By Alexandria Grace C. Magno
PHILIPPINE COMPANIES have to integrate environmental, social and governance (ESG) practices into their core operations to stay competitive and attract each local and international investors, an analyst said.
This includes reducing emissions, improving social impact and strengthening governance, together with adopting transparent ESG reporting aligned with global standards.
“By aligning their operations with global ESG standards and adopting transparent ESG reporting practices, firms can enhance their credibility and attractiveness to each international investors and customers,” ESGpedia Vice-President Jozsef Acabo said in an e-mailed reply to questions.
He added that global investors increasingly consider ESG rankings when making investment decisions, giving firms with strong ESG performance a competitive edge.
Locally, firms that show robust ESG practices usually tend to secure sustainability-linked loans and other green financing options offered by Philippine banks. Overseas, international funds and institutional investors now heavily factor ESG performance into their decision-making.
“In consequence, Philippine firms with strong ESG practices stand a greater likelihood of attracting foreign investment,” Mr. Acabo said.
“There’s a growing recognition that firms with strong ESG practices are higher positioned to administer long-term risks, particularly in areas akin to climate change and regulatory compliance,” he added.
This trend mirrors a wider investor shift viewing ESG as a value-creation strategy fairly than mere compliance.
Mr. Acabo said aligning disclosures with established reporting frameworks akin to the Global Reporting Initiative, Sustainability Accounting Standards Board (SASB) or the Task Force on Climate-related Financial Disclosures (TCFD) could enhance the credibility of Philippine firms amongst overseas investors.
Firms that adopt these standards signal a commitment to transparency and responsible operations, which may also help them manage long-term risks, particularly in climate change and regulatory compliance.
Mr. Acabo noted that global market shifts are adding urgency. Europe’s Carbon Border Adjustment Mechanism (CBAM) will impose levies on embedded emissions starting January 2026, while Southeast Asian markets like Singapore and Malaysia are raising expectations for low-carbon suppliers.
Firms in these regions may face direct carbon tax costs and can increasingly seek suppliers with proven low-carbon footprints to administer their exposure.
“Filipino suppliers which can be advanced of their sustainability practices and have proper documentary proof of their sustainability efforts can stand out and remain competitive, while avoiding higher costs from levies,” he said.
The Philippine Exporters Confederation, Inc. earlier said even firms not exporting on to Europe must comply with CBAM in the event that they are a part of the availability chain.
Philippine exporters have to familiarize themselves with the mechanism to stay competitive in global markets. ESG adoption, subsequently, isn’t only a compliance issue but a strategic step for firms aiming to secure international contracts and partnerships.
“Philippine firms can distinguish themselves in the worldwide market by embedding strong ESG practices into their core operations,” Mr. Acabo said.
“As sustainability becomes a central criterion for investors and customers worldwide, businesses that integrate responsible practices are positioned to fulfill increasing demand for sustainable services,” he added.