The past three years have proven to be challenging for many people following the outbreak of the Covid-19 pandemic. Though the situation has improved, many businesses are still grappling with economic pressures, such as higher costs driven by inflation and higher energy prices, while concerns over climate change are motivating businesses and the public to become more environmentally aware. Bangkok Post examines key business trends that are expected to set the tone in 2023.
Banks incorporate ESG
Banks are continuing to incorporate environmental, social and governance (ESG) factors into their business operations in a push for a sustainable transformation of the economy.
In November 2022, Kasikornbank (KBank) disclosed that it has set a goal to expand the extension of sustainable financial facilities to 25 billion baht in 2022, doubling to 50 billion in 2023, aiming to become Asean leader in the field of the ESG finance by 2030.
As of September 2022, KBank granted loans to ESG projects worth 16 billion baht, representing 66.1% of its total sustainable financial facilities, which cover loans and funding for 2022.
In 2022, Bank of Ayudhya (Krungsri) announced increasing the proportion of its ESG-linked loans to 10-15% of its anticipated total corporate loan portfolio by 2030. As of July 2022, the bank's ESG-linked loans stood at 10 billion baht or 2% of the total corporate loan portfolio of around 460 billion.
Thai banks now place greater emphasis on adopting ESG principles in their efforts to drive sustainable economic and social development, said Poonsit Wongthawatchai, Krungsri's executive vice-president and head of its ESG division.
Speaking at the BIS-BOT conference in Thailand in December 2022, Bank of Thailand governor Sethaput Suthiwartnarueput said one of the challenges facing central banks worldwide is climate change and central banks' role in combating it.
He said responding to climate change is about actively taking steps that help influence the incentives and willingness of society to alter their behaviour in such a way that mitigates adverse climate change. The most impactful channel for central banks in this respect is through the financial system.
Incentives, mindsets and expertise in the financial sector must be geared towards ensuring that sufficient resources become available to finance the green transition. This requires a collaborative approach, both among agencies within the country, as well as internationally, said Mr Sethaput.
