Making a resilient future with sustainable banking

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Your Excellency the Minister of Finance / distinguished company,

First, let me thank the United Nations and the Authorities Pension Fund for inviting me to share my remarks on sustainability which is quick turning into probably the most crucial difficulty of our time.

The latest UN Intergovernmental Panel on Local weather Change (IPCC) Report was much less of a wake-up name and extra of a hearth alarm. And but, if we have a look at the most recent UN NDC Synthesis Report, emissions, at the least measured when it comes to pledges, look like headed within the unsuitable course. This wake-up name and this alarm are significantly related for us right here in Thailand.

Thailand is a rustic which generally ranks among the many prime ten on the earth when it comes to vulnerability and susceptibility to local weather change. This isn’t altogether stunning. We’re a rustic with a big share of the labor drive nonetheless in agriculture and a whole lot of our inhabitants facilities and industrial areas are positioned in areas close to to the ocean and due to this fact susceptible to rising sea ranges.

However not solely are we susceptible to local weather change, we’re additionally susceptible to insurance policies that international locations are implementing in response to local weather change. Numerous our exports are in sectors which have a big carbon footprint and might be prone to coverage measures just like the Carbon Border Adjustment Mechanism at present being put in place by the European Union (EU), as a part of the EU inexperienced deal. So, what function can sustainable banking play in taking Thailand from the place it’s at the moment to the place it must be when it comes to decreasing its vulnerability to local weather change?

Banks in Thailand can play an necessary function in getting us to the place we have to go. Banks play the predominant function in channeling credit score to the non-public sector. Over 90 p.c of personal credit score comes from the banking sector. So, banks might want to more and more incorporate sustainability issues into their lending choices and more and more want to enhance disclosure on climate-related data. They will even want to enhance their danger evaluation instruments. For all these to work, there must be a really clear tone from the highest from these establishments.

There was progress up to now. The Thai banking sector, together with the Thai Bankers’ Affiliation and the Affiliation of Worldwide Banks in Thailand, have developed and adopted Sustainable Banking Pointers in 2019. Now we have seen concrete steps taken by Thai Banks to include sustainability into their enterprise technique. Now we have seen them establishing clear governance construction on sustainability points similar to devoted sustainability committees, creating danger evaluation instruments, and disclosing ESG-related data. Some notable requirements that banks adhere to incorporate the UN Ideas for Accountable Banking and suggestions from the Process Drive on Local weather-Associated Monetary Disclosures.

The Financial institution of Thailand stands prepared to guide and help the monetary establishments’ function on this transition. It’s our intention to create an ecosystem for sustainable finance that might higher internalize a whole lot of these environmental considerations and points. This would come with incorporating and enhancing disclosure requirements, creating higher danger evaluation instruments, in addition to, creating a inexperienced taxonomy that’s constant throughout the monetary sector.

Let me finish my remarks by saying that these are very early steps, and far rather more must be finished. Inaction will solely improve the danger of a disorderly transition.

Thanks very a lot.

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