IFC, Bank of Thailand to accelerate sustainable financing
Partnership to enable more sustainable business practices and tackle key challenges to address ESG risks in the Thai financial industry
THE International Finance Corporation (IFC), a member of the World Bank Group, on November 27 signed a memorandum of understanding (MoU) with the Bank of Thailand (BOT) to join forces to accelerate sustainable financing in Thailand. This partnership aims to enable more sustainable business practices by the financial industry and tackle key challenges to address environmental, social and governance (ESG) risks.
Addressing ESG risks is integral to sustainable financing. Subsequently, this will help Thailand’s financial sector bolster its regulatory and industry cooperation to improve risk management practices and enhance governance. The issuance of the Responsible Lending Guidelines by the Thai Bankers’ Association in 2019 — under BOT’s leadership — has already set a precedent, highlighting the importance of sustainable banking in translating the nation’s reform efforts into a competitive and resilient financial sector.
BOT’s assistant governor for financial institutions policy group Nawaron Dejsuvan says Thailand recognizes the importance of adopting ESG practices in the financial sector and has recently made significant progress including the launch of the Thai Bankers’ Association sustainable banking guidelines. However, more can and needs to be done to steer the Thai financial sector towards more sustainable practices. “BOT and the Thai financial sector can benefit greatly from IFC’s extensive experiences to support continued development of Thailand’s sustainable finance,” she adds.
As part of this collaboration, IFC will support BOT in developing a sustainable finance policy framework, which includes a sustainability roadmap and tools to help the banking sector improve ESG risk management practices. This includes directing more capital to sectors and projects that have environmental and social benefits. IFC, supported by the government of Australia, will also assist BOT and other financial institutions in the country build capacity in sustainable finance. Further, the partnership will facilitate knowledge sharing with other central banks that are members of Asean and with members of the Sustainable Banking Networking (SBN).
IFC country manager for Thailand Vikram Kumar notes the Thai financial sector is a key contributor to the growth of regional economies. “Sustainable finance by Thai banks will not only have an impact in Thailand, but also on neighbouring markets,” he says. “Together with the central bank, we will support the Thai banking sector to emerge as the regional sustainable finance leader, by sharing its capital and expertise with neighbouring markets.”
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