The Securities and Exchange Commission has adopted the Philippine Financial Reporting Standards (PFRS) on sustainability disclosures, aligning local reporting with international standards.
In a memorandum circular issued before Christmas, the SEC adopted PFRS S1 on general sustainability-related financial disclosures and PFRS S2 on climate-related disclosures, replacing SEC Memorandum Circular No. 4, Series of 2019.
The new standards are aligned with the International Financial Reporting Standards used in other ASEAN markets such as Singapore, Thailand, Malaysia and Indonesia. SEC chairman Francis E. Lim said the move aims to improve the quality and comparability of sustainability reporting and help stakeholders better assess sustainability-related risks and opportunities.
Listed companies and large non-listed firms are required to submit board-approved sustainability reports as part of their annual reports or audited financial statements.
Mandatory adoption will be phased in starting 2026: Tier 1 covers listed firms with over P50 billion market capitalization, Tier 2 covers those with more than P3 billion up to P50 billion, and Tier 3 includes smaller listed firms, certain debt-listed companies, and large non-listed firms with annual revenues above P15 billion.
Companies may use other international frameworks if these do not conflict with PFRS S1 and S2. The rules also require limited independent assurance on Scope 1 and 2 greenhouse gas emissions two years after implementation for each tier.
