The Bangko Sentral ng Pilipinas (BSP) is pushing to integrate mandatory sustainability and climate-related reporting standards into the domestic banking sector as early as 2027, aligning the country’s financial system with international governance benchmarks.

The initiative builds on existing frameworks established by the Securities and Exchange Commission (SEC), which previously mandated the adoption of Philippine Financial Reporting Standards S1 and S2. Those rules, covering sustainability and climate-related financial disclosures, closely track the International Sustainability Standards Board (ISSB) to ensure local lenders meet a global baseline for comparable reporting.

According to the BSP, the shift is increasingly urgent as “climate change increasingly poses risks to financial stability and stakeholders demand more reliable and decision-useful information.”

For this transition, the BSP is proposing specific amendments to Section 153 of the Manual of Regulations for Banks (MORB).

It noted in a draft circular issued on May 15 that the move aims to “harmonize regulatory reporting requirements across the financial system, strengthening market discipline, improving the quality of sustainability information, and enabling stakeholders to make more informed assessments of banks’ risks, opportunities, and resilience.”

Such a move is expected to simplify reporting for banks operating under both the SEC and the BSP jurisdictions while enhancing transparency.

Given varying sizes of domestic players, the BSP is proposing that the guidelines should adopt a “tiered implementation schedule for universal and commercial banks (UKBs) and publicly listed banks, based on size and market capitalization, consistent with the principle of proportionality.”

This would ensure that the largest and most systemically important institutions lead the way.

In particular, the BSP noted that the implementation will begin in 2027 for Tier 1 banks, “with subsequent phases covering other institutions.” These later phases are intended to support capacity building and allow smaller players time to align with global benchmarks effectively.

Even for specialized lenders, the rules will be adjusted to fit their respective operational scale.

“For non-listed thrift, rural, cooperative, digital, and Islamic banks, the Circular prescribes tailored disclosure requirements,” the draft read.

These banks will continue following their existing disclosure requirements under the MORB, but with minor adjustments to support transparency while avoiding excessive administrative burden.

This latest proposal is a continuation of the BSP’s 2020 Sustainable Finance Framework, which first integrated environmental, social, and governance (ESG) considerations into bank risk management.

Under stringent reporting, financial resources could be effectively channeled to economic activities that are environmentally sustainable, responsible, and resilient.