Companies urged to transition away from ‘compliance-driven’ sustainability reporting

COMPANIES should consider voluntarily filing sustainability reports to boost overall compliance, which could help them move away from a “compliance-driven” approach, participants at a sustainability forum were told.

“We should encourage voluntary reporting. I know that the culture of our companies is still compliance driven, but there is room for voluntary reporting and that should be encouraged,” Reyes Tacandong & Co. Strategic Governance and Sustainability Services Head Roberto T. Bascon, Jr. said at the forum in Quezon City last week.

“Companies should also be encouraged to adopt multiple sustainability reporting frameworks. Each framework will have a different audience,” he added.

Mr. Bascon said stronger government enforcement is needed to persuade companies to disclose more on sustainability.

“I know that the Securities and Exchange Commission (SEC) is aware of it, and they have made significant steps to enforce this. One of which is the revised sustainability reporting guidelines,” he said.

Mr. Bascon said companies should also tap technology in preparing their sustainability reports.

“We should invest in artificial intelligence or data analytics, which can help organizations improve the accuracy and efficiency of our reporting,” he said.

SEC Commissioner Javey Paul D. Francisco said separately that the corporate regulator has logged a 95% compliance rate among publicly listed companies (PLCs) for sustainability reporting.

The Philippine Stock Exchange (PSE) currently has more than 280 PLCs.

Mr. Francisco said the SEC could reach full compliance among PLCs by next year.

“It is just a handful (of PLCs) left. Maybe by next year,” he said.

“We expect to see an increase in submissions as we further align the guidelines with recent developments on international corporate sustainability disclosure standards,” he added.

In 2019, the corporate regulator issued Memorandum Circular (MC) No. 4, which laid down the sustainability reporting guidelines for PLCs.

The guidelines are intended to help the companies evaluate their non-financial performance and monitor their progress towards meeting sustainability goals.

The SEC also issued MC No. 5 in February on the Philippine Sustainable Finance Taxonomy Guidelines. The MC provides a framework for investors, businesses, and regulators to ensure that capital is directed toward activities that promote sustainable development. — Revin Mikhael D. Ochave