Thailand Enters Phase II of Sustainable Finance Transition
Construction, waste management, manufacturing, agriculture, etc., are included in the second phase.
The current investment is not sufficient to meet Thailand's annual demand.
Thailand introduced a programme called Thailand Taxonomy last year to help transition the country sustainably and achieve its climate goals.
The nation is now moving into the second phase of this sustainable finance transition, which focuses on providing sustainable or green loans to five industries and helping them achieve net zero goals.
Thailand's Climate Goals
The Southeast Asian country has set the following climate goals:
Methane emissions will be reduced by at least 30% by 2030.
Achieve carbon neutrality by 2050.
Net-zero greenhouse gas emissions by 2065.
To this end, banks and other financial institutions have an increasingly important role in helping businesses in the country transition to more sustainable practices. They are now offering sustainable finance or ESG (Environmental, Social, and Governance) finance products, including green bonds and loans, with this goal in mind.
But the journey is a longer one. Thailand requires at least 400-500 billion baht each year to facilitate the transition to greener technologies.
Classification System
The first phase classified economic activities as follows:
Green: Helps reduce climate change.
Yellow: Works to reduce emissions.
Red: Does not support emission reduction.
In the energy sector, only about 10-12% of activities are classified as green, 50-60% as yellow, and 20% as red.
Other sectors, such as construction, real estate, manufacturing, agriculture, and waste management, which contribute to around 90% of Thailand's greenhouse gas emissions, will be included in the second phase.
There is an increasing demand for financial products that support green initiatives. Among these, green bonds and loans are very popular. Many businesses are investing in them to expedite their environmentally friendly practices.
The nation introduced green bonds in 2018, and ever since then, it has issued about 7-8 billion baht in green bonds and a total of 350 billion baht in sustainability-linked loans. But this is not enough to meet the annual demand.
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Source: SustaiNation
