Resident Coordinator's Remarks at The Cooler Earth Sustainability Summit Thailand 2023

Mr. Wong,

Khun Pornphrom,

distinguished experts,

and UN colleagues.

It is an honor to address you as we work to bolster Thailand’s key role in climate mitigation at this important forum.

Let me thank CIMB Thai for inviting the UN to share its perspective on how the private sectors can lead the country’s green transition aligned with the government’s Bio-Circular-Green Economic Model (BCG) agenda.

Going forward, your contributions as bankers, investors, and asset managers will be particularly critical as we face global crises, including threats to food security, geopolitical tensions, fiscally stressed governments, and soaring rates of public debt.

Yet our gravest challenge is the climate emergency with temperatures rising at an unprecedented pace as we have witnessed record heatwaves across the planet over the past months.

At the same time, there has been backtracking on global commitments to the Paris Accord with dire consequences for people and the planet, as the UN’s Secretary-General has warned.

The costs of inaction will be enormous for countries like Thailand, which are vulnerable to the adverse effects of a changing climate.

We need to accelerate deep de-carbonization of industry while transitioning to sustainable consumption and production patterns requiring fundamental changes to our lifestyles.

With the government’s fiscal resources stretched, it falls to bankers, investors, and asset managers to show leadership.

Figures back this up as 74% of investments over the past year came from private sources with the public sector constituting the rest.

CIMB has demonstrated its commitment to climate action by committing to the UN Principles for Responsible Banking, to speed up progress on the SDGs.

This is especially important as CIMB is amongst banks globally that collectively hold $90 trillion in assets. Many of these assets can assist in green transformations in Asia and the Pacific where it will cost more than $3 trillion annually to achieve net zero by 2050, according to McKinsey.

No government can afford this scale in investment. We need the banking industry to step up as it accounts for more than two-thirds of all financing globally.

This includes setting ambitious targets for greatest sustainable development impacts and transparency through public reporting.

This message needs to be taken to the banking sector in Thailand and the region, led by CIMB and other prominent financial institutions.

In Thailand, the government has shown that it means business when it comes to climate action and a sustainable future in line with its BCG and the SDGs.

The country has committed to reducing greenhouse gas emissions by 30 to 40% by 2030 while aiming for carbon neutrality by 2050 and net zero by 2065.

According to UNEP, this implies that emissions in 2030 will be lower than in 2020. The Prime Minister will speak to this agenda this week at the upcoming Climate Ambition Summit in New York where heads of state will be gathering to accelerate climate action.

Importantly, developing a domestic green taxonomy creates a solid basis for a low-carbon transition and the Bank of Thailand and the Securities and Exchange Commission, Thailand (SEC) have taken a critical step in that direction by publishing the first generation of such a taxonomy.

It provides clear definitions of what activities are considered green, amber, or red, making it easier for investors to decide how to deploy their resources in service of both profits and sustainability.

Let me lay out five pathways for a low-carbon transition to accelerate progress.

The first involves unlocking sustainable financing in partnerships with investors, the government, and the private sector.

ESCAP analysis suggests that we will need an additional investment of at least $410 billion to achieve the SDGs on schedule in the country and that is before we factor in the pandemic’s impact.

Bridging this funding gap will require additional public and private resources.

Thailand has done well in leveraging Environment, Social, Governance (ESG)-related funding with the government and private sector together having raised over $10 billion in the past years.

Most of these resources are directed towards essential infrastructure including Bangkok’s electric monorail network, wind farms, and power plants for renewable energy.

In our dialogue with bankers, investors, and asset managers, we are learning that leveraging the bond market by increasing the supply of government-led green and sustainability-linked bonds, which represent only 1% of this market, can unlock additional climate financing. Such bonds will allow investors to better diversify their portfolios and meet their ESG targets.

We have seen a similar approach in Indonesia where the UN has partnered with the government for the issuance of two SDG bonds for $730 million, which were 2.5 times oversubscribed.

We can seize a similar momentum in Thailand to continue turning the country into a climate-resilient, prosperous, and inclusive nation.

The second pathway targets supporting large, medium, and small enterprises in their efforts at circularity and deep de-carbonization through the best available technologies.

The private sector provides nine in ten jobs and contributes nearly 90% of GDP, making it vital for the sector to make credible commitments to reduce their carbon footprints.

By setting action plans aligned with those of government, businesses can lead by example and inspire others to follow suit. Large corporations have the power to influence their supply chains, encouraging sustainability across the board.

The Global Compact Network Thailand has been spearheading this green transition by committing to achieving net zero by midcentury. It results in reductions of 8 million metric tons of carbon every year, amounting to nearly 2% of total greenhouse gas emissions. This raises ambition for the entire country.

Importantly, we will need to facilitate ESG transitions for the 2.6 million small and medium enterprises, who employ nearly 10 million people.

Without their full participation, Thailand will not be able to meet its carbon reduction targets. That is why we need to engage more comprehensively with SMEs to access clean technologies, improve resource efficiency, and build their capacities for circularity.

The government needs to provide an enabling environment, which should include support for upskilling, technological transfers, and innovation.

The UN comes into this equation by bringing to bear the best available technologies and environmental practices combined with integrated policy advice in close partnership with the government and the private sector.

We have seen that once the best available low-carbon technologies are introduced into heavily polluting industries, the private sector is quick to adopt and upscale them of its own accord. This gives us an opportunity to multiply impacts at scale.

In a pilot undertaken with the government, for instance, we have introduced scrap-processing smelters, regenerative furnaces, and carbon-absorbing solvents in the aluminum and steel industries.

These technologies have reduced emissions by 6% and are being scaled up by the industry.

Improved waste collection and reuse by converting into bioenergy premised on resource efficiency assessments is also being leveraged for emission reductions.

The third pathway entails leveraging carbon markets to unlock additional financing for vulnerable communities.

Carbon markets are an emerging way of mobilizing private capital for climate action. They offer companies and organizations, the opportunity to purchase carbon credits to offset hard-to-abate emissions.

Each carbon credit is equal to 1 ton of carbon-equivalent removed from the atmosphere. Despite solid growth, the carbon market in Thailand is still in its infancy, with the country needing a mandatory carbon pricing mechanism.

However, domestic carbon markets are already taking shape. For instance, the UN’s partnership with the 76 governors is translating into waste segregation for 14 million rural households across all provinces. This is yielding more than 550,000 tons of carbon reductions annually and its equivalent in carbon credits.

The carbon credits serve as an economic incentive for local authorities to ensure that every rural household will sustain waste segregation in the coming years. The first tranche of credits was recently bought by a local bank and the proceeds from it will support community infrastructure.

The fourth pathway revolves around ESG disclosures, a key means of validation that will need to be transparent and reliable.

Reliable ESG disclosers will enable bankers, investors, and asset managers to feel confident about such data without the need for further validation.

This will help reduce complexity and cut costs associated with sustainability investing. Having good data, good definitions, and good disclosures will also address greenwashing concerns through greater transparency.

Thailand has taken the first step in this regard. The SEC has made progress with the One Report providing a solid foundation for disclosures by listed companies.

Standardized reporting on emission reductions, human rights, and other dimensions of ESG will make the One Report even more impactful by facilitating the identification of the right companies to invest in.

The fifth pathway targets building capacity and expertise in the finance community to support green finance.

New capabilities and skillsets should include specialized expertise to quantify environmental benefits and the costs of projects.

We need to estimate how environmental costs can translate into future default risks. We also need to develop tools for reporting the sustainability metrics of various projects and business lines.

These are typically not covered in finance curriculum and require interdisciplinary approaches to integrate sustainability considerations into business strategies and investment decisions.

In conclusion, allow me to leave you with a takeaway message, which is that we need a deepened sense of solidarity and shared responsibility to cool down our planet in the years and decades to come.

The financial sector is not only an important stakeholder, but a key driver, of Thailand’s transition to a low-carbon economy.

Achieving net zero will necessitate collective efforts to create a world where economy and nature can thrive in harmony.

Your commitments will be paying dividends for generations, and I hope you agree that the 5 recommended pathways will speed up progress on Thailand’s ambitious green journey.

The UN looks forward to continuing to work with you all.

Thank you.