SEC tightens CSR reporting rules

SEC tightens CSR reporting rules | Daily Tribune

The Securities and Exchange Commission (SEC) has raised the bar for corporate sustainability reporting, issuing new disclosure standards that expand coverage, require climate-specific data, and align Philippine companies with global reporting norms.

In SEC Memorandum Circular (MC) 16, series of 2025, issued on 22 December, the regulator adopted the Philippine Financial Reporting Standards (PFRS) on Sustainability Disclosures, requiring both publicly listed companies and large non-listed entities to comply with internationally aligned sustainability and climate-reporting rules.

The circular adopts PFRS S1 on general sustainability-related financial disclosures and PFRS S2 on climate-related disclosures, replacing SEC MC No. 4, Series of 2019, which previously applied only to publicly listed companies.

“The adoption of the PFRS on Sustainability Disclosures underscores our commitment to high-quality, comparable, and globally aligned sustainability reporting,” SEC chairperson Francis Lim said.

“By elevating the standards of sustainability reporting in the Philippines, we hope to enable more companies and stakeholders to better understand the financial impacts of sustainability-related risks and opportunities, supporting long-term value creation and improved capital allocation decisions,” he added.

Sustainability updates needed

Under the new rules, publicly listed companies and large non-listed entities under Section 17.2 of the Securities Regulation Code must submit board-approved sustainability reports as part of their annual reports.

Large non-listed entities not covered by this provision are required to file sustainability reports alongside their audited financial statements.

Implementation will follow a tiered timeline starting in fiscal year 2026.

Tier 1 covers listed firms with market capitalization exceeding P50 billion, with reporting beginning in 2027 for fiscal year 2026.

Tier 2 includes listed companies with a market capitalization of over P3 billion up to P50 billion, with reporting starting in 2028.

Tier 3 applies to smaller listed firms, companies with only listed debt securities, and large non-listed entities with annual revenues above P15 billion, with adoption beginning in fiscal year 2028.

The circular allows companies to supplement PFRS S1 and S2 with other international frameworks, provided these do not conflict with the standards or obscure material information.

It also introduces mandatory limited assurance for Scope 1 and Scope 2 greenhouse gas emissions two years after adoption for each tier, in line with International Standard on Sustainability Assurance 5000.

To smooth the transition, the SEC granted temporary relief, allowing companies to continue using existing sustainability frameworks for fiscal year 2025 and phasing in climate-related disclosures.

Comparative data will not be required initially, and Scope 3 greenhouse gas emissions disclosures may be deferred for two years.

With the new rules, the SEC said it aims to push Philippine companies toward more rigorous, decision-useful sustainability reporting — bringing climate and sustainability risks squarely into the financial conversation.