SEC says new reporting rules to improve transparency, trust

THE Philippines’ move to adopt International Sustainability Standards Board (ISSB) disclosure standards is expected to strengthen transparency and trust in markets, the Securities and Exchange Commission (SEC) said.

SEC Chairperson Francisco Ed. Lim said during the Economic Journalists Association of the Philippines’ sustainability forum on Monday that companies should not conceal forward-looking risks, as investors consider these in capital allocation decisions across global markets.

“These are questions that investors deem important, and eventually it will decide how investors, how capital will be allocated to the different markets globally,” he said.

“Because I think, as I said again, trust is an invisible currency for markets. The more you disclose and the more complete and clear your disclosure, the credibility to the market will be sustained,” Mr. Lim added.

The SEC last year issued a memorandum adopting the Philippine Financial Reporting Standards (PFRS) on sustainability disclosures, setting guidelines to help covered companies prepare and submit reports aligned with international standards.

Memorandum Circular (MC) No. 16, Series of 2025, implements PFRS S1, which sets general requirements for sustainability-related financial disclosures, and PFRS S2, which covers climate-related disclosures. It repeals MC No. 4, Series of 2019, which required only publicly listed companies (PLCs) to submit sustainability reports. 

“Trust depends on what can be verified. Sustainability claims must not run ahead of facts. They must be grounded, measured, and governed with discipline. Everything less does not just weaken disclosure; it weakens the markets,” Mr. Lim said.

He said traditional corporate reporting focuses on past events, such as material incidents affecting operations, while sustainability reporting requires companies to disclose potential future risks that may affect investor decisions.

“Based on my understanding, you as the listed company should disclose that. You can’t hide it… All that is to disclose what can affect or what will affect the decision of your investors,” Mr. Lim said.

He said regulators are not imposing additional burdens on companies but are encouraging greater transparency in the market.

From the private sector, Metro Pacific Investments Corp. (MPIC) Chief Finance, Risk, and Sustainability Officer Chaye A. Cabal-Revilla said companies view sustainability reporting as part of strengthening operations and preparing for long-term risks.

“We don’t look at it as a burden. We take it as our responsibility to look at our resiliency and future of our businesses because in the case of the Philippines, where we get 20-25 category four to five storms on a yearly basis, we get floodings, etc. If we do not do anything, if we do not do our work too hard in our assets or fortify our network… therefore our businesses will also be impacted negatively,” she said.

Under the memorandum circular, PLCs and large non-listed companies (LNLs) under Section 17.2 of Republic Act No. 8799 must attach board-approved sustainability reports to their annual reports, while other LNLs must submit these alongside audited financial statements.

The adoption of PFRS S1 and S2 will be phased in starting fiscal year 2026. Tier 1 PLCs with a market capitalization of more than P50 billion as of Dec. 31, or upon listing thereafter, must begin PFRS-based reporting in 2027 for fiscal year 2026.

Tier 2 PLCs with market capitalization of over P3 billion to P50 billion will adopt PFRS in 2028 for fiscal years beginning on or after Jan. 1, 2027.

Tier 3 includes PLCs with market capitalization of P3 billion or less, debt-listed PLCs on the Philippine Dealing & Exchange Corp., and LNLs with more than P15 billion in prior-year revenue. These entities will adopt PFRS in 2028 for fiscal years beginning on or after Jan. 1, 2028.

Covered companies may also use other recognized international frameworks alongside PFRS S1 and S2, provided these do not conflict with the standards, obscure material information, and are properly disclosed. — Alexandria Grace C. Magno