A Thai Recipe for Green Finance: What’s Cooking in the World of Sustainable Finance?

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00:00 Hi everyone,

00:01 this is Fiona from the finance team here in Bangkok at the World Bank.

00:05 Um,

00:06 we've been doing a series of chats on green

00:09 and sustainable finance and what's happening here in Thailand,

00:12 and

00:13 we're really lucky today.

00:14 I've managed to grab my IFC colleague Rog Zhang.

00:17 Now Rog

00:18 has been the leader and,

00:19 and the developer and the and the starter

00:22 of the Sustainable Banking and finance Network,

00:25 the SB.

00:25 which has been going for several years now,

00:25 I think you have

00:29 it's almost 100 members,

00:30 isn't it?

00:31 It's over 90 members,

00:32 90 members,

00:34 and 70 something countries,

00:36 71 countries,

00:37 71 countries,

00:38 and I think you cover almost,

00:40 almost all of the banking assets in emerging markets,

00:43 so really,

00:44 really broad membership.

00:45 And you do these

00:47 super interesting

00:48 regular updates of what's happening in sustainable finance in

00:52 your member countries through the framework that you have.

00:55 I think it's been going since

00:56 2018.

00:57 2018,

00:58 you're right.

00:59 But we have the latest hot off the press.

01:01 The 2024 update is just out.

01:04 So I wanted to grab you to find out

01:07 where are the ASEAN countries and

01:09 where is Thailand in terms of this development?

01:12 How is it sitting in your framework compared to the rest of ASEAN?

01:16 Great.

01:16 It's so nice to see you,

01:17 uh,

01:17 Fiona,

01:18 and very exciting,

01:19 excited

01:20 exercise,

01:20 and,

01:21 uh,

01:21 maybe I'll start with the global.

01:23 So the key finding is that

01:25 all the SBM members across the emerging market

01:28 are making significant progress

01:30 with evidence,

01:31 uh,

01:32 despite the global

01:34 crisis and the multiple crisis.

01:35 Over the last two years

01:37 and specific

01:39 progress along the SBFN measurement framework,

01:41 the three pillars are,

01:43 first,

01:44 ESG,

01:44 environment,

01:45 social governance,

01:45 risk management.

01:47 It is regarded as the key backbone of

01:50 small finance to facilitate such small financing flow

01:53 and prevent

01:55 greenwashing,

01:56 and 39 countries have along such,

01:58 such frameworks.

01:59 OK.

02:00 The second pillar is the climate

02:02 and nature related risk management.

02:05 Glad to see nature in there.

02:07 Exactly.

02:07 added this year.

02:08 Excellent

02:09 and,

02:09 uh,

02:10 remarkable progress has been made along this pillar.

02:13 34 countries had launched such framework.

02:17 And third,

02:18 financing sensibility.

02:19 The opportunity side of the small finance.

02:22 47 countries

02:24 have launched

02:25 a thematic bonds taxonomies in similar framework

02:29 to promote,

02:30 uh,

02:31 financial flow toward green social

02:33 and sustainability goals.

02:35 I would like to highlight.

02:37 $759 billion US dollars in thematic bonds has been issued

02:42 in 45 SBFMN countries.

02:44 45 now in 2023,

02:47 and this is 25% increase compared to 2022.

02:50 So they really are accelerating exactly.

02:53 So

02:53 ASEAN countries,

02:54 um,

02:56 again,

02:56 significant progress has been made along the three pillars on ESG risk management.

03:02 It also regarded

03:03 not only ESG but disclosure.

03:05 I regard it as a backbone of a small finance.

03:08 So Indonesia,

03:10 Thailand,

03:11 I,

03:11 uh,

03:11 uh,

03:12 Cambodia,

03:13 Vietnam,

03:14 and the Philippines have launched such ESG risk management.

03:17 Interesting on Pillar 2,

03:18 the same five countries

03:20 have launched climate

03:22 risk management frameworks,

03:23 and the Philippines started to look at the nature

03:26 risk management frameworks,

03:27 yeah,

03:27 and Pillar 3,

03:29 the financing sensibility.

03:32 That,

03:32 um,

03:33 Cambodia,

03:33 Indonesia,

03:34 Philippines,

03:35 and Thailand

03:36 have developed

03:37 and aligned their,

03:38 their taxonomies along with

03:40 ASEAN taxonomies,

03:41 and this is great because it helps

03:44 with a cohesive,

03:45 uh,

03:46 the,

03:46 the regional approach and this interoperability interoperability,

03:49 the difficult word to pronounce,

03:51 but setting example of our regional integration

03:54 which we really need globally absolutely.

03:57 And so where is Thailand now?

03:59 How do you think Thailand can move up in terms of the framework and the results?

04:03 What's next for Thailand?

04:05 So Thailand has,

04:06 we have two members.

04:07 One is the banker,

04:09 uh,

04:09 Thai Bankers Association is a founding member,

04:11 joined 2012

04:13 with the central bank,

04:15 uh,

04:15 Bank of Thailand,

04:16 along as an observer for the network.

04:19 So this is a good basis for

04:21 public-private partnership and lead to significant progress

04:25 really for collaboration.

04:26 So Thailand moved since 2019,

04:30 moved from formulating stage,

04:32 substage.

04:33 To the developing stage,

04:34 meaning that

04:35 they deep dive,

04:36 uh,

04:36 dive deep into the implementation stage of the policy framework.

04:41 I particularly want to highlight that there's a small

04:43 finance roadmap launched in 2019 with IFC support,

04:47 and this is developed by an interagency working group along the public and private

04:54 and,

04:54 uh,

04:55 across banking and capital market,

04:57 um,

04:57 sectors,

04:58 and the roadmap and the direction.

05:00 And also frameworks for the small finance.

05:03 So that's

05:03 a kind of a guiding

05:05 framework for the whole uh ecosystem of financial system

05:09 in Thailand.

05:10 And you talk about recommendations,

05:12 you know,

05:13 progress made,

05:13 uh,

05:14 challenge remain.

05:15 I will look at the uh couple for recommendation and first

05:18 it's crucial for the financial institutions to adopt

05:21 standardized

05:22 and also the uh uh the the

05:24 reporting and disclosure practice to promote transparency.

05:27 Yes,

05:27 we've discussed that,

05:28 yeah.

05:28 The second is,

05:30 uh,

05:30 with the framework

05:31 climate risk management already in place,

05:33 it's about rigorous implementation,

05:35 always implementation.

05:37 And the third is the address the issue of capacity.

05:40 We heard again and again and again,

05:42 um,

05:42 from both regulators.

05:43 And the financial institution about capacity.

05:45 So I think IFC World Bank and other partners,

05:48 we should have a more systematic program

05:51 to build the capacity,

05:52 uh,

05:52 in the system,

05:53 uh,

05:53 in the

05:54 financial system.

05:55 And last but not least,

05:56 international collaboration and I have really reflect

05:59 the journey of uh

06:00 the Thailand and I think we should work more efficiently,

06:04 coordinate our efforts

06:06 to be more effectively.

06:07 So with that,

06:08 I think

06:09 with uh if

06:11 Thailand

06:12 kind of uh making progress along the four recommendation.

06:15 I see the Thailand

06:17 financial sector can make,

06:18 can accelerate

06:19 the

06:20 small finance journey.

06:21 I think there's a lot of lessons on the implementation,

06:23 as you say.

06:24 So really happy to follow up.

06:25 Um,

06:25 all of this is on your portal,

06:27 which is great.

06:27 There's now an SVFN

06:28 portal for all the data,

06:29 which is super helpful.

06:31 So

06:31 go and dig into that and more lessons on implementation to come.

06:35 Thank you,

06:36 Ron.

06:36 Thank you,

06:37 Fiona.

06:37 Great to speak to you.

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Hi everyone, this is Fiona from the finance team here in Bangkok at the World Bank. Um, we've been doing a series of chats on green and sustainable finance and what's happening here in Thailand, and we're really lucky today. I've managed to grab my IFC colleague Rog Zhang. Now Rog has been the leader and, and the developer and the and the starter of the Sustainable Banking and finance Network, the SB. which has been going for several years now, I think you have it's almost 100 members, isn't it? It's over 90 members, 90 members, and 70 something countries, 71 countries, 71 countries, and I think you cover almost, almost all of the banking assets in emerging markets, so really, really broad membership. And you do these super interesting regular updates of what's happening in sustainable finance in your member countries through the framework that you have. I think it's been going since 2018. 2018, you're right. But we have the latest hot off the press. The 2024 update is just out. So I wanted to grab you to find out where are the ASEAN countries and where is Thailand in terms of this development? How is it sitting in your framework compared to the rest of ASEAN? Great. It's so nice to see you, uh, Fiona, and very exciting, excited exercise, and, uh, maybe I'll start with the global. So the key finding is that all the SBM members across the emerging market are making significant progress with evidence, uh, despite the global crisis and the multiple crisis. Over the last two years and specific progress along the SBFN measurement framework, the three pillars are, first, ESG, environment, social governance, risk management. It is regarded as the key backbone of small finance to facilitate such small financing flow and prevent greenwashing, and 39 countries have along such, such frameworks. OK. The second pillar is the climate and nature related risk management. Glad to see nature in there. Exactly. added this year. Excellent and, uh, remarkable progress has been made along this pillar. 34 countries had launched such framework. And third, financing sensibility. The opportunity side of the small finance. 47 countries have launched a thematic bonds taxonomies in similar framework to promote, uh, financial flow toward green social and sustainability goals. I would like to highlight. $759 billion US dollars in thematic bonds has been issued in 45 SBFMN countries. 45 now in 2023, and this is 25% increase compared to 2022. So they really are accelerating exactly. So ASEAN countries, um, again, significant progress has been made along the three pillars on ESG risk management. It also regarded not only ESG but disclosure. I regard it as a backbone of a small finance. So Indonesia, Thailand, I, uh, uh, Cambodia, Vietnam, and the Philippines have launched such ESG risk management. Interesting on Pillar 2, the same five countries have launched climate risk management frameworks, and the Philippines started to look at the nature risk management frameworks, yeah, and Pillar 3, the financing sensibility. That, um, Cambodia, Indonesia, Philippines, and Thailand have developed and aligned their, their taxonomies along with ASEAN taxonomies, and this is great because it helps with a cohesive, uh, the, the regional approach and this interoperability interoperability, the difficult word to pronounce, but setting example of our regional integration which we really need globally absolutely. And so where is Thailand now? How do you think Thailand can move up in terms of the framework and the results? What's next for Thailand? So Thailand has, we have two members. One is the banker, uh, Thai Bankers Association is a founding member, joined 2012 with the central bank, uh, Bank of Thailand, along as an observer for the network. So this is a good basis for public-private partnership and lead to significant progress really for collaboration. So Thailand moved since 2019, moved from formulating stage, substage. To the developing stage, meaning that they deep dive, uh, dive deep into the implementation stage of the policy framework. I particularly want to highlight that there's a small finance roadmap launched in 2019 with IFC support, and this is developed by an interagency working group along the public and private and, uh, across banking and capital market, um, sectors, and the roadmap and the direction. And also frameworks for the small finance. So that's a kind of a guiding framework for the whole uh ecosystem of financial system in Thailand. And you talk about recommendations, you know, progress made, uh, challenge remain. I will look at the uh couple for recommendation and first it's crucial for the financial institutions to adopt standardized and also the uh uh the the reporting and disclosure practice to promote transparency. Yes, we've discussed that, yeah. The second is, uh, with the framework climate risk management already in place, it's about rigorous implementation, always implementation. And the third is the address the issue of capacity. We heard again and again and again, um, from both regulators. And the financial institution about capacity. So I think IFC World Bank and other partners, we should have a more systematic program to build the capacity, uh, in the system, uh, in the financial system. And last but not least, international collaboration and I have really reflect the journey of uh the Thailand and I think we should work more efficiently, coordinate our efforts to be more effectively. So with that, I think with uh if Thailand kind of uh making progress along the four recommendation. I see the Thailand financial sector can make, can accelerate the small finance journey. I think there's a lot of lessons on the implementation, as you say. So really happy to follow up. Um, all of this is on your portal, which is great. There's now an SVFN portal for all the data, which is super helpful. So go and dig into that and more lessons on implementation to come. Thank you, Ron. Thank you, Fiona. Great to speak to you.

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00:00 Hi everyone,

00:01 this is Fiona Stewart from the finance team here in Bangkok.

00:05 And we've been doing some updates on the really interesting developments

00:08 in the world of green and sustainable finance here in Thailand.

00:13 And we're super lucky to have my colleague Pom,

00:15 who's recently joined the team

00:17 here in Bangkok.

00:19 But Pom,

00:19 you've been working on taxonomies a lot,

00:21 specifically with the Climate bonds initiative.

00:25 We've just had the 2nd

00:27 round of the taxonomy

00:29 put out for consultation here in Thailand.

00:31 So

00:32 tell us what the updates are.

00:33 What are we seeing that Thailand's pushing the boundaries on taxonomies?

00:37 Yes,

00:37 thank you,

00:38 Fiona.

00:38 So as we know,

00:39 last year Thailand launched its taxonomy phase one,

00:43 and the phase one covers two sectors,

00:46 energy and transport.

00:48 Right now,

00:48 Thailand is in the process of developing phase two of the taxonomy.

00:52 And it will cover 4 more economic sectors

00:55 and that would be uh manufacturing,

00:57 agriculture,

00:59 buildings,

00:59 and waste management.

01:01 So with this,

01:02 uh,

01:02 after this phase is completed,

01:05 Thailand will have a set of taxonomies that

01:08 cover all major economic sectors that has a big

01:11 contribution to the emission profile of the country.

01:14 Excellent.

01:15 And

01:15 there's also the really interesting approach here in ASEAN where you have this.

01:19 Traffic lights,

01:20 so it's not just green.

01:22 You have an amber carrot category for what's transitioning towards green.

01:27 How does that work and how is that being built into Thailand?

01:30 Yes,

01:31 so under the taxonomy,

01:32 which we use to classify economic activities that could be

01:36 considered green from the perspective of greenhouse gas emission reduction.

01:42 So green is something that is today is net zero or already near net zero.

01:47 But the amber category is the activity for transition activities,

01:52 which means that activities that are not green today

01:54 but they have a pathway which is credible and ambitious

01:58 and could still contribute towards the green transition

02:01 uh with a pathway that is science based and also considering the local context.

02:08 So that is where the,

02:09 that is how the amber category in the traffic light taxonomy is designed.

02:14 And it follows some key principles of transition,

02:17 uh,

02:18 for example,

02:19 investment in transition

02:20 should not have clear immediate green options now,

02:24 but by investing in this asset right now,

02:27 it should not preclude uh future development of green technologies

02:31 and the transition activities today are still

02:34 should contribute to the Paris Agreement.

02:37 So these are the guiding principle of how the the amber category is designed.

02:41 But also the local context is important.

02:44 That's important.

02:44 We need to do a whole new one of these on transition at some point.

02:47 It's a really developing topic.

02:48 Just to finalize,

02:50 you mentioned

02:51 the local context.

02:53 How do you see we've now got almost 50 taxonomies around the world.

02:57 And as you say,

02:57 there are some

02:58 global principles,

02:59 but we have to reflect the local.

03:01 How does this,

03:02 this very ugly word of interoperability,

03:05 how do you see that going forward?

03:07 How's that going to work?

03:08 Yes.

03:08 I think there are also key principles by which uh

03:12 different taxonomies now are following in terms of their design.

03:16 For example,

03:17 they

03:18 are trying to maximize comparability in terms of the set of objectives

03:23 and uh how you categorize activities and also the technical

03:27 principles by which you set up the screening criteria.

03:31 So these are the key principles.

03:33 But going forward,

03:34 there are a lot of uh still uh.

03:36 Questions to be figured out,

03:37 for example,

03:39 the level of granularity at which you should ensure the interoperability,

03:43 not to mention some comparabilities and implementation supporting documents

03:49 that different countries will put in place.

03:52 So I think this is quite an exciting space where we'll

03:54 see a lot of developments in the next few years.

03:57 We need to come up with a new term,

03:58 and I think it's probably much more beautiful in Thai.

04:01 So more anon,

04:02 watch this space.

04:03 Thanks.

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Hi everyone, this is Fiona Stewart from the finance team here in Bangkok. And we've been doing some updates on the really interesting developments in the world of green and sustainable finance here in Thailand. And we're super lucky to have my colleague Pom, who's recently joined the team here in Bangkok. But Pom, you've been working on taxonomies a lot, specifically with the Climate bonds initiative. We've just had the 2nd round of the taxonomy put out for consultation here in Thailand. So tell us what the updates are. What are we seeing that Thailand's pushing the boundaries on taxonomies? Yes, thank you, Fiona. So as we know, last year Thailand launched its taxonomy phase one, and the phase one covers two sectors, energy and transport. Right now, Thailand is in the process of developing phase two of the taxonomy. And it will cover 4 more economic sectors and that would be uh manufacturing, agriculture, buildings, and waste management. So with this, uh, after this phase is completed, Thailand will have a set of taxonomies that cover all major economic sectors that has a big contribution to the emission profile of the country. Excellent. And there's also the really interesting approach here in ASEAN where you have this. Traffic lights, so it's not just green. You have an amber carrot category for what's transitioning towards green. How does that work and how is that being built into Thailand? Yes, so under the taxonomy, which we use to classify economic activities that could be considered green from the perspective of greenhouse gas emission reduction. So green is something that is today is net zero or already near net zero. But the amber category is the activity for transition activities, which means that activities that are not green today but they have a pathway which is credible and ambitious and could still contribute towards the green transition uh with a pathway that is science based and also considering the local context. So that is where the, that is how the amber category in the traffic light taxonomy is designed. And it follows some key principles of transition, uh, for example, investment in transition should not have clear immediate green options now, but by investing in this asset right now, it should not preclude uh future development of green technologies and the transition activities today are still should contribute to the Paris Agreement. So these are the guiding principle of how the the amber category is designed. But also the local context is important. That's important. We need to do a whole new one of these on transition at some point. It's a really developing topic. Just to finalize, you mentioned the local context. How do you see we've now got almost 50 taxonomies around the world. And as you say, there are some global principles, but we have to reflect the local. How does this, this very ugly word of interoperability, how do you see that going forward? How's that going to work? Yes. I think there are also key principles by which uh different taxonomies now are following in terms of their design. For example, they are trying to maximize comparability in terms of the set of objectives and uh how you categorize activities and also the technical principles by which you set up the screening criteria. So these are the key principles. But going forward, there are a lot of uh still uh. Questions to be figured out, for example, the level of granularity at which you should ensure the interoperability, not to mention some comparabilities and implementation supporting documents that different countries will put in place. So I think this is quite an exciting space where we'll see a lot of developments in the next few years. We need to come up with a new term, and I think it's probably much more beautiful in Thai. So more anon, watch this space. Thanks.

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00:00 Hi everyone,

00:01 this is Fiona Stewart from the finance team at the World Bank here in Bangkok.

00:06 And we're doing some updates on green finance and all

00:10 the very interesting developments that are happening here in Thailand.

00:14 And we're very lucky today we have with us Charika,

00:17 who is from the Thailand Research and Development Institute.

00:20 Tarika,

00:20 you've been

00:21 absolutely at the center

00:23 of

00:23 a lot of these discussions and developments.

00:26 One thing there's a lot of talk about globally is sustainability reporting,

00:31 how we build,

00:33 um,

00:33 econo beyond economic reporting,

00:35 finance,

00:35 bringing

00:36 uh environment,

00:37 bringing social issues into corporate and financial reporting.

00:41 Actually,

00:41 quite a lot happened in Thailand.

00:43 It's good reporting already here in Thailand.

00:45 How are the regulators,

00:47 how are the corporates

00:48 linking into this global phenomenon?

00:51 Yeah,

00:51 so,

00:51 uh,

00:52 thank you,

00:52 Fiona,

00:52 and

00:53 if you look at the sustainability reporting landscape in Thailand,

00:57 um,

00:57 some will see that some of the companies actually in DJSI index

01:01 and,

01:01 uh,

01:02 disclosing a lot of sustainability,

01:04 but that one's like a kind of more advanced one.

01:06 But when we talk about like Thai listed companies as a whole,

01:10 so there are.

01:11 Different,

01:11 um,

01:12 initiatives that stimulates the sustainability reporting

01:15 and make sustainability related information,

01:18 so we call it ESD information or environmental,

01:21 social and government information,

01:22 uh,

01:23 become more

01:24 important.

01:25 So the first one is the initiative by the Security Exchange Commission of Thailand.

01:30 So they

01:30 launched the filings that called 56-11 report.

01:36 The nickname is the one report that they try to uh integrate the,

01:40 uh,

01:40 Business sustainability into the disclosure

01:43 as well.

01:43 And one of the important things in there

01:45 is the requirement to disclose the greenhouse gas emissions

01:48 scope one and scope two.

01:50 even though this,

01:51 uh,

01:52 initiative is more or less like comply or explained.

01:55 So

01:55 you need to provide the information

01:57 or you need to provide the reason

02:00 why

02:00 you are you not and also provide the uh

02:02 pathway when you're collecting the data and when you decide

02:06 to disclose the data.

02:07 So this,

02:08 um,

02:08 makes all the company.

02:10 is in the listed um uh

02:11 uh

02:12 uh uh companies exchange

02:14 become more aware that we need to collect the data

02:16 and be aware of the greenhouse gas emissions now.

02:19 So I think that's one thing that's happening in Thailand started in 2021.

02:23 So this,

02:25 yeah,

02:25 so this information is actually kind of populating,

02:28 uh,

02:28 the information's in the market

02:30 and also that on top of what we call ESG data platform.

02:34 So,

02:35 uh,

02:35 besides just putting uh ESD or sustainability related information in the.

02:39 Reports.

02:40 So they have the kind of platform that,

02:42 uh,

02:42 companies need to put in the information in the tabular

02:46 formats.

02:47 So in the future,

02:47 if this,

02:48 um,

02:49 database is populated,

02:50 investor

02:51 or maybe like foreign investor or a researcher who are

02:55 interested in this kind of information can access this.

02:57 Very easily.

02:58 Yeah,

02:58 and then like compare and tabulate the information easier.

03:02 So this is also another

03:04 thing that,

03:04 uh,

03:05 uh,

03:05 stimulates the,

03:06 uh,

03:06 importance and also the amount of.

03:09 Uh,

03:10 ESD data populated in,

03:12 and I think there's another thing as well last year that,

03:14 um,

03:15 the SEC also launched the Thai ESD funds.

03:19 OK.

03:19 That can be used as a tax deduction scheme up to

03:23 100,000 baht.

03:25 So even though it's launched quite late in the year,

03:27 around like December,

03:29 um,

03:29 the flows and the monies that go into the funds are quite a lot.

03:32 And if you are the stocks or the companies that are gonna be under this fund radar,

03:37 you need to have,

03:38 ESD ratings or you need to disclose

03:41 ESD related data.

03:43 So this actually kind of so very joined up.

03:45 It's interesting,

03:46 lots of incentives.

03:47 And how do you think this links into what we're seeing internationally,

03:51 the ISSB,

03:52 this International Sustainability

03:55 Standards Board?

03:56 How does the Thai

03:58 experience link into the international?

04:01 So I think that's quite a,

04:02 um

04:04 a lot of people talk about this because it's the IFRS,

04:06 right,

04:06 and then the projects.

04:08 On,

04:08 uh,

04:08 harmonizing the uh financial uh reporting has been done before

04:13 and when this comes into the pictures,

04:15 a lot of companies kind of started to think about,

04:17 OK,

04:18 this is coming.

04:19 I'm not really sure when it's coming,

04:20 but it's coming for sure in Thailand.

04:21 Um,

04:22 I think currently the SEC actually studied,

04:25 um,

04:25 uh,

04:26 the possibility to localize.

04:29 So comparing what we have and also the gaps that,

04:32 um,

04:33 IFRS or the ISSB actually requires uh in their standard.

04:37 Yeah,

04:38 so there's another like big words that we talk about that uh

04:41 also proportionability.

04:43 Proportionability.

04:44 Yeah.

04:45 So like um

04:46 with the local context,

04:47 with the expertise,

04:48 how you actually localize that two way between the

04:51 benefits and also the cost that we incur in

04:54 like the Thai context.

04:55 Because if you're looking at like this listed company in Thailand,

04:58 uh around like 800

05:00 companies.

05:01 So maybe like

05:02 a top 100 companies,

05:04 people might think that our top companies are very good at this.

05:07 all this kind of information.

05:09 But if you look closer,

05:10 uh,

05:10 with this top 100 companies,

05:12 actually,

05:13 uh,

05:13 discrepancy between the amount and the quality of the data as well.

05:16 So we need to be careful when localizing this kind of big standards that coming in.

05:21 But I think what's,

05:22 uh,

05:22 the Thailand Stock Exchange,

05:24 that the exchange that they've done.

05:25 So they try to bridge the gap

05:27 between international standards and the local standards.

05:30 Because like,

05:30 um,

05:31 one of the standards,

05:32 uh,

05:32 GRI,

05:33 the Global Reporting Initiative,

05:34 that has been emerging for quite a while.

05:37 And a lot of tech companies picked up on

05:39 this as well

05:40 and um not all the listed companies are picking up on this.

05:43 So Stock Asian of Thailand uh has its own

05:46 sustainability reporting guidelines for the companies that are

05:49 not yet going up into the international standard.

05:53 So we have the analogies that

05:54 we have the kind of uh kindergarten which is like

05:57 56-1,

05:59 it's the elementary that you need to do.

06:01 And then we have the secondary school,

06:03 uh,

06:03 which is the set sustainability guidelines that you can.

06:06 Picked up and this is actually mapped with the

06:09 kind of international standards and localizing to Thai context.

06:12 They have one general standard and also 8

06:15 sector specific standards as well.

06:16 On top of that,

06:17 international,

06:18 if you go to universities like oh there's GRI,

06:20 IFRS all kinds of those,

06:22 so there's a journey and different

06:24 levels and layers that Thai listed company can choose too.

06:27 So lots of,

06:28 lots of education and lessons that we can learn from the Thai school.

06:31 So

06:31 more,

06:31 more to come and we'll definitely follow this journey.

06:33 But thank you,

06:34 Tarika.

06:34 Thank you.

06:35 Thank you.

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Hi everyone, this is Fiona Stewart from the finance team at the World Bank here in Bangkok. And we're doing some updates on green finance and all the very interesting developments that are happening here in Thailand. And we're very lucky today we have with us Charika, who is from the Thailand Research and Development Institute. Tarika, you've been absolutely at the center of a lot of these discussions and developments. One thing there's a lot of talk about globally is sustainability reporting, how we build, um, econo beyond economic reporting, finance, bringing uh environment, bringing social issues into corporate and financial reporting. Actually, quite a lot happened in Thailand. It's good reporting already here in Thailand. How are the regulators, how are the corporates linking into this global phenomenon? Yeah, so, uh, thank you, Fiona, and if you look at the sustainability reporting landscape in Thailand, um, some will see that some of the companies actually in DJSI index and, uh, disclosing a lot of sustainability, but that one's like a kind of more advanced one. But when we talk about like Thai listed companies as a whole, so there are. Different, um, initiatives that stimulates the sustainability reporting and make sustainability related information, so we call it ESD information or environmental, social and government information, uh, become more important. So the first one is the initiative by the Security Exchange Commission of Thailand. So they launched the filings that called 56-11 report. The nickname is the one report that they try to uh integrate the, uh, Business sustainability into the disclosure as well. And one of the important things in there is the requirement to disclose the greenhouse gas emissions scope one and scope two. even though this, uh, initiative is more or less like comply or explained. So you need to provide the information or you need to provide the reason why you are you not and also provide the uh pathway when you're collecting the data and when you decide to disclose the data. So this, um, makes all the company. is in the listed um uh uh uh uh companies exchange become more aware that we need to collect the data and be aware of the greenhouse gas emissions now. So I think that's one thing that's happening in Thailand started in 2021. So this, yeah, so this information is actually kind of populating, uh, the information's in the market and also that on top of what we call ESG data platform. So, uh, besides just putting uh ESD or sustainability related information in the. Reports. So they have the kind of platform that, uh, companies need to put in the information in the tabular formats. So in the future, if this, um, database is populated, investor or maybe like foreign investor or a researcher who are interested in this kind of information can access this. Very easily. Yeah, and then like compare and tabulate the information easier. So this is also another thing that, uh, uh, stimulates the, uh, importance and also the amount of. Uh, ESD data populated in, and I think there's another thing as well last year that, um, the SEC also launched the Thai ESD funds. OK. That can be used as a tax deduction scheme up to 100,000 baht. So even though it's launched quite late in the year, around like December, um, the flows and the monies that go into the funds are quite a lot. And if you are the stocks or the companies that are gonna be under this fund radar, you need to have, ESD ratings or you need to disclose ESD related data. So this actually kind of so very joined up. It's interesting, lots of incentives. And how do you think this links into what we're seeing internationally, the ISSB, this International Sustainability Standards Board? How does the Thai experience link into the international? So I think that's quite a, um a lot of people talk about this because it's the IFRS, right, and then the projects. On, uh, harmonizing the uh financial uh reporting has been done before and when this comes into the pictures, a lot of companies kind of started to think about, OK, this is coming. I'm not really sure when it's coming, but it's coming for sure in Thailand. Um, I think currently the SEC actually studied, um, uh, the possibility to localize. So comparing what we have and also the gaps that, um, IFRS or the ISSB actually requires uh in their standard. Yeah, so there's another like big words that we talk about that uh also proportionability. Proportionability. Yeah. So like um with the local context, with the expertise, how you actually localize that two way between the benefits and also the cost that we incur in like the Thai context. Because if you're looking at like this listed company in Thailand, uh around like 800 companies. So maybe like a top 100 companies, people might think that our top companies are very good at this. all this kind of information. But if you look closer, uh, with this top 100 companies, actually, uh, discrepancy between the amount and the quality of the data as well. So we need to be careful when localizing this kind of big standards that coming in. But I think what's, uh, the Thailand Stock Exchange, that the exchange that they've done. So they try to bridge the gap between international standards and the local standards. Because like, um, one of the standards, uh, GRI, the Global Reporting Initiative, that has been emerging for quite a while. And a lot of tech companies picked up on this as well and um not all the listed companies are picking up on this. So Stock Asian of Thailand uh has its own sustainability reporting guidelines for the companies that are not yet going up into the international standard. So we have the analogies that we have the kind of uh kindergarten which is like 56-1, it's the elementary that you need to do. And then we have the secondary school, uh, which is the set sustainability guidelines that you can. Picked up and this is actually mapped with the kind of international standards and localizing to Thai context. They have one general standard and also 8 sector specific standards as well. On top of that, international, if you go to universities like oh there's GRI, IFRS all kinds of those, so there's a journey and different levels and layers that Thai listed company can choose too. So lots of, lots of education and lessons that we can learn from the Thai school. So more, more to come and we'll definitely follow this journey. But thank you, Tarika. Thank you. Thank you.

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00:00 Good morning,

00:01 everyone.

00:02 This is Fiona Stewart from the finance team

00:04 here in Bangkok.

00:06 And we are bringing you a series of

00:08 really interesting interviews on

00:10 the latest state of play in green finance in Thailand,

00:14 because there's a lot going on here in Thailand

00:16 that we think other countries can learn from.

00:19 And it's my pleasure.

00:19 We're going to talk today to Doctor Sungkhin,

00:22 who's the president of the Thai Bond Market Association.

00:26 Now Doctor Stink,

00:27 you,

00:27 you've actually been very leading here in Thailand in terms of green bonds,

00:31 these instruments that help

00:33 direct capital to

00:35 low,

00:35 um,

00:35 carbon and green and environmental projects.

00:38 You've really been quite an active market here in Thailand.

00:42 Tell us about

00:43 the latest trends,

00:44 and do you think there's still quite a strong pipeline of issuance coming?

00:47 Yeah,

00:48 well,

00:48 uh,

00:48 actually,

00:49 uh,

00:50 we,

00:50 we have been

00:51 seeing

00:52 strong

00:53 bonds issuance in,

00:54 in the past.

00:56 Uh,

00:56 nevertheless,

00:57 I think,

00:57 uh,

00:57 the overall market of bonds,

01:00 uh,

01:00 uh,

01:00 slowing down in the past,

01:02 uh,

01:03 one or two years.

01:03 Nevertheless,

01:04 I think that,

01:05 uh,

01:05 we still have,

01:07 uh,

01:07 a lot of interest

01:09 from both sides,

01:10 from the investor sides and Also

01:12 from the issuers side because as you,

01:15 uh,

01:15 as we all know that,

01:16 uh,

01:17 the transition of the business is so

01:20 important

01:21 and,

01:22 uh,

01:22 I,

01:22 I think that,

01:23 uh,

01:23 in Thailand,

01:24 we not only have the,

01:26 the active

01:27 Uh,

01:28 corporate size,

01:29 but we also have the,

01:30 the,

01:31 the size of the government as well.

01:33 Yes,

01:33 and,

01:34 and,

01:34 uh,

01:35 in,

01:35 in so far we already have 720 billion

01:40 baht with of ESG bonds in Thailand

01:43 and,

01:44 uh,

01:45 recently we still see,

01:47 uh,

01:47 a few,

01:48 I think,

01:48 uh,

01:48 at least 4,

01:50 issuers are coming in this year

01:52 and some of them will be.

01:55 Uh,

01:56 the,

01:56 the blue bond,

01:58 yeah,

01:58 that's from the Exim Bank

02:00 and uh the sustainability links bond,

02:04 yeah,

02:04 and also,

02:07 right,

02:08 so

02:11 yes,

02:12 yes,

02:12 actually,

02:13 last year we also

02:15 Uh,

02:16 do have the blue bonds,

02:18 uh,

02:18 coming out.

02:19 That's from the TTB Bank,

02:21 right?

02:21 And this year,

02:22 probably will come from the Exim Bank.

02:26 And there's also this trend I think quite a

02:28 few social bonds that's also a trend I think.

02:32 That's right.

02:34 Um,

02:34 I think that come from two sides.

02:36 Um,

02:37 one part of it.

02:38 So,

02:38 of course,

02:39 we know that,

02:40 uh,

02:40 from the use of receipts

02:42 kind of financing,

02:43 uh,

02:43 we have the green,

02:44 we have the socio and the sustainability.

02:47 Um,

02:49 During the COVID,

02:50 yeah,

02:51 there was a need

02:52 in the social support

02:53 and therefore,

02:54 uh,

02:55 our government,

02:56 uh,

02:56 had,

02:57 uh,

02:57 many projects.

02:58 Yeah,

02:59 one of the more famous ones is called in Thai,

03:02 that means 50/50.

03:04 Um,

03:05 in that situation,

03:06 the government will put half of the money

03:09 and people put another half,

03:10 and we have this digital,

03:12 uh,

03:13 sort of this.

03:13 wallet to,

03:15 to bring this together and,

03:17 and I think that has been helping quite a lot and therefore

03:22 those kind of sustainability bonds,

03:25 mostly

03:27 social

03:27 because it's come to,

03:28 to help those people during that time and that was very

03:32 helpful.

03:33 And,

03:33 and also the other side of the social bonds.

03:36 Uh,

03:36 for example,

03:37 the gender bonds

03:38 that come from the,

03:40 uh,

03:40 bankruptcy that come to,

03:43 uh,

03:44 support the

03:46 lady entrepreneur or executives,

03:49 that's part of it.

03:50 And,

03:50 and also we do have these

03:53 government housing banks,

03:55 government saving banks,

03:56 which in those uh

03:59 Corporations,

04:00 their mission

04:02 is already

04:03 in this area and therefore

04:07 that's,

04:08 that's right.

04:08 And,

04:09 and,

04:09 and therefore when they,

04:11 they have those mission as the purpose of the organization and they push it through

04:17 this uh financing and it has been,

04:20 uh,

04:21 helpful,

04:23 yeah,

04:23 it's a very successful way to yeah,

04:24 yeah,

04:25 and also,

04:26 uh,

04:27 one of the uh

04:28 Private sector,

04:30 uh,

04:30 issuers,

04:31 for example,

04:32 uh,

04:32 Toyota,

04:33 I think,

04:33 they also have this,

04:35 uh,

04:35 kind of socio that's linked to the vehicle for the,

04:40 the,

04:40 the,

04:40 the poorer people,

04:41 that's,

04:42 for example,

04:43 and,

04:43 and apart from

04:44 the,

04:45 the greener vehicles,

04:46 uh,

04:46 that's for example.

04:48 So you really are on the edge,

04:49 the blue,

04:50 the social,

04:50 you're really on the leading edge here.

04:53 What about the sustainability linked bonds?

04:56 This is the idea where it's

04:57 not the use of proceeds,

04:58 but you change the cost of capital if you meet our targets.

05:02 There's been a few here,

05:04 but there's been some questions around them.

05:06 Do you think there'll be some more issuance of these SLDs in?

05:10 Yeah,

05:10 I,

05:10 I think we still,

05:12 uh,

05:12 can,

05:12 can,

05:13 can see them.

05:14 Um,

05:15 of course,

05:16 uh,

05:17 there's challenge for,

05:18 for the SLB because,

05:20 uh,

05:21 you,

05:21 you have to identify the FBI

05:24 and you also have to set the

05:26 challenging enough targets

05:29 and deliver it.

05:30 So,

05:31 so that,

05:31 that wasn't easy,

05:33 but we have a few companies that have been

05:36 successful in,

05:37 in,

05:37 uh,

05:38 coming up with that.

05:39 Um,

05:40 but also,

05:41 uh,

05:41 of course,

05:42 these challenges are still there,

05:44 but we do see,

05:45 uh,

05:46 a few organizations is working

05:49 on it as well.

05:50 And,

05:51 um,

05:51 so I think if we,

05:53 we,

05:54 uh,

05:54 look at it from two aspects.

05:56 Uh,

05:57 the first aspect is from the issuer side.

05:59 Yeah,

06:00 the issuers side has what I have to say,

06:02 the difficulty of identifying the KPI and challenging,

06:07 you know,

06:08 uh,

06:08 SPI.

06:10 And then from the investors side,

06:12 there is also some

06:14 group of investors who

06:16 usually when they invest in this

06:20 bonds,

06:21 they

06:22 Prefer

06:24 to

06:25 a book that value

06:27 as a,

06:29 a

06:30 stable investment that,

06:32 uh,

06:33 continuing to,

06:34 to growing if they choose to hold to maturity which is

06:38 uh nature of many institutional investors.

06:41 Nevertheless,

06:42 uh,

06:42 because

06:43 of the,

06:45 the,

06:45 uh

06:46 Possible

06:48 Vary of the cash flows

06:51 that make some of these organizations reluctant because

06:55 uh from the accounting standard they probably have to get uh

07:01 it's not something they,

07:02 they like or their,

07:04 their beneficiary

07:06 like,

07:07 um,

07:07 but that I think uh is some

07:09 of the,

07:10 the,

07:11 the smaller issue,

07:12 I mean.

07:12 Because

07:13 yeah,

07:14 yeah,

07:15 because

07:15 some of those investors who have this interest,

07:19 for example,

07:19 mutual funds companies,

07:21 they used to market to market already,

07:24 so they don't have problems with that,

07:26 and some of the issues,

07:28 uh,

07:28 issuers start to

07:31 change the way they,

07:33 they,

07:33 they measure or they reward or punish themselves.

07:37 Um,

07:38 for example,

07:39 some change to buy the carbon

07:42 credit in state,

07:42 and that make the,

07:44 the,

07:46 uh,

07:46 the variability of cash flow,

07:49 uh,

07:50 go out,

07:50 uh,

07:50 it,

07:51 it was solved.

07:52 So I,

07:53 I think that in,

07:54 in,

07:54 in general,

07:55 uh,

07:56 we still can,

07:57 can see this

07:58 sustainability,

08:00 uh,

08:00 linked one.

08:02 Very glad to hear.

08:04 Lots going on.

08:05 There's really good statistics,

08:06 by the way,

08:06 on your website.

08:07 Very good statistics about the market.

08:10 Really look forward to carrying on the conversation,

08:12 and we'll,

08:13 we'll update you as more issuances come through during the year.

08:16 But thank you so much.

08:17 Thank you.

08:18 Thank you very much.

08:18 Nice to see you.

08:19 Thank you.

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transcript

Good morning, everyone. This is Fiona Stewart from the finance team here in Bangkok. And we are bringing you a series of really interesting interviews on the latest state of play in green finance in Thailand, because there's a lot going on here in Thailand that we think other countries can learn from. And it's my pleasure. We're going to talk today to Doctor Sungkhin, who's the president of the Thai Bond Market Association. Now Doctor Stink, you, you've actually been very leading here in Thailand in terms of green bonds, these instruments that help direct capital to low, um, carbon and green and environmental projects. You've really been quite an active market here in Thailand. Tell us about the latest trends, and do you think there's still quite a strong pipeline of issuance coming? Yeah, well, uh, actually, uh, we, we have been seeing strong bonds issuance in, in the past. Uh, nevertheless, I think, uh, the overall market of bonds, uh, uh, slowing down in the past, uh, one or two years. Nevertheless, I think that, uh, we still have, uh, a lot of interest from both sides, from the investor sides and Also from the issuers side because as you, uh, as we all know that, uh, the transition of the business is so important and, uh, I, I think that, uh, in Thailand, we not only have the, the active Uh, corporate size, but we also have the, the, the size of the government as well. Yes, and, and, uh, in, in so far we already have 720 billion baht with of ESG bonds in Thailand and, uh, recently we still see, uh, a few, I think, uh, at least 4, issuers are coming in this year and some of them will be. Uh, the, the blue bond, yeah, that's from the Exim Bank and uh the sustainability links bond, yeah, and also, right, so yes, yes, actually, last year we also Uh, do have the blue bonds, uh, coming out. That's from the TTB Bank, right? And this year, probably will come from the Exim Bank. And there's also this trend I think quite a few social bonds that's also a trend I think. That's right. Um, I think that come from two sides. Um, one part of it. So, of course, we know that, uh, from the use of receipts kind of financing, uh, we have the green, we have the socio and the sustainability. Um, During the COVID, yeah, there was a need in the social support and therefore, uh, our government, uh, had, uh, many projects. Yeah, one of the more famous ones is called in Thai, that means 50/50. Um, in that situation, the government will put half of the money and people put another half, and we have this digital, uh, sort of this. wallet to, to bring this together and, and I think that has been helping quite a lot and therefore those kind of sustainability bonds, mostly social because it's come to, to help those people during that time and that was very helpful. And, and also the other side of the social bonds. Uh, for example, the gender bonds that come from the, uh, bankruptcy that come to, uh, support the lady entrepreneur or executives, that's part of it. And, and also we do have these government housing banks, government saving banks, which in those uh Corporations, their mission is already in this area and therefore that's, that's right. And, and, and therefore when they, they have those mission as the purpose of the organization and they push it through this uh financing and it has been, uh, helpful, yeah, it's a very successful way to yeah, yeah, and also, uh, one of the uh Private sector, uh, issuers, for example, uh, Toyota, I think, they also have this, uh, kind of socio that's linked to the vehicle for the, the, the, the poorer people, that's, for example, and, and apart from the, the greener vehicles, uh, that's for example. So you really are on the edge, the blue, the social, you're really on the leading edge here. What about the sustainability linked bonds? This is the idea where it's not the use of proceeds, but you change the cost of capital if you meet our targets. There's been a few here, but there's been some questions around them. Do you think there'll be some more issuance of these SLDs in? Yeah, I, I think we still, uh, can, can, can see them. Um, of course, uh, there's challenge for, for the SLB because, uh, you, you have to identify the FBI and you also have to set the challenging enough targets and deliver it. So, so that, that wasn't easy, but we have a few companies that have been successful in, in, uh, coming up with that. Um, but also, uh, of course, these challenges are still there, but we do see, uh, a few organizations is working on it as well. And, um, so I think if we, we, uh, look at it from two aspects. Uh, the first aspect is from the issuer side. Yeah, the issuers side has what I have to say, the difficulty of identifying the KPI and challenging, you know, uh, SPI. And then from the investors side, there is also some group of investors who usually when they invest in this bonds, they Prefer to a book that value as a, a stable investment that, uh, continuing to, to growing if they choose to hold to maturity which is uh nature of many institutional investors. Nevertheless, uh, because of the, the, uh Possible Vary of the cash flows that make some of these organizations reluctant because uh from the accounting standard they probably have to get uh it's not something they, they like or their, their beneficiary like, um, but that I think uh is some of the, the, the smaller issue, I mean. Because yeah, yeah, because some of those investors who have this interest, for example, mutual funds companies, they used to market to market already, so they don't have problems with that, and some of the issues, uh, issuers start to change the way they, they, they measure or they reward or punish themselves. Um, for example, some change to buy the carbon credit in state, and that make the, the, uh, the variability of cash flow, uh, go out, uh, it, it was solved. So I, I think that in, in, in general, uh, we still can, can see this sustainability, uh, linked one. Very glad to hear. Lots going on. There's really good statistics, by the way, on your website. Very good statistics about the market. Really look forward to carrying on the conversation, and we'll, we'll update you as more issuances come through during the year. But thank you so much. Thank you. Thank you very much. Nice to see you. Thank you.

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