A significant shift is underway in Philippine corporate reporting, as the Securities and Exchange Commission (SEC) mandates new sustainability disclosure standards for major companies. These changes, outlined in Memorandum Circular No. 16, Series of 2025, will fundamentally alter how publicly listed companies and large private entities communicate their environmental and social impact.
The new standards, PFRS S1 and S2, require detailed reporting on sustainability-related financial information and specifically, climate-related risks and opportunities. Implementation will be phased, beginning in fiscal year 2026, with a tiered approach based on company size and revenue.
Tier 1, encompassing the largest publicly listed companies – those with a market capitalization exceeding P50 billion as of December 31, 2025 – will begin reporting in 2027. Tier 2, for companies with market caps between P3 billion and P50 billion, follows in 2028.
Smaller publicly listed companies, alongside large non-listed entities with annual revenues over P15 billion, fall into Tier 3 and will start reporting in 2029. Market capitalization is determined by the total value of outstanding shares, calculated as of the end of 2025, or the listing date for companies joining the exchange later.
To ease the transition, the SEC is offering some flexibility. Companies will have delayed reporting timelines, exemptions from providing comparative data initially, and a phased approach to mandatory assurance of greenhouse gas emissions (Scope 1 and 2). Parent companies already providing sustainability reports can also exempt their subsidiaries.
Alongside these sustainability requirements, the SEC is also tightening rules around beneficial ownership disclosure with Memorandum Circular No. 15, Series of 2025. This move is designed to combat illicit activities and enhance corporate transparency.
The new beneficial ownership rules demand comprehensive information on individuals owning or controlling at least 20% of a company, or those who exert significant influence. This includes names, addresses, tax IDs, nationalities, and precise ownership percentages.
A new, dedicated web-based registry will replace the current system, and companies will be required to annually confirm the accuracy of their submissions. Failure to comply will result in substantial fines, scaled to retained earnings or fund balance, and potential disqualification of responsible officers.
Providing false information carries even steeper penalties, potentially reaching P2 million in fines and even corporate dissolution. These rules take effect on January 1, 2026, marking a clear signal of increased regulatory scrutiny.
Ultimately, these regulatory changes represent a comprehensive effort to improve corporate transparency, align Philippine reporting with international standards, and strengthen oversight of company ownership and sustainability practices. The SEC aims to foster a more responsible and accountable business environment.
