SEC issues new sustainability reporting guidelines for firms

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December 29, 2025 | 12:00am

MANILA, Philippines — The Securities and Exchange Commission (SEC) has issued new sustainability reporting guidelines for publicly listed companies and large non-listed entities that are in line with global practices.

Through the issuance of Memorandum Circular (MC) 16, Series of 2025, the SEC has adopted the Philippine Financial Reporting Standards (PFRS) on sustainability disclosures, setting clear guidelines that will help covered companies prepare and submit sustainability reports in line with international standards.

“The adoption of the PFRS on sustainability disclosures underscores our commitment to high-quality, comparable and globally aligned sustainability reporting,” SEC chairperson Francis Lim said.

“By elevating the standards of sustainability reporting in the Philippines, we hope to enable more companies and stakeholders to better understand the financial impacts of sustainability-related risks and opportunities, supporting long-term value creation and improved capital allocation decisions,” he said.

The SEC said the PFRS on sustainability disclosures is aligned with the international financial reporting standards issued by the International Sustainability Standards Board, which have been adopted by other ASEAN capital markets including Singapore, Thailand, Malaysia and Indonesia.

The new circular repeals SEC MC 4, Series of 2019, which only required publicly listed companies to submit sustainability reports.

Under the circular, publicly listed companies and large non-listed entities that fall under Section 17.2 of the Securities Regulation Code are required to submit their sustainability reports reviewed and approved by the board of directors, as an attachment to their annual report.

Large non-listed entities that are not covered by the provision are mandated to submit sustainability reports together with their audited financial statements.

The mandatory adoption of PFRS S1, which outlines the general requirements for the disclosure of sustainability-related financial information, and PFRS S2, which addresses climate-related disclosures, will be implemented in a tiered approach, commencing in fiscal year 2026.

Tier 1 covers publicly listed companies with a market capitalization of over P50 billion as of Dec. 31, 2025, or at the date of their listing after the same date, with reporting starting in 2027, covering fiscal year 2026.

Tier 2 involves publicly listed companies with a market capitalization of over P3 billion up to P50 billion as of Dec. 31, 2025, or upon their listing after the same period.

The covered companies are required to adopt the PFRS for their sustainability reports for the fiscal year beginning on or after Jan. 1, 2027, with reporting due in 2028.

The adoption of the PFRS for Tier 3 is scheduled to begin in 2028, covering the fiscal year that starts on or after Jan. 1, 2028.

This applies to publicly listed companies listed in the Philippine Stock Exchange (PSE), with a market capitalization of P3 billion or less as of Dec. 31, 2025, or at the date of its listing after the same date, as well as those with debt securities listed solely on the Philippine Dealing and Exchange Corp. and with no equity securities listed in the PSE.

Tier 3 also covers large non-listed entities with annual revenue of more than P15 billion for the immediately preceding fiscal year, with revenue generated from their ordinary activities, as defined by the applicable PFRS accounting standards.

For parent firms, the threshold will be based on the consolidated or group-level revenues. Otherwise, it will be based on the company level.

The rules allow covered companies to adopt other international frameworks, in addition to PFRS S1 and S2, provided they do not conflict with PFRS S1 and S2, obscure material information, and are properly disclosed.

The SEC said that transitional reliefs are provided under the new circular to address the challenges identified by the stakeholders during the public consultation for the policy.

It said that MC 4 remains in force until a publicly listed company reaches its adoption year, while companies may continue using any recognized framework for their submission of sustainability reports for the fiscal year 2025.

Companies that fall under Tiers 1 and 2 are allowed to disclose information on climate-related risks and opportunities only for one year, while Tier 3 companies will be given two years.