The Bank of Thailand (BOT) recognizes the increasing importance of sustainable banking and has adopted a three-year strategic plan (2017-2019) to promote sustainable banking in the Thai financial sector. In this respect, the BOT organised the inaugural Bangkok Sustainable Banking Forum on 23 July 2018 (Monday) to increase awareness of sustainability practices in finance by showcasing best practices and efforts by financial players and identifying areas for improvement.
The event was part of a series of conferences organized throughout this year to commemorate the 75th Anniversary of the BOT. SIIA Chairman Prof Simon Tay spoke on the panel, “Financing while Preserving Environment” alongside other distinguished speakers: Mr. Banthoon Lamsam, Chairman of the Board and CEO of Kasikornbank; Mr. Vivek Pathak, Director, East Asia & the Pacific, the International Finance Corporation (IFC) and Mr. Roger Charles, Director, Environmental and Social Risk Management, Standard Chartered PLC. The panel was moderated by Dr. Wit Sittivaekin, Chief Marketing Officer at DC Consultants and Marketing Communications and news anchor.
Here’s a look at what came up during the Forum:
The sustainability of the banking sector should involve making finance more accessible to the poor. Those at the bottom of the pyramid are often most impacted by the effects of climate change. One speaker noted that the floods in Bangkok for instance, saw some people who have just got out of poverty, fall back into poverty again. At the same time, low financial literacy and high household debt level continue to hinder the ability of individuals to pursue new opportunities and secure long-term financial security. Without giving adequate support to the poor such as improving their access to credit, this could worsen wealth and income inequality in the Thai society.
Banks can make a genuine and lasting impact by engaging their clients on challenging projects rather than walking away from them. In the face of various environmental and social challenges, some banks such as the IFC and Standard Chartered Bank see value in engaging their clients to improve their sustainability practices instead of walking away. Improvements will take time but they are more likely to be successful when the client is committed. It is also critical for the banking industry as a whole to be aligned on sustainability views and goals as one bank’s attempt to inspire change is limited. In the long run, these efforts will help raise the bar not only for banks’ clients but also for the industry as a whole.
Many opportunities exist and they can be better captured with the right government policies and guidance. Beyond renewable energy, there is potential to expand investments into energy efficiency and transport. At the same time, certain projects such as dam construction continue to be debated as different stakeholders disagree on how well a project is managed in terms of its impact on the environment. Therefore, it will be helpful for governments and regulators to provide guidance on banks’ involvement in these projects. One example could be the incorporation of Environmental, Social and Governance (ESG) factors in the project lifecycle so that they will be more acceptable and sustainable in the long run.
