Now, with IFRS S1 and S2 officially effective in January 2024, the Philippines is expected to integrate these standards into local reporting frameworks. This signals that Philippine businesses will need to future-proof their sustainability reporting—not just for local compliance, but also to meet the expectations of global capital markets.

What Are IFRS S1 and S2?

The IFRS Sustainability Standards, issued by the International Sustainability Standards Board (ISSB), represent the most significant development in sustainability reporting in recent years:

• IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information:
  Provides a baseline for reporting sustainability risks and opportunities that could reasonably affect a company’s cash flows, access to finance, or cost of capital.
  
  
• IFRS S2 – Climate-related Disclosures:
  Builds on the TCFD recommendations and requires disclosures around governance, strategy, risk management, and metrics/targets specifically related to climate risks.
  
  

Together, these standards ensure companies report ESG information in a way that is investor-focused, decision-useful, and comparable across markets.

Why This Matters for Philippine Companies

For businesses operating in the Philippines, these developments have profound implications:

1. Access to capital – Global investors increasingly require ESG-aligned disclosures before deploying funds. Philippine firms aiming for cross-border financing or foreign investment must adopt IFRS-based reporting.
2. Regulatory alignment – The SEC is signaling convergence with IFRS standards. Companies that prepare early will avoid last-minute compliance headaches.
3. Risk management – Climate risks—from extreme weather events to supply chain disruptions—are material for Philippine businesses. IFRS S2 and TCFD disclosures help companies anticipate and plan for these risks.
4. Competitive advantage – Transparent ESG reporting builds trust with customers, employees, and partners, positioning companies as leaders rather than laggards.
   
   

The Role of TCFD in ESG Reporting

The Task Force on Climate-related Financial Disclosures (TCFD) has become the global reference point for climate reporting. IFRS S2 incorporates TCFD’s four core pillars:

• Governance – How the board and management oversee climate-related risks and opportunities.
• Strategy – The impact of climate risks and opportunities on the organization’s business model and strategy.
• Risk Management – How climate risks are identified, assessed, and managed.
• Metrics and Targets – The KPIs and targets companies use to assess and manage climate risks.
  
  

For Philippine companies, TCFD-aligned disclosures will be critical to demonstrate resilience in the face of both physical risks (like typhoons) and transition risks (like shifting energy regulations).