Thailand ups effort to classify economic activities based on environment impact
The Bank of Thailand (BOT) says it is accelerating issuance of standards to classify economic activities based on their environmental impact, to help the country cope with climate change.
The so-called Thailand Taxonomy standards will aid green financing as companies transition to the government’s BCG (Bio-Circular-Green) economic model for sustainable development.
The new standards are being issued to combat increasing effects from global climate change, said Wipawin Promboon, BOT’s senior director of financial institutions strategy.
The Thailand Taxonomy will enable financial institutions to manage environment risks and offer businesses loans and other financial services to make their operations eco-friendly, Wipawin explained.
She said businesses should check whether they were environmentally friendly and find out how to adapt to green practises.
She added that the Thailand Taxonomy working team has been set up to ensure that the new standards meet the Kingdom’s context and international standards. The working team consists of representatives from the BOT, Securities and Exchange Commission (SEC), Thai Chamber of Commerce, Federation of Thai Industries, and the energy and transport ministries.
"We are currently in the first phase, starting with the energy and transport sector which are significant activities in Thailand's economy and emit a large amount of greenhouse gas," she said.
The SEC said it is also promoting Environmental, Social and Governance (ESG) standards to boost Thai capital market growth in a sustainable way.
The SEC has issued regulations on green, social and sustainability (GSS) bonds, said Tayakorn Jitrakuldhacha, director of the SEC's bond department.
He added that more than 30 Thai businesses have issued a total 500 billion baht worth of GSS bonds.
He predicted the GSS bond market will grow as it accounts for only 3% of Thailand's bond market and currently covers only a limited number of industries.
"We believe that Thailand Taxonomy will enable businesses raise funds in line with their context," he said. "Meanwhile, it will enable fund managers to arrange their investment portfolio to meet investors' demand."
Ornsaran Manuamorn, from climate action organisation Climate Bonds Initiative, said Thailand Taxonomy will help determine which investments are environmentally friendly, boosting confidence among investors and other financial market players.
She said similar standards have been issued by the European Union, Malaysia, Russia and Mongolia and are currently being prepared in Thailand’s neighbours Indonesia, Singapore and Vietnam.
"Thailand Taxonomy will create transparency in environment-friendly investment, attract foreign investment, enable businesses to evaluate risk, and help the government promote sustainability and climate action," she said.
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