Sustainability reporting in the Philippines has entered a new phase with the adoption of PFRS S1 and S2, according to a report by Philstar Biz. These standards, aligned with global frameworks, require companies to integrate sustainability disclosures into mainstream financial reporting rather than treating them as a separate exercise.
PFRS S1 focuses on general sustainability-related disclosures, including governance, strategy, risk management, and metrics and targets. PFRS S2 specifically addresses climate-related risks and opportunities, demanding detailed scenario analysis and transition plans. The standards emphasize connectivity between financial and sustainability information, pushing entities to explain how sustainability factors affect financial position and performance.
Companies are expected to provide forward-looking information and disclose assumptions, uncertainties, and data sources. The Philippine Financial and Sustainability Reporting Standards Council has adopted these standards to enhance transparency and comparability for investors and stakeholders. Compliance will require significant changes in data collection, internal controls, and board oversight, marking a shift from voluntary to mandatory sustainability reporting in the country.