In today’s fast-changing business environment, the demand for consistent, comparable, and transparent sustainability reporting is crucial for investment decisions. The International Sustainability Standards Board (ISSB) has introduced IFRS S1 General Requirements for Sustainability-related Financial Information and S2 Climate-related Disclosures, which provide crucial sustainability-related information alongside financial statements, catering to investor demands for transparency.
These standards offer businesses a chance to enhance corporate governance and investor protection through globally aligned regulations.
Following the adoption of IFRS S1 and S2, on Dec. 22, the Securities and Exchange Commission (SEC) issued Memorandum Circular No. 16, Series of 2025 requiring publicly-listed companies (PLCs) and large non-listed companies (LNLs) to adopt Philippine Financial Reporting Standards (PFRS) on Sustainability Disclosures starting in FY2026 with limited extensions of transition reliefs under a tiered approach.
Mandatory external limited assurance of Scope 1 and Scope 2 Greenhouse Gas (GHG) emissions by an independent assurance practitioner will also be required two years after the initial implementation of these standards for each tier.
The standards focus on four core areas:
- Governance: governance processes, controls and procedures a reporting entity uses to monitor, manage and oversee sustainability- and climate-related risks and opportunities
- Strategy: approach the entity uses to manage sustainability- and climate-related risks and opportunities
- Risk Management: processes the entity uses to identify, assess, prioritize and monitor sustainability- and climate-related risks and opportunities
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