IFRS-Based Sustainability Reporting Standards to Become Mandatory in the Philippines

Takeaways

• The Philippines has adopted IFRS-based sustainability reporting standards, making climate and sustainability disclosures mandatory for large and listed companies.
• Reporting will be rolled out in phases from 2027, aligned with global standards developed by the IFRS Foundation’s ISSB.
• Transitional reliefs will give companies time to adapt, including delayed Scope 3 emissions reporting.

The Philippines has taken a major step toward stronger sustainability and climate transparency, with the Philippine Securities and Exchange Commission announcing the adoption of new IFRS-based sustainability reporting standards.

The Commission said it has approved the Philippine Financial Reporting Standards (PFRS) on Sustainability Disclosures, a framework aligned with global standards developed by the IFRS Foundation and its International Sustainability Standards Board (ISSB). These standards will form the foundation of mandatory sustainability and climate-related reporting requirements for large and publicly listed companies in the country.

According to the regulator, the move will allow Philippine companies to prepare sustainability reports that are consistent, comparable, and aligned with international expectations. The new framework includes PFRS S1, which focuses on sustainability-related disclosures, and PFRS S2, which covers climate-related disclosures. These standards mirror the ISSB’s S1 and S2 standards, first released globally in June 2023.

Read More: The Rise of Mandatory ESG Reporting Under CSRD: What Organizations Need to Know

The Commission noted that around 40 jurisdictions worldwide have already begun adopting or preparing to adopt ISSB-aligned standards. Several ASEAN markets are moving in the same direction, including Singapore, Thailand, Malaysia, and Indonesia, positioning the Philippines within a broader regional shift toward standardized sustainability reporting.

Phased Rollout for Companies

Mandatory reporting under the new IFRS-based sustainability reporting standards will be introduced gradually. Publicly listed companies with a market capitalization of at least ₱50 billion (around US$840 million) will be the first to report, starting in 2027, based on their 2026 fiscal year data.

One year later, publicly listed companies with a market capitalization above ₱3 billion will be required to comply. By 2029, the rules will extend to all remaining listed companies, as well as large non-listed firms with annual revenues exceeding ₱15 billion (about US$250 million), covering the 2028 fiscal year.

In addition to disclosures, companies will also be required to obtain mandatory limited assurance on their Scope 1 and Scope 2 greenhouse gas emissions. This assurance must be conducted by an independent practitioner and will apply two years after a company begins reporting under the new standards.

Transitional Reliefs to Ease Adoption

To help companies adjust, the Commission has introduced several transitional relief measures following feedback from public consultations. These include allowing companies to delay reporting Scope 3 emissions for the first two years. Tier 1 and Tier 2 companies will also be permitted to disclose only climate-related risks and opportunities in their first year of reporting, while Tier 3 companies will have two years before full disclosure is required.

Also Read: SEC’s ESG Warning Could Influence Canada’s Next Move on Sustainability Reporting

SEC Chairperson Francis Lim said the adoption reflects the regulator’s commitment to high-quality and globally aligned disclosures, emphasizing the importance of transparency as sustainability expectations continue to rise.

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Source: ESGtoday