The Philippines is moving towards implementing full mandatory disclosure of ESG compliance by all businesses in the country, but emphasized the need to find balance amid social concerns being a developing country.
This was emphasized by Trade and Industry Secretary Alfredo E. Pascual at the EU Sustainable Investment Summit in Brussels with the theme "Striving for Transparency Globally" on Friday, Oct. 28.
In aligning with environment, sustainability, and governance, Pascual emphasized that the Philippines must balance this goal against its social concerns.
“We have to worry about the welfare of our people. To what extent do we balance environmental sustainability with social sustainability?” he asked.
For instance, the Philippines has to balance between the use of cheaper coal because that is locally available and more affordable for the poor than importing expensive high calorific value coal with lower carbon emission.
“How do you balance that, that's something that has to be looked into as well,” he said.
In formulating a harmonized global ESG compliance metrics, he said, “We might need to also throw in the issue of social sustainability.”
Pascual further said that although the Philippines had a “very tiny” carbon footprints in the context of the global emission, “We're doing our part, we have our own greenhouse gases reduction commitments.”
To be able to measure how the country is meeting its commitment, the government through the Securities and Exchange Commission requires publicly listed companies to disclose compliance to the requirement.
“It's still a on a comply or explain basis,” he said but eventually “there will be mandatory requirements for full disclosure and eventually the disclosure requirement will be extended to all corporations registered with the Securities and Exchange Commission.”
With respect to banks, the central bank has the responsibility. “We expect the banks to also play the role in enforcing disclosure by corporations,” he said.
One policy for the banks could be “without disclosure, no loan.”
Banks will play its role in getting clients make full disclosure to show they have all the plans to avoid adding to the emission into the atmosphere, Pascual said.
The Philippines has no equivalent to the taxonomy measure in the EU, but Pascual assured that it is using the global standards like for disclosure by public listed companies. The most popular so far is the GRI standards.
“We are aligned with global standards,” said Pascual. The problem, he said, is that there are so many standards.
With that, Pascual batted for the harmonization of standards to be led by the bigger economies.
“We are prepared to consider aligning ourselves with a harmonized standard,” he added.
Meanwhile, in her opening message, President of the European Commission Ursula Von der Leyen expressed the EU's commitment to finance public and private investments that will not only drive economic growth but will also create a positive impact on research and innovation for low carbon economy. The EU aims to build a more sustainable economy amid global disruptions such as the Russian invasion of Ukraine.
The panel members included Bayer's Global Head of Public Affairs, Science, and Sustainability Matthias Berninger, Zurich Insurance Group's CEO Mario Greco, Chair of the Committee on Economic and Monetary Affairs Irene Tinagli, and ING Group's CEO Steven van Rijswijk.
The Summit focused on the EU regulatory frameworks that were put in place such as the Action Plan on Sustainable Finance and the Strategy for Financing the Transition to a Sustainable Economy. Both aim to promote transparency and create a harmonized reporting system on sustainable finance in the European Union. Similar frameworks in other countries that promote sustainability and affect businesses and investments were also tackled during the Summit.