Philippines Mandates IFRS-Based Sustainability Reporting Standards

The Philippines has taken a major step toward strengthening commercial translucency and climate responsibility with the Securities and Exchange Commission (SEC) publicizing the relinquishment of the Philippine Financial Reporting norms (PFRS) on sustainability exposures. The move aligns the country with IFRS-grounded norms, buttressing the Philippines’ commitment to encyclopedically accepted fabrics for sustainability reporting, climate reporting, ISSB norms, and PFRS sustainability exposures.

With this development, the Philippines joins a growing list of countries enforcing internationally aligned exposure rules aimed at perfecting the quality, community, and credibility of sustainability information handed out by companies. The new norms are anticipated to reshape how large and listed companies report on environmental, social, and governance (ESG) matters in the coming times.

Alignment with global sustainability norms

The recently espoused PFRS on sustainability exposures are grounded on the norms issued by the IFRS Foundation’s International Sustainability Standards Board (ISSB). These include PFRS S1, which focuses on general sustainability-related exposures, and PFRS S2, which concentrates specifically on climate-related exposures. Both norms correspond directly to ISSB’s IFRS S1 and IFRS S2, released in June 2023 as the first comprehensive global birth for sustainability and climate reporting.

According to the SEC, the relinquishment of these norms will enable Philippine companies to prepare sustainability reports that are harmonious with transnational prospects. This is anticipated to enhance investor confidence, ameliorate access to global capital, and ensure that exposures from Philippine enterprises are similar to those from other authorities.

Obligatory Reporting to Be Rolled Out in Phases

The SEC verified that the new sustainability reporting conditions will be obligatory and introduced on a tiered basis. Intimately listed companies with a requested capitalization of at least P50 billion will be the first group needed to misbehave, with reporting beginning in 2027 grounded on their 2026 fiscal time data. This original phase targets the country’s largest listed realities, which are considered to have the topmost request impact and coffers to apply the new norms.

One time later, intimately listed companies with a request for capitalization exceeding P3 billion will be needed to start reporting. The final phase, beginning in 2029 and covering the 2028 fiscal time, will extend the conditions to all remaining intimately listed companies as well as large non-listed companies with periodic earnings above P15 billion. This phased approach is designed to give businesses sufficient time to prepare and make the necessary internal systems.

Strengthening Climate and Sustainability Exposures

The new PFRS norms place strong emphasis on climate-related pitfalls and openings, in line with global investor demand for better climate translucency. Companies will be needed to expose how climate change and sustainability issues affect their business models, strategies, and fiscal performance. This includes information on governance, threat operation, criteria, and targets related to sustainability and climate.

By aligning with ISSB norms, the Philippines aims to ensure that commercial exposures go beyond general sustainability statements and give decision-useful information for investors, lenders, and other stakeholders. The SEC noted that this will help ameliorate the quality of ESG data available in the request and support more informed investment opinions.

obligatory assurance for greenhouse gas emissions

In a significant move to enhance credibility, the SEC has also introduced a demand for obligatory limited assurance on Compass 1 and Compass 2 greenhouse gas (GHG) emigrations. Companies will need to have these emigrations singly assured by a good guru two times after they begin reporting under the new norms.

This demand is intended to ameliorate the trustability of emigration data and reduce the threat of greenwashing. By subjugating emigration exposures to external verification, controllers hope to ensure that companies give accurate and secure information on their climate impact.

Transitional Reliefs to Support Companies

Feting the complexity of enforcing new sustainability norms, the SEC has blazoned a series of transitional relief measures. These were introduced in response to feedback entered during the public discussion process.

One crucial relief allows companies to postpone reporting of Compass 3 emigrations for two times after they begin reporting. Compass 3 emigrations, which cover circular emigrations across the value chain, are frequently the most grueling to measure. In addition, League 1 and League 2 companies will be allowed to expose only climate-related pitfalls and openings in their first time of reporting. League 3 companies will be granted this inflexibility for their first two times of reporting.

These transitional arrangements are designed to ease the compliance burden and give companies time to develop the necessary data collection and reporting capabilities.

Part of a Broader ASEAN Trend

The SEC stressed that the Philippines isn't alone in espousing IFRS-grounded sustainability reporting norms. Several other ASEAN members, including Singapore, Thailand, Malaysia, and Indonesia, have formally started the process of enforcing analogous fabrics. This indigenous alignment is anticipated to grease cross-border investment and ameliorate the community of sustainability information across Southeast Asia.

By joining this group, the Philippines positions itself as a visionary party in the indigenous drive for advanced ESG norms and lesser commercial responsibility on sustainability issues.

Regulatory Commitment to High-Quality Reporting

SEC Chairperson Francis Lim emphasized that the relinquishment of the PFRS on Sustainability exposures reflects the controller’s commitment to high-quality and encyclopedically aligned reporting. He stated that the move underscores the Commission’s fidelity to ensuring that sustainability exposures in the Philippines meet transnational norms and support long-term profitable adaptability.

The SEC believes that stronger sustainability reporting won't only profit investors but also help companies better understand and manage their environmental and social pitfalls. Over time, this is anticipated to contribute to further sustainable business practices and bettered commercial governance across the country.

Looking Ahead

As the perpetration timeline begins, companies are anticipated to start preparing by reviewing their being reporting practices, strengthening data systems, and erecting internal moxie in sustainability and climate reporting. The phased rollout and transitional reliefs give a window for capacity structure, but the direction is clear: sustainability reporting in the Philippines is set to become more rigorous, standardized, and nearly aligned with global morals.

With obligatory IFRS-grounded sustainability norms now in place, the Philippines is taking a decisive step toward embedding sustainability and climate considerations into the core of commercial reporting.