parts. Reversing the sequence, which unfortunately has permeated the thinking of most businesses in the past, just doesn’t work when your primary goal of maximizing shareholder value leaves little room to benefit anything else.

That model of shareholder primacy above all else no longer fits with the extraordinary times we live in. It’s resulted in the mindless pursuit of growth, unbridled consumption, the overshoot of our planet’s environmental limits, and widening inequalities. Although traditional CSR has been good, it has its limits and may never be able to scale enough in time to reverse the damage done. There is an urgency for all of us to go beyond incremental sustainability and transform into regenerative forces that align our profit engines with the need for a better world and a safer planet. Collectively, we have the creativity and innovative energy needed to solve the world’s greatest problems. Unlocking these will be the foundation to some of the greatest business opportunities in the coming century.

I hope that you all share my excitement and optimism as we move along our course to a decarbonized and regenerative future for all. I wish you a blessed and meaningful Christmas celebration with your loved ones and may the New Year bring you renewed strength for our exciting journey ahead. - FEDERICO R. LOPEZ