Companies that initiated environmental, social and governance (ESG) reforms ahead of any prodding from corporate regulators are proving to be more resilient to the shockwaves caused by the prolonged COVID-19 pandemic, a top Securities and Exchange Commission (SEC) official said.
Presenting a business case for ESG, SEC corporate governance and finance department director Rachel Esther Gumtang-Remalante said in a forum held by the Philippine Institute for Development Studies on Thursday that sustainability business practices and reporting would not only boost a company’s brand, but likewise improve financial metrics.
“So when corporate managers still believe that dealing with ESG issues would entail sacrificing some financial return, this view is outdated and no longer holds true,” she said.
In 2016, the SEC issued the Philippine corporate governance blueprint or the CG code for publicly listed companies (PLCs), raising local CG awareness and standards to meet global standards. In 2019, the SEC also started requiring PLCs to reporting sustainability and nonfinancial issues based on a globally accepted reporting framework.
Compliance
As of end-August this year, Remalante noted that compliance to the sustainability reporting requirement was 90.77 percent, with 246 out of 271 PLCs submitting their report for 2019. This marked a big improvement from the results of the 2017 KPMG survey which showed that only 22 percent of PLCs published a report on sustainability initiatives, sustainability impact and performance. During this pandemic, the SEC official said the importance of sustainability practices and reporting had become more pronounced.
“Companies that have been reporting way before the regulators, or the SEC required this, are more resilient, and more quick to adapt during this pandemic. They were able to immediately identify the problem areas, engage their stakeholders, provide solutions and adapt to the new normal,” she said.
“More companies gave more focus on the social aspect of the business, giving more importance to health concerns, providing safe and healthy work environment, taking care of their well-being and mental health.”
The SEC official did not cite any specific company but noted that this had become more apparent in how companies prioritize vaccination of employees.
With the fast-changing business landscape, she said it has become imperative for companies to train and to retool their employees, giving them new skills and means for career advancement.
Overall, the SEC official reminded the audience that sustainability should be everyone’s responsibility.
“We must be remarkable ancestors who champion sustainability [for] our descendants,” she said.