SCB CIO Urges Entrepreneurs to Adopt Green Taxonomy

Siam Commercial Bank's (SCB) Chief Investment Officer (CIO) is actively engaged in supporting Thai entrepreneurs and investors in adopting the Green Taxonomy framework for environmentally sustainable economic endeavours.

Financial institutions are exploring the possibility of offering more attractive interest rates to companies that adhere to these taxonomy guidelines.

Furthermore, institutional investors are urged to develop financial products based on Environmental, Social, and Governance (ESG) principles, catering to the growing preference for sustainability among retail investors.

This call to prioritise environmentally friendly investments comes as Thailand sets its sights on achieving net-zero emissions by 2065, with particular attention to addressing carbon emissions from the energy and transportation sectors.

Dr. Kampon Adireksombat, First Senior Vice President and Team Head of SCB Chief Investment Office at Siam Commercial Bank, has shed light on the establishment of universal standards for ESG across the global landscape.

These standards offer transparent and comprehensive guidelines for categorising various economic activities, with a specific emphasis on those aligned with environmentally sustainable practices, commonly referred to as Green Taxonomy.

These standards play a pivotal role within the Thai capital market, impacting individuals and entities alike. They empower investors and financial institutions to make informed decisions regarding fund allocation for projects and provide stakeholders with a means to evaluate project alignment with ESG principles.

Additionally, listed companies seeking fundraising for specific projects can leverage these standards to underscore their commitment to ESG principles, signalling their dedication to potential investors and financial institutions.

Dr. Adireksombat's analysis extends to Green Taxonomy standards across different countries, including the EU, ASEAN, and Thailand. The EU Taxonomy, which came into effect in July 2020, stands as a global benchmark, emphasising environmental sustainability and the ambitious goal of achieving net-zero carbon emissions by 2050.

It prioritises actions to combat climate change, transition to circular economies, prevent pollution, and protect biodiversity and ecosystems. This framework aims to combat greenwashing and imposes disclosure obligations on companies and financial market participants.

In contrast, the ASEAN Taxonomy acts as a central standard for member countries, aligning with the Paris Agreement and other national commitments. However, it lacks explicit provisions on water and sea resource protection and pollution control.

The Thailand Taxonomy sets forth six distinct objectives aimed at fostering environmental sustainability, with a primary focus on mitigating climate change and transitioning to a circular economy. Notably, it targets the energy and transportation sectors, which are responsible for a significant portion of carbon emissions. Thailand has committed to carbon neutrality by 2050 and net-zero greenhouse gas emissions by 2065.

The Green Taxonomy is expected to incentivise listed companies to align their operations with its objectives. Financial institutions may need to offer competitive interest rates to companies adhering to the taxonomy.

Institutional investors, in compliance with EU regulations, will need to incorporate the taxonomy into financial product design, considering ESG factors.

Retail investors will likely see an increase in environmentally friendly financial products, prompting service providers to revise their investment strategies to incorporate sustainability. This shift may involve accepting higher levels of risk and providing products aligned with the taxonomy, making sustainable investments more accessible to retail investors.

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Source: SCB