December 30, 2024 | 12:00am
MANILA, Philippines — The Securities and Exchange Commission (SEC) has issued a framework for green equity offerings to provide companies with greater visibility of their activities that make substantial contribution to an environmental objective.
The commission has come out with the draft rules that will govern the issuance or designation of green equity in the Philippines.
The SEC said the guidelines were developed based on global principles and may be amended as the market develops, or due to regulatory changes.
By coming out with the green equity guidelines, the SEC aims to promote the visibility and attractiveness of companies that actively support green activities and initiatives.
“By identifying and recognizing businesses aligned with environmental and sustainability objectives, the green equity label aims to direct capital flows toward enterprises that contribute to building a climate-resilient and low-carbon economy, thereby supporting the country’s broader goals for sustainable development,” it said.
According to the commission, green equity refers to shares of stock of a company which revenue is derived significantly from green activities and which majority of investments are in economic activities that are aligned with a net zero trajectory by 2050 and the broader environmental goals other than climate.
The SEC said green equity is a complement to sustainable debt instruments to expand the range of sustainable investment products in the market and further support the transition toward a
net-zero carbon economy.
Under the draft guidelines, a company intending to issue green equity or to label its outstanding shares as green equity must provide information on activities considered green as well as environmental targets set in the guidelines.
The SEC said a company applying for the green equity label for its shares must specifically signify its intention to label its shares as such prior to its offering through a letter addressed to the commission’s Markets and Securities Regulation Department (MSRD).
To qualify for green equity, the draft guidelines states that at minimum, more than 50 percent of the company’s revenue and investments must be derived from activities that are considered green, as reported on the latest publicly available financial statement.
For pre-revenue companies, the rules indicate that the minimum threshold revenue requirement must be assessed from available business plans.
Another criteria for green equity is that the company must be aligned with the Philippine Sustainable Finance Taxonomy Guidelines and the ASEAN Taxonomy for Sustainable Finance, where available.
The guidelines state that the company must take into consideration the criteria to do no significant harm, remedial measures to transition and minimum social safeguards as defined in the aforementioned taxonomies – to the extent that its activities are included in the taxonomies.
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