By Madelaine B. Miraflor
The Securities and Exchange Commission (SEC) has launched the Sustainability Reporting Guidelines for Publicly Listed Companies (PLCs), which will require companies to be more open on how they invest on their sustainability efforts and how they implement them.
The guidelines was launched during the conference the SEC held together with the Philippine Stock Exchange (PSE) and in partnership with the Global Reporting Initiative (GRI) and Australia’s Department of Foreign Affairs and Trade (DFAT).
Kanna Mihara, vice president at Macquarie Capital Securities (Japan) Ltd., noted how sustainability has increasingly become a major consideration for investors, citing the latest biennial report from Global Sustainable Investment Alliance that estimated the value of assets professionally managed under responsible investment strategies at $30.7 trillion in 2018.
Upon the issuance of the guidelines, the SEC will start requiring PLCs to submit their sustainability reports, together with their annual reports, on a “comply or explain” basis for the first three years.
The first sustainability report must be attached to the annual report for 2019, which must be submitted in 2020.
The Sustainability Reporting Guidelines reflects four of the globally accepted frameworks for reporting sustainability and non-financial information, including the GRI’s Sustainability Reporting Standards, the International Reporting Council’s Integrated Reporting Framework, the Sustainability Accounting Standards Board’s Sustainability Accounting Standard, and the recommendations of the Task Force on Climate-related Financial Disclosure.
Drafted in line with some provisions of the Code of Corporate Governance for PLCs, the guidelines sets forth the information that PLCs will have to disclose in relation to their non-financial performance across the economic, environmental and social aspects of their organizations.
For economic impacts, the information may relate to the companies’ contribution to the pool of economic resources that flows in the local and national economy such as data on employee wages and benefits, investments in communities and procurement practices.
For environmental impacts, the information may pertain to energy and water consumption, materials used, operational sites near protected areas and areas of high biodiversity value outside protected areas, air emissions as well as solid and hazardous wastes.
Disclosures should include the PLCs’ initiatives to enhance their operations’ positive impacts and minimize the negative impacts.
For societal impacts, the information may range from employee benefits, diversity and equal opportunity at the workplace and occupational health and safety to customer satisfaction, customer privacy and data security.
The Guidelines also provides a framework for the reporting of the companies’ contributions toward achieving universal sustainability targets like the United Nations Sustainable Development Goals as well as national policies and programs like AmBisyon Natin 2040.
Sustainability reporting has emerged as a common practice for companies globally, with 93 percent of the world’s largest 250 companies and 75 percent of the top 100 companies in 49 countries reporting on sustainability, according to the KPMG Survey of Corporate Responsibility Reporting 2017.
In the Philippines, only less than 22 percent of PLCs have published a report on sustainability impacts and performances, based on the 2017 Integrated Annual Corporate Governance Reports submitted to the SEC.
“We hope we would all be reminded that the responsibility of creating a sustainable environment is an obligation so basic and imperative that it precedes any kind of law. It is a call for the preservation of humankind, of our generation and of the generations to come,” SEC Chairperson Emilio B. Aquino said.
For his part, PSE President Ramon S. Monzon said publicly listed companies must have the moral and social accountability to be at the forefront in acting on and upholding the SDGs (sustainable development goals) relevant to the country.