Skip to main content

Philippines introduces mandatory sustainability reporting aligned with global standards.

 3 February 2026.

The Philippines has taken a step towards strengthening corporate transparency by mandating sustainability reporting aligned with international standards.

The Securities and Exchange Commission (SEC) has adopted the Philippine Financial Reporting Standards on Sustainability Disclosures (PFRS S1 and S2), which correspond directly with the International Financial Reporting Standards developed by the International Sustainability Standards Board (ISSB).

Core standards of the framework

The framework comprises two core standards. PFRS S1 sets out requirements for sustainability-related financial disclosures, while PFRS S2 focuses on climate-related risks and opportunities. Together, they align Philippine sustainability reporting with globally recognised ISSB standards and place the Philippines alongside other ASEAN markets such as Singapore, Thailand, Malaysia and Indonesia.

This move also marks the end of the SEC’s voluntary “comply or explain” approach introduced in 2019, signalling a shift towards mandatory, standardised sustainability disclosures.

Phased implementation beginning in 2026

The adoption of PFRS S1 and S2 will follow a three-tier phased rollout starting from fiscal year 2026, prioritising the largest entities while allowing time for companies to prepare their reporting systems.

  • Tier 1 applies to publicly listed companies with market capitalisation exceeding PHP 50 billion as of 31 December 2025. These companies will report from 2027, covering fiscal year 2026.
  • Tier 2 includes listed companies with market capitalisation above PHP 3 billion and up to PHP 50 billion. Reporting will apply to fiscal years beginning on or after 1 January 2027, with first reports due in 2028.
  • Tier 3 covers listed companies with market capitalisation of PHP 3 billion or less, as well as large non-listed entities with annual revenues exceeding PHP 15 billion. These entities will be required to report for fiscal years beginning on or after 1 January 2028, with disclosures due in 2029.

The inclusion of large non-listed entities broadens the scope of mandatory sustainability reporting in the Philippines.

Assurance requirements strengthen credibility

To enhance the reliability of sustainability disclosures, the SEC has introduced limited assurance requirements for Scope 1 and Scope 2 greenhouse gas emissions. Limited assurance will become mandatory two years after each tier’s initial adoption date, applying from 2029 for Tier 1 companies, 2030 for Tier 2 and 2031 for Tier 3.

The SEC has also provided transitional reliefs, including phased disclosure requirements and temporary exemptions for Scope 3 emissions and comparative period data, recognising the complexity of implementing sustainability reporting frameworks.

Key implications for Philippine companies

The adoption of ISSB-aligned sustainability standards represents a shift in how Philippine companies communicate environmental, social and governance information to investors. Sustainability disclosures will move from voluntary reporting towards regulated, decision-useful information that supports investor confidence and capital allocation.

By aligning with ISSB standards, the Philippines’ capital markets become more competitive while ensuring greater comparability and consistency of sustainability information.

Conclusion

The adoption of PFRS S1 and S2 establishes mandatory, standardised sustainability disclosure requirements for Philippine companies. By aligning with ISSB standards, the Philippines positions itself alongside regional leaders in sustainability transparency and creates a foundation for improved investor decision making.

However, implementation timelines and technical requirements vary substantially across tiers. Companies should review their classification under the three-tier system and monitor subsequent guidance from the SEC, particularly regarding assurance requirements, transitional reliefs, and reporting system specifications. Organisations preparing for compliance may benefit from establishing internal reporting frameworks and greenhouse gas accounting systems ahead of their applicable deadlines.

Philippines introduces mandatory sustainability reporting aligned with global standards

About Acclime.

Acclime helps businesses, from funded startups to multinational corporations, start and operate in the Philippines and beyond, navigating local regulatory complexities to maximise opportunities while ensuring compliance. As a trusted partner, we provide premier advisory and corporate services across the Philippines and the Asia-Pacific region.

Learn more