Just like how the first step of self-improvement is reflection, the journey towards a greener, more vibrant tomorrow all starts with sustainability reporting. Through disclosing information regarding their environmental, social, and governance (ESG) activities, organisations can communicate their progress and determine their next course of action.
Similar to how you’d start off your goals for the year with a list of New Year’s resolutions, companies of all sizes hold themselves accountable by setting clear sustainability targets and tracking their achievements. However, in the Philippines, there are still gaps in reporting standards and practices, as the market is still mostly at the learning stage of its sustainability journey.
With the goal of bridging these gaps, organisations such as the Philippine Stock Exchange (PSE), and the International Financial Reporting Standards Foundation (IFRS) and European Financial Reporting Advisory Group (EFRAG) continue to issue guidelines and develop standards, respectively, for sustainability reporting. In this article, let’s identify the challenges faced by Philippine businesses in this area, and the latest developments in the field of sustainability reporting.
Identifying the Gaps
Early last year, the Center for International Private Enterprise (CIPE) conducted a study on the state of sustainability reporting in the Philippines. Aiming to address the key opportunities and challenges in corporate setting, the study laid out its recommendations for improvement in a local context.
The study found that 63% of the respondent companies mentioned problems related to data collection, monitoring, and verification needed for reporting. Additionally, 45% of companies, especially those who have just started reporting, lack experts who can help them follow the SEC sustainability report template and identify the data that needs to be disclosed.
Although the study concluded that most local businesses see the benefits in sustainability reporting and are now taking it into account in their medium and long-term plans, these results highlighted a need for further investment into the field, both monetarily, legislatively, and in terms of commitment. It’s clear that improving the sustainability reporting landscape in the Philippines is a collaborative effort between both the public and private sector. Developing standards and legislation relevant to the Philippine context and its industries is an imperative next step. For example, recent studies showed that less than 0.50% of the global GHG emission is contributed by the Philippines.
Nevertheless, you will notice that most of the initiatives and efforts of the country are focused on the environment instead of focusing on the major issue, i.e., poor governance resulting in poor economic growth and social progress because of wasted resources due to corruption.
Local Strides
With the increased importance of environmental, social, and governance (ESG) factors in today’s business landscape, raising the standards of sustainability reporting is a necessary step.
Acknowledging these gaps, the Philippine Stock Exchange (PSE) released "ESG 101: A reporting guidebook", providing guidance on sustainability reporting for publicly listed companies. The guidebook provides a great first step for companies looking to enhance their reports, towards the goal of promoting quality sustainability reporting aligned with international best practices, standards and frameworks.
While this does not overturn any sustainability-related legislation or rules issued by regulators, this is a great resource to use alongside globally recognized reporting frameworks and standards. Focusing on the sustainability reporting principles, namely “Fair”, “Accurate”, and “Consistent and Comparable”, the document “does not provide a one-size fits all template but a conceptual guidance that highlights the key elements of an effective ESG report to better serve the needs and expectations of investors and internal stakeholders”, according to Ramon Monzon, CEO and President of the PSE.
The Global Level
Meanwhile, at the global level, the IFRS Foundation and the EFRAG issued the “Voluntary Sustainability Reporting Standard for non-listed SMEs”, providing technical advice for non-listed micro-, small-, and medium sized undertakings, as these entities are not under the scope of the Corporate Sustainability Reporting Directive.
This standard was developed in order to create better opportunities to obtain green financing for SMEs and facilitate the transition to a sustainable economy. Providing a systematic set of information, this new reporting standard gives SMEs an opportunity to voluntarily respond to sustainability data requests in a consistent manner. Perhaps it’s about time that the Philippines adopt or develop a similar standard for our SMEs.
The Path Forward
These recent developments further highlight a key point: that the path towards a greener, brighter tomorrow involves everyone: from businesses of every size to local and international enterprises. This is only the first step towards shaping a better, more sustainable business landscape: it also falls onto the organizations to act with authenticity and integrity.
To navigate this evolving landscape effectively, businesses can greatly benefit from the expertise of sustainability professionals. As the Chief Sustainability Officer of my Firm, P&A Grant Thornton, I encourage organisations, regardless of whether private or government owned, to seek professional guidance to ensure their sustainability reporting is comprehensive, accurate, and aligned with global standards.
As we continue to tread the path of sustainability, let’s move beyond mere compliance for the sake of appealing to investors, or for its financial benefits. Rather, we must all see the value of these steps towards genuine environmental stewardship and social responsibility.
Are you ready to set yourself and your organisation to these evolving standards?
As published in The Manila Times, dated 02 April 2025
