The Securities and Exchange Commission (SEC) has adopted taxonomy guidelines on sustainable finance to promote environmentally and socially sustainable economic activities.
Formulated under the auspices of the Financial Sector Forum, composed of the Bangko Sentral ng Pilipinas, the SEC, the Insurance Commission, and the Philippine Deposit Insurance Corporation, the Philippine Sustainable Finance Taxonomy Guidelines (SFTG) provide a framework for the determination of the environmental and social sustainability of economic activities and guidance for stakeholders in making well-informed investment and financing choices, the SEC said.
The SEC issued the guideline through memorandum 5 Series of 2024.
The SFTG offers a simplified approach for the assessment of micro, small and medium enterprises’ (MSMEs) activity for financing, to ensure that MSMEs are not unduly excluded from participating in sustainable finance.
“With the Philippine Sustainable Finance Taxonomy Guidelines in place, we hope to channel and amplify more capital toward economic projects that further sustainability goals such as lowering greenhouse gas emissions and bolstering climate resilience, while fostering transparency by reducing the likelihood of greenwashing,” said Emilio Aquino, SEC chairman.
Aquino said securities issuers shall refer to the Philippine SFTG when making investment decisions or designing sustainable financial products and services, among others.
“They must also comply with the relevant memorandum circulars issued by the SEC when issuing green, social, sustainability, and sustainability-linked bonds,” he said.
Aquino added the SFTG includes a list of activities that cannot be considered, and determine whether or not the activity complies with Philippine laws, under the guideline for the issuers’ guidance.
“Issuers should then select the Environmental Objective (EO) of the activity, such as its relevance and strategic alignment; investors or financial institution’s priority; and government and industry guidance,” Aquino said.
