SET unveils roadmap to help companies achieve ESG goals
Several Thai companies are now committed to following these rules,
The Stock Exchange of Thailand (SET) has prepared three mechanisms to help listed firms achieve their Environmental, Social, and Governance (ESG) goals.
Speaking at the Bangkok Post conference on “The Rise of ESG: The Megatrend and Sustainability Challenges” at Centara Grand at CentralWorld yesterday, SET President Pakorn Peetathawatchai said the SET is holding to its commitment to promote good governance and zero carbon emissions among listed companies by preparing the aforementioned mechanisms.
“This year, there are 170 [out of 799] listed companies on the Thailand Sustainability Investment [TSI] list and Thailand is ranked [first] in the Southeast Asian region on the Sustainable Development Report 2022 of the UN,” he said. “Although it looks encouraging, we still need to do much more. The SET is now working in full force to facilitate ESG implementation [among listed enterprises] in three main areas.”
First, this provides a practical ESG advisory and capacity building for listed firms, their suppliers, and customers in the value chain of their business.
Mr Pakorn said this would be the first time the calculation of a carbon footprint is mandatory while the biocircular model and digital transformation would serve as the means to decarbonise their operations.
The SET set up its “SET ESG Academy” in May to disseminate the necessary knowledge, tools, standards, and learning packages to help listed enterprises implement their ESG goals.
“Academics have joined the education programme and organised workshops for practical ESG,” he said.
Furthermore, last year the SET organised a “Live Platform” e-learning platform to help SMEs and start-ups improve both their business quality and competitiveness. This year, it launched a curriculum for local universities to use in hope of producing the next generation of ESG-savvy professionals.
“As we all need greater market forces to drive ESG in practice, growing interest in sustainability among the younger generation needs to be backed up by real action,” Mr Pakorn said.
Second, the SET has encouraged listed enterprises to disclose their data more effectively, which would help firms improve their operations and communicate their value and performance with stakeholders more effectively.
Last month, the SET released its ESG data platform to serve as a better link between business operators and investors and ensure all the information sent and received is standardised, he said.
The exchange will use the data from this platform to select companies to add to the TSI list and develop sustainable investment products.
“Hopefully, this will provide critical infrastructure for further ESG development. This year, we’ve also introduced our Live Exchange as a trading platform for SMEs and startups,” Mr Pakorn added.
Third, the SET initiated a Climate Care Programme to encourage listed companies to embark on their first step toward good environmental practices.
Leading businesses are adopting environment, social and corporate governance (ESG) practices, in line with government efforts to protect the environment and build a sustainable society. Executives shared their thoughts on ESG at a forum titled “The Rise of ESG: Megatrends and Sustainability Challenges”, organised by the Bangkok Post.
TECH SUSTAINABILITY
Nalin Vanasin, executive director of Thonburi Healthcare Group Plc (THG), said sustainable healthcare is connected to various factors such as financial security, education, gender and wealth inequality, reflecting the social aspect of the ESG model.
She said Thailand has low-income families that faced financial ruin when their breadwinners become sick or injured, forcing them to sell their assets and face debt.
THG is working on offering sufficient access to quality healthcare, especially when specialised care is required in a timely manner to prevent death and disability, said Ms Nalin.
These services need to be affordable for all people, including patients and third parties, she said.
For example, its flagship Thonburi Hospital keeps costs 15-30% lower than other private hospitals for tertiary care, said Ms Nalin.
The company partnered with Phuket Provincial Hospital to share management expertise and specialised knowledge, while controlling costs with a fixed price contract, she said.
THG also invested in heart centres in public hospitals that lack an emergency care facility, which helps reduce waiting time for patients.
“By leveraging technology and innovation, THG can make healthcare more sustainable,” said Ms Nalin.
Innovations include adopting robotic surgery for prostate cancer and bariatric surgery, which offers high accuracy and shortened recovery time, while at the same price as public hospitals.
She said THG is also looking into telemedicine to treat strokes and offer maternity care.
As Thailand has 355,671 stroke patients and a shortage of specialists, this technology can help connect neurologists from the main hub with patients in local hospitals when in need.
THG also invested in a mixed-use project, Jin Wellbeing County, which provides senior housing with medical care and services, as the nation’s demographics grey.
“With a medical inflation rate of 5-8% a year, preventive healthcare and lifestyle wellness will be crucial for the sustainability of our population,” said Ms Nalin.
THG joined the Thailand Carbon Neutral Network to audit and offset the carbon footprint of one of its hospitals, while aiming for a 50% reduction in energy consumption and adopting smart designs for new hospitals under construction, she said.
SUSTAINED PASSION
Energy conglomerate Banpu Plc is determined to develop sustainable businesses through ESG, sharing a passion for social and environmental responsibility, Somruedee Chaimongkol, chief executive of Banpu, told the forum.
The company will push ahead with clean energy development projects and promoting modern energy technology to achieve sustainable growth, she said.
“This is embedded in our DNA, which we call ‘Banpu Heart,’” said Mrs Somruedee.
“We not only take action in our home of Thailand, but also in another 10 countries where we operate over the last decade.”
Banpu started its business as a coal miner, but is gradually shifting away from coal as it diversifies into renewable energy, electric mobility and energy solutions.
Chanin Vongkusolkit, former chief executive of Banpu, said the business direction of sustainability was set since the company’s establishment and it has become a part of the company’s culture.
He is now a chairman of Banpu’s board of directors.
Banpu earlier announced it would stop investing in new coal mine projects despite a huge volume of coal deposits.
It will maintain coal production, but wants to focus more on clean energy.
The company’s subsidiary, Banpu NEXT, acquired a stake this year in Thai tech startup AltoTech Global Co, which developed the Alto Energy Edge energy management platform that uses artificial intelligence and Internet of Things technology to monitor and optimise a building’s energy usage efficiently.
MANDATORY ESG
Speaking at the same event, Srikanya Yathip, secretary-general of the Government Pension Fund, said ESG adoption is not an option, but rather a must.
Mrs Srikanya said she has noticed a paradigm change in Thailand regarding corporate thinking about ESG.
She said investors and companies now agree ESG adoption is not merely a trend or PR exercise, but an essential practice that contributes to society and the planet.
Mrs Srikanya said she sees more companies and investors working together to put ESG concepts into practice.
In the past when companies wanted to adopt common ESG standards, they would develop them alone. Now there are many frameworks from global organisations companies can integrate into their own strategies, she said.
She said the ESG concept is not static, but rather a moving target that keeps evolving. All organisations are aware of this and are working together to achieve the ESG goals, said Mrs Srikanya.
One of the main challenges in ESG adoption is how companies can put ESG concepts into practice.
For example, if a company wants to focus on climate change, it might not know where to start or what to do. All stakeholders working together are more likely to be useful, she said.
NOT JUST A GIMMICK
Ariya Tiranaprakij, senior executive vice-president of the Thai Bond Market Association (ThaiBMA), said the outlook for ESG bonds in Thailand is bright, with demand increasing substantially, especially in the post-Covid era.
Both issuers and investors agree that businesses focusing on ESG gives them long-term sustainability and the capability to endure various conditions, she said.
The ThaiBMA categorises ESG products into four categories: Green Bonds, Social Bonds, Sustainability Bonds and Sustainability-Linked Bonds.
Since the first ESG bond issuance in Thailand in 2019, the value of ESG bond issuance has increased steadily every year. From 29.0 billion baht in 2019, the value jumped to 174 billion at the end of 2021, up almost six times over three years. The number of issuers increased among both state agencies and the private sector.
Funding involved projects that are friendly to the environment and beneficial to society, within the scope of each company’s business operations.
Ms Ariya said global ESG bond issuance in 2021 amounted to almost US$1.1 trillion, a 57% increase from the 2020 tally of $700 billion. In the first half of this year, the amount was $418 billion.
The cumulative volume reached $3.3 trillion. The first green bonds were issued in 2007 with a value totalling $437 million.
Global assets under management for ESG products are expected to exceed $50 trillion in 2026, up from $30 trillion in 2018. Global ESG assets are expected to account for more than one-third of global assets in 2025, she said.
In Thailand, ESG bonds have grown in parallel with the global market. The outstanding value of ESG bonds issued in the Thai market stood at 449 billion baht as of last month, representing 2.9% of the total bond market’s outstanding value, up from 299 billion at the end of last year.
Given the ESG-conscious business practices, this year large corporations around the world are raising more funds via ESG bonds, said Ms Ariya. This will support the goal of reducing greenhouse gas emissions to zero, while companies aim to be good corporate citizens, she said.
“Both the government and the business sector are increasingly interested in ESG issuance,” said Ms Ariya.
Since last year, Ratch Group, Global Power Energy, B.Grimm Power and SPCG issued ESG bonds to invest in wind power generation.
“Issuing ESG bonds is not a gimmick because it is proven that ESG plays an important role in a company’s sustainability and investors can rely on sustainability in the long term,” she said.