The Bank has continuously cooperated with various sectors to strengthen sustainability within the Thai banking sector. In 2023, the Bank collaborated with the Thai Bankers’ Association in producing the Industry Handbook: Internalizing Environmental and Climate Change Aspects into Financial Institution Business for Banks, in alignment with the Bank of Thailand’s (BOT) policy statement on Internalizing Environmental and Climate Change Aspects into Financial Institution Business, which requires commercial banks to incorporate environment and climate change opportunities and risks into their governance structure, strategy formulation, risk management and information disclosure.
The Bank has collaborated with the Thailand Taxonomy Board, comprising agencies from both the public and private sectors, to develop the Thailand Taxonomy namely a classification system of economic activities deemed as environmentally-sustainable. Phase 1 of this work covers the energy and transportation sectors which create a high proportion of greenhouse gas emissions. To increase knowledge and understanding within the organization, the Bank organized a training session under the topic “Inside Thailand Taxonomy: Journey to Sustainability” with experts from the Climate Bond Initiative (CBI). We also encouraged our employees to participate in the Thai Bankers’ Association’s training course on Thailand Taxonomy Phase 1 via the Bank's online learning platform.
The Bank recognizes that increasing household debt has been an enduring challenge for Thailand. The Bank cooperates and supports measures to sustainably solve the household debt problem in line with the BOT’s responsible lending guidelines. In 2023, the BOT launched a new regulation to manage household debt with an aim to ensure appropriate debt management throughout the debt cycle, covering development and advertisement of lending products, granting of loans, troubled debt management and debt relief, as well as a strict requirement to provide accurate and full information on loan conditions and risks that customers should be aware of. Although this regulation will come into effect in 2024, the Bank has already begun necessary preparations to adjust its relevant credit management processes accordingly.
The Bank continues to increase employee awareness and understanding of ESG risks and opportunities through online seminars, its online learning platform, internal training courses and internally published articles, while also sending employees to attend external training and seminars. In 2023, we organized seminars on various topics such as “Energy Transition: the Business Survival in the Era of Global Chaos”, “Carbon Credits and Renewable Energy Trading Market, Opportunities for Business in an Era of Global Chaos”, and “Carbon Footprint, Carbon Credits & the Carbon Credit Market and the Credit Work Role Now and in the Future”, so that our staff can apply the knowledge received to provide useful advice to customers. With our longstanding commitment to operating business in line with sustainable finance guidelines, in 2023 the Bank received three global awards related to sustainable finance, namely Best Bank for Sustainable Finance in Thailand Award, and Outstanding Leadership Award in ESG-related Loans for Asia-Pacific from Global Finance magazine’s Sustainable Finance Awards 2023, and Best Sustainable Bank in Thailand in 2023 from FinanceAsia magazine.
Sustainable Lending
The Bank has established a responsible lending policy which entails setting up an Exclusion List of loan applicants or activities that the Bank does not provide credit for. We also developed and incorporated ESG risk mitigation dimension in our credit assessment and underwriting process, along with communicating relevant policies and guidelines and providing training to relevant business and working units to emphasize the importance of considering ESG risks in the lending process to ensure efficient and effective responsible lending management. The Bank’s Board of Directors is responsible for formulating policies and strategies and monitoring responsible lending operations. The Corporate Governance Committee and the Risk Oversight Committee are responsible for providing necessary support to the Board of Directors. Executives and staff in departments concerned are responsible for implementing the related credit policies and driving the Bank’s ESG strategy and strategic direction on responsible lending. Furthermore, the Bank allows stakeholders to express their opinions on ESG impacts that may occur from the Bank’s lending through the Bank's contact channels.
Integrating ESG Issues into the Credit Approval Framework
The Bank considers ESG issues when considering loans to prevent negative impacts that may arise from projects or activities which the Bank provides credit to, while also creating ESG risk and impact assessment tools for credit officers. The Bank uses the following definitions of ESG factors when considering business loans, project loans and personal loans:
- Environmental
such as deforestation, damage to natural resources and biodiversity loss, the creation of soil, water, air, noise and sea pollution, as well as climate change that is deemed to have an impact on business activities.
- Social
such as human rights violations, labor rights violations, unfair labor practices, household debt problems, community rights violations, and adverse impacts on the community which includes indigenous peoples and minorities, such as the loss of arable land, involuntary migration, restricted access to natural resources and public utilities, and negative impact on income, culture, lifestyle, health and safety.
- Governance such as corruption, violation of personal data rights, money laundering, financing terrorism and the proliferation of weapons of mass destruction, infringement of intellectual property, and unfair trade competition.