The Securities and Exchange Commission (SEC) is set to institutionalize sustainability reporting across publicly listed and large non-listed companies by adopting the Philippine Financial Reporting Standards (PFRS) S1 and S2, aligning the Philippines with global sustainability disclosure practices. Full implementation is targeted for 2026.
Under draft guidelines released by the SEC, companies will begin adopting PFRS S1 (general sustainability-related financial disclosures) and PFRS S2 (climate-related disclosures) in phases, starting with fiscal years from 1 January 2026. The move marks a major regulatory embrace of international sustainability standards and is expected to enhance corporate accountability and investor confidence in ESG (Environmental, Social, and Governance)-driven performance.
“The Guidelines and Roadmap for Publicly Listed Companies (PLCs) and Large Non-Listed Corporations (LNLs) aim to align local disclosures with international standards and attract ESG-focused investors,” the SEC said in a draft circular. The framework also supports firms in evaluating non-financial performance and contributing to national and global sustainability goals such as the UN Sustainable Development Goals and AmBisyon Natin 2040.
At present, only listed firms are required to submit sustainability reports. Starting 2026, the requirement will expand to include large non-listed entities, phased in across three tiers based on market capitalization or revenue:
- Tier 1: Listed firms with market cap over ₱50 billion, reporting from 2027.
- Tier 2: Listed firms with market cap between ₱3 billion and ₱50 billion, reporting from 2028.
- Tier 3: Listed firms with cap below ₱3 billion and non-listed firms with over ₱15 billion in annual revenue, reporting from 2029.
The SEC also plans to mandate limited assurance on Scope 1 and 2 greenhouse gas emissions by independent auditors two years after each tier’s implementation, in line with international assurance standards.
To ease transition, companies may still use any globally recognized framework for sustainability reports in 2025. Other transitional reliefs include phased disclosure requirements for climate-related data, temporary flexibility on GHG methodology, and exemptions for non-listed firms consolidated under a parent entity already producing compliant sustainability disclosures.
Listed firms failing to comply with the report submission requirement will face penalties. Sanctions for non-listed entities are still being finalized.
