By Arra B. Francia, Reporter
THE country’s bourse operator and corporate regulator are placing the spotlight on sustainability reporting for listed firms, recognizing the need to disclose non-financial information to better aid the public in making investment decisions.
The Securities and Exchange Commission (SEC) on Tuesday said it plans to release the guidelines for sustainability reporting and the template for publicly listed companies by the end of the year. The initial draft was released for public comment last July.
The SEC described sustainability reporting, otherwise known as environmental, social, and governance (ESG) reporting, as an “organization’s practice of reporting publicly on its significant economic, environmental and/or social impacts, in accordance with globally accepted standards.”
The guidelines will require companies to disclose information related to their resource management, ecosystem and biodiversity, environmental impacts, employee management, and supply chain management, among others.
SEC Chairperson Emilio B. Aquino said this will guide investors in choosing which companies to invest in.
“Small investors can be able to invest in very good companies, not only in terms of returns, but also sustainability advocacy,” Mr. Aquino told reporters on the sidelines of the 5th SEC-PSE Corporate Governance Forum at the Philippine International Convention Center.
The Philippine Stock Exchange (PSE) welcomed this move, while also highlighting its efforts to encourage sustainability reporting among listed firms.
“Sustainability reporting guidelines is an important milestone for the capital market. It will assist in the realization of our collective goal of creating platforms for disclosure of non-financial information that will enable stockholders to have access to a company’s ESG performance thereby enabling them to make better investment decisions,” PSE President and Chief Executive Officer Ramon S. Monzon said in a speech during the forum.
Mr. Monzon said the exchange is studying the possibility of requiring ESG reporting as part of its listing rules.
PSE Chief Operating Officer Roel A. Refran said they target to implement this by 2019, as they are currently building up awareness for sustainability practices.
“(This) should be implemented by 2019. We’re doing now the dialogue with asset managers, we’re seeing how we can rationalize these indices. This is very relevant as we look at sectors, at certain considerations,” Mr. Refran told reporters on the sidelines of the forum.
Part of the PSE’s initiatives is also its application to be a member of the Sustainable Stock Exchanges (SSE) initiative established by the United Nations in 2009. The group currently has 75 members, five of which are part of the Association of Southeast Asian Nations.
“The SSE initiative is a peer-to-peer learning platform, for exploring how exchanges in collaboration with investors, regulators, and companies can promote responsible investment for sustainable development… PSE aims to learn from the experiences of our partner exchanges in the region,” Mr. Monzon said.
In the near future, Mr. Monzon said they are also aspiring to create a sustainability related index once ESG reporting in the country has improved.
“We have to prepare the ground work for the establishment of a sustainability-related index some time in the near future…The Philippine market is expected to improve its governance rules to promote transparency and disclosure of ESG factors, which in turn will hopefully result to thematic indices in line with ESG standards,” Mr. Monzon said.