THURSDAY, March 28, 2024
nationthailand

No loans for unsustainable plans, Veerathai urges

 No loans for unsustainable plans, Veerathai urges

Bank of Thailand governor Veerathai Santiprabhob has urged all financial institutions to discontinue practices that might pose environmental, social and governance (ESG) risks.

 

Such risks directly impact the business prospects of banks as well as their clients, thus presenting a threat to the country’s economic stability, Veerathai said at Tuesday’s Bangkok Sustainable Banking Forum.

As an example, he said commercial banks should intensify their regulations covering loans to unsustainable projects that might harm the environment.

Climate change and natural disasters resulting from environmentally unsustainable projects can directly impact businesses, leading to loan-repayment risks, he warned.

Financial institutions that provide capital for unsustainable projects have a responsibility to actively reduce ESG risks, he said.

Veerathai commended Thai banks such as Siam Commercial Bank and Kasikorn Bank for promoting sustainable investments in Southeast Asia and being included in the Dow Jones Sustainability Indices.

The Stock Exchange of Thailand compiled its own “Thailand Sustainability Investment” list for 2018, which included the Bank of Ayudhya, Bangkok Bank and TMB Bank.

Veerathai urged financial institutions to continue focusing on reducing ESG risks by increasing internal standards for loans sought by unsustainable businesses.

Jeanne Stampe, head of Asia sustainable finance at the World Wide Fund for Nature, noted that the Thai Bankers Association (TBA) has been working with her organisation on standardising sustainable banking throughout the country.

The TBA planned later in the day to release its official sustainable banking guidelines for commercial banks.

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