Environmental, social, and governance (ESG) reporting is becoming increasingly important in the Philippines as companies recognize the value of sustainability and responsible business practices. The country is committed to achieve the United Nations Sustainable Development Goals (SDGs), which require businesses to play a role in addressing environmental and social challenges.
As of 2023, all Publicly Listed Companies (PLCs) in the Philippines that have a public float of at least 50% are already required to comply with and submit their annual ESG reports, following the guidelines issued by the Securities and Exchange Commission (SEC) in 2019, in line with Global Reporting Initiative (GRI) standards. Medium to large companies and other PLCs that are not required to comply with the guidelines are still highly encouraged to do so voluntarily, as part of good business practice, and in order to promote mindfulness across all areas of operations.
THREE MAIN ESG REPORTING AREAS IN THE PHILIPPINES
The set of guidelines cover three (3) main areas of sustainability:
- Economic: focuses on the PLC’s impact on its employees, customers, suppliers and the community
- Environmental: PLC’s impact on the natural environment, such as its greenhouse gas emissions, waste generation and water usage
- Social: PLC’s commitment to human rights, labor standards, boardroom diversity, anti-corruption and bribery, executive compensation and corporate governance
REPORTING CRITERIA
ESG reports are expected to carry the weight of:
- Materiality: Companies should expound on areas that are material to their main line of business and operations
- Accuracy and completeness: Companies should provide verified and credible references for the data points contained in their reports
- Comparability: Companies should use consistent methodologies and frameworks for their sustainability reporting.
- Timeliness: Companies should publish their annual sustainability reports in a timely manner
- Accessibility: Companies should make their sustainability reports accessible to the public
If you need professional help in putting together your company’s Annual Sustainability Report, we’d love to speak with you and see how we can serve you best.
SAMPLE OUTLINE & ESG REPORTING TEMPLATE
For the guidance of companies covered, here’s a sample outline of an ESG report in the Philippines, which may be used as a template:
- Executive Summary: This section should provide a brief overview of the sustainability report, including the company’s sustainability strategy, key performance indicators (KPIs), and progress made over the reporting period.
- Governance: This section should discuss the company’s governance structure and how it supports its sustainability efforts. This includes information on the board of directors, management, and internal control systems.
- Economic Performance: This section should report on the company’s economic performance, including its financial results, impact on the local economy, and contribution to sustainable development.
- Environmental Performance: This section should report on the company’s environmental impact, including its greenhouse gas emissions, water use, and waste management practices.
- Social Performance: This section should report on the company’s social impact, including its employee relations, community engagement, and human rights practices.
- Risks and Opportunities: This section should discuss the risks and opportunities facing the company in relation to sustainability. This includes information on climate change, resource scarcity, and social unrest.
- Management Discussion and Analysis: This section should provide a more detailed discussion of the company’s sustainability performance. This includes information on the company’s targets, progress made, and challenges faced.
- Auditor’s Report: This section should provide an independent assurance on the sustainability report.
The specific content and format of the sustainability report will vary depending on the company and its industry, but this template should provide a good starting point for companies that are drafting and developing their sustainability reports.
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BENEFITS OF ESG REPORTING
FOR COMPANIES
While the preparation and completion of annual ESG reports may seem to be an additional burden to companies doing business in the Philippines, it is also a very useful tool for:
- Communicating their sustainability performance to investors, customers and other stakeholders
- Attracting and retaining talent
- Reducing the risk of damage to reputation
- Identification and management of growing ESG risks within is areas of operations
- Improving the company’s sustainability and long-term performance
FOR THE COUNTRY
For the Philippines as a whole, the practice of requiring large companies to send in their ESG reports annually contribute in:
- Promoting sustainable development
- Attracting foreign investment
- Introducing the country as a responsible business destination to large foreign investors that are heavily invested on sustainability and good business practices
The Guidelines for Sustainability Reporting in the Philippines are an important step towards improving the transparency and accountability of PLCs in the Philippines. By requiring PLCs to report on their sustainability performance, the guidelines help to ensure that investors, creditors and other stakeholders have the information they need to make informed decisions for better holistic sustainability.