Central bank to launch first phase of sustainability guidelines for businesses

The announcement was made by BOT deputy governor Ronnadol Numnonda at a seminar at the Siam Kempinski Hotel in Bangkok on Wednesday.

He said the Thai version of the classification system, which defines criteria for economic activities, is a set of new rules with the goal of raising awareness about the dangers of climate change in all sectors.

The first phase of Thailand Taxonomy aims to ensure the development of sustainable business, Ronnadol said.

Misunderstanding of the Thailand Taxonomy is widespread, he added, explaining that although the project includes “tax” in its title, it does not collect taxes. Instead, the taxonomy is a set of criteria for classifying types of businesses in terms of environmental protection, he said.

Ronnadol said the Thailand Taxonomy is in line with Asean Taxonomy, EU Taxonomy and Climate Bonds Taxonomy, which all aim at reaching net zero by 2050 and preventing the global temperature from rising more than 1.5 degrees Celsius in line with the Paris Agreement.

The Climate Bonds Taxonomy is a global standard that was developed by the Climate Bonds Initiative. It is based on the latest climate science and covers six economic sectors: energy, transport, buildings, land use, water, and waste. The taxonomy uses a traffic light system to indicate whether an economic activity is considered to be "green" (green light), "potentially green" (orange light), or "not green" (red light).

The EU Taxonomy is a regional standard that was developed by the European Commission. It covers six economic sectors: energy, industry, buildings, transport, agriculture, and waste. The taxonomy uses a more detailed scoring system than the Climate Bonds Taxonomy, and it also includes criteria for economic activities that contribute to adaptation to climate change.

Ronnadol said the Thailand Taxonomy classifies economic activities into three groups based on the traffic light system. Green businesses are environment-friendly and include those that use wind and solar energies. Yellow businesses are those with potential to be developed into green businesses. Red businesses are those deemed not environmentally protective at all, like coal-fired power plants, and they should be phased out.

Ronnadol said all sectors could support the Thailand Taxonomy. For example, financial institutions may issue green bonds for the sake of environmental protection and approve loans for green businesses. He said corporations should also make public their environmental data for investors to consider whether to invest in their stocks. Government agencies may issue policies to deal with climate issues in line with the Thailand Taxonomy, Ronnadol said.