InfoQuest (July 25, 2023)- Mr. Rungroj Nongnuch, Deputy Director of the Financial Stability Research Institute of the Bank of Thailand, said at the opening ceremony of the seminar on changing and updating the environmental, social and governance framework rules that Thailand has already passed the stage and point where it is necessary and important to consider the environmental, social and governance framework agreement when conducting business activities, especially considering the environmental issues, global warming issues and various disaster issues that have changed significantly and have negative impacts due to climate change.
In essence, Thailand ranks towards the end among nations capable of managing natural disasters. Out of 48 such nations, Thailand ranks 39th. It's speculated that, without taking any action in 2020, Thailand could have lost 43% of its GDP, causing significant economic damage. This necessitates swift action by Thailand to lead in the implementation and development of the ESG framework, particularly in terms of environmental issues and establishing stability.
Mr. Rungroj highlighted that Thailand will face pressure from abroad on environmental measures, including different work philosophies from foreign businesses and the EU, which is dedicated to reducing greenhouse gas emissions. These will encourage Thailand to constantly adjust and prepare. For example, on October 1, 2023, the European Union is preparing to impose a carbon tariff, which will affect some Thai products, such as cement, steel and fertilizer, which have an annual export value of more than 18 billion baht, and more than 1,000 entrepreneurs may be affected. Meanwhile, other developed countries are expected to intensify their environmental efforts.
Japan, as a major player in the fuel-powered vehicle industry, is shifting towards increased electric vehicle production, transitioning to more environmentally friendly industries, including agriculture, catering, and various tourism sectors. These industries prioritize not just human health, but also environmental impact. This necessitates Thailand to adjust and innovate in its industries.
Mr. Rungroj noted that the Bank of Thailand had relevant policies concerning the ESG framework and has been promoting them for quite some time. For example, ongoing social policies to address household debt, and financial institution governance policies emphasizing fair and just customer service. In environmental policy, financial institutions view this as a support medium for continuous adaptation to changing needs.
Mr. Rungroj said that the implementation and introduction of central bank policies should not lag behind or run ahead of global trends, allowing time for adjustments and adaptation. We will not leave anyone behind.
In summary, the Bank of Thailand's environmental initiatives focus on five key areas. The two that have been launched are: Adjusting financial business processes to link with the environment (started in August 2022) and the Thai Classification Plan (launched in June 2023). This is a positive signal from financial institutions starting to consider the potential business and credit risks brought about by the environment, including the goal of expanding green economic activities in Thailand.
The remaining three areas that need to be advanced are the development of an environmental database system, the support of self-adjustment mechanisms related to environmental considerations, and the enhancement of financial literacy (which will continue to be made more specific).
Source: InfoQuest, by Jirayuth Chansongsakul/Kamaporn Kittisampan/Ratchada Kongkhuntien, translated by Xinhua Silk Road
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