SEC issues PH firms’ guide on sustainability

MANILA, Philippines – Businesses of all sizes can expect easier access to sustainable financial services with the passage of a new set of landmark guidelines, developed under the watch of key government agencies including the Securities and Exchange Commission (SEC).

Jointly formulated by the SEC, Bangko Sentral ng Pilipinas, the Insurance Commission, and the Philippine Deposit Insurance Corp., the Philippine Sustainable Finance Taxonomy Guidelines (SFTG) allows stakeholders to make informed decisions related to investments and financing.

“With the Philippine [SFTG] in place, we hope to channel and amplify more capital toward economic projects that further sustainability goals such as lowering greenhouse gas emissions and bolstering climate resilience, while fostering transparency by reducing the likelihood of greenwashing,” SEC chair Emilio B. Aquino said in a statement on Tuesday.

SFTG to guide investment decisions

The corporate regulator said issues of securities may now refer to the Philippine SFTG to guide investment decisions or craft sustainable financial products and services.

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These must also comply with the relevant memorandum circulars issued by the SEC when issuing green, social, sustainability, and sustainability-linked bonds, the SEC said.

Micro, small and medium enterprises (MSMEs) also gain easier access to sustainability financing options as a result of new guidelines, the regulator added.

Issuers are advised to consult the list of “excluded activity” to determine if the activity qualifies as environmentally or socially sustainable, and whether its financing can be categorized as aligned with the SFTG.

Environmental objective

These companies must then select the environmental objective (EO) of the activity, such as its relevance and strategic alignment; investors or financial institution’s priority; and government and industry guidance.

“Focusing on an EO should not significantly harm other EOs. Should there be harm, the issuer should verify that the same has been remediated or will be remediated within the required defined period,” the SEC said.

“Regulated entities should refer to the general guiding questions for the do no significant harm to focus assessment on the potential or actual harm to another EO,” it added.