SEC Issues Sustainability Reporting Guidelines for Publicly-Listed Companies in the Philippines
The Securities and Exchange Commission (SEC) formally launched on Friday last week the Sustainability Reporting Guidelines for Publicly-Listed Companies (PLCs), requiring such companies to disclose compliance/non-compliance of the recommendations provided under the Code of Corporate Governance for PLCs operating in the Philippines.
SEC approved the Sustainability Reporting Guidelines on February 12, which was presented by SEC Commissioner Kelvin Lester K. Lee. It was issued through SEC Memorandum Circular No. 4-2019 on Feb. 15.
The Guidelines requires PLCs to submit their sustainability reports, together with their annual financial reports, starting next year. The sustainability report must be attached to the annual report for 2019, which must both be submitted to SEC in 2020.
Companies who already have sustainability reports in accordance with international standards and frameworks shall be considered compliant with the reporting template. They may attach the whole report to their annual report or include a statement that provides a link to the said report.
The Guidelines is set to follow the “comply or explain” approach in a bid to harmonize the corporate governance reportorial requirements of the SEC and the Philippine Stock Exchange (PSE). It provides a framework for the reporting of PLCs’ contributions toward achieving universal sustainability initiatives, such as the United Nations Sustainable Development Goals and the AmBisyon Natin 2040 program of the National Economic and Development Authority (NEDA).
Additionally, the Guidelines reflects four of the globally accepted frameworks for reporting sustainability and non-financial information: (1) the Global Reporting Initiative’s Sustainability Reporting Standards; (2) the International Reporting Council’s Integrated Reporting Framework; (3) the Sustainability Accounting Standards Board’s Sustainability Accounting Standard; and (4) the recommendations of the Task Force on Climate-Related Financial Disclosure.
PLCs that will fail to attach the sustainability reports to their annual reports are subject to penalty equivalent to that imposed for incomplete annual reports. SEC Memorandum Circular No. 6-2005 states that violators will face fines of up to P60,000 plus P1,000 per day of delay of filing the amended report.