The Philippines

Political importance

As the only ASEAN country among the beneficiaries of the EU GSP+ special incentive arrangement for sustainable development and good governance, the Philippines commits to international conventions and cooperate with the European Commission to monitor the implementation of matters related to ESG and track its progress every two years.

The Philippines attach vital importance to the environment, ranking among the most vulnerable countries in the world to climate change. For instance, the Philippine Commission on Human Rights has framed climate change as a human rights issue, concluding that major contributors of global emissions are violating or threatening to violate human rights due to their impact on climate change. With sustainability reporting gaining traction in the Philippines, the country is demonstrating commitment to ESG in accordance with international standards and has taken significant leaps in recent years to promote itself as a credible part of global supply chains.

 

 

 

 

 

 

 

 

Corporate Attention

Being part of global supply chains, companies in the Philippines recognize that ESG performance is increasingly tied to corporate success. Along with adhering to international conventions linked to the EU GSP+ special initiative arrangement, the Corporate Sustainability Reporting Directive require Philippine companies to further align with the expectations of their international counterparts to remain an attractive investment destination. Locally, sustainability reporting is currently limited to publicly listed companies on a “comply or explain” basis. However, the Philippine Securities and Exchange Commission (SEC) has declared that it will gradually introduce a mandatory approach to sustainability reporting for all types of corporations to align companies operating in the country with global standards. Coinciding with global trends, ESG considerations in the Philippines are quickly evolving from a trend to a business imperative underscoring not only financial resilience but also future growth and investor confidence.

 

 

Emerging Trends

ESG is still an incipient practice in the Philippines, but the country has reaffirmed its commitment to international standards, announcing its intention to adopt the inaugural global sustainability disclosure standards issued by the ISSB. Emerging trends for ESG in the Philippines are characterized by the country’s strong emphasis on addressing the detrimental impact of climate change on the nation. Accordingly, the SEC is already revising its reporting guidelines to include disclosures on climate-related opportunities and risks exposures. This is facilitated by the rise of big data and AI technologies offering new opportunities for improving ESG data management and reporting. In addition to environmental concerns, significant challenges to poverty and social inequality also persist in the Philippines despite recent economic strides, which has invoked a growing emphasis from various stakeholders for companies to operate socially responsible. While ESG regulations in the Philippines are still at their beginning, stakeholder activism, national environmental concerns, and international expectations from investors are pushing new legislation forward.

 

Get to know the Regulatory Opportunities and Threats

Threats

The ESG landscape in the Philippines hold significant opportunities for green solutions, with its strong emphasis on the environment. As a global frontrunner in the green transition, Danish companies are well-positioned to leverage current and future key regulations in the country, providing fiscal and non-fiscal incentives to support innovation in clean, sustainable, and efficient energy, as well as protecting the health and well-being of the people from pollution and climate change. Additionally, by integrating social factors into their core business model, Danish companies are also well-equipped to benefit from growing demand in the Philippines for companies to operate socially responsible, such as fair labor practices and community engagement.

Climate change has also amplified the demand for green growth beyond the Philippines. With the country’s unique commitment to international standards, Danish companies can test the implementation of global ESG regulations in the Philippines. In doing so, Danish companies can refine their approaches before exporting green solutions to other developing ASEAN markets also benefitting from investors exploring new markets beyond China. Thus, by establishing a foothold in the Philippines, Danish companies can gain insights into regional dynamics and adapt their ESG practices accordingly. In short, Danish companies can leverage ESG regulations in the Philippines to foster long-term business sustainability and future-proof global operations against climate-related risks.

Opportunities

Compliance with evolving ESG regulations in the Philippines is crucial for Danish companies to avoid legal and financial setbacks, as well as loss of reputation. Additionally, addressing growing stakeholder expectations for companies to operate socially and environmentally responsibly is also becoming critical for overall market performance by upholding consumer support and investor confidence. As one of the most vulnerable countries in the world to climate change, failing to demonstrate commitment to environmental challenges in particular can escalate into public outcry against business operations. This illustrates that a robust ESG strategy has matured from a trend to a business imperative underlying competitive advantage in the Philippines and the integrity of global supply chains. The effective management of ESG risks in the Philippines is not just about compliance but building future-proof and resilient businesses.

 

Understand ESG Regulations in Malaysia

Mitigating the impact of climate change has become a vital part of ESG regulations in the Philippines. The government has introduced the Energy Efficiency and Conservation Act, which mandates designated establishments to promote energy projects. Additionally, the Electric Vehicle Industry Development Act has enacted a broader regulatory framework and roadmap for innovation in clean, sustainable, and efficient energy, as well as protecting people from pollution and climate-change. The Revised Corporation Code now empowers the SEC to dissolve or impose sanctions on companies that engage in graft and corrupt practices, gradually paving the way for stricter corporate governance regulations in the Philippines, while the Expanded Anti-Trafficking in Persons Act has been implemented to meet growing demands for improving social factors in the Philippines.

Memorandum Circulars 2016-19, 2019-04, and 2019-24 requires publicly listed companies to disclose their ESG performances and practices in their annual corporate governance reports, submit a sustainability report to assess and manage their non-financial performance across the economic, environmental and social aspects of their organization, along with their contributions towards achieving universal targets of sustainability. Moving forward, the SEC is supporting mandatory sustainability reporting for all types of corporates, adopting the new ISSB inaugural sustainability disclosure standards to align the Philippines with international best practices for ESG regulations.