Nearly all of Thai banks have been making an attempt to account for local weather threat however say they want extra supportive authorities insurance policies, with clearer definitions and requirements on reporting emissions, stated Sarinee Achavanuntakul, director at Local weather Finance Community Thailand.
“If we glance across the area, Singapore, for instance, has already introduced obligatory Scope 1 and a pair of carbon accounting for listed firms within the 2025 fiscal yr,” stated Sarinee, who can also be managing director of sustainable enterprise accelerator Sal Forest. Scope 1 refers to direct emissions from a enterprise’s operations, whereas Scope 2 emissions are from vitality use.
“[Mandatory reporting] sends a really clear sign that’s going to assist banks tremendously in verifying information, in addition to implementing and designing their transition plans away from fossil fuels,” she stated on the latest Unlocking capital for sustainability Thailand discussion board, organised by Eco-Enterprise.
Chow Wong Yuen, chief sustainability officer on the Thai arm of the United Abroad Financial institution (UOB) echoed Sarinee’s views. Emissions information is essential in serving to banks precisely measure their financed emissions and can enhance transparency in capital markets, he stated.
“I feel [Thailand] must have a greenhouse gasoline emissions stock,” stated Chow. “We have to begin reporting Scope 1 and a pair of emissions and [impose] sure penalties if firms don’t comply.” Aside from Singapore, he highlighted that Malaysia has taken obligatory disclosures a step additional by requiring even massive non-listed companies to reveal their emissions by 2030.
Thailand has made progress on rising sustainable finance lately by introducing the primary part of the nation’s climate-related taxonomy for the monetary sector in June 2023. The Thailand Taxonomy Section 1 focuses on actions within the vitality and transportation sectors, whereas Section 2 – which is at present open for public suggestions – will cowl agriculture, manufacturing, actual property and waste.
Nevertheless, extra must be achieved to enhance competency and literacy in the direction of the taxonomy, stated the World Financial institution’s senior monetary sector specialist Dr Ornsaran Pomme Manuamorn. Analysis by the World Financial institution signifies that Thailand seems to be on the “implementation stage” of sustainable finance, together with round 60 per cent of nations globally.
“In terms of whether or not cash is definitely flowing into inexperienced initiatives, we have to do way more,” stated Ornsaran. “There must be extra steerage and capability constructing for voluntary customers, each within the company and monetary sectors.” Solely then, she stated, can the personal sector work out how one can use the taxonomy, corresponding to linking it to inexperienced monetary merchandise or disclosures.
Adaptation finance wanted
Sarinee cautioned that the taxonomy have to be carried out with justice in thoughts, although the idea of a simply transition continues to be new in Thailand. “Having a taxonomy in place doesn’t assure a simply transition – quite the opposite, it might speed up an unjust transition if, for instance, a coal-fired energy plant or coal mines are shut down with none plan in place for the employees concerned,” she stated.
Within the meantime, Thailand is already struggling the consequences of local weather change, highlighting the necessity for local weather adaptation. The nation noticed not too long ago recorded the heaviest rainfall in many years for the month of October, resulting in extra extreme flash floods, stated Bangkok’s chief sustainability officer Pornphrom Vikitsreth, who can also be advisor to the town’s governor.
On the identical time, Thailand is experiencing rising city warmth ranges, affecting not solely susceptible folks however those that are wholesome and need to be exterior for work, he stated.
Impacts are additionally being felt within the agricultural sector, which contributes about 9 per cent to Thailand’s gross home product. Excessive climate occasions corresponding to extreme flooding or water shortage have resulted in smaller harvests, stated Friberg-Storey.
“We want a number of funding in Bangkok [to adapt to climate change],” stated Pornphrom. Thailand’s present use of balanced budgeting – through which the federal government solely spends what it receives in taxes and different revenues – is inadequate to fund local weather adaptation measures.
“Mitigation is simpler as a result of public-private partnerships can be utilized to fund, for instance, waste-to-energy or wastewater therapy vegetation,” he stated. “However for adaptation initiatives, like constructing seawalls to guard the Bang Khun Thian district, we’ve got to make use of our personal funds – it is vitally tough and prices loads.”
The Bang Khun Thian district sits on the gates of the Gulf of Thailand and communities dwelling there bear the brunt of any extreme flooding that happens. In September this yr, a plan was floated by Thaksin Shinawatra, the daddy and advisor of present prime minister Paetongtarn Shinawatra, to assemble a mega synthetic island mission within the coastal expanse past the district, for protecting sea partitions to behave as a barrier to the rising seas.
In 2024, Thailand expereinced lethal floods throughout varied areas on account of elevated rainfall. Picture: Soi Buakhao /Flickr CC BY-SA 2.0
On financing such adaptation initiatives, Pornphrom stated that sooner or later, the federal government may need to difficulty municipal bonds to boost funds. “We haven’t achieved it earlier than however it’s one thing we’ve got to do [while also] different revolutionary options,” he stated.
One other solution to deal with unfavorable externalities is by placing a value on carbon and air pollution, stated Sarinee. “Think about if nature sends us a invoice and says, pay up for all of the injury you’ve achieved – then we wouldn’t want to speak about these completely different financing mechanisms. However since we don’t have that, we’ve got to search out proxies and value them,” she stated. Thailand has already introduced that it will introduce a carbon tax subsequent yr.
The trick to doing this effectively, nevertheless, is to make sure that present brown industries, which nonetheless depend on fossil fuels or are excessive emitters, aren’t not noted of the image, added Sarinee. “It is usually necessary to create disincentives for extra brown initiatives,” she stated. “To me, that’s key to unlocking capital.”
Monetary sector collaboration
One other essential step is for Thailand’s monetary establishments to collaborate on accelerating sustainable finance throughout the trade, stated UOB’s Wong.
“There are banks with huge oil and gasoline mortgage portfolios that [have not divested from fossil fuels], not as a result of they’re unwilling however as a result of they don’t even know the place to start out,” he stated. Addressing this may require collaboration throughout sectors in addition to amongst monetary establishments.
Wong acknowledged remarks from viewers members that within the meantime, small and medium-sized companies have struggled to safe inexperienced finance. “A enterprise in sustainability doesn’t imply it’s a sustainable enterprise… The corporate have to be a credit score worthy firm,” he stated.
Business banks should work with different monetary establishments, corresponding to smaller banks or bigger multinational banks, that will have completely different credit score threat profiles or lending priorities which permit them to finance smaller firms, instructed Wong.
“We activate the entire ecosystem to allow the cash to go in the direction of the stakeholders,” stated Wong.
On the Unlocking capital for sustainability Thailand occasion, panellists agreed that Thailand must make sustainability-related disclsoures obligatory so as to enhance inexperienced finance. The audio system had been: (from left) Sarinee Achavanuntakul, director of Local weather Finance Community Thailand; Chow Wong Yuen, chief sustainability officer of United Abroad Financial institution (Thai); Dr Ornsaran Pomme Manuamorn, senior monetary sector specialist on the World Financial institution. Picture: Eco-Enterprise
Sarinee noticed that Thai banks have been traditionally conservative, partly due to the 1997 Asian monetary disaster. Whereas this has made it harder for smaller firms to acquire inexperienced financing, she advisable that firms make the most of “derisking mechanisms” provided by multilateral improvement finance establishments (DFIs).
Though the US$300 billion annual goal for local weather finance agreed on at COP29 was disappointing, it’s nonetheless triple the earlier US$100 billion quantity, Sarinee stated. “So there’s already a rise within the commitments, and I feel the multilateral DFIs know that they now need to ship,” she stated.
Within the meantime, the Thai authorities has chosen to not look ahead to worldwide local weather finance handouts. Final month, Thailand grew to become the primary nation in Asia to difficulty sovereign sustainability-linked bonds, which acquired overwhelming demand from buyers. Indonesia and Singapore have issued sovereign inexperienced bonds. The bonds are tied to two nationwide local weather targets: decreasing greenhouse gasoline emissions by 30 per cent by 2030 and growing the annual registration of zero-emission street autos to 440,000 autos by the identical yr.
The issuance was elevated to 30 billion baht (US$871 million) after the unique 20 billion baht (US$581 million) quantity was oversubscribed by practically thrice. The nation plans to difficulty much more of such bonds subsequent yr, totalling 130 billion baht (US$3.8 billion).
“We have to be sure that these bonds are de facto inexperienced, de facto sustainable, and that they are going to result in affect on the bottom,” stated the UN’s Friberg-Storey.
The subsequent version of Eco-Enterprise’ flagship discussion board Unlocking capital for sustainability finance shall be held in Hong Kong, on 28 February 2025. Discover out extra particulars right here.
