SEC helps promote sustainable investment framework

MANILA, Philippines — The Securities and Exchange Commission (SEC) shared its efforts toward sustainable finance during the Organization for Economic Co-operation and Development (OECD) Ministerial Meeting on Responsible Business Conduct (RBC) in the Global Economy, held recently in Paris, France.

SEC Commissioner Kelvin Lester Lee said promoting and enabling a sustainable investment framework would help ensure that business activities and investment decisions contribute to progress while also protecting Philippine resources.

The OECD is an international organization, co-chaired by France and the United States, that works alongside various government agencies, policy makers, and regular citizens to establish evidence-based international standards and search for solutions to various social, economic, and environmental issues.

The ministerial meeting aimed to reflect on the role of RBC in creating an international rules-based trade and investment system to help businesses in the global economy.

In line with the Philippines’ Sustainable Finance Roadmap, the SEC has issued several guidelines that will promote good corporate governance and support the deepening of the capital markets through sustainable investment products.

One such issuance is memorandum circular no. 4, Series of 2019, or the Sustainability Reporting Guidelines for Publicly Listed Companies (PLCs).

The guidelines look to aid PLCs in assessing their non-financial performance and monitoring their contributions towards achieving universal targets of sustainability set by various initiatives, such as the UN SDGs.

The SEC also issued SEC Memorandum Circular No. 11, Series of 2022, or the Rules on Sustainable and Responsible Investment Funds, which provides guidelines for newly formed and existing investment companies that are qualified as sustainable and responsible investment funds.

At present, the SEC is drafting guidelines on sustainability-linked bonds integrating the ASEAN Sustainability-linked Bond Standards (SLBS).

To further promote capital market integration in the region, the SEC has been actively involved in the regional sustainability agenda of the ASEAN Capital Markets Forum (ACMF), currently working as co-chair of the ACMF Sustainability Finance Working Group.

The SEC also sits as a member of the ASEAN Taxonomy Board, an initiative that seeks to develop, maintain, and promote a multi-tiered ASEAN Taxonomy for Sustainable Finance that will identify sustainable economic activities and serve as a framework for ASEAN members to create their respective national sustainability initiatives.

Furthermore, the SEC is working with the Bangko Sentral ng Pilipinas and other financial regulators on the Philippines’ Proposed Sustainable Finance Taxonomy that will provide clarity in communicating standards with market participants. The SEC is taking the lead in the Financial Sector Forum Technical Working Group on Sustainable Finance – Taxonomy Sub Group for these Guidelines.

“The Philippine taxonomy is designed as an evolving framework similar to the development of the ASEAN taxonomy. It will employ a phased approach: from a qualitative, principles-based framework towards a metrics system utilizing threshold-based screening criteria,” Lee said.