NINETEENTH CONGRESS OF THE 
REPUBLIC OF THE PHILIPPINES 
Third Regular Session
)
)
SENATE 
S. No. /bO
,;i I (?r ■ f ■' 3‘t'nui.i*
of t'u’ £ ■' ci;:r;>
24 AUG-5 P7 :26
RUCEIVlD B',
Introduced by Senator Loren B. Legarda
AN ACT
ESTABLISHING THE FRAMEWORK STRATEGY ON SUSTAINABILITY 
REPORTING COVERING ENVIRONMENTAL, SOCIAL, AND GOVERNANCE 
(ESG) CONSIDERATIONS, INSTITUTIONALIZING ASSURANCE THEREFOR, 
AND FOR OTHER PURPOSES
EXPLANATORY NOTE
ESG stands for Environmental, Social, and Governance - the three vital factors 
used in measuring an organization's corporate financial interests. ESG has gained 
significant traction globally as a framework for evaluating the sustainability and ethical 
practices of companies and organizations.
The importance of ESG in corporate governance is globally recognized. The 
Principles for Responsible Investment (PRI) and Sustainable Development Goals 
(SDGs) of the United Nations (UN) reinforced the importance of ESG for sustainable 
development. Further, under the Organisation for Economic Co-operation and 
Development (OECD) Principles of Corporate Governance, well-designed corporate 
governance policies support the sustainability and resilience of corporations and, in 
turn, may contribute to the sustainability and resilience of the broader economy.1
A sound framework for corporate governance with respect to sustainability 
matters can help companies recognize and respond to the interests of shareholders 
and different stakeholders, as well as contribute to their own long-term success. Such
1 G20/OECD Principles of Corporate Governance accessible at httDs://leaalinstruments.oecd.oro/en/instruments/OECD-LEGAL-0413.


a framework should include the disclosure of material sustainability-related 
information that is reliable, consistent, and comparable. Reporting on sustainability 
and corporate social responsibility (CSR) initiatives should be fostered. Many countries, 
including the Philippines, have introduced regulations mandating ESG reporting for 
companies; and such mandatory reporting pushed businesses to be more transparent 
about their ESG efforts.
Further, the International Financial Reporting Standards (IFRS) SI requires an 
entity to disclose information about its sustainability-related risks and opportunities 
that is useful to primary users of general purpose financial reports in making decisions 
on allocating resources to that same entity. The Task Force on Climate-related 
Financial Disclosures (TCFD) recommends that climate-related financial disclosures be 
provided in mainstream (i.e., public) annual financial filings. Disclosure in mainstream 
financial filings is believed to foster shareholder engagement and broader use of 
climate-related financial disclosures; thus promoting a more informed understanding 
of climate-related risks and opportunities by investors, among others.2
The link between financial statements and sustainability disclosures is 
important for stakeholders, including investors, regulators, and the general public, as 
it provides a holistic view of a company's value creation by integrating financial and 
non-financial information. The integration of reports aims to present a comprehensive 
view of how the company's financial performance is influenced by its sustainability 
efforts and vice versa. To encourage connectivity and ensure that information is 
decision-useful for investors, sustainability-related financial disclosures should be filed 
at the same time as their Audited Financial Statements.3
2 TCFD Recommendations accessible at https://www.fsb-tcfd.org/recommendations/.
3 BCl. Based on ISSB, a company would need to report sustainability-related financial information at the same time and for the 
same period as its annual financial statements. This is consistent with sustainability reporting proposals in certain jurisdictions 
including the ED, but not in other jurisdictions where sustainabiiity-reiated information may be pubiished after the finandai 
statements. Many respondents supported reporting sustainability-related financial information at the same time as the financial 
statements. This would facilitate greater connectivity between sustainability-related financial information and financial 
statements, supporting capital allocation decisions.


In the Philippines, ESG principles promote long-term sustainability by guiding 
ethical business practices, risk management, and boosting investor confidence. 
Companies that excel in ESG aspects are often perceived as more resilient, 
responsible, and attractive investment options.
In 2019, the Securities and Exchange Commission (SEC) issued the 
Sustainability Reporting Guidelines for Publicly Listed Companies through SEC 
Memorandum Circular No. 4, series of 2019, to promote transparency through 
sustainability reporting, and assist publicly-listed companies assess and manage their 
non-financial performance across Economic, Environmental and Social aspects of their 
organization.
In a country where companies directly contribute to positive societal change 
particularly on job creation, community development, and environmental preservation, 
it is imperative that the ESG principles and sustainability reporting be promoted and 
integrated in the business practices and plans of corporations, among others. This bill 
seeks to promote and integrate ESG principles into the business practices of 
corporations by establishing a robust framework and program for sustainability 
reporting. At no other time in our history has the incorporation of ESG considerations 
in business operations become more critical than today. In fact, the 2022 World Risk 
Index Report ranked the Philippines first in the world in terms of risk exposure to 
natural disasters, including events which are predicted to become more frequent and 
more severe as climate change worsens. The Philippines' Nationally Determined 
Contribution even expressly recognizes that the country is "extremely vulnerable to 
climate-related and geological hazards." To drive the point further, it is expected that 
children in Southeast Asia will witness increased losses in coastal settlements and 
infrastructure due to flooding caused by unavoidable sea-level rise.
In view of the foregoing, the passage of this bill is earnestly sought.
LOREN LEGARDA


NINETEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
Third Regular Session 
)
SENATE 
S. No. ♦Wb0
S-riuvr
of tl)f f?-; r fl.TI’
24 AUG-5 P7.-26
Rl:CEl\/::0 BV.
Introduced by Senator Loren B. Legarda
AN ACT
ESTABLISHING THE FRAMEWORK STRATEGY ON SUSTAINABILITY 
REPORTING COVERING ENVIRONMENTAL, SOCIAL, AND GOVERNANCE 
(ESG) CONSIDERATIONS, INSTITUTIONALIZING ASSURANCE THEREFOR, 
AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
CHAPTER I
GENERAL PROVISIONS
3 
Section 1. Short Title. — This Act shail be known as the "ESG Reporting Act."
4 
Sec. 2. Declaration of Policy. — It is the declared poiicy of the State to: (i)
5 
promote sustainability reporting in the corporate sector; (ii) guide companies in
6 
assessing, measuring, monitoring, reporting on, and disclosing non-financial and
7 
financial aspects of their ESG initiatives and programs; (iii) aiign with globally-
8 
recognized standards on the integration and connection of sustainability and financial
9 
information to address the needs of the primary users of such information; and (iv)
10 
assist companies in achieving the universal targets of sustainability, aligned with the
11 
United Nations Sustainable Development Goals, as well as with nationai policies and
12 
programs, such as Ambisyon Natin 2040.
13 
Sec. 3. Definition of Terms. — For the purposes of this Act:
14 
a) Assurance refers to the act or process where an independent provider
15 
aims to obtain sufficient appropriate evidence in order to express a
16 
conclusion as to the basis of an opinion, designed to enhance the degree


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of confidence of the intended users (i.e., investors, lenders, and the 
generai public) about the sustainability and financial information of the 
reporting entity's sustainability reports and financial statements. This 
may either be:
(i) 
Reasonable Assurance refers to a high but not an absolute 
form of assurance in which the assurance provider reduces 
engagement risk to an acceptably low level in the 
circumstances of the engagement as the basis for the 
conclusion of the assurance provider. The conclusion is 
expressed in a form that conveys the opinion on the outcome 
of the measurement or evaluation, including presentation and 
disclosure, of the sustainability matters against the applicable 
criteria; or
(ii) 
Limited Assurance refers to an assurance in which the 
assurance provider reduces engagement risk to a level that is 
acceptable in the circumstances of the engagement but where 
that risk is greater than a reasonable assurance as to the basis 
for expressing a conclusion, in a form that conveys whether, 
based on the procedures performed and evidence obtained, a 
matter has come to the assurance provider's attention to 
cause them to believe the sustainability information is 
materially misstated. The nature, timing, and extent of 
procedures performed in a limited assurance engagement is 
limited compared with that necessary in a reasonable 
assurance engagement; but is planned to obtain a level of 
assurance that is, in their professional judgment, meaningful. 
To be meaningful, the level of assurance obtained by the 
assurance provider is likely to enhance the intended users' 
confidence about the sustainability information to a degree 
that is clearly more than inconsequential.
b) Assurance Provider refers to the firm, partner or other individual 
appointed by the firm, who is responsible for the assurance report and


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who, where required, has the appropriate authority from a professional, 
legal or regulatory body. An assurance provider must be independent of 
the reporting entity.
c) Corporation refers to an artificial being created by operation of law, 
having the right of succession and the powers, attributes, and properties 
expressly authorized by law or incidental to its existence.
d) Environmental, Social and Governance (ESG) Reporting or Sustainability 
Reporting refers to an organization's practice of reporting publicly on its 
material economic, environmental and/or social impacts, in accordance 
with globally accepted standards as adopted by the Securities and 
Exchange Commission.
e) Errorxef&cs to the effects of mathematical or clerical mistakes, mistakes 
in applying the definitions for metrics or targets, oversight or 
misinterpretations of facts, or unintentional misapplication of policies.
f) Financial regulators refer to the Securities and Exchange Commission 
(SEC), Bangko Sentral ng Pilipinas (BSP), and the Insurance Commission 
(IC).
g) Firm refers to a form of partnership of professional accountants 
registered with the SEC for the purpose of engaging primarily in the 
general practice of public accounting
h) Fraud refers to an intentional act by one or more individuals, whether 
from among management, those charged with governance, employees 
or third parties, involving the use of deception to obtain an unjust or 
illegal advantage that results in a misrepresentation of sustainability and 
financial information in the sustainability reports and financial 
statements.
i) Independent Assurance Report refers to a report used as a means by 
which the assurance providers communicate the outcome of the 
assurance engagement to the intended users (i.e., investors, lenders, 
and the general public). It contains a clear expression of the 
independent assurance provider's reasonable assurance opinion or


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limited assurance conclusion about the sustainability and financial 
information.
j) Material Information refers to information that reflects the organization's 
significant economic, environmental, and social impacts that 
substantively influence the assessments and decisions of stakeholders, 
including investors. These are matters that substantively affect the 
organization's ability to create value over the short, medium, and long 
term. Information is material if omitting, misstating or obscuring that 
information could reasonably be expected to influence the decisions that 
primary users of general-purpose financial reports make on the basis of 
those reports, which include financial statements and sustainability- 
related financial disclosures and which provide information about a 
specific reporting entity.
k) Misstatement refers to the difference between the disclosures and the 
appropriate measurement or evaluation of the sustainability matters in 
accordance with the applicable criteria. Misstatements can arise from 
error or fraud, may be qualitative or quantitative, and include omitted 
information or information that obscures the presentation of the 
disclosures.
l) Partner refers to any individual with authority to bind the firm with 
respect to the performance of a professional services engagement. A 
partner shall be a Certified Public Accountant (CPA) in public practice, 
supported by climate or sustainability experts, and, when necessary, 
such other types of subject matter experts.
m) Professional competence and due care refer to the fundamental principle 
that applies to professionals. A professional is required to attain and 
maintain professional knowledge and skill at the level required to ensure 
that a client or employing organization receives competent professional 
service, based on current technical and professional standards and 
relevant legislation; and act diligently and in accordance with applicable 
technical and professional standards.


1 
n) Reporting entity refers to an entity that is required to prepare general-
2 
purpose financial reports.
3 
o) Sustainability Reporting (SR) frameworks refer to the internationally
4 
recognized sustainability-related and financial reporting frameworks,
5 
which may consist of a set of sustainability-related principles, standards,
6 
and pronouncements for the preparation and submission of reports.
7 
These include, but are not limited to. International Financial Reporting
8 
Standards (IFRS) on disclosures for sustainability-related 
financial
9 
information. Global Reporting Initiative (GRI), Sustainability Accounting
10 
Standards Board (SASB), Carbon Disclosure Project (CDP), and
11 
recommendations of 
the Taskforce on Nature-related 
Financial
12 
Disclosures (TNFD) and the Task Force on Climate-related Financial
13 
Disclosures (TCFD).
14 
Sec. 4. Scope and Covered Entities. — This Act shall cover all corporations, both
15 
stock or non-stock, registered with the SEC.
16 
The scope of this Act notwithstanding, the Governance Commission for
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Government-Owned or -Controlled Corporations (GCG) shall not be precluded from
18 
establishing an appropriate sustainability reporting framework for government-owned
19 
or -controlled corporations (GOCCs).
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CHAPTER II
SUSTAINABILITY REPORTING FRAMEWORK AND REPORTS
22 
Sec. 5. Sustainability Report. — In addition to their Annual Report, audited
23 
financial statements, and other reports submitted to the SEC, all corporations—both
24 
stock and non-stock—are mandated to submit their Sustainability Report to the SEC
25 
in accordance with the implementation guidelines or directives set forth by the SEC.
26 
The provided Sustainability Report must be accessible to the public upon request and
27 
can be viewed during reasonable business hours on business days.
28 
The Sustainability Report shall include both financial and non-financial
29 
disclosures. When certain information about sustainability matters affects the


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company's financial position, financial operations and cash flows, such information
2 
shall be consistent with the disclosures in the financial statements.
3 
For this purpose, the SEC, in consultation with relevant government agencies,
4 
shall issue guidelines on the phases of implementation of mandatory reporting on
5 
corporations, while ensuring reasonable transition and structural reliefs.
6 
Sec. 6. Integration and Connection of Sustainabiiity Reports and Financial
7 
Statements. - The connection between the sustainability reports and financial
8 
statements is important for stakeholders to provide a holistic view of the company's
9 
value creation through the integration of financial and non-financial information. The
10 
issuance of sustainability reports shall be authorized by the corporation's board of
11 
directors/trustees, in the same manner the issuance of audited financial statements is
12 
authorized. Sustainability reports should be filed at the same time and for the same
13 
reporting period as their audited financial statements.
14 
Sec 7. Collection and Disclosure Requirements in Annual Report. - The SEC
15 
shall act as the data collector and repository of ESG data submitted by corporations.
16 
Sec. 8. Recognition of International Reporting Frameworks and Standards. -
17 
The SEC shall have the authority to adopt internationally recognized standards as
18 
reporting frameworks and prescribe the most appropriate requirements that shall form
19 
part of the applicable reporting framework of the covered entities. In adopting a
20 
reporting framework, the SEC shall take into consideration the pronouncements and
21 
interpretations of the Philippine Financial and Sustainability Reporting Standards
22 
Council and the financial regulators. At all times, the adoption of a reporting
23 
framework shall incorporate the principles of proportionality and structural reliefs to
24 
avoid any unnecessary administrative burden to the reporting corporation.
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Sec. 9. ESG Code of Conduct. - The SEC shall formulate a voluntary code of
26 
conduct for ESG ratings and data product providers (ESG Code of Conduct). For this
27 
purpose, the SEC may consider the adoption of an internationally recognized,
28 
interoperable, and proportionate ESG Code of Conduct. The SEC shall likewise issue
29 
the relevant guidelines, and exercise such necessary and reasonable powers, for the
30 
effective enforcement of this ESG Code of Conduct.


CHAPTER III 
ASSURANCE
3 
Sec. 10. Independent Assurance Reports. - To establish transparency,
4 
credibility and reliability of disclosed sustainability and financial information, the
5 
sustainability reports and financial statements filed and submitted to the SEC and
6 
other relevant agencies shall be covered by an Independent Assurance Report from a
7 
duly registered assurance provider. The Independent Assurance Report may be a
8 
Reasonable or Limited Assurance as defined in this Act. Climate-related disclosures in
9 
the sustainability report shall be subject to Reasonable Assurance or Limited
10 
Assurance, while other sustainability disclosures outside of those climate-related shall
11 
be subject to Limited Assurance, or as needed to be determined by the SEC.
12 
The SEC, in consultation with relevant government agencies, shall issue
13 
guidelines on the phased impiementation of the Independent Assurance Report
14 
requirements.
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Sec. 11. Assurance Providers. - All assurance providers engaged to provide
16 
assurance services over sustainability reports and financial statements of the covered
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entities shall be registered with the SEC. All SEC-registered corporations shall engage
18 
assurance providers of sustainability reports and financial statements duly registered
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with the SEC.
20 
For this purpose, the SEC shali prescribe the qualifications, requirements and
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procedure for registration as an assurance provider of sustainability reports and
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financial statements within the coverage of this Act. Subject matter competency,
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industry knowledge, and levels of training shall be required for all assurance providers.
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Further, the SEC shall exercise such adequate level of oversight on the
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assurance providers for sustainability reports and financial statements through, among
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others, inspection programs, supervision of activities, monitoring, enforcement of
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compliance, and imposition of sanctions over registered assurance providers.
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Sec. 12. Professional Standards for Assurance Providers. -The SEC shall adopt
29 
and prescribe internationaiiy recognized professional standards for sustainability
30 
assurance engagements, including ethical and independence requirements, internal
31 
controls, and quality management systems. For this purpose, the SEC may consult


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relevant stakeholders, including standard-setters, financial regulators, and other
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government agencies.
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Sec. 13. Independence and Ethical Requirements. - All registered assurance
4 
service providers shall fully meet the requirements of independence and ethical
5 
requirements as provided for in the Code of Ethics for Professional Accountants in the
6 
Philippines and this Act.
7
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CHAPTER IV
POWERS AND FUNCTIONS OF SEC
9 
Sec. 14. Powers and Functions of the Sec. - The SEC, as the lead agency, shall
10 
have original and primary jurisdiction in the enforcement and implementation of the
11 
provisions of this Act, and its implementing rules and regulations. In addition to the
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express powers granted under this Act, the Revised Corporation Code (RCC),
13 
Securities Regulation Code (SRC), and other relevant laws, the SEC shall also exercise
14 
the following powers and functions:
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(a) Issue such other rules, policies and guidance on sustainability reporting to
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ensure compliance with international standards and global best practices;
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(b) Monitor compliance of the covered entities with the provisions of this Act
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and its Implementing Rules and Regulations, and such other SEC rules on
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sustainability reporting;
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(c) Exercise supervisory and oversight functions over assurance providers of
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sustainability reports and financial statements;
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(d) As may be necessary, create an appropriate unit or office within its control
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to regulate and supervise the implementation of the provisions of this Act;
24 
(e) Enlist the aid and support of any and all agencies of the Government, as
25 
well as private institutions, corporations, entities or associations, in the
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issuance of rules and regulations and for proper implementation of its
27 
powers and functions;
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(f) Provide and facilitate continuous capacity-building initiatives on
29 
sustainability reporting;


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(g) Conduct administrative proceedings, impose sanctions, fines or penalties
2 
for any non-compliance with or violation of this Act and its IRR; and
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(h) Perform such other functions as may be necessary to carry out the
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objectives of this Act.
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Sec. 15. Appropriation. -The funding requirements for the implementation of
6 
this Act shall be charged against the operating budget of the SEC. In this regard, the
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SEC shall be authorized to collect, retain and use the fees, fines, and other charges
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collected pursuant to this Act and its IRR. The amount collected shall be deposited
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and maintained in a separate account, which shall form a fund to be utilized exclusively
10 
for the implementation of this Act, including the promotion of sustainability reporting.
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The funding requirements of other government agencies shall be charged against their
12 
respective budgets.
13 
Sec 16. Incentives. - The SEC and other concerned government agencies may
14 
establish a system of rewards and incentives, including streamlined regulatory
15 
processes, based on a reporting entity's demonstrated commitment to ESG practices,
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policies and reporting.
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CHAPTER V
PROHIBITED ACTS AND PENALTIES
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Sec. 17. Willful Certification of Incomplete, Inaccurate, False; or Misleading
20 
Statements or Reports; Penalties. — Any person who willfully certifies a report
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required under this Act, knowing that the same contains incomplete, inaccurate,
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false or misleading information or statements, shall be punished with a fine ranging
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from Twenty Thousand Pesos (P20,000.00) to Two Hundred Thousand Pesos
24 
(P200,000.00). When the wrongful certification is injurious or detrimental to the
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public, the assurance provider or the responsible person may also be punished with
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a fine ranging from Forty Thousand Pesos (P40,000.00) to Four Hundred Thousand
27 
Pesos (P400,000.00).
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Sec. 18. Collusion by the Assurance Provider; Penalties. — An assurance
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provider who, in collusion with the corporation's directors or representatives,
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certifies the corporation's sustainability reports and financial statements despite its


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incompleteness or inaccuracy, its failure to give a fair and accurate presentation of
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the corporation's condition, or despite containing false or misleading statements,
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shall be punished with a fine ranging from Eighty Thousand Pesos (P80,000.00) to
4 
Five Hundred Thousand Pesos (P500,000.00). When the statement or report
5 
certified is fraudulent or has the effect of causing injury to the general public, the
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assurance provider or responsible officer may be punished with a fine ranging from
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One Hundred Thousand Pesos (P100,000.00) to Six Hundred Thousand Pesos
8 
(P600,000.00).
9 
Sec. 19. Administrative Penaities. — Any violation of this Act, its IRR and other
10 
related regulations shall be subject to the following administrative penalties:
11 
1. Imposition of a fine of not less than Ten Thousand Pesos (P10,000.00) but not
12 
more than One Million Pesos (P1,000,000.00), plus not more than Two
13 
Thousand Pesos (P2,000.00) for each day of continuing violation;
14 
2. Suspension or revocation of any registration for the offering of securities;
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3. In case of material misrepresentation or misstatements in the Sustainability
16 
Report, disqualification from being an officer, member of the Board of Directors,
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or person performing similar functions;
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4. Imposition of monetary penalties not exceeding Five Hundred Thousand Pesos
19 
(P500,000) and/or disciplinary measures to registered assurance providers in
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case of non-compliance of professional standards, misconduct or breach of
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independence and ethical requirements as required in this Act; and
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5. Suspension or revocation of the assurance providers' registration with the SEC;
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Provided, that the fines and penalties imposed under this Act shall be without
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prejudice to the administrative penalties that the SEC may impose pursuant to the
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RCC, SRC, and other relevant laws and regulations.
26
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CHAPTER VI
MISCELLANEOUS PROVISIONS
28 
Sec. 20. Implementing Rules and Regulations. - Within ninety (90) days from
29 
the approval of this Act, the SEC, in consultation with the stakeholders concerned.
10


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shall formulate and promulgate the necessary rules and regulations to effectively
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implement the provisions of this Act.
3 
Sec. 21. Separability Clause. - If any part or provision of this Act is declared
4 
invalid or unconstitutional, such declaration shall not affect in any manner other parts
5 
or provisions hereof.
6 
Sec. 22. Repealing Clause. - All laws, decrees, proclamations, issuances or
7 
ordinances that are contrary to or inconsistent with the provisions of this Act are
8 
hereby amended, repealed or modified accordingly.
9 
Sec. 23. Effectivity. - This Act shall take effect fifteen (15) days after its 
10 publication in the Official Gazette or in a newspaper of general circulation.
Approved,
11