BSP plans stricter sustainability reporting rules for banks by 2027
PHILIPPINE BANKS may soon be required to adopt stricter international reporting standards related to sustainability as the Bangko Sentral ng Pilipinas (BSP) noted the growing risks posed by climate change to financial stability.
According to a draft circular, the central bank is eyeing a phased implementation of the Philippine Financial Reporting Standards (PFRS) S1, or the General Requirements for Disclosure of Sustainability-related Financial Information, and S2, or Climate-related Disclosures, starting next year for universal and commercial banks.
“Subsequent global and local developments have underscored the need for more robust and consistent sustainability reporting, as climate change increasingly poses risks to financial stability and stakeholders demand more reliable and decision-useful information,” the BSP said in an explanatory note.
“The amended requirements aim to enhance the quality, consistency, and comparability of sustainability-related information disclosed by banks, strengthen market discipline, and support stakeholders in making well-informed assessments of sustainability-related risks, opportunities, and long-term resilience,” it said. “Moreover, the amendments promote better integration of sustainability-related risks and opportunities into banks’ corporate governance and risk management framework.”
The implementation schedule will depend on the banks’ size and market capitalization, which will follow the principle of proportionality.
Under Tier 1, publicly listed banks holding over P50 billion in market capitalization as of Dec. 31, 2025 or as of listing date must comply with the new reporting standards starting 2027.
Meanwhile, Tier 2 covers publicly listed banks with P3 billion to P50 billion in capital and nonlisted large banks with P50-billion capital, with reporting beginning 2028.
Lastly, under Tier 3 are publicly listed lenders with capitalization under P3 billion, nonlisted large banks with less than P50 billion in capital, and listed banks whose debt securities are only listed on the Philippine Dealing & Exchange Corp. and without listed equity securities on the Philippine Stock Exchange. Their first reporting will be in 2029.
Based on the proposed circular, all banks may submit their reports later than their related audited financial statements for the first reporting year.
These may be filed either with their next second-quarter or half-year interim financial statements, or within nine months from the end of the reporting period if they do not issue interim financial statements.
The BSP will also grant banks transitory relief until the initial implementation phase next year, where they may observe the minimum disclosure requirements currently applicable to those not covered by the PFRS S1 and S2.
They were told to update their internal processes, data systems, and disclosures before implementation starts.
Meanwhile, additional implementation phases will be set for other financial institutions such as nonlisted thrift, rural, cooperative, digital, and Islamic banks.
However, they will be required to include related information in their annual reports, such as their overall sustainability strategic objectives and risk appetite; overview of their environmental and social (E&S) risk management system and its interactions with credit, operational, and/or liquidity risk management; their products or services aligned with sustainable finance frameworks; and the breakdown of their E&S risk exposures by industry, sector, or location.
The BSP’s proposed issuance comes as the Securities and Exchange Commission (SEC) released a memorandum circular last year that sets similar rules for publicly listed companies and large nonlisted entities.
It said that banks already covered by this measure may submit the same sustainability report to both the BSP and the SEC, which may be filed together with their annual report. — Katherine K. Chan
