Resident Coordinator's Message to the Seminar “Responsible Investment in Practice: Implementing ESG Incorporation in Listed Equity and Fixed Income”
24 September 2022
[as prepared for delivery]
Distinguished experts, colleagues and friends,
I am honored to join you at this important seminar, which focuses on drawing out best practices to integrate ESG in listed companies and mutual funds in Thailand.
Let me thank the co-hosts for making this possible.
My special thanks to Khun Ruenvadee Suwanmongkol, the Secretary-General of The Securities and Exchange Commission (SEC), Thailand, for her leadership and foresight in supporting the establishment of a sustainable investment ecosystem for the private sector, banks, and investors to accelerate the green transition.
Khun Ruenvadee, your personal commitment to UN guiding principles on business and human rights has been crucial to progress the ESG agenda in country. Many of the listed companies, as you know, are institutionalizing the principles of human rights into its business operations.
Under your leadership the SEC has also launched the One Report to standardize sustainability reporting and enhance the quality of information disclosure of both issuers and listed companies on the Stock Exchange of Thailand. This is an important step which will contribute to developing consistent standards to green the economy.
I would also like to thank James Robertson. As Asia head of the Principles for Responsible Investment he serves a vital role in the Principles for Responsible Investment (PRI), which provides a useful framework for achieving better long-term investment returns in more resilient markets.
PRI also creates the impetus for fund managers to mobilize their energies towards incorporating ESG into investment and ownership decisions, contributing to sustainability gains.
As you know, capital markets have a huge influence on the Thai economy and responsible investments premised on ESG are crucial to bottom lines in a world increasingly dominated by concerns over long-term sustainability.
Importantly, the PRI agenda must be domestically owned in Thailand and leadership on it has to come from within the country.
By investing responsibly in line with the Bio-circular-green (BCG) economy model and other policy frameworks, domestic champions of the investment world can lend invaluable support to these transformative sustainability agendas whose aims encompass inclusivity, equity and transparency.
An important step in that direction was taken last year at the Sustainable Thailand Forum, co-hosted by the RTG and the UN, where 43 financial institutions with total assets of $1.3 trillion committed to action on the SDGs and climate.
ESG investment is continuing to mature in the country with the pipeline of sustainability-related projects emerging slowly. Dialogues such as today’s discussions will take the agenda forward.
According to Thai banks, ESG lending has helped them weather the pandemic better with net returns more sustainable and shareholders more confident.
There are champions in the finance sector with the Government Pension Fund and a couple of major banks leading on sustainability.
Each of you have a pivotal role in supporting the green transition and your investments can support the fast tracking of introducing best available clean technologies, scaling up sustainable solutions to reduce emissions and create green jobs in the country and the region.
As you know, your investments can leverage change at a much faster pace.
Going forward, sustainable investment requires a multipronged approach to tackle global and domestic challenges.
Climate change is posing unfamiliar risks, but front-lining sustainable investing will boost risk mitigation and resilience.
Sustainable investment strategies need to go beyond excluding brown industries in favor of new green technologies. They must also support companies in transitioning from brown to green in their operations.
A practical green taxonomy, which is being developed by the Working Group of Sustainable Finance led by the Bank of Thailand and SEC, will help Thailand’s financial markets better evaluate environmental performance and direct investments accordingly.
Another critical building block lies in enabling greater transparency and clarity on issuer-level transition pathways. We need to identify, assess and measure companies’ de-carbonization strategies. Having robust sustainability reporting standards is a good place to start.
To that end, the SEC’s One Report, which I mentioned earlier, provides guidance for businesses to operate responsibly on ESG dimensions with a focus on human rights, companies’ sustainability strategies, environmental impacts and social engagement.
Simultaneously, continued upskilling in the financial industry will boost competencies and uphold values. Financial regulators should develop technical know-how in green bond issuance and taxonomy, the impacts of climate risks in infrastructure investment as well as responsible lending and investment.
A Sustainable Finance Certification or a baseline sustainable finance curriculum can also be considered for Thai bankers and investors.
Our overarching goal must be to build a sustainable and inclusive economy that meets the goals of the Paris Agreement while leaving no one behind.
Global impetus is building on climate action and Thailand is well-placed to tap into it. At COP26 last year some 450 financial institutions from 45 countries with total assets worth $130 trillion pledged to achieve net-zero carbon emissions by 2050.
In Thailand closer coordination between regulators and the industry will be essential to achieve national sustainability objectives on schedule.
UN Thailand looks forward to working with you all as the country continues on its ambitious green journey.
By sharing your expertise and experience in today’s discussions you will all help generate creative ideas and lasting solutions for the future.