Asset managers in Thailand will soon be able to set up funds to invest in forestry and tree planting projects, as regulators seek to diversify the capital markets and provide funding to sectors that champion the goal of carbon neutrality.
The "green investment trusts," as Thai regulators are calling them, will initially be limited to investments in projects that generate income from carbon credits, said Pornanong Budsaratragoon, secretary-general of the Securities and Exchange Commission (SEC). Complete details and rules for the so-called green funds will be hammered out by mid-year after input from various stakeholders, she said.
"The new category of trusts will cater to the rising appetite for green financial products beyond just bonds and loans," the SEC chief said in a recent interview. "The offering process will be much more streamlined than that for fixed-income securities."
Thailand has set a 2050 target for carbon neutrality, sparking a wave of investment in both the public and private sectors. However, scrutiny has been raised after some high-profile projects were found to be over-claiming their benefits toward conservation and emissions reduction.
Thailand, Southeast Asia’s second-biggest economy, in September launched its first carbon credit exchange. The new carbon market, called FTIX, will be operated by the Federation of Thai Industries (FTI), which comprises about 12,000 private companies across 45 sectors.
The World Bank is seeking to reduce overcounting of carbon credits and outright fraud by implementing stricter monitoring and verification protocols that, among other things, ensure that reforestation efforts do not lead to the clearing of trees elsewhere.
The SEC will establish protocols so that licensed green trusts comply with emissions tallies and carbon-credit reviews from certified agencies, Ms Pornanong said. The regulator is also promoting local companies to raise funds for green projects via tokens and other digital assets, she said.