The Securities and Exchange Commission has announced that companies seeking to earn the Philippine Green Equity Label for their fundraising activities must have their shares listed or be in the process of listing their shares with the Philippine Stock Exchange.
This follows the securities market regulator’s finalization of its rules on Green Equities Guidelines, the first in Southeast Asia.
In a statement on Thursday, the SEC said that the guidelines form part of a series of Sustainable Finance Frameworks it has issued to expand the capital markets in support of sustainable growth and development.
The new guidelines will complement the P1.02 trillion Sustainable Finance fixed-income market, it said.
“The issuance of the SEC Green Equity Guidelines is a game-changing initiative that will help develop the capital market not only by boosting liquidity but also by supporting our climate goals,” Francis Lim, SEC Chairman, said.
“This also positions the country as an emerging destination for foreign investors seeking credible, transparent, and meaningful green investments,” he added.
Apart from having their shares listed on the PSE, companies planning to issue green equity must have more than 50 percent of their revenues and investments — computed as the sum of capital expenditure and operating expenditure — derived from or directed toward green activities or environmentally friendly projects.
“Such activities must meet the eligibility criteria of the Philippine Sustainable Finance Taxonomy Guidelines (SFTG) or the ASEAN Taxonomy for Sustainable Finance (ATSF),” the SEC said.
The guidelines also limit a company’s fossil fuel-derived revenues to less than 5 percent.
“Details or information on meeting the criteria must be contained in an external review assessment report submitted to the SEC and made publicly available,” the SEC said.
Philippine Green Equity Label holders are also subject to an annual assessment by the PSE to ensure compliance with the criteria.
The SEC emphasizes that companies adopting the Sustainable Finance Taxonomy will be given “adequate relief” to comply.
“Applicants are expected to demonstrate that the green activities covered by the revenue and investments criteria make a substantial contribution to at least one environmental objective under the SFTG or ATSF, and attest that the covered activities are not known to cause harm or to be in non-compliance with the minimum social safeguards at the time of application,” the SEC added.
To be considered aligned with the SFTG, an economic activity must satisfy three main criteria: the activity must make a significant positive contribution to either climate change mitigation or climate change adaptation; it must not cause significant harm to other environmental objectives; and the entity undertaking the activity must comply with Philippine social safeguard requirements (national laws on human rights and labor rights).
The ATSF, meanwhile, is designed to be an inclusive, multi-tiered guide for all member states, recognizing the region’s diverse economic development and transition needs.
