On 22 December 2025, the Securities and Exchange Commission (“SEC“) issued Memorandum Circular No. 16, series of 2025 (“MC No. 16“), adopting the Philippine Financial Reporting Standards (“PFRS“) S1, General Requirements for Disclosure of Sustainability-related Financial Information, and PFRS S2, Climate-related Disclosures, and approving the issuance of the Sustainability Reporting Guidelines for publicly listed companies (“PLCs“) and large non-listed entities (“LNLs“).
Under MC No. 16, PLCs and LNLs that are reporting under section 17.2 of the Revised Securities Regulation Code are required to submit a Sustainability Report as an attachment to their annual report. These are LNLs which have assets worth at least PHP50 million, have a minimum of 200 stockholders, and the stockholders own at least 100 shares each. Other LNLs which do not belong to this category are only required to submit the Sustainability Report with their audited financial statements. Further, all Sustainability Reports must be reviewed and approved by the board of directors of the PNC or LNL (collectively, “Covered Entities“) prior to issuance.
Notably, MC No. 16 introduced a tiered approach in the adoption of PFRS S1 and PFRS S2 beginning fiscal year starting on 2026.
From the effectivity of MC No. 16 until the fiscal year immediately preceding the year of their mandatory adoptions of PFRS S1 and S2, the Covered Entities shall continue to comply with the Sustainability Reporting Guidelines prescribed under SEC Memorandum Circular No. 4, series of 2019. The covered entities are encouraged to begin transitioning to PFRS S1 and PFRS S2 during the intervening fiscal years prior to their mandatory adoption.
MC No. 16 provides limited transition reliefs, including a climate-first approach, deferred comparative disclosures, flexibility in accounting and reporting greenhouse gas (“GHG“) emissions, allowing methods other than the GHG Protocol, and temporary exemption from Scope 3 GHG emissions reporting.
Disclaimer
Rajah & Tann Asia is a network of member firms with local legal practices in Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Our Asian network also includes our regional office in China as well as regional desks focused on Brunei, Japan and South Asia. Member firms are independently constituted and regulated in accordance with relevant local requirements.
The contents of this publication are owned by Rajah & Tann Asia together with each of its member firms and are subject to all relevant protection (including but not limited to copyright protection) under the laws of each of the countries where the member firm operates and, through international treaties, other countries. No part of this publication may be reproduced, licensed, sold, published, transmitted, modified, adapted, publicly displayed, broadcast (including storage in any medium by electronic means whether or not transiently for any purpose save as permitted herein) without the prior written permission of Rajah & Tann Asia or its respective member firms.
Please note also that whilst the information in this publication is correct to the best of our knowledge and belief at the time of writing, it is only intended to provide a general guide to the subject matter and should not be treated as legal advice or a substitute for specific professional advice for any particular course of action as such information may not suit your specific business and operational requirements. You should seek legal advice for your specific situation. In addition, the information in this publication does not create any relationship, whether legally binding or otherwise. Rajah & Tann Asia and its member firms do not accept, and fully disclaim, responsibility for any loss or damage which may result from accessing or relying on the information in this publication.
