February Global Regulatory Brief: Green finance

The financial sector continues to face new rules and government expectations as part of the broader effort to aid the green transition. The following green finance policy developments represent a sample of wider regulatory and policy coverage available to Bloomberg Terminal customers.

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• Philippines: SEC mandates IFRS-Aligned sustainability reporting
• EU: Lawmakers strike provisional deal on sustainability omnibus
• Viet Nam: SSC launches corporate governance code 2026
• Malaysia: JC3 issues sustainable & transition finance guidancePhilippines SEC mandates IFRS-aligned sustainability reporting via PFRS S1 and S2

Philippines SEC mandates IFRS-aligned sustainability reporting via PFRS S1 and S2

Overview

The Philippine Securities and Exchange Commission (SEC) has adopted PFRS S1 and PFRS S2, requiring publicly listed companies (PLCs) and large non-listed entities (LNLs) to disclose sustainability-related financial and climate information. These standards align with the IFRS Sustainability Disclosure Standards issued by the ISSB. Implementation begins in FY 2026 under a phased, tiered approach.

Context

This regulatory overhaul aims to enhance corporate transparency and align Philippine sustainability reporting with global norms. Similar phased frameworks and assurance requirements are emerging across ASEAN, such as Malaysia’s proposed sustainability assurance regime. 

Key takeaways 

Scope & Standards: 

• PFRS S1 – General sustainability-related financial disclosures 
  • PFRS S2 – Climate-related disclosures
  • Both mirror ISSB’s IFRS standards
• Tiered timeline: 
  • Tier 1: PLCs with market cap > PHP 50B → FY 2026 reporting (due 2027)
  • Tier 2: PHP 3B–50B → FY 2027 reporting (due 2028)
  • Tier 3: Smaller PLCs & LNLs (revenue > PHP 15B) → FY 2028 reporting (due 2029)
• Transition reliefs: 
  First-year flexibility: disclosures can follow financial statements (within nine months).
• No comparative data required initially:
  • Climate-first approach: focus on PFRS S2 for 1 year (Tiers 1 & 2) or 2 years (Tier 3)
  • Scope 3 GHG emissions deferred for two years
• External assurance: 
  • Mandatory limited assurance on Scope 1 & 2 emissions two years post-adoption
  • Assurance per ISSA 5000, by CPA or qualified practitioner
• Exemptions: 
  • Subsidiary LNLs covered by parent sustainability reports under PFRS or comparable frameworks (e.g., ESRS) can file a Certificate of Exemption
• Penalties: 
  • PLCs: Missing sustainability report = “Incomplete Annual Report”
  • LNL penalties to be issued later

Next steps 

Effective Date: 

• FY starting 1 January 2026 for Tier 1
• Action Points:
  • Conduct gap analysis vs. ISSB standards
  • Establish ESG data collection and governance systems
  • Identify assurance providers early (competency requirements similar to Malaysia’s model)
• Monitor: SEC guidance on LNL penalties and exemption procedures

EU reaches provisional deal to simplify sustainability reporting and due diligence requirements

EU co-legislators have reached a provisional agreement to scale back sustainability reporting and due diligence obligations under the Omnibus I package amending the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

Context

The agreement follows European Commission proposals published in February 2025 to streamline the CSRD and CSDDD, to ensure a clear, simple and smart regulatory framework for businesses and drastically reducing administrative, regulatory and reporting burdens, in particular for SMEs. Parliament and Council negotiators have now aligned on a simplified approach ahead of formal adoption of the Omnibus I scheduled for December 2025.

Key takeaways

• Revised sustainability reporting thresholds: Only EU companies with >1,000 employees and > €450m net turnover must report. Non-EU companies would be captured if they generate €450m in the EU.
• Simplified reporting framework: Requirements will become more quantitative, while sector-specific standards will become voluntary. Companies with fewer than 1,000 employees may refuse requests for additional information beyond voluntary standards.
• New digital reporting portal: The Commission will establish an online portal offering templates and guidance for both EU and national requirements.
• Narrowed due diligence requirements: Obligations apply only to EU companies with >5,000 employees and > €1.5bn turnover, and to non-EU companies meeting the same EU turnover threshold.
  • Companies must adopt a risk-based approach, avoiding unnecessary information requests from entities outside scope.
  • No requirement to prepare a transition plan under the due diligence rules, but obligation to report transition plans under the CSRD where companies have adopted one.
  • Liability remains at national level, with possible fines up to 3% of global net turnover.

Next steps

• The European Parliament and EU Member States are expected to vote on the political agreement by year-end, with the final legislative text anticipated in early 2026.
• EU Member States will have 12 months to transpose the new CSRD requirements into national law before they become legally binding and enforceable.
• For the CSDDD, transposition is required by July 2028, with application starting in July 2029.

Viet Nam launches Corporate Governance Code 2026

Overview

On 3 February 2026, the State Securities Commission of Viet Nam (SSC), in collaboration with the International Finance Corporation (IFC), launched the Viet Nam Corporate Governance Code 2026 (VN CG Code). The Code adopts a principles‑based approach aligned with the G20/OECD Principles (2023) and aims to raise governance standards for listed and public companies. It strengthens expectations on board leadership, risk oversight, transparency, shareholder protection, and ESG integration. The CG Code 2026 is based on the G20/OECD Principles of Corporate Governance (2023) and incorporates best practices from developed markets and ASEAN countries.

Context

The VN CG Code 2026 updates Viet Nam’s governance framework in line with international standards and regional best practices, including ASEAN Corporate Governance Scorecard (ACGS) criteria. It complements existing legal requirements rather than replacing them, offering recommended practices under a “Comply or Explain” model. The launch forms part of Viet Nam’s broader capital‑market reform efforts, particularly as the country seeks an upgrade in international market classifications.

Key takeaways

1. Principles-based corporate governance framework
   • The Code introduces nine core principles covering modern governance themes.
   • It emphasises board leadership, independence, diversity, and a clear separation between oversight and management.
   • Strengthens expectations around the establishment and functioning of board committees, especially Audit Committees.

2. Enhanced control and risk management requirements
   • Highlights the Board’s responsibility for risk governance, internal controls, and internal audit.
   • Encourages stronger frameworks for identifying and managing both financial and non-financial risks.

3. Strengthened disclosure and transparency standards
   • Recommends expanded disclosures beyond legal requirements, including:
     • Governance structures and policies
     • Key risks and long-term value drivers
     • Sustainability-related information
   • Supports companies in preparing for new and emerging sustainability and ESG disclosure obligations.

4. Shareholder protection and fair treatment
   • Reinforces protections for minority shareholders.
   • Calls for greater transparency regarding related-party transactions and conflicts of interest.

5. ESG integration and sustainability oversight
   • Significantly enhances expectations on ESG and climate-related risk integration.
   • Boards are expected to incorporate environmental and social considerations into strategy, risk oversight, and decision-making.
   • Aligns with global sustainability governance trends and disclosure standards.

6. Market-level benefits
   • Aims to enhance corporate credibility, investor confidence, and access to long‑term capital.
   • Part of Viet Nam’s strategic push toward market reclassification and deeper international integration.

Next steps

• The VN CG Code 2026 will be implemented under a “Comply or Explain” mechanism.
• Initially applicable to listed companies, with later expansion to public companies.
• Companies are expected to begin aligning governance practices and disclosures with the new recommendations.
• SSC, IFC, and SECO will continue capacity‑building and support programmes to aid adoption.

Viet Nam launches Corporate Governance Code 2026

Overview

On 3 February 2026, the State Securities Commission of Viet Nam (SSC), in collaboration with the International Finance Corporation (IFC), launched the Viet Nam Corporate Governance Code 2026 (VN CG Code). The Code adopts a principles‑based approach aligned with the G20/OECD Principles (2023) and aims to raise governance standards for listed and public companies. It strengthens expectations on board leadership, risk oversight, transparency, shareholder protection, and ESG integration. The CG Code 2026 is based on the G20/OECD Principles of Corporate Governance (2023) and incorporates best practices from developed markets and ASEAN countries

Context

The VN CG Code 2026 updates Viet Nam’s governance framework in line with international standards and regional best practices, including ASEAN Corporate Governance Scorecard (ACGS) criteria. It complements existing legal requirements rather than replacing them, offering recommended practices under a “Comply or Explain” model. The launch forms part of Viet Nam’s broader capital‑market reform efforts, particularly as the country seeks an upgrade in international market classifications.

Key takeaways

1. Principles-based corporate governance framework
   • The Code introduces nine core principles covering modern governance themes.
   • It emphasises board leadership, independence, diversity, and a clear separation between oversight and management.
   • Strengthens expectations around the establishment and functioning of board committees, especially Audit Committees.

2. Enhanced control and risk management requirements
   • Highlights the Board’s responsibility for risk governance, internal controls, and internal audit.
   • Encourages stronger frameworks for identifying and managing both financial and non-financial risks.

3. Strengthened disclosure and transparency standards
   • Recommends expanded disclosures beyond legal requirements, including:
     • Governance structures and policies
     • Key risks and long-term value drivers
     • Sustainability-related information
   • Supports companies in preparing for new and emerging sustainability and ESG disclosure obligations.

4. Shareholder protection and fair treatment
   • Reinforces protections for minority shareholders.
   • Calls for greater transparency regarding related-party transactions and conflicts of interest.

5. ESG integration and sustainability oversight
   • Significantly enhances expectations on ESG and climate-related risk integration.
   • Boards are expected to incorporate environmental and social considerations into strategy, risk oversight, and decision-making.
   • Aligns with global sustainability governance trends and disclosure standards.

6. Market-level benefits
   • Aims to enhance corporate credibility, investor confidence, and access to long‑term capital.
   • Part of Viet Nam’s strategic push toward market reclassification and deeper international integration.

Next steps

• The VN CG Code 2026 will be implemented under a “Comply or Explain” mechanism.
• Initially applicable to listed companies, with later expansion to public companies.
• Companies are expected to begin aligning governance practices and disclosures with the new recommendations.
• SSC, IFC, and SECO will continue capacity‑building and support programmes to aid adoption.

Malaysia’s JC3 issues sustainable and transition finance guidance for banks

Overview

On 17 December 2025, Malaysia’s Joint Committee on Climate Change (JC3) published its Sustainable and Transition Finance Guidance (STFG), offering banks a standardised framework to assess borrowers and align financing with sustainability and transition principles. The guidance aims to localise global standards, complement Malaysia’s Climate Change and Principle-based Taxonomy (CCPT), and support national policies such as the National Energy Transition Roadmap (NETR) and the New Industrial Master Plan 2030 (NIMP 2030). The guidance references Bloomberg data sources in support of its analysis (see page 44).

Context

The STFG was developed by an industry-led working group comprising Maybank, CIMB, and HSBC Amanah, supported by Bank Negara Malaysia (BNM) and the Securities Commission Malaysia (SC). It responds to industry challenges identified in a JC3 survey, including client readiness, inconsistent definitions, lack of expertise, and data quality issues. The guidance builds on JC3’s broader efforts to strengthen Malaysia’s sustainable finance ecosystem.

Key takeaways

• Purpose and Scope
  • Provides banks with practical recommendations for assessing borrowers at both asset and entity levels.
  • Distinguishes between sustainable finance (green/social projects) and transition finance (hard-to-abate sectors).
  • Offers tools for consistent and credible assessments, even when projects do not fully meet taxonomy requirements.
• Alignment with National and Global Frameworks
  • Complements Malaysia’s CCPT and aligns with national strategies such as NETR and NIMP 2030.
  • Translates global principles into actionable guidance tailored for Malaysia.
• Sustainable Finance Criteria
  • Adopts four core components of Green and Social Loan Principles:
    • Use of proceeds
    • Project evaluation and selection
    • Management of proceeds
    • Reporting
  • Encourages banks to maintain internal frameworks referencing national/regional taxonomies.
• Transition Finance Principles
  • Defines transition finance as capital for carbon-intensive sectors essential beyond 2050.
  • Asset-level requirements: Financing aligned with 1.5°C pathways, material emissions reduction, and avoidance of carbon lock-in.
  • Entity-level requirements: Robust transition plans with:
    • Integrated strategy and governance
    • Coverage of material emissions
    • Financial commitments and CAPEX plans
    • Science-based targets (short, medium, long term)
    • Transparent reporting
• Industry Challenges
  • JC3 survey findings:
    • 77% cite client readiness as a hurdle
    • 59% cite varying definitions and standards
    • 64% cite lack of expertise
    • 59% cite data availability and quality

Next steps

Banks are expected to integrate STFG into their financing practices. JC3 will continue capacity-building initiatives to support implementation. Full guidance is published by JC3.

The Central Bank of Bahrain proposes new rules to introduce Sustainable and Sustainability-Linked Debt Instruments

Summary

The Central Bank of Bahrain (CBB) is proposing new regulatory rules to introduce and govern the issuance of Sustainable Debt Securities (SDS) and Sustainability-Linked Debt (SLD) instruments in Bahrain. These rules are intended to align with international sustainability standards, enhance market transparency, and support Bahrain’s broader ESG goals.

The consultation invites feedback on the proposed additions to Volume 6 of the CBB Rulebook, which focuses on the offering of securities and collective investment undertakings.

Key proposals include

New Chapter on Sustainable Instruments: Addition of a new chapter in Volume 6 (Offering of Securities Module) covering requirements for SDS and SLD instruments.

Eligible Instruments: Applies to bonds, sukuk, and similar debt instruments that are either:

• Labelled as “green,” “social,” or “sustainability” (SDS), or
• Sustainability-linked (SLD) with ESG performance targets.

Disclosure Requirements: Issuers must provide pre-issuance frameworks and post-issuance reports aligned with international principles (e.g., ICMA Green Bond Principles, Sustainability-Linked Bond Principles).

Verification and Reporting: Mandatory third-party external reviews (pre- and post-issuance). Ongoing annual updates are required for transparency.

SLD-Specific Obligations: For SLDs, key performance indicators (KPIs), sustainability performance targets (SPTs), and impact of failure to meet SPTs must be clearly disclosed.

Label Use: Use of sustainability-related labels must be justified with robust documentation.

Next steps

The CBB is soliciting comments from stakeholders until 30 October 2025.