By Denise A. Valdez
THE Philippine Stock Exchange, Inc. (PSE) wants listed companies to submit sustainability reports as part of disclosure requirements.
“We have to have a simplified implementation of the circular of the Securities and Exchange Commission (SEC) on sustainability reporting. It’s still optional. So we want to encourage more companies to make it part of the disclosure requirements,” PSE President and Chief Executive Officer Ramon S. Monzon told BusinessWorld on Friday.
The SEC issued earlier this year Memorandum Circular (MC) No. 4 which outlines sustainability reporting guidelines for publicly listed companies. It provided a reporting template for the new regulatory filing, which shall be attached to SEC Form 17-A or the annual reports of companies submitted every year.
The regulator requires companies to disclose their climate-related risks and opportunities in the sustainability report. “Whenever applicable, these disclosures should be quantifiable and measurable, effectively providing a snapshot of an organization’s non-financial performance for the reporting period,” the MC said.
The first sustainability report shall be attached to the 2019 annual report that companies will submit in 2020. The MC provides that for the first three years of the policy’s implementation, companies will be allowed to just attach the template and “provide explanations for items where they still have no available data on.”
“We’re working with SEC on how to incentivize the companies to do an earlier reporting, kahit na hindi pa mandatory [even though it’s not yet mandatory],” Mr. Monzon said.
He said what the PSE wants is to make sustainability reporting part of the disclosure requirements. “They have that (SEC) circular on the guidelines for sustainability reporting… Hopefully (we can incentivize sustainability reporting) soon,” he added.
Under the MC, the SEC “will not penalize companies for failure to provide required material information as long as they provide sufficient and acceptable explanations.”
However, a listed firm that fails to include the sustainability report to its annual report submitted to the SEC will face fines of up to P60,000 plus P1,000 per day of delay of filing.
Mr. Monzon said the PSE is currently reviewing the disclosure guidelines of other exchanges to see what the SEC can apply locally in relation to sustainability reporting.
In a speech at the SEC-PSE Corporate Governance Forum in Pasay City last week, Mr. Monzon said the Sustainable Stock Exchanges (SSE) Initiative and the World Federation of Exchanges already drafted a blueprint for stock markets “so that bourses worldwide can embed sustainability practices in their policies and processes to manage the impact of exchange operations to the environment and society.”
“We are guided by the blueprint to see how we can best implement the recommended courses of action in the PSE… [W]e are reviewing disclosure guidelines of other exchanges to see how we can best adopt their practices,” Mr. Monzon said.