The Securities and Exchange Commission (SEC) is revising the Sustainability Reporting (SR) Guidelines for publicly listed companies (PLCs), in an effort to reflect the latest developments in global sustainability frameworks.
The Commission on October 4 issued for public comment the draft Memorandum Circular on the Revised SR Guidelines, seeking to update current rules on sustainability reporting provided under SEC Memorandum Circular No. 4, Series of 2019 (MC 4).
“In keeping with the commitment to be at the forefront of promoting good corporate governance, and aligned with international best practices, the SEC considers it imperative to keep SR regulations responsive to latest global developments,” SEC Chairperson Emilio B. Aquino said.
“The further development of the SR framework in the country contributes to the creation of a green and blue economy, as well as the establishment of sustainable communities,” he added.
Under the revised guidelines, PLCs will be mandated to submit sustainability reports in two formats: the SR Narrative, and Sustainability Report (SuRe) Form.
For the SR Narrative, PLCs shall submit a narrative report following the format outlined in MC 4, which will be submitted in conjunction with the company’s annual report.
Meanwhile, PLCs will be required to submit their duly answered SuRe Form through the SEC Electronic Filing and Submission Tool (eFAST). Its template comprises three major sections, namely Sustainability and Climate-related Opportunities and Risks Exposures (SCORe); Cross-Industry Standard Metrics (CISM); and Industry-Specific Metrics (ISM).
Separate guidelines for ISM, which largely considered the existing Philippine Standard Industrial Classification (PSIC), will be released at a later time.
The SuRe Form aims to elevate the quality of sustainability reporting and ensure the consistency of non-financial information submitted by PLCs.
The revised guidelines consider the latest global advancements in sustainability reporting frameworks, notably the IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information)and IFRS S2 (Climate-related Disclosures)
— both of which are fully aligned with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
Moreover, the guidelines recognize the United Nations Sustainable Development Goals (UN SDGs), Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), International Integrated Reporting Council (IIRC), and the United Nations Conference on Trade and Development (UNCTAD)- International Standards of Accounting and Reporting (ISAR) Guidance on Core Indicators, among other widely-adopted frameworks.
The SEC institutionalized sustainability reporting among corporations in 2019 through MC 4, which mandated PLCs to submit sustainability reports on a “comply or explain” approach. This allowed PLCs to disclose corporate sustainability data, when available, and provide explanations for items where there are none.
The adoption of SR across covered entities has been very positive, with an average of 96% of PLCs submitting sustainability reports annually.
The draft Memorandum Circular on the Revised Sustainability Reporting Guidelines for Publicly-Listed Companies may be accessed through the SEC website. All interested parties have until October 16 to submit their comments and inputs through email at email@example.com.