Business leaders urge re-think of investing choices in sustainability

BANGKOK (9 September 2023) – Trillions of dollars in assets and resources can be unlocked to speed up the transition away from carbon emissions and put the world on a low-carbon pathway, but corporate planners will need to commit themselves to better strategic investment choices, a United Nations-sponsored high-level forum has heard.  

The call was made as the United Nations Global Compact launched a regional hub in Bangkok to help businesses across the country redouble their efforts to invest in reducing their environmental and carbon footprints.  

The event, titled “CEO Forum on Sustainable Finance: Scaling up Sustainable Finance Solutions for Accelerating Progress on the SDGs,” featured a gathering of officials and experts from government, UN, the private sector and public finance from across Thailand.  

The participants highlighted the potential of scientifically robust, realistic, and profitable climate-aligned financing strategies and business models towards decarbonization efforts and the country’s green economy transition in line with its bio-circular-green (BCG) economic model. 

Suphachai Chearavanont, chairperson of UN Global Compact Network Thailand (GCNT), one of the 69 networks of the UN’s Global Compact initiative, said that interest in corporate sustainability performance has been high among investors and the financial sector in the country.  

Climate finance is crucial for corporate strategies, with the latest scientific evidence indicating that over half of the world economy is dependent on nature. Without healthy ecosystems and robust biodiversity, economic growth and well-being of the global population cannot be maintained, Suphachai noted. 

“I believe businesses have the responsibility and power to make it happen, to help reduce emissions and adapt to the potential and inevitable impacts of climate change,” he said. 

The UN GCNT executive went on to highlight five strategies for accelerating the progress and uptake of the UN’s Sustainable Development Goals (SDGs) in the private sector. These are 1) having clear targets and visibility, 2) leveraging market mechanisms and partners in the value chain, 3) promoting business leadership on sustainability, 4) empowering young emerging leaders to join as changemakers, and 5) creating a culture of innovation. 

Sanda Ojiambo, executive director and CEO of the UN Global Compact, in turn stressed that “there is ample capital in the world to provide the US$5 to 7 trillion needed to achieve the global goals,” referring to the SDGs, a set of 17 targets that world leaders established at the UN General Assembly in 2015 and encompass a range of sustainable development goals globally with a focus on environmental and societal issues. 

Ojiambo emphasized the urgency for taking action, noting that development achievements made over the past decade are being eroded as a result of the pandemic, armed conflicts, growing economic instability, global food and energy shortages, and rising temperatures. 

Stocktaking shows that in Asia, as in the rest of the world, progress on the SDGs has stalled and in some cases has even been reversed, Ojiambo observed. However, even against this backdrop the private sector still has the resources, knowledge and skills needed to make strides in global outcomes, she stressed.  

The Asia and Oceania region will be of great importance in driving sustainable development forward as it is home to more than 60 per cent of the world's population while more than two-thirds of the projected global growth is expected to take place in the region.  

The potential for leaps in sustainable development is evident and the UN Global Compact is expanding its presence in the region to support businesses in reducing their environmental impacts, Ojiambo said. 

Gita Sabharwal, UN Resident Coordinator in Thailand, concurred, highlighting the importance of the Bangkok event in driving the region’s sustainable development agenda. “Today’s forum is an opportunity to advance the dialogue on the leadership role of businesses in support of the green transition in country and the region,” Sabharwal said.  

“Importantly, we cannot achieve a true transformation without greening the supply chains to boost circularity and reduce their carbon footprints across the board. We at the UN are assisting these efforts by bringing science, introducing the best available technologies, and convening stakeholders,” she went on to explain. 

“We are at the midway point to the 2030 Agenda and the leadership of the private sector will remain pivotal in accelerating the achievement of the SDGs in Thailand,” Sabharwal emphasized. “Equally important is the leadership of bankers, investors, and asset managers. They need to take center stage in unlocking domestic financing for sustainable development.” 

Ruenvadee Suwanmongkol, secretary-general of the Securities and Exchange Commission, said that the public and private sectors needed to work together for maximum benefit.  

“The government plays an important role in driving the financial sector towards sustainability, including by promoting investments in enabling infrastructure and developing green financial products to ensure climate change targets and the SDGs can be achieved quickly,” Ruenvadee said.  

“The private sector also plays an important role in managing and evaluating risks arising from climate change and other environmental impacts throughout the business chain,” she continued.  

“More funds are allocated to low-carbon projects and more sustainability disclosures are available. This is helping to increase the number of analytical reviews of environmentally friendly financial products,” Ruenvadee said. 

Importantly, the introduction of a green taxonomy at the national and regional levels will further increase the credibility of climate-focused financial ecosystem, which  “will be an important force in driving the effective net zero emission reduction (Net Zero Economy), and encourage further investments in green projects,” explained the secretary-general of the Securities and Exchange Commission. 

The high-level gathering also included a roundtable for small and medium-sized enterprises (SMEs), with chief executives from more than 20 UN GCNT member organizations discussing opportunities and challenges in elevating their sustainability finance and investment strategies.  

The business leaders agreed that in the current economic and social climate sustainability must be a part of corporate strategy for every business. In addition to key performance indicators, organizations need to focus on sustainability target indicators (Key Impact Performance), covering their entire supply chain as well as their suppliers, most of which are SMEs.  

Common measures include accessing sustainable funding sources, clean technology and knowledge exchanges. The most common indicator relates to the management of greenhouse gas emissions. Consumers are increasingly driven by sustainability-related considerations while the financial sector, banks and investors are increasingly interested in investing in sustainable projects, the business leaders said.  

They noted that if the financial sector can work more closely with the business sector, a flow of new capital will result. Past examples of this include the Alliance of Financial Institutions Promoting Energy Transition (Just Energy) or the partnership to support the Net Zero goal by an asset management firm, known as the Climate Asset Management, which aims to become the world's largest asset management firm focused on natural capital and low-carbon projects. 

Representatives of SMEs also discussed their role in greening supply chains in order to add long-term value rather than look only for short-term profits. SMEs in Thailand have an extensive supply chain network as they account for 90 per cent of businesses and over half of employment. SMEs in the country have been recognized as important contributors to economic growth, but still need better access to additional capital.  

The business leaders noted as an example that if smallholder farmers could access more sources of finance, they could adopt cleaner and more resource-efficient production technologies and increase their knowledge, which will boost productivity while meeting sustainability commitments.