Request for Comments on the Draft Memorandum Circular on the Revised Sustainability Reporting Guidelines for Publicly Listed Companies and the SEC Sustainability Reporting Form (SuRe Form)

October 4, 2023 CORPORATE GOVERNANCE AND FINANCE DEPARTMENT MEMORANDUM TO : All Concerned Corporations SUBJECT : Request for Comments on the Draft Memorandum Circular on the Revised Sustainability Reporting Guidelines for Publicly Listed Companies and the SEC Sustainability Reporting Form (SuRe Form) NOTICE The Commission hereby requests comments and/or inputs on the attached draft Memorandum Circular on the Revised Sustainability Reporting Guidelines for Publicly Listed Companies and the SEC Sustainability Reporting Form (SuRe Form). The written comments on the exposure draft must be submitted to the Corporate Governance and Finance Department (CGFD) via email at [emailprotected] on or before 16 October 2023. Issued on October 4, 2023. ATICcS ATTACHMENTS Comments on the Draft Memorandum Circular on the Revised Sustainability Reporting Guidelines for Publicly-Listed Companies and the SEC Sustainability Reporting Form (SuRe Form) Draft as of October 4, 2023 SEC MEMORANDUM CIRCULAR NO. ____ Series of 2023 TO : PUBLICLY-LISTED COMPANIES SUBJECT : REVISED SUSTAINABILITY REPORTING GUIDELINES FOR PUBLICLY-LISTED COMPANIES WHEREAS , the Commission plays an active role in promoting sustainability reporting in the Philippines through the issuance of SEC Memorandum Circular (MC) No. 4, Series of 2019, also known as the Sustainability Reporting Guidelines for Publicly-Listed Companies (PLCs) or the SR Guidelines, which mandated sustainability reporting in the Philippines under a "comply or explain" approach or that which allowed PLCs to disclose corporate sustainability data, when available, and provide explanations for items where data is unavailable; ETHIDa WHEREAS , on 26 June 2023, the International Sustainability Standards Board (ISSB) issued its inaugural standards, the International Financial Reporting Standards (IFRS) S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures), which create a common language for disclosing the effects of climate-related risks and opportunities on a company's prospects, and ensure that companies provide sustainability-related information alongside financial statements, in the same reporting package; 1 WHEREAS , in the exercise of its rule-making powers, the Commission recognizes and integrates the latest developments in global sustainability reporting frameworks, including the IFRS S1 and IFRS S2 both of which fully incorporate the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) the United Nations Sustainable Development Goals (UN SDGs), Global Reporting Initiative (GRI), Sustainability Accounting Standards Board (SASB), International Integrated Reporting Council (IIRC), and the United Nations Conference on Trade and Development (UNCTAD)-International Standards of Accounting and Reporting (ISAR) Guidance on Core Indicators, among others; and WHEREAS , Section 179 (d) of Republic Act No. 11232, otherwise known as the Revised Corporation Code of the Philippines, grants the Commission the power to promote corporate governance and the protection of minority investors, through, among others, the issuance of rules and regulations consistent with international best practices; NOW, THEREFORE , to further promote sustainability reporting, make the same relevant and useful for Philippine PLCs, and contribute to a robust sustainability reporting framework in the country, the Commission, in its En Banc meeting on 28 October 2023, resolved to issue the Revised Sustainability Reporting Guidelines for Publicly-Listed Companies (Revised SR Guidelines) attached to this Memorandum Circular. Sustainable practices are shown to lead to company benefits like improved management systems, a motivated workforce, and sustainable vision, strategy, and business plans. Moreover, the Revised SR Guidelines serves as an effective tool to encourage companies to adopt sustainable business practices and attract Environmental, Social, and Governance (ESG) investors in the country's capital markets. The Revised SR Guidelines is intended to help PLCs assess and manage non-financial performance across Economic, Environmental, and Social aspects of their organization, and enable PLCs to measure and monitor their contributions towards achieving universal targets of sustainability, such as the United Nations Sustainable Development Goals, as well as national policies and programs, such as AmBisyon Natin 2040. Section I. Sustainability Reporting Format. The Sustainability Reporting (SR) required of PLCs shall be composed of the following: 1. SR Narrative: The PLCs shall submit a narrative sustainability report. The SR Narrative follows the format under SEC MC No. 4, Series of 2019. The SR Narrative shall be submitted together with the company's Annual Report (SEC Form 17-A). It is recommended to have a one-page Executive Summary/Highlights of the companies' sustainability activities, programs, and projects at the beginning of the report. 2. Sustainability Report (SuRe) Form: The PLCs shall submit their duly answered SuRe Form through the SEC Electronic Filing and Submission Tool (eFAST), or any other related SEC-approved/implemented submission tools for easier access, data capture, analytics, and data management. The SuRe Form SHALL be submitted in Microsoft Excel format. The SuRe Form template includes three (3) major parts, to wit : A. Sustainability and Climate-related Opportunities and Risks Exposures (SCORe); B. Cross-Industry Standard Metrics (CISM); and C. Industry-Specific Metrics (ISM). The PLC MAY also attach its SuRe Form or the details of the Form at the end of the SR Narrative, in addition to the eFAST submission. Section II. SuRe Form Submission Process Mode of Submission. The SuRe Form shall be submitted to the Commission in Microsoft Excel file format, and shall be done using eFAST through the link: ________. The PLCs must ensure that for the Microsoft Excel file, the fields are NOT moved, merged nor altered when inputting data. Otherwise, the system will not accept the submission. Further instructions for filing may be accessed on eFAST. Note that neither signature nor notarization is required for both the SR Narrative and the SuRe Form. However, it is the board's responsibility to confirm in writing in the SR Narrative that it has reviewed the accuracy and completeness of the SR submissions. The SEC will also post on the eFAST website and the official SEC website the step-by-step guidelines on how to file the SuRe Form using the eFAST. cSEDTC Section III. Deadline for submission of the SR. The SuRe Form is required to be submitted starting in the year 2024 covering the reporting year 2023. The SuRe Form covering the reported year shall be submitted through eFAST on or before April 15 of the following year during the same time as the filing of the PLCs Annual Report (SEC Form 17-A), which is within 105 calendar days from the end of the fiscal year. The Narrative SR covering the reported year shall be attached as an Annex to the SEC Form 17-A to be submitted in the following year. Section IV. Disclosures under the SuRe Form. The SuRe Form shall be composed of mandatory disclosures, unless otherwise indicated. Section V. SuRe Form Additional Reminders. The companies must indicate "0" if the disclosure has zero (0) value and indicate "N/A" if the disclosure is not applicable. Note that "0" and "N/A" are not interchangeable. The industry classification of the companies must be based on the 2019 Philippine Standard Industrial Classification (PSIC). If the reporting PLC is a holding company, that PLC's SR must not include subsidiaries that are also listed. These listed subsidiaries are required to submit a separate and independent SR in accordance with this MC. HTcADC Section VI. Penalty for Failure to Timely Submit SuRe Form and/or Narrative SR with the Annual Report. Non-submission, non-attachment, or late submission of the SuRe Form and/or Narrative SR shall be subject to the following separate and distinct penalties: Non-attachment of SR Narrative 2 Non-submission of SuRe Form 3 Late submission 4 Incomplete First Offense Reprimand/Warning Reprimand/Warning Reprimand/Warning Reprimand/Warning Second Offense P50,000 + P500 per day of delay P50,000 + P500 per day of delay P30,000 + P500 per day of delay P30,000 + P500 per day of delay in completing the SuRe Form Third Offense P100,000 + 1,000 per day of delay P100,000 + 1,000 per day of delay P60,000 + P1,000 per day of delay P60,000 + P1,000 per day of delay in completing the SuRe Form Fourth Offense Suspension/Revocation of Secondary license or a fine of P1,000,000.00 Suspension/Revocation of Secondary license or a fine of P1,000,000.00 P500,000.00 + P2,000 per day of delay P500,000.00 + P2,000 per day of delay in completing the SuRe Form It must be emphasized that compliance with only one of the requirements (SR Narrative or SuRe Form) does not amount to compliance with this Memorandum Circular. Thus, penalties for each infraction listed above are cumulative. Section VII. Transition Period for Compliance. In recognition of the critical need for a relief period for transition, PLCs may comply with disclosures specified in this Memorandum Circular on a "comply or explain" basis for a period of two (2) years. Afterwards, mandatory submission of ALL disclosures required by this Memorandum Circular shall be mandatory and therefore, subject to penalties. AIDSTE Section VIII. Modification/Amendment. All other circulars, memoranda, notices and implementing rules and regulations that may be inconsistent with the foregoing provisions shall be deemed modified or amended accordingly. Section IX. Effectivity. This Memorandum Circular shall take effect immediately upon its approval. Makati City, Philippines, _________ 2023. Sustainability Report (SuRe) Form Footnotes 1. https://www.ifrs.org/news-and-events/news/2023/06/issb-issues-ifrs-s1-ifrs-s2/. 2. The penalty will apply if the non-attachment is more than 30 calendar days from the due date. 3. The penalty will apply if the non-submission is more than 30 calendar days from the due date. 4. The penalty will apply for late submission of either the SR Narrative or the SuRe Form.