By The Nation
The partnership aims to enable more sustainable business practices by the financial industry and tackle key challenges to address environmental, social, and governance (ESG) risks.
Addressing ESG risks is integral to sustainable financing. Subsequently, this will help Thailand’s financial sector bolster its regulatory and industry cooperation to improve risk management practices and enhance governance. The issuance of the Responsible Lending Guidelines by the Thai Bankers’ Association in 2019 — under BOT’s leadership — has already set a precedent, highlighting the importance of sustainable banking in translating the nation’s reform efforts into a competitive and resilient financial sector.
“Thailand recognises the importance of adopting ESG practices in the financial sector and has recently made significant progress including the launch of the Thai Bankers’ Association Sustainable Banking guidelines. However, more can and needs to be done to steer the Thai financial sector towards more sustainable practices,” said Nawaron Dejsuvan, assistant governor of the Bank of Thailand’s Financial Institutions Policy Group. She added, “The Bank of Thailand and the Thai financial sector can benefit greatly from IFC’s extensive experiences to support continued development of Thailand’s sustainable finance”.
As part of this collaboration, IFC will support BOT in developing a Sustainable Finance policy framework, which includes a sustainability roadmap and tools to help the banking sector improve ESG risk management practices. This includes directing more capital to sectors and projects that have environmental and social benefits.
IFC, supported by the government of Australia, will also assist BOT and other financial institutions in the country build capacity in sustainable finance. Further, the partnership will facilitate knowledge sharing with other central banks that are members of Asean (Association of South East Asian Nations) and with members of the Sustainable Banking Network (SBN).
“The Thai financial sector is a key contributor to the growth of regional economies. Sustainable finance by Thai banks will not only have an impact in Thailand, but also on neighbouring markets,” said Vikram Kumar, IFC Country Manager for Thailand.
“Together with the central bank, we will support the Thai banking sector to emerge as the regional sustainable finance leader, by sharing its capital and expertise with neighboring markets”, he added.