Banks agree to ESG

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Mr. Krit says adopting ESG principles should help KBank achieve quality growth.

Banks continue to integrate environmental, social and governance (ESG) factors into their business operations with the aim of sustainable economic transformation.

Sathian Leowarin, Senior Executive Vice President and Chief Strategy Officer at Siam Commercial Bank (SCB), said that in addition to digital transformation, organizations have considered the ESG concept when operating businesses to ensure sustainable growth.

He said climate change had had a dramatic impact on the business sector and people’s lifestyles, while social inequality remained a global challenge that all parties needed to tackle together.

As the environment and society are interconnected with the economy, an imbalance in one will inevitably impact the others, Sathian said.

He said the pandemic has shown that organizations that embrace ESG factors, meaning they assess possible social and environmental risks and follow good governance, can better handle difficult business situations.

Mr. Sathian said that this year, SCB continues to pursue sustainability through three main strategies: sustainable finance, creating social impact and securing a better environmental future.

For sustainable finance, the bank integrates ESG factors into three activities: responsible lending extensions, green financial product offerings and the promotion of sustainable investment.

In January of this year, SCB became a member of the Equator Principles Association and adopted the Equator Principles.

The Equator Principles are a globally recognized risk management framework adopted by financial institutions to identify, assess and manage environmental and social risks in projects, and primarily aims to provide a minimum standard of due diligence and oversight for support responsible risk-based decision making. .

He said that this year, the SCB is ready to provide credits worth more than 20 billion baht to fight climate change, reduce social disparities and promote a better quality of life.

The bank wants to continue offering ESG-related products to all customer segments this year, Sathian said. For large companies, the bank offers sustainable loans, green bonds, a sustainability-linked bond and an ESG advisory service for the development of large projects.

The SCB SME Go Green loan campaign is aimed at small and medium-sized enterprises (SMEs). The loans focus on energy efficiency, pollution management, green transport and support for women entrepreneurs.

Products for retail borrowers include loans for clean energy vehicles and green homes.

The bank also provides its clients with ESG investment funds. Last year, SCB offered 79 ESG funds worth 39.5 billion baht, or 7.3% of its net assets under management in 2021.

Mr. Sathian says companies are now factoring ESG concepts into their operations.


ESG IS A MUST

Krit Jitjang, President of Kasikornbank (KBank), said adopting ESG will help the bank to enjoy quality growth.

He said adopting ESG principles is a must, not an option, which will ensure banks, their customers and partners all grow together.

Mr Krit said that if a bank takes ESG factors into account when evaluating loans, it will reduce the risks companies could pose to the environment and society. Eco-friendly business loans present a good business opportunity as these businesses are on a growth trend, he said.

Last year, KBank’s credit value for project finance was 12.9 billion baht, while credit for medium-sized companies that passed its ESG risk assessment was around 407 billion.

The bank sold green financial products worth 65.2 billion baht last year.

This year, KBank launched the Green Zero lending campaign as part of its “Go Green Together” program to offer a wide range of financial products to environmentally conscious businesses and individuals, Mr Krit said.

The bank has allocated 100-200 billion baht for sustainable financing and investments by 2030.

This year, KBank’s sustainable financing and investment target is 25 billion baht, of which 3 billion is earmarked for its Green Zero lending campaign.

BLUE BONDS

Recently, TMBThanachart Bank Plc (ttb) announced its intention to offer “blue bonds” in the third quarter of this year to increase access to finance for sustainable marine and ocean projects as well as “blue economy” projects in Thailand. The bonds have a term of five years.

The International Finance Corporation (IFC), a member of the World Bank Group, will subscribe up to US$50 million to these blue bonds, helping ttb increase its financing of eligible blue assets.

The IFC is expected to help ttb structure the bond and develop a blue funding strategy and framework, according to a joint statement from the bank and IFC.

IFC is also supporting ttb’s broader sustainability program, including a green bond underwriting of up to $100 million dedicated to financing customers’ electric vehicle (EV) purchases.

“TTB’s business strategy and operations always aim for a sustainable banking framework, and one of our strategic focuses is climate finance. IFC’s support will help TTB grow its green financing portfolio for electric vehicles and build its capacity to identify eligible blue assets,” said TTB’s Managing Director. Piti Tantakasem.

“This will allow us to focus on critical areas such as marine plastic recycling, water conservation and wastewater treatment projects, which are essential to the country’s economy.”

IFC Chief Executive Makhtar Diop said the company is at the forefront of creating green and blue funding markets in Asia, including Thailand.

Mr. Piti, left, and Mr. Diop sign a collaboration agreement for ttb’s plan to issue blue bonds.

Through this investment, IFC plans to establish new asset classes in Thailand’s debt market and mobilize more investment in the blue and green economies to support Thailand’s sustainable development and address key climate challenges. from the country.

According to global investment firm abrdn, the importance of sustainable and green investments will increase as Thai investors become more aware of how they want to invest. Thailand could become a leader in sustainable investing, the company said.

From Singapore recently, René Buehlmann, abrn’s managing director for Asia-Pacific, said Thailand was an important growth market for the company.

He outlined the trends that will have the greatest impact on Thailand and provide the greatest opportunities for Thai investors. The key trend is the rise of ESG-focused investing.

“As Thai investors become more socially conscious, they will want to invest in companies with strong ESG standards. Our recent conversations with the Stock Exchange of Thailand confirm that many Thai companies are ready to embrace sustainability and ESG reporting, which is encouraging for global investors,” Mr. Buehlmann said.

He said responsible investing can go hand in hand with profitable investing. Abrn’s advice is to invest where there is the best chance of dual performance, with both financial and environmental returns, as this positions the investor to be part of the greater good.

Holding investments with strong ESG credentials adds significant diversity to portfolios, Buehlmann said, which can help investors through downturns. The fields of clean energy and digital transformation both offer exciting new opportunities, he said.

Looking ahead, Buehlmann acknowledged considerable uncertainties in terms of global inflation, geopolitical risks in Eastern Europe and the pandemic impacting both micro and macro trends.

Despite these challenges, he believes Asia will continue to grow thanks to its changing demographics and growing consumer demand, as investors will continue to want Asian exposure.

The company recently launched two innovative integrated ESG strategies for Thai investors. The abrdn Global Innovation Equity Fund invests in innovative companies across geographies and sectors that create a positive impact on society while maintaining a focus on sustainability for a greener future. The abrdn-listed private equity fund offers retail investors access to diversified opportunities in private assets, including private equity, private debt, infrastructure and REITs, with ESG factors integrated into the investment process. investment.

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