Not your old CSR report: The Philippines moves forward on sustainability reporting

As the world marks Earth Month this April, the Philippines is entering a transformative chapter in its sustainability journey, one that moves the conversation beyond awareness and advocacy toward accountability, action, and measurable impact.

With the issuance of the Securities and Exchange Commission’s (SEC) Memorandum Circular No. 16, Series of 2025, the country formally adopts the Philippine Financial Reporting Standards (PFRS) on Sustainability Disclosures, signaling a decisive shift toward globally aligned, investor relevant sustainability reporting. The new circular introduces PFRS S1 (General sustainability-related disclosures) and PFRS S2 (Climate-related disclosures), reinforcing the Philippines’ commitment to transparency, enhanced decision, useful information, and stronger corporate governance.

This development is timely. Earth Month has traditionally been a moment for reflection on climate, communities, and collective responsibility. But this year, it is also a call to elevate sustainability from aspiration to execution. The SEC’s move makes clear that sustainability is no longer just about programs and pledges; it is about how organisations explain their long-term prospects, manage risk, and create value in a changing world.

This is more than regulatory housekeeping. It marks a structural shift in how Philippine companies will communicate resilience, strategy, and performance, recognising that sustainability is inseparable from financial stability, access to capital, and economic resilience.

A sustainability turning point for Philippine businesses

The Philippines ranks among the most climate-vulnerable countries in the world. Its exposure to typhoons, floods, water stress, and rising temperature volatility makes sustainability not a theoretical concept, but a direct driver of operational and financial risk. 

The SEC’s adoption of PFRS S1 and S2 replaces the earlier, narrower framework under MC 4 (2019), which covered only publicly listed companies (PLCs). The new requirements apply more broadly, ensuring that both listed and large non-listed companies submit sustainability reports reviewed and approved by their boards. These reports must accompany annual reports or audited financial statements, depending on the type of entity. 

The SEC complements these standards with the national sustainability reporting adoption roadmap, outlining a phased, tiered approach to full implementation beginning this fiscal year 2026. 

PFRS S1 and S2 compel businesses to articulate how sustainability and climate factors affect their governance, strategy, business models, risk management, and performance metrics, ensuring sustainability is integrated into real business thinking, not merely treated as CSR or compliance.  

This is a significant shift. As several ASEAN peers, including Singapore, Malaysia, Indonesia, and Thailand, have begun integrating globally aligned disclosures into their reporting regimes, the Philippines is moving to ensure its capital market remains competitive and credible across Asia-Pacific and global capital markets. 

As the SEC extends requirements to large non-listed companies, sustainability reporting becomes an economywide expectation. These broadening signals that resilience, transparency, and long-term value creation are not just the domain of listed companies, they are fundamentals of good business in the Philippines.

Why sustainability reporting is becoming non-negotiable 

The move reflects more than regulatory evolution, it mirrors a broader global trend where sustainability information is becoming as important as financial information. The ISSB standards aim to reduce greenwashing and create a common global language for sustainability reporting, backed by the G7, G20, IOSCO, and the Financial Stability Board.  

Across markets, investors want clearer visibility of sustainability-related risks and opportunities that could influence future cash flows. Philippine regulators share this view: SEC Chairman Francis Lim highlights that heightened transparency will help stakeholders better understand the financial impacts of climate-related and sustainability related risks, ultimately improving resource allocation decisions and supporting long-term value creation.  

Grant Thornton International’s “Scaling Sustainability” research reinforces the trend: 85.9% of firms globally will maintain or increase sustainability investment in 2025, and 72.9% will continue sustainability reporting, even amid global regulatory rollbacks, because they view sustainability as a strategic enabler, not a compliance cost.  

Preparing early: A strategic imperative 

With mandatory reporting beginning for many tier 1 covered companies in 2026, preparations must begin now. Covered entities should treat 2026 as the foundation year, the period during which they establish the systems, controls, and data baselines needed for credible reporting and future assurance. 

Even professional services firms are modeling this shift. P&A Grant Thornton recently released its inaugural Sustainability Report in 2025, signaling a move from compliance-driven operations to purpose-led ESG leadership, showcasing initiatives in energy efficiency, waste management, ESG risk management, and community engagement.  

Below are practical, actionable preparations companies can undertake starting 2026 to ensure the completeness, accuracy, and audit readiness of their first PFRS S1/S2-aligned sustainability report.

1. Conduct a comprehensive gap analysis

Companies must understand their current position across governance, existing sustainability strategy, data quality, and internal processes. A gap analysis helps identify where work is needed to meet PFRS S1 and S2 requirements, particularly as companies begin embedding sustainability into risk management and strategic planning.  

Entities may seek advisory support to conduct this analysis, especially complex data areas such as GHG emissions or climate related scenario analysis. 

2. Develop a sustainability roadmap 

A sustainability roadmap should outline the steps needed to close identified gaps, define roles and responsibilities, set internal timelines, and create budgets for system enhancements, data integrations, skills development, and governance strengthening. 

The roadmap should also specify key milestones leading to the first PFRS aligned report, including internal testing cycles, mock reporting runs, and board review timelines. Advisory assistance may be helpful in shaping a roadmap that is both realistic and aligned with regulatory expectations. 

3. Strengthen data quality and internal controls 

High-quality sustainability reporting depends on reliable data, consistent methodologies, and strong internal controls. Entities should examine whether current systems enable accurate tracking of sustainability related data, especially GHG emissions, energy use, and climate related financial impacts. 

If gaps exist, entities may need help establishing new controls, improving data governance, or implementing software systems designed for sustainability data management. This also prepares companies for the upcoming limited assurance requirement, which will require traceability, documentation, and audit ready data.  

4. Know the standards: Build internal capability and technical understanding 

Insufficient understanding of PFRS S1 and S2 may result in incomplete or overly lengthy reports, duplication of information, or unintentional noncompliance.

Companies should ensure key personnel are trained in:

• PFRS S1 and S2 requirements 
• Materiality assessments 
• Climate scenario analysis 
• ISSB interoperability and global alignment

Expertise in the standards also enables internal teams to collaborate effectively with assurance providers, auditors, or advisors. 

5. Set the tone at the top 

Sustainability reporting is not an exercise owned solely by the sustainability or finance teams, it requires participation across the organisation. Leadership plays a central role in setting expectations, allocating resources, and ensuring sustainability is embedded across operations, risk management, and strategy. 

The practical actions above directly support the earlier foundational preparations already outlined, including establishing emissions baselines, improving data management, strengthening governance, conducting training, and drafting early reports. 

These steps, taken early in 2026, will allow companies to enter the first reporting cycle not with uncertainty or pressure, but with confidence, clarity, and readiness. 

Assurance: The next big step 

Under the SEC circular, sustainability reporting will not stop at disclosure. Mandatory limited assurance over Scope 1 and Scope 2 GHG emissions will be required two years after initial implementation, performed by an independent assurance practitioner.  

This move echoes global developments: sustainability disclosures are increasingly expected to be “investor grade,” and assurance establishes credibility by ensuring sustainability data meets governance and control standards comparable to financial reporting.  

ESG reports of several member firms within the Grant Thornton network show this in practice. In their 2024 ESG reports, these firms obtained third party limited assurance over their 2023 and 2024 GHG emissions inventories, demonstrating how credible assurance builds trust and improves data quality.                      

The road ahead 

The issuance of Memorandum Circular No. 16‑2025 marks more than a regulatory milestone in Philippine corporate governance, it signals the end of the era when sustainability reporting resembled traditional CSR narratives and the beginning of a more rigorous, investor‑relevant, and globally aligned disclosure regime. 

This transformation is cultural as much as it is technical. Sustainability is no longer a glossy appendix or an annual CSR highlight reel released once a year.  It is now embedded in how organizations articulate their long-term strategy, manage enterprise-wide risks, oversee governance, and demonstrate accountability to stakeholders.

And as the Philippines embraces this new era under PFRS S1 and S2, Earth Month becomes more than a time for reflection, it becomes a reminder that sustainability, when done right, shapes how businesses endure, compete, and create long-term value. 

This is not your old CSR report. It is how the future of corporate reporting in the Philippines begins.

As published in The Manila Times, dated 08 April 2026