Our Future Context:

Environment

Climate change has rapidly accelerated since it caught the attention of governments in 1988 with the Congress testimony of NASA scientist James Hansen. He specifically described the climate phenomenon as “global warming”. By July 2023, the climate situation worsened to “global boiling” according to UN Secretary General Antonio Guterres,³⁹ accompanied by reports on the discovery of a new phenomenon described as flash droughts between 2023 and 2024.⁴⁰ As we prepared to submit this 2024 IR, the January

2025 California fires manifested a higher level of disruption scientists call a “weather whiplash” or more frequent, sudden, and high magnitude swings of the weather with wet-dry-wet conditions.⁴¹ Experts say the volatility of weather conditions is connected to the temporary breaching of the 1.5C limit in temperature in 2024, leading to the projected breaking of the thresholds of some climate tipping points between 2026 to 2042.^{42 43}

Economy

A 2024 study concluded that emerging markets led by China, Vietnam and the Philippines are expected to contribute 65 percent of the global economic growth by 2035.⁴⁴ These findings were echoed in another report that assessed the Philippines and Malaysia having improved prospects for economic revival and development compared to other Southeast Asian countries.⁴⁵

►Geopolitics

Geopolitical risks are becoming dominant due to polarization and inter-state conflicts resulting in knock-on effects on crosscutting themes. The World Economic Forum reported that their multistakeholder informants see 2035 as a “point of no return” with most of the risks increasing in rating over the long term.^{46 47} However, it was also noted that widely-supported political leadership and institutions can be the key to bringing back stability to solve the risks identified in the next decade.

Amidst these predicted disruptions, the Heads of State and Governments (including the Philippines) strongly supported the pact presented during the UN Summit for the Future in September 2024. The pact focuses on adapting international cooperation to the problems of today and the issues to come. It highlights the importance of multilateralism to address: a) sustainable development and international finance; b) science, technology, innovation and digital regulation; c) youth and future generations; and the d) transformation of global governance.⁴⁸

Implications of the Future Context on FPH

Today, FPH is highly competitive in the key areas where it participates. Its power subsidiary is the largest renewable energy producer in the country based on 2024 data from the Independent Market Operator of the Wholesale Electricity Spot Market (WESM). The manufacturing and energy solutions subsidiary has captured most of the transformer demand of Private Distribution Utilities and is increasing its sale with Electric Cooperatives. In real estate, our commercial and residential subsidiary is a major player in the high-end market while our industrial park continues to be one of the leaders in their segment based on cumulative new and expansion investment values in the last 5 years covering the period January 2020-October 2024. The yearend data for this segment are not yet available as of the writing of the report. Lastly, our construction subsidiary is one of the biggest local players in terms of revenues generated. For us to maintain our standing, we reviewed below the trends, impacts on FPH’s future, our response to adverse factors, and opportunities.

We believe that our efforts in the last five years with doubling down on governance and upskilling our subsidiaries can help prepare us for the complexities of our anticipated future, and contribute to the continuation of our competitiveness. Crucial to this is our approach to protect the planet, care for the well-being of our employees and host communities, and partnership with government agencies and nonstate organizations. At the same time, the openness of our workforce for innovation and change also heavily contributes to these preparations. Our ethical framework is also centered on the recognition of the human rights of our stakeholders within our work sites and in our areas of influence. All of these initiatives build our foundation for a resilient future. Below is our analysis of the effects of future contexts and our responses.