Thai finance leaders and United Nations experts who participated in a recent discussion co-organised by the UN and the Global Compact Network Thailand (GCNT) said improved cooperation in the country’s financial system and mainstreaming climate finance will get Thailand closer towards a net-zero economy.
Participants in the informal Sustainable Financing dialogue earlier in September said committing financial resources to green investments while adhering to higher standards and better reporting will help accelerate the transition to a new bio-circular-green economy, create new jobs, and increase Thailand’s ability to tackle the climate crisis.
Priority must be given to aligning the availability of data on investments and their impacts as well as the risk-return equation for ambitious environmental targets, the experts noted.
Gita Sabharwal, the UN Resident Coordinator in Thailand, opened the meeting by emphasising that leadership from the domestic private sectors, banks and investors was key for scaling up sustainable financing premised on ESG (Environmental, Social and Governance) principles.
“Uniting private sector leadership, including small and medium enterprises (SMEs), will be critical to unlock the required climate finance,” Sabharwal said.
“Sustainability can only happen with the cooperation of all these partners and the sustainable investment ecosystem that we foster to accelerate the green transition” the UN representative stressed.
Ruenvadee Suwanmongkol, Secretary-General of the Securities and Exchange Commission, said the financial sector can use this financial tool to assess ESG-related risks and opportunities in their business operations while benefitting from financial products, information and services needed to promote and support a sustainable business transition.
“The financial sector plays a key role in the development of infrastructure necessary for the transition as part of a whole-of-government approach towards the Sustainable Development Goals (SDGs) in Thailand. As regulators, what we can do best is create an ecosystem and serve as role models of SDGs champions,” Ruenvadee said during the roundtable discussion.
The United Nations and SEC Thailand have recently launched the SDG Investor Map, a market intelligence tool that highlights opportunities for targeted investments towards accelerating progress on the SDGs in the country.
Another participant, Chavinda Hanratanakool, who is chair of the Association of Investment Management Companies (AIMC), presented what steps have been taken and will be taken by institutional investors to scale up financing for green investments. Demand for sustainability-related financial products was increasing, the financial expert said.
“ESG funds are thriving and seeing decent returns, which signifies the collective investor voice and bolder targets,” Chavinda observed.
Dr. Man Juttijudata, Deputy Secretary-General of the Government Pension Fund (GPF), said that the conditions to raise long-term funds have been improved with notable growth in the ESG bond market which saw a 100% increase in issuance volume from 2020 to 2021. GPF’s ESG bonds investment has been increased significantly from a balance of 9.9 billion baht in 2020 to 32.9 billion baht as of August 2022.
The surge in institutional investors looking for companies with an easier transition to the green economy is sending a strong signal that smart financial management can go together with greener investment and environmentally friendly outcomes, Dr. Man said.
Adit Laixuthai, Senior Executive Vice-President of KASIKORNBANK, said that the challenges of climate change require bold action.
“To drive the Sustainable Finance agenda, we must set the tone from the top. It’s a cultural shift, no longer a nice-to-have agenda, and must be embraced and understood from the boardrooms and be in alignment with shareholders,” Adit said.
Giorgio Gamba, CEO of HSBC Thailand, in turn reaffirmed the potential of both short- and long-term green investments, but urged a focus on generating strong returns by investing in companies meaningfully contributing to a more sustainable economy.
While being “mindful of greenwashing, we must recognise that sustainability will only happen with the cooperation of our partners,” said Gamba, whose bank has set out to reach net-zero emissions by 2050.
Yongyut Setthawiwat, Managing Director of Thai Union, noted that more Thai businesses have been embracing green practices, but added that further progress necessitated expanding environmentally-friendly supply chains.
“The green economy needs green consumption. As demand for products and investments with sustainability labels increases, so must their supply,” Yongyut said.
Nikorn Nikornphan, a representative of the Thai Bankers’ Association, stressed the importance of “a common taxonomy on sustainable finance among Thai banks” as collective efforts were needed for a green transition.
Preeti Sinha, Executive Secretary of the UN Capital Development Fund (UNCDF) who was on an official visit to Thailand, spoke of the role of innovative capital markets, including cross-border mobility of private climate finance, in which “Thailand especially has geographical potential.”
Responding to the climate crisis requires collective action from all countries, cities, corporations and individuals to ensure prosperity while also protecting the planet, Sinha emphasised.
Dr. Netithorn Praditsarn, Deputy Secretary-General of Global Compact Network Thailand (GCNT), pointed out that the financial sector plays a very important role in influencing businesses to enhance sustainability of their operations. One example is the disclosure of ESG information through the SEC’s “One Report” requirement for listed companies, which is in line with GCNT’s principles. He added that GCNT Forum 2022, the organisation’s key annual event, will be held to strengthen the private sector's leadership in addressing climate change, accelerating Thai businesses’ journey towards the goal of Net Zero. Sustainable finance will be a vital part of this discussion, he said.
According to the United Nations, Thailand is particularly vulnerable to impacts of climate change and biodiversity loss. At the same time, the rich biodiversity of Thailand is a critical resource for mitigating greenhouse gas emissions and increasing resilience against impacts of climate change, especially extreme weather conditions that are likely to increase within the coming years.
“GCNT currently has over 100 members of various sizes from diverse industries. We are committed to reducing our climate impacts. We are rallying our members to speed up their effort in fighting global warming, as well as preserving and rehabilitating biodiversity, which is an essential resource for human well-being and sustainable economic growth. We need to join forces with all sectors. Additional supporting factors such as sustainable financial cooperation from leading Thai financiers will be one of the main themes to be discussed at the GCNT Forum 2022 in November,” Dr. Netithorn concluded.