PSE Introduces Green Equity Label to Advance Sustainable Finance in the Philippines

The Philippine Stock Exchange, Inc. (“PSE” or the “Exchange”) seeks to incentivise the transition to green operations, technological innovation, and strong corporate governance by introducing the Green Equity Label into the Philippine market. PSE has taken this step to showcase to the investing public, both local and foreign, that the Philippine markets can be a suitable destination for sustainable finance by placing the spotlight on companies that ensure that their business models and decisions contribute to environmental protection, long-term resilience, and a just transition.

Guided by the framework of the World Federation of Exchanges’ Green Equity Principles, PSE will act as the responsible institution to evaluate applications for the Green Equity Label and, accordingly, to grant, disapprove, and revoke the Label. As a self-regulatory organisation, the mandate of the Exchange is to provide the investing public with reliable and credible information that may serve as the basis for investment and business decisions.

The Exchange may grant the Green Equity Label according to the following criteria:

1. Revenues – More than 50% of the revenues of the company, as reported in the latest audited annual financial statements, must be derived from Green Activities.

2. Investments – More than 50% of the investments (sum of capital expenditure and operating expenditure) of the company, as reported in the latest audited annual financial statements, must be channelled towards Green Activities.

3. Fossil Fuel Limitation – Revenues of the company derived from fossil fuels must be limited to less than 5% to be eligible for the Label.

4. Taxonomy Alignment – The company's activities must meet the eligibility criteria of the Philippine Sustainable Finance Taxonomy Guidelines (“SFTG”) or ASEAN Taxonomy for Sustainable Finance (“ATSF”).

For the protection of the investing public, companies seeking the Green Equity Label must publish an Assessment Report written by an independent and accredited external review provider (“Accredited Reviewer”). The Assessment Report must detail the alignment with the requirements of the Rules, including alignment with the SFTG or the ATSF. In developing the Assessment Report, the Accredited Reviewer must have applied its duly published proprietary methodology to analyse the company's environmental targets, sustainability strategy, risk management, KPIs, and progress in achieving its stated sustainability and climate-related objectives. The Assessment Report shall be made available on the company’s website as well as on a dedicated page on the PSE website.

These safeguards are in place to protect against greenwashing. The Green Equity Label is intended to give investors information on the company’s structures for governance, accountability, strategy, and long-term prospects. The Label prompts business leaders to reflect on how their business models can align with national and global goals for a low-carbon and future-ready economy.

The adoption of the Green Equity Label in the Philippine market is aligned with PSE’s roadmap to be a champion for sustainability and climate action. In 2023, at COP28, PSE became the third Asian stock exchange and the second in Southeast Asia to become a member of the Net Zero Exchange Group – SSE Climate Leaders (“NZEG”), a coalition under the wider Glasgow Financial Alliance for Net Zero (“GFANZ”). By becoming a member of NZEG, PSE committed to pushing for decarbonisation targets in its own value chain and the capital markets as a whole. Among the efforts the Exchange has undertaken is becoming one of the few stock exchanges in the world to recognise listed companies for their net-zero roadmaps and actions by granting the Green Equity Label.

To date, two Philippine companies have been granted the Green Equity Label: Maynilad Water Services, Inc. (PSE: MYNLD) and Alternergy Holdings Corporation (PSE: ALTER).