Banking industry promotes sustainable financial products
Kasikorn Research Centre believes that the development of financial products for sustainable growth is less likely this year as a result of the political uncertainty affecting both government and private sector investments.
However, that belief comes with a proviso: Progress is possible, the Centre says, with the establishment of a new government and the introduction of policies promoting various dimensions of greenhouse gas reduction, including private sector engagement.
Looking ahead, challenges in developing a significant sustainable financial market in Thailand arise from complexities and higher costs compared to regular debt issuance. Moreover, there are limited projects falling within the scope of interest, resulting in a lower proportion of sustainable financing in Thailand.
Despite being less extensive compared to the global scale, the presence of a suitable taxonomy and support from the government can accelerate the development and transition towards sustainable goals for both businesses and the country.
This aligns with the Bank of Thailand's policy of supporting the economy towards sustainability while simultaneously addressing environmental opportunities and risks. The financial sector policy includes evaluating environmental impacts and opportunities as part of decision-making and operations, along with providing necessary and sufficient financial products and services to stimulate and support business adaptation.
Financial institutions have announced an ESG (Environmental, Social, and Governance) declaration, focusing on environmental, social, and ethical considerations. The declaration sets a clear direction for the banking industry to align with Thailand's environmental goals using a colour code system.
Green indicates environmentally-friendly activities in line with the Paris Agreement, such as solar energy production. Yellow represents activities that reduce greenhouse gas emissions, while red indicates environmentally harmful activities that need gradual reduction, such as coal-based energy. Initiating change is not simple, just as with green finance, which is at the beginning stages and has potential for significant progress. However, cooperation from multiple components is necessary to achieve sustainable financial goals.
