Corporate governance in the Philippines is doing well on paper. Too well, perhaps, to be entirely reassuring.

The 2024 ASEAN Corporate Governance Scorecard (ACGS) Country Report and Assessment paints an impressive picture: 97 percent of the country’s top 100 publicly-listed companies (PLC) maintain formal compliance statements with the Code of Corporate Governance, and every single one now operates a transparent website with a dedicated ESG (Environmental, Social, and Governance) reporting section.

By the metrics traditionally used to measure governance quality, Philippine PLCs are performing admirably.

Near-perfect scores on a disclosure-based scorecard do not reflect near-perfect governance.

They reflect near-perfect form-filling. If the metrics were truly capturing substance — genuine board independence, meaningful risk oversight, ESG woven into corporate strategy rather than bolted onto annual reports — scores would vary far more widely.

Substance is hard. Substance is uneven. Uniformly high compliance numbers are not a sign that everyone is governing well. They are a sign that everyone has learned to look like they are.

SEC chairperson Francisco Ed. Lim, in his message in the 2024 ACGS Country Report, put it plainly: good governance is a continuing task. To keep progressing, we must constantly measure our performance and identify areas for improvement. Compliance, however near-perfect, is never the finish line. It is, at best, the floor.

The uncomfortable truth is that Philippine corporate governance progress has been largely disclosure-driven rather than substance-integrated. Our PLCs have learned to speak the language of good governance fluently. What remains uncertain is whether they have internalized it — whether governance is something they practice, or something they merely report.

Consider the most common failure mode: a board that technically satisfies independence requirements, yet whose independent directors were nominated by the same controlling shareholder they are supposed to check. The form is correct. The function is absent. No scorecard catches this. No disclosure requirement fixes it. And it is far more common in Philippine listed companies than the compliance numbers suggest.

This is why four structural vulnerabilities demand honest reckoning: independence deficit, incentive misalignment, risk oversight gaps, and accountability deficit. These are not new problems — they are Philippine corporate governance’s perennial problems. What is overdue is the regulatory willingness to pursue solutions that go beyond adding another reporting layer to an already disclosure-heavy framework.

The 2016 Code of Corporate Governance for PLCs has served its purpose. Over a decade, it built the architecture — the committees, the disclosures, the compliance infrastructure. That was necessary work. But architecture is not culture, and structures are not values. The next phase of reform must answer a harder question: how do you make governance genuinely operational, not merely formally present?

The answer begins with a fundamental shift in how companies view governance itself. For too long, it has been treated as a cost center — a regulatory tax paid in the form of compliance officers and board training budgets. This framing is both inaccurate and self-defeating. Sound governance is not an expense imposed from the outside. It is a value driver generated from within.

Companies with genuinely independent boards make better capital allocation decisions. Those with robust risk frameworks weather disruptions more resiliently. Those that embed ESG into strategy — rather than appending it to their annual reports — attract longer-term, higher-quality investors. Governance quality correlates with lower cost of capital, stronger institutional investor confidence, and more sustainable earnings. For Philippine PLCs competing for regional and global investments, this is not a soft argument. It is a financial one.

Good governance is not something a company does for the regulator. It is something a company does for itself — and for the market it depends on to grow.