The Securities and Exchange Commission (SEC) is working with other Southeast Asian countries to develop green financial products, including sustainability-linked bonds and "Asean Transition" guidelines regarding taxes, according to the Thai regulator.
Speaking on Wednesday at the "Thailand Taxonomy" seminar jointly organised with the Bank of Thailand, Jomkwan Kongsakul, SEC deputy secretary-general, said this work with Asean counterparts is expected to be completed this quarter, supporting Thailand's efforts to manage climate risks.
The international standards for climate finance can be adopted by large companies, while small and medium-sized enterprises still have limited capacity, she said.
Concerned agencies jointly developed a definition of a "Thailand taxonomy" scheme to provide greater opportunities for Thai firms of all sizes to access environmentally friendly financial products to meet such standards, Ms Jomkwan said.
In the past five years, only 31 companies have issued green or sustainability bonds with a total value of 600 billion baht, aiming to cut greenhouse gas (GHG) emissions. The majority of such bond issuers are in the sectors of alternative energy and electric trains, she said.
Phase one of the taxonomy, a classification system of economic activities deemed environmentally sustainable, focuses on the energy and transport sectors.
These two were selected for two reasons: their significant volume of GHG emissions and the availability of technological solutions to decarbonise these sectors.
Various stakeholders agreed that phase one should prioritise economic activities that contribute significantly to GHG emissions. Some participants proposed the scope of the taxonomy should be expanded to cover other economic activities, such as manufacturing and agriculture, in the next phase.
The taxonomy is an extension of the work carried out by the Working Group on Sustainable Finance of Thailand, whose members include the Fiscal Policy Office, the central bank, the SEC, the Office of the Insurance Commission, and the Stock Exchange of Thailand.
The group was set up to develop a financing plan to support the Thai economy in achieving its sustainable development goals and carbon emission reduction targets, in line with the Paris Agreement.
The group's work resulted in the creation of five sustainable finance initiatives. The first is the taxonomy, while the other four comprise: improving the data environment, implementing effective incentives, creating demand-led products and services, and building human capital.
The taxonomy is also intended to establish a common investment language for the Thai sustainable finance market, accelerating its development.