The Green Money Problem: Why Thailand's Small Firms Can't Get In

 

Only the largest corporates can afford the cost of proving they are green. Speakers set out how shared facilities and aggregators could change that.

 

Thailand has built much of the machinery of sustainable finance — a taxonomy, disclosure rules, transition loans and a coming climate fund. What it has not yet solved is who can afford to use it.

 

That was the central tension at the second panel of the Nation Visionary Club Roundtable, where a World Bank economist, a Bank of Thailand official, and representatives of two of the country's largest commercial banks described a system in which the cost of proving environmental performance excludes precisely the businesses that make up most of the economy.

 

 

 

Thirty to one

Dr Kwanpadh Suddhi-Dhamakit of the World Bank began with the global picture. Worldwide, he said, the ratio of money flowing into activities that harm the environment versus activities that protect it is roughly 30 to one.

 

"So the role of the banks is how you achieve this equation," he said. "We are in the middle, as the intermediary, to make sure the shift happened."

 

Public money alone was never going to deliver, he said, which is why the past two decades have been spent trying to move private capital — through ESG frameworks, impact investing and now digital assets. The World Bank's own lineage in this space runs back to the Clean Development Mechanism under the Kyoto Protocol.

 

"We are the midwives of the carbon market," he said.

 

For that capital to move at scale, investors need two things: simplicity and security. Simplicity comes from taxonomy — align with it and money can flow without bespoke analysis.

 

 

 

Security means confidence that funds are used for the stated purpose and that outcomes are real rather than greenwashed. He drew a distinction that framed much of the discussion.

 

"Financing green" means developing environmental projects that banks can lend against, which is hard because such projects lack the familiar risk profile of conventional investments.

 

"Greening finance" means the disclosure and transparency layer. Both are needed, he said — but once they are in place, transaction costs become the binding constraint, particularly for SMEs.

 

 

 

Standards as the new trade barrier

The World Bank's World Development Report 2025 focuses on standards, and Dr Kwanpadh argued that sustainability requirements are rapidly hardening into non-tariff measures.

 

Roughly 90 per cent of global trade measures are already non-tariff, and environmental requirements are joining them. Standards mean testing, certification and fees.

 

"They won't be able to—they won't even understand what standard they need to apply, let alone be able to pay for it," he said of smaller firms.

 

His proposed remedy is a shared facility: a single publicly backed platform where a small business enters a limited set of data points about itself and its market, then receives a clear action list, the templates it needs to complete, and a route to financing.

 

The same logic applies to carbon credits. Issuing a credit requires paid consultants, and the cost is prohibitive for a single small firm.

 

"Those who have done so know that SMEs will never be able to access carbon finance," he said.

 

 

 

 

 

The World Bank has therefore worked with the Thai government to establish an aggregator, with Krungthai Bank taking on the role of aggregating emission reductions from many small producers — rooftop solar, efficiency upgrades and similar measures — and bearing the cost of crediting on their behalf.

 

He offered a simple analogy: if everyone in a room orders from the same restaurant, nobody wants to pay for a separate delivery. Pooling emission reductions works the same way, cutting transaction costs across the whole economy.

 

 

 

Brown, less brown, then green 

Chananun Supadulya of the Bank of Thailand said Thailand's starting point demands a sequenced approach. Three features define the local context: a relatively small economy, high vulnerability to natural disasters, and a large share of activity concentrated in SMEs that are largely unprepared for a green transition.

 

"We cannot move straight from brown to green — that would harm too many people and undermine broader economic stability," she said. "We need to move from brown to less brown first, then toward green."

 

For small firms, she added, starting small is far better than doing nothing and being left behind.

 

The central bank's long-term work rests on five building blocks for a sustainable finance ecosystem, including the taxonomy—a common language for classifying environmentally friendly activity—and standard practices guiding banks on governance, strategy, risk management and risk culture.

 

Because that takes years, the regulator is also running shorter initiatives. Its two-year Financing the Transition project works with participating banks to move SMEs from brown to less brown.

 

It has expanded from financial products into a total solution covering awareness, emissions measurement, reduction planning, funding and certification. The initial focus is hospitality, with other sectors to follow.

 

A Green Innovation Sandbox aims to turn banks into a one-stop shop for clients, with results expected as early as next year.

 

 

 

The investability gap

Dr Yunyong Thaicharoen of SCB framed the imbalance in structural terms. Mitigation projects — renewable energy, electric vehicles, efficiency upgrades — generate identifiable income streams that banks can underwrite.

 

Adaptation, by contrast, is mostly about avoiding future losses, which is far harder to finance. Recent research bears this out.

 

A 2026 study by Climate Finance Network Thailand (CFNT) and the Puey Ungphakorn Institute for Economic Research (PIER) found that Thailand's local mitigation budget stood at 287.317 billion baht, concentrated heavily in transport, while the largest single adaptation allocation — water management — reached 167.869 billion baht.

 

Both budgets were heavily skewed towards five major cities, leaving the country's most climate-vulnerable provinces with allocations of less than 100 million baht each.

 

The funding source compounds the imbalance: more than 97 per cent of adaptation spending came from the public sector, with almost no private-sector participation.

 

Even so, available funding met only 15 to 18 per cent of estimated annual adaptation needs, which researchers put at between 165 billion and 192 billion baht a year. The pattern mirrors the global picture.

 

According to the Climate Policy Initiative (CPI) and the UN Environment Programme (UNEP), worldwide climate finance reached US$2.1 trillion in 2025, but annual growth has slowed to just 2 to 3 per cent.

 

Developing countries are estimated to need between US$310 billion and US$365 billion a year in adaptation finance by 2035; they currently receive roughly US$46 billion, even as public funding signals continue to weaken.

 

Thailand remains highly exposed to both flood and drought, and SCB EIC had that morning published research on the likely agricultural impact of a coming super El Niño event.

 

The country spends heavily on relief after disasters and too little on prevention beforehand.

 

Dr Yunyong argued that closing the gap requires addressing three broader shortfalls: a lack of clear implementation pathways for lower-carbon investment, a valuation gap that only government policy direction and multilateral de-risking tools such as blended finance or guarantees can close, and a mindset gap within industry, which still treats transition as the exception rather than the norm.

 

 

 

Teeth, not rhetoric

Dr Wichai Narongwanich described KBank's approach as building an "expressway" — bundling awareness, carbon accounting, transition advisory, vendor introductions and certification into a single route from brown to less brown to green.

 

The bank has also begun offering adaptation financing to smaller clients, including unsecured, low-interest funding to install flood protection equipment and financing for the vendors who supply it.

 

Both banks described greenwashing safeguards built on independent third-party verification of targets, controls on the use of proceeds, exclusion lists for sectors the banks will not serve, and screening against IFC performance standards.

 

 

Weenarin Lulitanonda of the Thailand Clean Air Network argued those safeguards need statutory force. Sustainable finance measures in Thailand remain voluntary, she said, which penalises banks that comply.

 

Privately, she said, bankers tell her to make the rules mandatory so everyone knows the benchmark. She also urged lenders to tie disbursement conditions on project finance directly to ESG requirements — "another way to actually have teeth rather than just rhetoric."

 

The Clean Air Bill, she noted, contains its own answer to the SME problem: a Clean Air Fund financed on the polluter-pays principle, used partly to help small firms that lack the money or knowledge to transition.

 

"It is the government stepping in through this transition," she said. "It's provisional support until it's marketable, and then the market takes over."