History of Sustainability Reporting in the Philippines
Sustainability reporting involves companies disclosing their material economic, environmental, social, and governance impacts according to globally accepted standards like GRI, SASB, and TCFD. The practice was slow to adopt in the Philippines. A 2017 KPMG study revealed that only 22% of the PLCs published sustainability reports compared to much higher rates globally.
Recognizing this gap, the SEC Philippines introduced sustainability reporting guidelines for publicly listed companies (PLCs) in 2019, aiming to boost disclosure and transparency. The initiative proved highly effective; by 2019, compliance jumped to 90.4%.
Sustainability Reporting Requirements: The Comply-or-Explain Baseline
Starting in 2023, sustainability reporting became mandatory for all Philippine PLCs, requiring them to submit reports alongside annual filings. This aligns the Philippines with neighboring countries like Thailand, Singapore, Malaysia, and Indonesia that already mandate such reporting.
A defining feature is the "comply or explain" principle, which allows companies flexibility. Rather than imposing uniform standards, the approach permits firms to either comply with guidelines or publicly explain why they cannot. This acknowledges varying business capacities and reduces burden on smaller enterprises during the transition.
The Sustainability Reporting Template
The SEC provided a standardized template to guide PLCs in identifying material EESG impacts and determining necessary data collection. Significantly, sustainability reports must now be attached to annual reports, elevating their importance to equal that of financial disclosures.
Non-compliance carries penalties: PLCs failing to include sustainability reports face the same sanctions as incomplete annual reports, underscoring the seriousness of these requirements.
PFRS S1 + S2: Mandatory ISSB-Aligned Reporting (SEC MC 16, December 2025)
On 22 December 2025, the Securities and Exchange Commission (SEC) issued Memorandum Circular No. 16, Series of 2025, formally adopting PFRS S1 (Philippine Financial Reporting Standards on General Requirements for Disclosure of Sustainability-related Financial Information) and PFRS S2 (Climate-related Disclosures). These correspond directly to IFRS S1 and IFRS S2 issued by the International Sustainability Standards Board (ISSB).
This represents a step change from the SuRe / comply-or-explain regime: PFRS S1 + S2 introduce a more rigorous, internationally comparable standard that sits on top of the existing baseline.
Three-tier phased adoption
| Tier | Scope | First FY of application | First reports due | Limited assurance from |
|---|---|---|---|---|
| Tier 1 | PLCs with market cap > PHP 50 billion (as of 31 December 2025) | FY 2026 | 2027 | 2029 |
| Tier 2 | PLCs with market cap PHP 3 billion - PHP 50 billion | FY beginning 1 January 2027 | 2028 | 2030 |
| Tier 3 | PLCs with market cap <= PHP 3 billion plus Large Non-Listed entities with revenue > PHP 15 billion | FY beginning 1 January 2028 | 2029 | 2031 |
Transitional reliefs
The SEC has built in transitional reliefs to support implementation:
- Phased disclosure requirements by tier
- Temporary exemption for Scope 3 emissions disclosure
- Temporary exemption for comparative period data in the first year of adoption
Limited assurance
External limited assurance for Scope 1 and Scope 2 emissions becomes mandatory two years after adoption for each tier. There is no current commitment to reasonable assurance.
Coverage extension to Large Non-Listed entities
In December 2025, the SEC also broadened sustainability reporting rules to Large Non-Listed (LNL) entities with annual revenue exceeding PHP 15 billion. This significantly expands the reporting universe beyond the PSE-listed population.
How PFRS S1 + S2 relates to the existing SuRe / comply-or-explain regime
PFRS S1 + S2 layer on top of the existing SuRe / comply-or-explain regime; they do not replace it. PLCs outside the Tier 1-3 mandatory scope continue to use the SuRe template with comply-or-explain. In-scope tiers will additionally produce PFRS S1 + S2 disclosures aligned with the ISSB Standards.
Future Plans for Sustainability Reporting in the Philippines
The SEC's December 2025 actions confirm and accelerate what previously was a vague "gradual expansion to all corporation types" outlook. The PFRS S1 + S2 adoption gives the Philippines a clear, ISSB-aligned roadmap from FY 2026 (Tier 1) through FY 2028 (Tier 3 + LNLs), with assurance phasing in two years after each tier's adoption.
For Philippine companies, this means:
- Tier 1 PLCs should be in active PFRS S1 + S2 implementation now, ahead of FY 2026 first-time application
- Tier 2 PLCs have FY 2026 as a preparation year ahead of FY 2027 mandatory application
- Tier 3 PLCs and Large Non-Listed entities have FY 2026-27 as preparation ahead of FY 2028 mandatory application
- Companies outside the mandatory tiers can continue with the SuRe template (comply or explain), but will benefit from voluntarily building PFRS S1 + S2 capability ahead of likely future scope expansion
Conclusion
Sustainability reporting in the Philippines has progressed from voluntary disclosure (pre-2019), to mandatory comply-or-explain SuRe reporting (2023), to ISSB-aligned PFRS S1 + S2 standards under SEC MC 16 (FY 2026 onward). The country is now firmly on a trajectory of converging with global investor expectations, while protecting smaller PLCs through the tiered approach and transitional reliefs.
As transparency demands increase globally, adoption will likely accelerate further. Keslio guides organizations through sustainability implementation and offers a downloadable sustainability reporting checklist for Philippine companies.
Need help applying these requirements?
If your team is using this checklist to prepare a disclosure, Keslio can support sustainability reporting and communications, GHG emissions calculations, and, when the request comes from a customer or buyer, supplier request support.
