Philippine’s SEC Issues Draft Framework for Green Equity Offerings

The Philippine Securities and Exchange Commission (SEC) has unveiled a draft memorandum circular outlining the Green Equity Guidelines, a framework designed to regulate and promote the issuance of green equity in the country. This initiative aligns with the Philippines’ commitment to achieving sustainability goals under the Paris Agreement and the United Nations Sustainable Development Goals (SDGs).

Key Highlights from the Guidelines

• Revenue and Investment Criteria: Companies must derive at least 50% of their revenue and investments from activities classified as green under the Philippine Sustainable Finance Taxonomy Guidelines (SFTG) and the ASEAN Taxonomy for Sustainable Finance.
• KPI and Disclosure Requirements: Companies issuing green equity must define and disclose key performance indicators (KPIs) linked to environmental objectives. The KPIs must be measurable, benchmarkable, and verified externally, with progress updates made publicly available through designated websites.
• External Reviews and Oversight: Companies must undergo assessments by independent external reviewers to ensure compliance with the guidelines. These reports will also be accessible to investors for transparency.

Purpose of the Green Equity Guidelines

The framework aims to:

• Enhance the visibility of companies contributing to environmental sustainability.
• Attract capital flows toward green-focused businesses that support a low-carbon and climate-resilient economy.
• Provide a complementary sustainable investment product to existing green bonds and other instruments.

Regulatory Requirements

Companies seeking the Green Equity label must:

1. Submit applications to the SEC’s Markets and Securities Regulation Department (MSRD).
2. Provide regular updates on environmental targets, KPI performance, and alignment with taxonomy guidelines.
3. Conduct annual limited reviews and comprehensive triennial assessments to maintain the label.

Limitations and Penalties

The SEC reserves the right to withdraw the Green Equity label if a company’s activities no longer meet the established standards. Violations of the guidelines could lead to penalties in accordance with the Securities Regulation Code (SRC) and related laws.

These draft guidelines, open for public comment until January 25, 2025, mark a significant step in advancing sustainable finance in the Philippines. Stakeholders are encouraged to submit their inputs via email to help refine the framework. For more details, visit the SEC’s official website.

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