Philippines

YEAR IN REVIEW

(1 July 2024 to 30 June 2025)

The following key sustainability-related bills failed to be enacted into law before the 19th Congress of the Philippines adjourned: (a) The ESG Reporting Act, which seeks to require all corporations to prepare and submit a sustainability report; (b) The Low Carbon Economy Act, which seeks to create a domestic cap and trade system; and (c) The Climate Accountability Act which seeks to impose sweeping climate-related obligations (including climate-related due diligence) on businesses.
It remains to be seen if the above bills will be enacted during the current 20th Congress.
Draft guidelines were issued on a framework for green equity offerings, which proposes to allow companies whose revenue is derived significantly from green activities and whose majority of investments are in green activities to apply for a “green equity” label.

Scroll down or click below for further information on each key theme.

PODCAST OVERVIEW

Please click on the podcast above for a snapshot of the three key themes of ESG reporting, transition planning and greenwashing risks in respect of Philippines.

KEY CONTACT

Jose Florante M. Pamfilo
Partner, SyCip Salazar Hernandez & Gatmaitan

A. ESG Reporting

1. Are there legal or regulatory requirements for companies to make ESG disclosures in your jurisdiction?

Yes.

2. What are the key legislative and regulatory sources for ESG disclosure requirements and to whom do they apply?

In the Philippines, ESG disclosure/reporting requirements or recommendations are provided in the following:

Securities and Exchange Commission (SEC) Memorandum Circular No. 4, Series of 2019 (Sustainability Reporting Guidelines for Publicly-Listed Companies) (Sustainability Reporting Guidelines), which applies to publicly-listed companies.
SEC Memorandum Circular No. 24, Series of 2019 (Code of Corporate Governance for Public Companies and Registered Issuers) (CG Code for PCs & RIs), which applies to public companies and registered issuers.
Insurance Commission (IC) Circular Letter No. 2020-71 (Revised Code of Corporate Governance for Insurance Commission Regulated Companies) (CG Code for ICRCs), which applies to IC regulated companies.
Bangko Sentral ng Pilipinas (BSP, the Philippine Central Bank) Circular No. 1085 (Sustainable Finance Framework), which applies to banks and has been incorporated as Section 153 of the Manual of Regulations for Banks.
SEC regulations governing the issuance of green, social, sustainability, sustainability-linked, and blue bonds, and the establishment of Sustainable and Responsible Investment (SRI) funds.

While not a source of separate disclosure/reporting obligations, a guidance document issued by the Philippine Stock Exchange (PSE), ESG 101: A Reporting Guidebook, contains updated sustainability reporting regulations, data, and best practices that are relevant to Philippine listed companies. The guidance document is intended by the PSE to serve as a starting point for companies seeking to enhance their sustainability reporting capabilities.

A bill, Senate Bill No. 2765, was filed in the Philippine Senate seeking to enact the ESG Reporting Act, which will require all corporations – both stock and non-stock – to submit a sustainability report to the SEC in accordance with implementation guidelines or directives to be issued by the SEC. However, the Philippines’ 19th Congress adjourned on 30 June 2025 without enacting the bill into law. The bill will have to be re-filed in the 20th Congress to be further considered. Under the ESG Reporting Act, the SEC will have the authority to prescribe the reporting standard or framework to be used by reporting entities.

3. Are the requirements mandatory or do they apply on a comply-or-explain basis?

The SEC’s Sustainability Reporting Guidelines adopted the comply or explain approach for the first three years of its implementation. While the SEC has stated in various public fora that the reporting requirement shall be upgraded to mandatory after the first three years of implementation (i.e. from 2023), the SEC has yet to issue a regulation to formalise this.
The reporting requirements under the CG Code for PCs & RIs and the CG Code for ICRCs apply on a comply or explain basis.
The requirements under the BSP’s Sustainable Finance Framework are mandatory.
The reporting requirement under SEC regulations concerning green (including blue), social, sustainability, and sustainability-linked bonds, and SRI funds are mandatory.

4. Which aspects of ESG do the requirements focus upon?

The SEC’s Sustainability Reporting Guidelines focus on economic, environmental (including climate) and social issues.
The CG Code for PCs & RIs and the CG Code for ICRCs focus on economic, environmental, social, and governance issues.
The BSP’s Sustainable Finance Framework focuses on environmental and social risks.

5. Are the disclosure requirements based on international standards? If so, which one(s)?

The SEC’s Sustainability Reporting Guidelines draws from the GRI’s Sustainability Reporting Standards, the SASB’s Sustainability Accounting Standards, the recommendations of the TCFD, and the UN Sustainable Development Goals.
The CG Code for PCs & RIs and the CG Code for ICRCs recommend that companies adopt a globally-recognised standard or framework in reporting sustainability and non-financial issues, but does not recommend a specific standard or framework.

6. How do the disclosure requirements approach materiality (e.g. single or double materiality)?

The SEC’s Sustainability Reporting Guidelines focus on impact materiality.
The CG Code for PCs & RIs and the CG Code for ICRCs focus on impact materiality.
The BSP’s Sustainable Finance Framework focuses on single materiality.

7. Are there requirements for the disclosure of GHG emissions? If so, please specify the scope (e.g. Scope 1, Scope 2 and/or Scope 3), to whom they apply and whether there are requirements on the measurement methodology.

The reporting template under the SEC’s Sustainability Reporting Guidelines includes disclosures of “Direct (Scope 1) GHG Emissions,” “Energy indirect (Scope 2) GHG Emissions,” and “Emissions of ozone-depleting substances”. The Sustainability Reporting Guidelines do not prescribe any specific measurement methodology for calculation of Scope 1 and Scope 2 emissions. However, they provide guiding principles for disclosures, including that disclosures must be consistent over time, be comparable among companies within a sector, industry or portfolio, and be reliable, verifiable and objective.

8. Are there requirements to obtain independent assurance of any ESG disclosures? If so, what is the scope of such requirements? If not, are there plans to introduce such requirements?

External review is recommended under SEC rules governing the following:

Issuance of green bonds;
Issuance of social bonds; and
Issuance of sustainability bonds.

External review and verification are strongly encouraged under SEC rules governing the issuance of blue bonds.

External review is required under SEC rules governing the issuance of sustainability-linked bonds.

There are no mandatory assurance requirements in relation to disclosures under the SEC’s Sustainability Reporting Guidelines.

The ESG Reporting Act, as proposed by Senate Bill No. 2765, would require independent assurance. Climate-related disclosures in the sustainability report would be subject to reasonable assurance or limited assurance, while other sustainability disclosures outside of those climate-related disclosures would be subject to limited assurance, or as needed to be determined by the SEC. However, as noted, it has not yet been enacted into law.

9. For companies not subject to mandatory or comply-or-explain ESG reporting, are voluntary ESG disclosures customary?

No, voluntary ESG disclosures are not customary in the Philippines. However, 22% of listed companies disclosed their sustainability reports to the SEC as of 2017, even prior to the adoption of the SEC’s Sustainability Reporting Guidelines.

10. Has your jurisdiction issued or adopted a taxonomy on sustainable activities? Is it mandatory and what is its scope of application?

The Inter-Agency Technical Working Group for Sustainable Finance has prepared the Philippine Sustainable Finance Guiding Principles (Guiding Principles). The Guiding Principles were developed to provide principles-based guidance (rather than set rules detailing requirements) on identifying activities that contribute to supporting sustainable development, with a focus on addressing the impacts of climate change.

The Philippine Sustainable Finance Taxonomy Guidelines (SFTG) were formulated through collaborative efforts between the BSP, the SEC and the IC. It serves as an overarching guide for the financial sector and its stakeholders to operationalize the Guiding Principles. The SFTG serves as a tool to classify whether an economic activity is environmentally and socially sustainable and guides different stakeholders in making informed investment or financing decisions. SEC-regulated entities are directed to deepen their understanding and familiarity with the SFTG and are encouraged to take into consideration its provisions and prescribed standards. Banks were given until end-December 2024 to deepen their understanding and familiarity in applying the SFTG. Starting 2025, the BSP began collecting information related to the use of the SFTG.

The SEC’s rules on green (including blue), social and sustainability bonds identify categories of projects eligible to be financed by proceeds from the issuance of said bonds. The list of eligible projects, while indicative, captures the most commonly used types of projects supported or expected to be supported by the market for these types of bonds.

11. Are there plans to adopt or incorporate any (other) international ESG reporting framework (e.g. the ISSB Standards and/or the TNFD)? If so, please give details.

In late 2023, the SEC issued for public comment a draft memorandum circular on the Revised Sustainability Reporting Guidelines for Publicly Listed Companies (Revised Sustainability Reporting Guidelines) to enhance sustainability reporting by listed companies, but subsequently deferred its implementation. After receiving comments from the public, the SEC announced that the finalised Revised Sustainability Reporting Guidelines is planned for release within 2025 and its implementation will follow a phased timeline (which has not yet been announced). Sustainability reports covering the year 2024, which are due in 2025, will be covered by the SEC’s existing Sustainability Reporting Guidelines issued in 2019.

Separately, the Philippine Sustainability Reporting Committee (PSRC) has been established to evaluate ISSB Standards for local use and to issue local interpretation and guidance. The PSRC is preparing a jurisdictional roadmap for the adoption of IFRS S1 and S2 in the Philippines. In a private sector forum hosted by the PSRC, it was disclosed that the PSRC is looking at separate timelines for adoption, first, for listed companies and universal and commercial banks, and subsequently, for large corporations and other types of banks. The Professional Regulatory Board of Accountancy (BOA) published a resolution resolving to adopt IFRS S1 and IFRS S2 as endorsed by the PSRC. It has been reported that, in view of the BOA resolution, the SEC and the Philippine Stock Exchange (PSE) have been undertaking certain steps and dialogues with stakeholders to assess the readiness of the market, but the timeline for application is not yet known.

While the SEC is represented in the PSRC, it appears that the roll out of the Revised Sustainability Reporting Guidelines will not necessarily coincide with the adoption of the ISSB Standards as part of financial reporting of covered entities.

12. Other upcoming developments / direction of travel

The SEC issued a draft of Memorandum Circular on the Guidelines for the Philippine Green Equity (SEC Guidelines on Philippine Green Equity). The SEC Guidelines on Philippine Green Equity establishes a framework for “green equity” offerings (i.e., issuance or designation of shares) which will allow companies to apply for a “green equity” label, providing greater visibility of their “green activities.” “Green equity” refers to a company whose revenue is derived significantly from activities considered green and whose majority of investments are in activities considered green. The draft guidelines contain reporting obligations on those with a green equity label, including disclosures on activities considered green and environmental targets. The draft guidelines are currently undergoing revisions after the SEC received substantial comments from the public.

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B. Transition Planning

1. Has your jurisdiction set decarbonisation targets and strategies?

The Philippines has committed to a GHG emissions reduction and avoidance target of 75%, referenced against the business-as-usual scenario, for the period of 2020 to 2030. Of this, 2.71% is unconditional and 72.29% is conditional.

The National Climate Change Action Plan 2011–2028 outlines specific programs and strategies for climate change adaptation and mitigation. Four of these programs and strategies relate to achieving lower carbon emissions: (i) Ecological and Environmental Stability; (ii) Climate-Smart Industries and Services; (iii) Sustainable Energy; and (iv) Knowledge and Capacity Development. The Philippine Sustainable Finance Roadmap lays out an action plan to promote sustainable finance in the Philippines, with its first phase focusing on the transition to a low carbon economy.

The STFG (discussed in section A.10) seeks to operationalize the Philippine Sustainable Finance Roadmap.

2. Are businesses subject to any mandatory carbon pricing or other “polluter pays” instruments (such as ETS, carbon taxes or EPR schemes)? If so, please give details. If not, are there plans to do so?

There is currently no carbon trading market in the Philippines. However, a bill for the enactment of the Low Carbon Economy Act was filed in the Philippine Senate (the upper house of Congress). It provides for, among others, a domestic cap and trade system, with provisions on emission reduction measures and targets, a cap on GHG, allowances, and the establishment of a carbon trading system. A counterpart bill has also been filed in the House of Representatives (the lower house of Congress). Under the bills, annual emission/avoidance targets, including the sectors and levels to be covered, will be determined annually by the President of the Philippines through the recommendation of a steering committee. The Philippines’ 19th Congress adjourned last June 30 without the bills having been enacted into law. It is expected that bill will be re-filed in the 20th Congress.

Earlier in 2024, the Secretary of Finance acknowledged, during the Technical Working Group Meeting for Preparing Carbon Pricing Instruments for the Philippines, the need for a study of carbon pricing instruments (including a carbon tax and an emissions trading system) and the optimal mix thereof.

Under the Extended Producer Responsibility Act of 2022 (EPR Act), a mandatory EPR scheme is in place for producers of plastic packaging, with fines imposed for failure to meet specified recycling targets. Producers are required to recover up to 80% of their plastic packaging waste by 2028.

There are proposed accountability mechanisms for certain businesses and carbon majors for adverse climate change impacts under the CLIMA bill referred to in B.5 below, but it is unclear if the bill will be enacted as proposed.

3. Are there mandatory requirements for companies to have in place and/or disclose climate-related transition plans? If so, please give details. If not, are there plans for such requirements?

No, it is not mandatory to have a transition plan for listed companies, public companies, registered issuers, and IC regulated companies. It is also not mandatory for them to disclose whether they have a transition plan.

On the other hand, banks are required to have a transition plan with specific timelines to implement board-approved strategies and policies that integrate sustainability principles into their corporate governance, risk management frameworks, strategic objectives, and operations. However, this transition plan relates to the bank’s sustainability policies and objectives generally and is not necessarily limited to the transition towards a lower-carbon economy.

4. Are there mandatory requirements to set, meet and/or disclose climate-related targets? If so, please give details. If not, are there plans for such requirements?

No, there are no mandatory requirements for companies to set climate targets.

However, there are disclosure requirements under the SEC’s Sustainability Reporting Guidelines, which requires listed companies to disclose (i) the organization’s governance around climate-related risks and opportunities; (ii) the actual potential impacts of these climate-related risks and opportunities; (iii) how the organization identifies, assesses, and manages climate-related risks; and (iv) the metrics and targets used to assess and manage relevant climate-related risks and opportunities.

The CLIMA bill referred to in B.5 below includes proposed requirements for certain businesses and carbon majors to reduce their GHG emissions, but it is unclear if the bill will be enacted as proposed.

5. Other upcoming developments / direction of travel

A bill, House Bill No. 9609, was filed in the Philippine House of Representatives in 2023 seeking to enact The Climate Accountability (CLIMA) Act. One of the key features of The CLIMA Act is the imposition of responsibilities on businesses that have reported a gross income of PHP 100 million in the previous tax year and carbon majors (regardless of gross income) to:

make climate-related financial disclosures;
measure and analyse their GHG emissions and strategically reduce their GHG emissions;
prevent human rights abuses throughout their value chains; and
conduct due diligence on and address their climate change-related human rights impacts.

However, the Philippines’ 19th Congress adjourned on 30 June 2025 without the bill having been enacted into law. The bill will have to be re-filed in the 20th Congress to be further considered and it remains to be seen whether the bill will be enacted in its current form.

If established, the “green equity” framework (mentioned in A.12 above) is intended to complement sustainable debt instruments to expand the range of sustainable investment products in the market and further support the transition towards a net zero carbon economy.

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C. Greenwashing Risks

1. Are there any recent examples of legal proceedings, regulatory actions or investigations against or into greenwashing in your jurisdiction?

A group of consumers filed a case before the Department of Trade’s Fair Trade Enforcement Bureau against certain manufacturers of fast-moving consumer goods, alleging false or misleading recyclability claims on the plastic packaging of the respondents. One respondent has agreed to settle the case. In news reports on the settlement, said respondent stated that it is compliant with applicable laws and regulations, but recognized opportunities to improve labelling to comply with the EPR Act, the Consumer Act and other relevant guidelines. The case is still pending as to the other respondents.

2. Are there any laws or regulations specifically dealing with greenwashing?

No, but some guidance does exist.

BSP Circular No. 1149 (Guidelines on the Integration of Sustainability Principles in Investment Activities of Banks) requires banks to adopt measures to ensure that investments are channelled to, among others, companies that do not engage in greenwashing. It defines greenwashing as the deceptive marketing used to persuade the public that an organization's products, aims, and policies are environmentally friendly. Greenwashing may also come in the form of dissemination of misleading information, whether intentional or not, regarding a company's environmental strategies, goals, motivations, and actions that can induce false positive perception of a company's environmental and social performance.
As previously mentioned, SEC regulations set guidelines when bonds may be labelled as green, blue, social, sustainability, or sustainability-linked bonds, and when funds may be labelled as SRI funds.

The draft CLIMA Act, as proposed by House Bill 9609, defines greenwashing as: “the conveyance of false information on the environmental soundness of [a company’s] products, operations, and services.” Acts of greenwashing include, but are not limited to, “outright false statements, understating impacts, omitting trade-offs, absence of proof backing up claims, vague or overbroad claims, [and] false third-party certifications.”

3. What are the likely grounds on which such proceedings, actions or investigations can be instigated?

Likely grounds for a suit include:

Making false or misleading statements, or fraud under the Securities Regulation Code;
False, deceptive or misleading advertisement under the Consumer Act of the Philippines;
Fraud, giving rise to damages under the Civil Code;
Estafa by false pretenses or deceit under the Revised Penal Code; and
Breach of express warranties in a contract of sale.

Administrative penalties may also be imposed against investment funds for unauthorized use of SRI, ESG, or any other similar or associated terms in the name and/or marketing materials, or for making false statements as to its qualification as an SRI fund or over-emphasizing sustainability or ESG features in any communication or advertising materials.

4. Other upcoming developments / direction of travel

With the enactment of the EPR Act, which requires product producers (including brand owners and product manufacturers) to recover up to 80% of their plastic packaging waste by 2028, environmental claims made by product producers may become subject to even greater scrutiny by consumer and public interest groups.

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