For Philippine listed companies seeking the Philippine Green Equity Label, the eligibility bar is quantitative, cumulative, and unforgiving. A firm cannot compensate for weak revenue alignment with strong capital expenditure, nor can it offset fossil fuel exposure through unrelated environmental initiatives. The framework, established under SEC Memorandum Circular No. 13, Series of 2025, imposes four distinct thresholds that must all be satisfied simultaneously .
The Four Cumulative Criteria
The first criterion concerns revenue. More than fifty percent of a company’s total revenues, as reported in its most recent audited annual financial statements, must come from activities classified as Green Activities under the Philippine Sustainable Finance Taxonomy Guidelines (SFTG) or the ASEAN Taxonomy for Sustainable Finance (ATSF) .
The second criterion applies to investments. More than fifty percent of the company’s combined capital expenditures and operating expenditures must be channeled toward Green Activities. This dual threshold ensures that a company cannot qualify solely on the basis of legacy revenue while continuing to invest in non-green operations .
The third criterion is a fossil fuel limitation. Revenues derived from fossil fuel-related activities must not exceed five percent of total revenues. This provision is designed to exclude companies with material exposure to coal, oil, or gas, even if their aggregate green revenue exceeds the fifty percent threshold .
The fourth criterion requires alignment with the SFTG or ATSF. This alignment anchors the label in recognized classification systems and ensures consistency with national, regional, and international sustainable finance standards .
Independent Review and Annual Compliance
Compliance is not self-declared. The guidelines mandate independent external review by a qualified third party with demonstrated expertise in sustainable finance and ESG practices. The reviewer must apply a published methodology and issue a formal assessment report, which becomes part of the public disclosure record .
Label holders face continuing obligations. Annual externally reviewed assessment reports must cover green revenue, investments, fossil fuel exposure, and taxonomy alignment. Material changes affecting eligibility require confirmation from an accredited reviewer that the company remains compliant. Exchanges maintain a public registry of valid label holders and may withdraw, suspend, or cancel a label following due notice and evaluation .
The SEC’s transition period runs until the end of 2026. During this window, technical non-alignment with the taxonomy will not trigger administrative penalties or label revocation, but applicants must still demonstrate substantial contribution to at least one environmental objective. Full alignment becomes mandatory from fiscal year 2027 .
For companies with borderline fossil fuel exposure or ambiguous revenue classification, the five percent cap and the fifty percent investment test are the most common disqualification risks. Legal advisers recommend early engagement with accredited reviewers and taxonomy specialists before filing an application, particularly for conglomerates with diversified operations that may straddle green and non-green segments .
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