Clearer standards and labelled equity instruments will strengthen the attractiveness of the Philippine capital market to long‑term institutional capital
The Philippines has taken a significant step in sustainable finance by issuing its first Green Equity Guidelines, becoming the first market in Asean to introduce a dedicated framework for equity instruments aligned with green objectives.
The move is designed to give investors clearer signals on which listed companies genuinely derive their value from environmentally sustainable activities, rather than relying on broad or self‑defined ESG claims.
Published as SEC Memorandum Circular No. 13, the guidelines form part of the Securities and Exchange Commission’s broader effort to position the country as an “emerging destination” for global investors seeking credible and transparent green exposures.
By setting minimum thresholds for how much of a company’s revenues and investments must come from green activities, the rules aim to reduce greenwashing risk and make it easier for fund managers to integrate Philippine names into dedicated sustainable and climate‑focused portfolios.
Under the framework, companies that wish to use the Philippine Green Equity label must derive more than 50% of both their revenues and investments from activities classified as green. These activities must be aligned with either the Philippine Sustainable Finance Taxonomy Guidelines or the Asean Taxonomy for Sustainable Finance, effectively tying the label to regional and domestic classification systems rather than ad hoc corporate definitions. This is intended to ensure that the label reflects real economic contribution to decarbonisation, resilience, or environmental protection, rather than peripheral or one‑off initiatives.
The guidelines also impose clear exclusions and limits. No more than 5% of a labelled company’s revenues may come from fossil fuel‑related activities, creating a high bar for businesses with legacy exposure to coal, oil, or gas. This threshold is particularly relevant for investors with strict fossil fuel screens or those committed to net‑zero portfolio targets, as it helps distinguish between firms in genuine transition and those whose green activities are still outweighed by carbon‑intensive operations.
To qualify, companies must be listed on the Philippine Stock Exchange (PSE), aligning the green equity label with the formal capital market and its disclosure regime. Once they obtain the label, these firms will be subject to an annual assessment conducted by the PSE to verify ongoing compliance. This recurring review mechanism is designed to prevent the label from becoming a one‑time certification and to ensure that companies continue to meet the revenue, investment, and taxonomy‑alignment criteria as their business models evolve.
“The issuance of the SEC Green Equity Guidelines is a game‑changing initiative that will help develop the capital market not only by boosting liquidity but also by supporting our climate goals,” says SEC chair Francis Lim. By channelling more capital toward compliant issuers, the regulator hopes to deepen trading in green‑aligned stocks and encourage more companies to restructure their portfolios towards sustainable activities in order to qualify. Strategically, the guidelines serve several purposes at once.
For policymakers, they create a tool to support the Philippines’ climate and environmental commitments by steering private capital into low‑carbon and climate‑resilient sectors.
For the SEC and the PSE, they offer a way to differentiate the domestic market in a region where investors are increasingly comparing ESG standards across Asean exchanges. And for asset owners and managers, they provide a clearer framework to build Philippine allocations within global or regional sustainable equity strategies.
The Green Equity Guidelines complement earlier sustainable finance initiatives in the country, such as bond‑focused frameworks and the development of a national sustainable finance taxonomy. Together, they help shift the market from principles‑based ESG rhetoric to rules‑based classifications that investors can use in their mandates, benchmarks, and risk assessments.
Over time, the SEC expects that this combination of clearer standards and labelled equity instruments will strengthen the attractiveness of the Philippine capital market to long‑term institutional capital that prioritises environmental performance alongside returns.