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  • Writer's pictureZiggurat Realestatecorp

PHL ranked among laggards in governance, ESG

The Philippines has kept the 11th spot but at a lower overall score in a ranking of 12 Asia-Pacific countries on their performance in corporate governance (CG) and environmental, social, and corporate governance (ESG).


The 2023 CG Watch biennial survey by nonprofit association Asian Corporate Governance Association (ACGA) showed that the Philippines maintained its previous ranking in 2020, besting only Indonesia. The survey looked into the countries’ market performance and practices.


According to the report, the Philippines scored 37.6 in the 2023 ranking, down from a score of 39 in 2020, citing the country’s policy focus being “elsewhere” and the securities regulator’s “lacks resources.” 



Australia secured the top spot with a score of 75.2, followed by Japan at 64.6, Singapore at 62.9, Taiwan at 62.8, Malaysia at 61.5, India at 59.4, Hong Kong at 59.3, Korea at 57.1, Thailand at 53.9, and China at 43.7. 


The rankings were based on seven categories, namely: government and public governance; regulators on funding, capacity building, and reform, and enforcement regulators; corporate governance rules; listed companies; investors; auditors and audit regulators; and civil society and media. 


ACGR data showed that the Philippines scored higher in categories such as government and public governance at 29 versus 28 in 2020; CG rules at 48 from 45; investors at 25 from 21; and auditors and audit regulators at 62 from 60. 


However, the country scored lower in terms of regulators at 25 from 27; listed companies at 48 from 55; and civil society and media at 33 from 36. 


“Our goal in CG Watch is to give a diagnosis of the health of CG systems across APAC (Asia-Pacific). More than 20 years after the Asian Financial Crisis there is no doubt that most of the region is in better shape. We hope our scores and rankings help each market to pinpoint next steps for improvement,” ACGA Secretary General Jamie Allen said. 


Meanwhile, a separate survey done by Hong Kong-based capital markets and investment group CLSA Ltd. showed that the Philippines ranked last among the 12 APAC countries in terms of the CLSA CG score. 


The Philippines came out with a score of 49.3 in the 2023 CLSA CG ranking, lower than the 50.5 score in 2020. 


“Our analysis of CG scores by thematic characteristics revealed that gender-diverse firms have the highest CG scores, followed by privately-owned enterprises, large caps and manager-run companies; while state-owned firms score the lowest,” CLSA said.

CLSA reveals CG winners and losers by sector and examines CG scores by corporate characteristics as well as CG’s relationship with broader ESG scores and shareholder value creation.


“The Asian region is characterized by extreme weather events, shifting demographics and geopolitical uncertainties. Now more than ever it has become increasingly crucial to comprehend the connection between effective corporate governance, ESG, and shareholder returns,” CLSA Head of Sustain Asia Research Seungjoo Ro said. 


Sought for comment, SEC Commissioner McJill Bryant T. Fernandez said via Viber message that the regulator has been consistent in promoting corporate governance and protecting minority investors, through policies and regulations consistent with international best practices.


“This can be attested by, among others, the recognitions from both domestic and international bodies, as well as engagements with stakeholders here and abroad,” he said.


He added that the SEC “was neither consulted nor interviewed” about the report.

“To be circumspect, the Commission will go over the entire report and commits to provide substantive comments thereon soonest,” he said.


Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that greater emphasis on ESG compliance is needed since it has been linked to good business practices. 


“Global and local regulators have already encouraged compliance with ESG standards for both issuers and investors even before the pandemic, which somewhat disrupted business, market, and other economic activities,” Mr. Ricafort said in a Viber message. 

“There should be greater emphasis on ESG compliance as this has become one of the important considerations by foreign investors in recent years, as ESG compliance is tied to good business practices,” he added.


Mr. Ricafort added that corporate regulators should have more funding to support more ESG compliance initiatives.


“More funding is needed to bankroll more ESG compliance initiatives amid limited financial resources of the government due to budget deficits especially since the pandemic,” Mr. Ricafort said.


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