The Bank of Thailand is implementing phase 2 of its Thailand Taxonomy to standardise the transition of banks and local businesses towards sustainability.
The Thailand Taxonomy Board released a draft of phase 2 for public consultation, which runs from Oct 28, 2024 to Jan 10, 2025.
This phase covers four key business sectors: agriculture (including livestock, fisheries and forestry), building and real estate, manufacturing, and waste management.
The Thailand Taxonomy Working Group, which includes representatives from government agencies and the business and financial sectors, developed the taxonomy as a framework for classifying environmentally sustainable economic activities.
Aligned with international standards while being tailored to Thailand's specific context, the taxonomy serves as a reference for identifying eco-friendly economic activities under a unified standard.
It aims to facilitate efficient capital allocation, risk management, private sector investment and to guide public policies and measures, all in pursuit of Thailand's environmental sustainability goals.
Phase 1 of the Thailand Taxonomy, launched on June 30, 2023, focused on greenhouse gas mitigation in the energy and transport sectors, which are major contributors to emissions.
"The working group is now preparing for phase 2, which will include additional economic sectors that either have a significant environmental impact or are highly vulnerable to natural disasters," said Roong Mallikamas, deputy governor for financial institutions stability at the central bank.
While banks and large local corporations are largely prepared for the transition to sustainable business practices in line with international standards, small and medium-sized enterprises (SMEs) are facing more challenges.
As a result, the central bank is encouraging financial institutions to help SMEs make the transition to sustainability as well.
To support this, the regulator has launched the "Financing the Transition" programme, which encourages banks to support local businesses in their sustainable transition.
Under the programme, the central bank collaborates with eight commercial banks: Bangkok Bank, Krungthai Bank, Kasikornbank, Siam Commercial Bank, Bank of Ayudhya, TMBThanachart Bank, Kiatnakin Phatra Financial Group and UOB Thailand.
In phase 2, the central bank aims for banks to give more attention to helping SMEs transition to sustainable practices and adhere to environmental, social and governance standards in line with international norms.
"We want banks to assist SMEs in transitioning from existing brown businesses to less-brown businesses. This would help SMEs improve business efficiency and strengthen competitiveness in a changing global economic landscape," Mrs Roong said recently.
