THE Securities and Exchange Commission (SEC) is looking into making mandatory some parts of sustainability reports, requiring sustainability reporting for public and small companies while rewarding their good methods.
SEC Director for Corporate Governance and Finance Department Rachel Esther J. Gumtang-Remalante said that the regulator is considering guidelines on mandatory items that it wants to be disclosed in a sustainability report.
“We do a lot of partnerships in order to encourage reporting, not only to encourage reporting but good-quality reporting,” Ms. Gumtang-Remalante said at the 8th Annual Forum of Good Governance Advocates and Practitioners of the Philippines last week.
She said the move might raise fears among companies as reports require a review from a third party, but the SEC will make sure that the companies are ready.
“Definitely, we will be providing companies some space and opportunity to go over the draft,” she said.
Meanwhile, Ms. Gumtang-Remalante said that the SEC is also looking into requiring sustainability reporting for public companies as well as small enterprises.
“It’s not only the job of the private companies to be sustainable,” she said, adding that public entities must also have their own sustainability guidelines.
“There is [also] a growing discussion even in the global space that micro-small – and medium-sized enterprises (MSMEs) have to have their reports as well,” she added.
According to Ms. Gumtang-Remalante, although there is a push for the inclusion of small companies, the SEC would need to ensure capacity-building for MSMEs to help them in reporting.
“We have to [also] identify which industry we have to focus on, [those] which have a large impact, especially to the environment or social side,” she said.
The SEC is also considering an awards system that will serve as an incentive for companies to abide by sustainability guidelines.
“The [SEC] chairman wants us to come up with an awarding system for those companies which are providing good sustainability methods,” Ms. Gumtang-Remalante said.
She noted, however, that the move is going to be a challenge for the SEC as companies will tend to only share the good side of their sustainability reports.
“In a sustainability report, you don’t only report the good ones, you also have to report on the negative ones. Because when you report on the negative ones this will also help policymakers do the right policies,” she added. — Justine Irish D. Tabile