Philippines Sustainability Reporting: A Guide to PFRS S1 and S2

In January 2026, the Philippines Securities and Exchange Commission (SEC) formally adopted Philippine Financial Reporting Standards (PFRS) S1 and S2 through Memorandum Circular No. 16, making sustainability and climate disclosure mandatory for publicly listed companies (PLCs) and large non-listed entities (LNLs). The move places the Philippines alongside Singapore and Malaysia, both of which have introduced formal ISSB-aligned mandates, and reflects a broader shift across ASEAN economies toward standardised sustainability reporting.

The timing reflects domestic as well as international pressure. As one of the world's most climate-vulnerable countries, typhoons, flooding, and sea-level rise are not abstract financial risks for Philippine businesses: they are operational realities. This guide covers what the two standards require, how the phased rollout works, what transitional reliefs are available, and what companies need to do before their first filing deadline arrives.

What are PFRS S1 and S2?

PFRS S1 and S2 are the Philippines' locally adopted versions of the International Sustainability Standards Board (ISSB) standards, IFRS S1 and IFRS S2, published in June 2023. PFRS S1 covers general sustainability-related financial disclosures: the sustainability risks and opportunities that are material to a company's long-term business value. PFRS S2 focuses specifically on climate, requiring companies to disclose how climate-related risks and opportunities affect their business, strategy, and finances.

Both standards are structured around four disclosure pillars: governance, strategy, risk management, and metrics and targets. Together, they give investors a consistent, comparable picture of how a company is exposed to sustainability and climate risk, and what it is doing about it.

For Philippine companies seeking international capital or operating within global supply chains, that comparability is a practical advantage. Reports filed under PFRS S1 and S2 are directly comparable to disclosures filed under IFRS S1 and S2 in other markets.

Who needs to report, and when?

The SEC has introduced a phased, tiered rollout. The tier a company falls into determines when it must begin reporting and, initially, how much it must disclose.

• Tier 1: PLCs with a market capitalisation above PHP 50 billion. First sustainability report due in 2027, covering FY2026.
• Tier 2: PLCs with a market capitalisation above PHP 3 billion. First report due in 2028.
• Tier 3: All remaining PLCs, and LNLs with annual revenue above PHP 15 billion. First report due from 2029.

LNLs that meet the Section 17.2 criteria submit their sustainability report alongside their annual report, as PLCs do. LNLs below that threshold file alongside their audited financial statements. Government-owned and controlled corporations (GOCCs) and entities regulated by the Insurance Commission are currently exempt, with separate frameworks to follow.

What transitional reliefs apply?

The SEC has built several reliefs into the framework to reduce the burden on first-year reporters. They are worth understanding clearly, because they are narrower than they sometimes appear.

• Climate-only reporting in year one: Tier 1 and Tier 2 companies can limit their first report to PFRS S2 (climate disclosures) rather than covering all sustainability topics under PFRS S1.
• Scope 3 deferral: Companies can omit Scope 3 emissions disclosures for their first two years of reporting.
• Comparative data: First-year reporters are not required to provide comparative prior-year data.
• Alternative GHG methodologies: In year one, companies may use greenhouse gas (GHG) accounting methodologies other than the GHG Protocol, provided they disclose which methodology they have applied.
• Filing extension: First-year reporters are permitted additional time beyond the standard statutory deadline to submit their sustainability report.

These reliefs reduce what you publish in year one. They do not reduce what you need to measure. The underlying data infrastructure, internal processes, and board-level reporting all need to be in place before the first filing deadline arrives.

What does a compliant report include?

A PFRS-compliant sustainability report is structured around four disclosure pillars, applied to what is material for the specific company. What a company discloses depends on its industry, business model, and stakeholder context.

Governance: How does the board and senior management oversee sustainability and climate-related risks and opportunities?

Strategy: How do those risks and opportunities affect the company's business model, strategy, and financial planning, including under different climate scenarios?

Risk management: How does the company identify, assess, and manage sustainability and climate-related risks, and how does that process integrate with overall risk management?

Metrics and targets: What does the company measure, including Scope 1 and Scope 2 GHG emissions, and what targets has it set?

On assurance: Two years after a company's initial reporting year, it must obtain limited external assurance on its Scope 1 and Scope 2 GHG emissions from an independent practitioner, expected to be an accredited professional services firm. For Tier 1 entities, whose initial reporting year is FY2026, that means assurance is required on the FY2028 report, filed in 2029. The requirement is expected to move from limited to reasonable assurance as reporting matures, so building audit-ready data processes early is the lower-risk approach.

How to submit the PFRS report

The sustainability report is filed as part of, or as an annex to, the company's annual report using the SEC's electronic filing system. LNLs that do not meet the Section 17.2 criteria file alongside their audited financial statements.

Before submission, the report must be reviewed and approved by the company's Board of Directors. That requirement has a direct operational implication: sustainability data cannot sit within the sustainability team alone. It needs to be consolidated, verified, and presented at board level in time for the filing deadline. Planning around that timeline from the outset is the lower-risk approach.

Why act now?

Companies that build disclosure capability ahead of their deadline gain things that late movers do not: stronger credibility with ESG-focused investors, better access to green and sustainability-linked financing, and clearer visibility into the climate risks embedded in their operations and supply chains.

There is also a practical case for early action on data. Building the infrastructure before assurance requirements and Scope 3 obligations kick in is significantly easier than doing it under deadline pressure. And non-compliance carries financial penalties, with late or non-submission of sustainability reports treated as a separate category of offence under the circular. 

Zevero supports companies preparing for ISSB-aligned reporting, helping them structure their emissions data, close measurement gaps, and produce board-ready disclosures. If your organisation is in Tier 1, or beginning Tier 2 preparation, now is the right time to identify where your data gaps are. Contact us to find out where you stand.