Resident Coordinator's remarks at the GCNT Annual Forum 2021

It’s a pleasure to address you all here today. Let me first thank His Excellency Prime Minister Prayut Chan-o-cha for his leadership, His Excellency Minister Varawut Silpa-archa for his participation, and Khun Supachai, Chairperson of GCNT for his insightful remarks.

These discussions fit within the context of the Prime Minister’s addresses during the recent UN General Assembly, specifying Thailand’s commitments on reducing emissions, food systems sustainability, and the BCG model premised on balanced development.

In recent weeks, I’m glad to say that there has been real momentum going into this forum. Last month, we completed the Sustainable Thailand event, in which 43 financial institutions committed to the UN Principles for Responsible Investment and Banking.

We have also been ramping up bilateral discussions with business leaders across the board. Two key themes have emerged: 1) the private sector is committed to sustainability and in many cases more ambitious than official targets; and 2) the economy needs to move in unison, which makes platforms such as the GCNT all the more important.

We also need to talk about momentum in the global context. Ahead of the COP26 conference, the IPCC has issued its clearest warning to date – to keep the target of 1.5 degrees within reach, net-zero emissions by 2050 are essential, and global emissions need to fall by more than 7% each year over the next decade.

The UN climate agency has also reported that nationally determined commitments are nowhere near meeting that target, with emissions actually set to increase by 16% by 2030. This is headed towards 2.7 degrees of heating by the end of the century, a “catastrophic pathway” in the words of the UN Secretary-General.

The private sector already understands this shared social responsibility towards future generations, to your own children and grandchildren. 

What is new, however, is the growing consensus and resolve to take action now, especially in the context of the COVID stimulus. Last year, the GCNT already made commitments in excess of US$40 billion over 10 years to advance the SDGs, and we need to build on that progress.

I cannot emphasize enough – we want to be ahead of this curve. Businesses are adjusting to decarbonization because it is inevitable, but also because this period of creative disruption is the key commercial opportunity of our time.

Today, I want to focus on three themes: structural transformation, the role of the GCNT, and the enabling ecosystem that we need.

The good news is that economic transformation is already built into the national development plan, which places the Bio-Circular-Green economy at the center.

This model based on sustainability has deep roots in Thailand, inspired by the Sufficiency Economy Philosophy. We must recognize that this structural transition requires urgently moving away from a fossil fuel-dependent economy and towards a much greater share of renewables in the energy mix.

UN policy advice is aligned with this transformation. ESCAP has already set forth a “build forward better” package strengthening climate and clean energy, as well as enhanced access to healthcare and social protection, and digital technologies. For Thailand, the package could reduce the number of poor people by almost 600,000, increase output by 10%, and cut carbon emissions by about 27% by 2030.

In the short term, and in a tough economic environment, access to capital, investments in sustainability and transforming operations will be challenging. Growth for this year is projected at 1.3%, targeted to rise to 4 to 5% next year.

In discussions with financial institutions, we see that while sustainable funding is limited, so too are available investments. At present, there are 146 ESG stocks on the SET, a number that will continue to increase in line with investor appetite.

Businesses that embed ESG in their operations are increasingly more attractive, with highlighted growth sectors in Thailand including electric vehicles, renewable energy and healthcare.

Leaders in industry also agree that ESG reduces risk and increases benefits for portfolios with higher rates of returns, improved productivity and efficiency, and reduced waste. Banks report that ESG lending has also enabled them to weather the pandemic better, because stocks outperformed, with net returns more sustainable and shareholders more confident.

These measures are good for the planet, essential for long-term sustainability, and also better for the bottom line.

In this regard, we need to address the so-called “missing middle”. Investing in sustainability can be an uphill road for SMEs, and there are varying levels of commitment.

A CEO in heavy industry recently told me that his company was the only one in his field addressing emissions. They had reduced emissions by 20% in the first year, but needed guidance on further reductions related to the supply chain. Providing that assistance is part of the UN role, but we need to strengthen the comprehensive framework supporting SMEs from within the GCNT and industry groups.

There are entirely new businesses opening in the landscape, such as plant-based meats as one example that is seeing growing demand. At the same time, SMEs in traditional sectors need structural support, exemplified in Thailand by UN partnerships providing digital skill training for beauty salons, which have been so hard hit by the pandemic.

This also highlights a key role that the UN can play in concert with government and the private sector to address the much-needed rigorous analysis of the SME landscape, sectors that are winners and losers, and those that will be hardest hit by emissions limits.

At its inception 20 years ago, the Global Compact foresaw a transformative role for the private sector, with human rights, labour, the environment and anti-corruption as fundamental drivers of sustainability and responsible business practices. At the same time, this is only possible through the vital linkages with policymakers and civil society.

When we talk about structural transformation and the move away from fossil fuel-based economies, we also need to focus on the “enabling ecosystem” supporting business to thrive in this transition.

The BCG model cultivates that ecosystem, focused on environmentally friendly growth, high value-added, and the more efficient use of resources.

I want to add that the UN walks the talk in this regard. We expect new data to confirm that the entire UN system achieved climate neutrality in 2020, including the ESCAP premises, which is powered by 100% renewable energy.

The shift away from fossil fuel dependency and reducing carbon emissions are among the most significant and pressing priorities, in which we have a finite window of opportunity to act.

Putting a price on carbon is an important regulatory instrument to incentivize and support the transition to net-zero, with increased innovation and investments in sustainable technologies.

The Bank of Thailand has been working closely with other institutions to develop a practical taxonomy and definitions on green financing and sustainability aligned with international standards.

Linked with regional and bilateral market-based agreements across ASEAN, this can help to ensure that Thailand can be a leader in the future low-carbon economy and support the achievement of goals set by the Paris Agreement.

What is striking in this response to the climate crisis is that much of the policy, good practices and technology are available today. At the same time, we recognize the need for further innovation in areas such as energy storage and batteries.

We look to the private sector for that innovation, increased efficiency, and technological breakthroughs that are still required. In this multi-generational challenge, which goes to the very heart of our relationship with the planet, businesses cannot be expected to go alone. The UN is here for the long term to provide the support, expertise and network of partners to make these efforts succeed.

Throughout my remarks, I’ve been referring to the many conversations we have been having, with government and business leaders here today, as well as members of the public and young people whose voices must be heard. There is cause for optimism, even in the face of these major challenges, founded in the renewed and growing commitment to take meaningful action.

In conclusion, the key takeaways today are that we need to urgently make progress on the transition to clean energy, consolidate and expand carbon markets, and provide more support for SMEs in this transformation. At the same time, the GCNT recognizes that while sustainability goals are universal, companies have to go at their own pace, to learn and unlearn, in a challenging environment.

This is a vital coalition to enable that action, which I hope will be built upon with further commitments and expanded membership. It is of paramount importance that we keep channels of communication open, honestly addressing both setbacks and opportunities, and sharing good practices that can collectively enable the structural transformation that we need.

Thank you for your time and I very much look forward to the insights and constructive discussions ahead today.