The SEC plans to require PLCs to submit sustainability reports in two different formats under the proposed updated guidelines for sustainability reporting.
The corporate regulator announced on Thursday that it released a draft memorandum circular (MC) on Oct. 4 for public feedback. The proposed changes aim to modernize the existing sustainability reporting guidelines outlined in MC No. 4 from 2019.
According to the proposed MC, PLCs will need to provide sustainability reports in both the sustainability reporting narrative and sustainability report (SuRe) form.
To comply with the sustainability report guidelines, corporations must submit a narrative report following the structure outlined in MC 4, along with their annual report.
The SuRe form would be submitted by the companies through the SEC’s electronic filing and submission tool. The form is divided into three sections: sustainability and climate-related opportunities and risks exposures (SCORe), cross-industry standard metrics (CISM), and industry-specific metrics (ISM).
The SEC stated that the SuRe Form intends to improve the standard of sustainability reporting and guarantee the uniformity of non-financial data provided by PLCs.
The SEC plans to issue additional guidelines for ISM in the future.
SEC Chairperson Emilio B. Aquino stated that the SEC values being a leader in promoting good corporate governance and adhering to international standards. It is crucial for the SEC to continuously update sustainability reporting regulations in order to stay current with global advancements.
He stated that the continued progress of the sustainability reporting guidelines in the nation plays a role in promoting an eco-friendly and environmentally-conscious economy, as well as fostering sustainable communities.
In 2019, the Securities and Exchange Commission (SEC) released MC 4, which required Publicly Listed Companies (PLCs) to submit sustainability reports using a “comply or explain” method. This allowed them to disclose any available corporate sustainability data and provide explanations for any missing information.
The SEC mentioned that the draft MC took into account recent sustainability reporting frameworks, including the International Financial Reporting Standards (IFRS) S1 which outlines the general criteria for reporting sustainability-related financial information, and IFRS S2 which focuses on disclosures related to climate.
The regulatory agency stated that the guidelines acknowledge various frameworks, including the United Nations Sustainable Development Goals, Global Reporting Initiative, Sustainability Accounting Standards Board, International Integrated Reporting Council, and United Nations Conference on Trade and Development-International Standards of Accounting and Reporting Guidance on Core Indicator.
The Securities and Exchange Commission stated that there has been a high level of acceptance of sustainability reporting among the entities included, as 96% of publicly listed companies submit sustainability reports every year.
Deadline for submission of comments on the draft MC for updated sustainability reporting guidelines for public limited companies is Oct. 16.