The Bank of Thailand (BoT) is urging financial institutions to assist small and medium-sized enterprises (SMEs) in their transition to sustainable business practices.
During a seminar hosted by the central bank on Wednesday, titled “Financing the Transition,” deputy governor Ronadol Numnonda highlighted the regulator’s plans to initiate the second phase of Thailand’s sustainability taxonomy in the fourth quarter of this year. This phase will concentrate on four sectors: manufacturing, agriculture, waste management, and building and construction.
The first phase was implemented last year, focusing on the energy and transportation sectors.
In this next phase, the BoT aims for banks to pay more attention to helping SMEs adopt sustainable practices that align with environmental, social, and governance (ESG) standards in accordance with international guidelines.
“We want banks to assist SMEs in transitioning from existing ‘brown’ business models to more sustainable practices,” stated Mr. Ronadol. “This will enhance the efficiency and competitiveness of SMEs in a rapidly evolving global economic environment.”
The Financing the Transition initiative involves collaboration between the central bank and eight commercial banks: Bangkok Bank (BBL), Krungthai Bank, Kasikornbank (KBank), Siam Commercial Bank (SCB), Bank of Ayudhya (Krungsri), TMBThanachart Bank (ttb), Kiatnakin Phatra Financial Group, and UOB Thailand.
These banks are offering sustainable product programs tailored for SMEs, with favorable interest rates and attractive loan terms designed to meet their specific needs.
Bangkok Bank, the largest lender by total assets in the country, has introduced the “Bualuang Green Financing for Transition to Environmental Sustainability,” focusing on three key areas: reducing greenhouse gas emissions, adapting to climate change, and decreasing pollution. The bank has allocated 10 billion baht to this loan program, allowing for loan periods of up to eight years at special rates.
KBank has identified four industries for its sustainable finance efforts: auto parts, packaging and plastics, food and beverage, and hospitality. The bank provided 94 billion baht in sustainable finance in 2023, with a goal of reaching 100 billion baht this year and 200 billion by 2030.
SCB aims to increase the value of its sustainable finance portfolio to 150 billion baht by 2025, having already provided 110 billion baht in loans, particularly in the hospitality sector.
Krungsri is assisting local SMEs in transitioning to sustainable finance through both financial and non-financial support, including the launch of the Krungsri ESG Academy, which offers training on sustainability practices.
Additionally, TTB has expanded its green and blue loans to a total of 30 billion baht, which includes 5 billion in sustainable-linked loans and US$210 million in green and blue bonds.
