SEC Memorandum Circular No. 16, Series of 2025: Why Sustainability Reporting Is Now a Strategic Imperative for Philippine LNLs

SEC Memorandum Circular No. 16, Series of 2025 now requires Philippine large non-listed companies to publish sustainability reports—reshaping governance, risk, and long-term value creation.

Published on: December 13, 2025

For years, sustainability reporting in the Philippines was largely associated with publicly listed companies. Large non-listed companies (LNLs) were often observers rather than participants—encouraged, but not required, to disclose their environmental, social, and governance (ESG) performance.

That era has officially ended.

With the issuance of SEC Memorandum Circular No. 16, Series of 2025, the Securities and Exchange Commission has taken a decisive step: Large non-listed companies are now required to prepare and publish sustainability reports. This move signals a fundamental shift in how sustainability, corporate governance, and risk management are expected to operate across the Philippine corporate landscape.

This is not simply a regulatory update.
It is a structural change in how Philippine businesses are expected to govern, disclose, and future-proof their operations.

What SEC MC No. 16, Series of 2025 Changes

SEC MC No. 16, s. 2025 extends sustainability reporting obligations beyond publicly listed entities to Large Non-Listed Companies, recognizing their systemic importance to the economy, employment, supply chains, and environmental impact.

Under the Circular, covered LNLs are expected to:

Prepare and publish a Sustainability Report
Disclose material ESG risks and opportunities
Align reporting with globally recognized sustainability reporting frameworks
Integrate sustainability into governance, strategy, and risk management
Ensure disclosures are credible, consistent, and decision-useful

The message from regulators is clear:
Size and impact—not listing status—now determine accountability.

Why the SEC Is Expanding Sustainability Reporting to LNLs

The SEC’s decision reflects both global convergence and local realities.

Globally, sustainability reporting is moving from voluntary to mandatory. Frameworks such as IFRS S1 and IFRS S2, the integration of TCFD principles, and the rise of sustainability-linked finance have redefined what investors and regulators expect from companies—listed or not.

Locally, LNLs play a critical role in:

National infrastructure and utilities
Energy, power, and natural resources
Manufacturing and large-scale services
Employment generation and supply chain stability

Many LNLs carry climate, environmental, and social risks that are material not only to their businesses but to the broader economy. Bringing them into the sustainability reporting ecosystem strengthens transparency, resilience, and market confidence.

From Private to Accountable: The New Reality for LNLs

Historically, non-listed companies operated with less disclosure pressure. Financial statements were often sufficient. Sustainability issues were managed operationally, not strategically.

SEC MC No. 16 disrupts this model.

LNLs are now expected to demonstrate:

How climate risks affect their business models
How governance structures oversee ESG issues
How sustainability considerations shape long-term strategy
How social issues—labor, communities, safety—are managed
How performance is measured, monitored, and improved

In effect, sustainability reporting becomes a mirror of management quality and governance maturity.

Why This Is More Than Compliance

For LNLs, the instinctive reaction may be to treat sustainability reporting as another compliance requirement. That would be a mistake.

The Circular creates an opportunity for LNLs to:

Strengthen governance.
Sustainability reporting requires board oversight, clearer accountability, and structured risk management—improving overall corporate governance.

Improve risk visibility.
Climate risks, resource constraints, and social issues become visible, measurable, and manageable rather than latent threats.

Enhance investor and lender confidence.
Banks, private equity, and institutional lenders increasingly assess ESG performance—even for non-listed entities.

Prepare for future capital access.
Green financing, sustainability-linked loans, and strategic partnerships increasingly require ESG disclosures.

Protect reputation and license to operate.
Transparency builds trust with regulators, communities, employees, and business partners.

In short, compliance satisfies regulators; sustainability leadership builds resilience and value.

Key Expectations Under the New Circular

While SEC MC No. 16 allows flexibility in approach, certain expectations are implicit:

Sustainability reporting should be principles-based, not box-ticking.
Disclosures should focus on material ESG issues, not generic narratives.
Reports should align with international frameworks to ensure comparability.
Governance, strategy, risk management, and metrics must be connected—not siloed.

This naturally pushes companies toward frameworks such as GRI, IFRS S1 and S2, and TCFD-aligned disclosures, even if not explicitly mandated.

Challenges LNLs Are Likely to Face

For many LNLs, this will be their first formal sustainability report. Common challenges include:

Limited internal sustainability expertise
Fragmented or unavailable ESG data
Lack of formal materiality assessments
Weak linkage between sustainability and strategy
Unclear governance roles and oversight
Difficulty aligning with global frameworks
Uncertainty around assurance and verification

These challenges are normal—but they require a structured, strategic response.

Why Doing This Internally Is Risky

Some LNLs may attempt to handle sustainability reporting entirely in-house. While internal ownership is important, going solo carries risks:

Inconsistent or non-comparable disclosures
Misalignment with SEC and global expectations
Overlooking material risks
Weak credibility with investors and lenders
Future rework as standards evolve

Sustainability reporting is no longer a communications exercise. It is a technical, governance-driven, and risk-sensitive discipline.

How GCSS, Inc. Supports LNLs Under SEC MC No. 16

GCSS, Inc. supports Large Non-Listed Companies in transitioning smoothly—and strategically—into sustainability reporting under the new SEC Circular.

Our support includes:

ESG readiness and gap assessments tailored to LNLs
Materiality assessments aligned with business strategy and stakeholder expectations
Governance and accountability frameworks for board and management oversight
Sustainability reporting aligned with GRI, IFRS S1/S2, and TCFD
Climate risk and opportunity assessments
Data systems and KPI development
Assurance readiness and third-party verification support
Executive and board-level briefings

We help companies move beyond producing a report—to building credible, future-ready sustainability systems.

The Strategic Opportunity for LNLs

SEC MC No. 16 places LNLs at a crossroads.

One path leads to minimal compliance, reactive disclosures, and future regulatory stress.
The other leads to sustainability leadership, resilience, and long-term value creation.

Companies that act early will:

Reduce transition risks
Build investor and lender confidence
Strengthen governance and decision-making
Position themselves for sustainable finance
Enhance operational resilience in a climate-exposed economy

In today’s environment, the cost of inaction is higher than the cost of preparation.

Take Action: Prepare, Lead, and Future-Proof

Sustainability reporting is no longer reserved for listed companies. With SEC Memorandum Circular No. 16, Series of 2025, Philippine LNLs are now firmly within the sustainability accountability landscape.

The question is no longer whether to report—but how well.

Reach out at sales@gcssinc.com to begin your IFRS- and TCFD-aligned ESG journey. Book your discovery call here and talk to our experts today.

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Sustainability reporting is now a requirement.
Sustainability leadership is the advantage.