BSP eyes stricter climate reporting for banks

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is proposing to require the country’s largest and publicly listed banks to adopt stricter sustainability and climate-related disclosure standards starting 2027, as regulators seek more consistent and comparable reporting of environmental risks.

Under a draft circular, the BSP plans to adopt the Philippine Financial Reporting Standards S1 and S2 on sustainability-related disclosures. PFRS S1 covers general requirements for sustainability-related financial information, while PFRS S2 covers climate-related disclosures.

The standards are aligned with the International Sustainability Standards Board framework, which aims to create a common global baseline for sustainability reporting.

“The amended requirements aim to enhance the quality, consistency and comparability of sustainability-related information disclosed by banks, strengthen market discipline and support stakeholders in making well-informed assessments of sustainability-related risks, opportunities and long-term resilience,” the draft circular said.

The BSP said the proposed rules would also help banks better integrate sustainability-related risks and opportunities into their governance and risk management frameworks.

The proposed rules will be rolled out in phases, starting with publicly listed banks with market capitalization of more than P50 billion as of Dec. 31, 2025. These banks will be covered for fiscal years beginning Jan. 1, 2026, with the first sustainability reports due in 2027.

The second tier, covering fiscal years beginning Jan. 1, 2027, will apply to publicly listed banks with market capitalization of more than P3 billion up to P50 billion, as well as non-listed big banks with capital of more than P50 billion. Their first reporting will be in 2028.

The third tier, which will begin reporting in 2029, will cover smaller listed banks, banks whose debt securities are listed only on the Philippine Dealing and Exchange Corp. and non-listed big banks with capital of P50 billion or less.

Covered banks will have to submit a sustainability report to the BSP either as part of or attached to their annual report. Branches of foreign banks will submit the report with their audited financial statements.

To avoid duplicative filing, the BSP said banks might submit the same sustainability report filed with the Securities and Exchange Commission under its 2025 guidelines on PFRS sustainability disclosures.

The proposal builds on the BSP’s 2020 Sustainable Finance Framework, which requires banks to disclose how they integrate environmental, social and governance considerations into their risk management, strategy and operations.

The draft circular also gives banks transition relief as they build the systems needed for full compliance. During the initial phase, banks may limit disclosures to climate-related risks and opportunities. This will apply during the first year for the first two tiers and during the first two years for the third tier.

Non-listed Islamic, digital, thrift, rural and cooperative banks will not yet be covered by the full PFRS S1 and S2 regime. Instead, they will continue submitting minimum sustainability disclosures, including their strategic objectives, risk appetite, environmental and social risk exposures, sustainable finance products and progress in integrating sustainability principles into their operations.