Sustainable Finance
Commitment
To manage ESG risks in lending and promote sustainable finance to support the achievement of the Sustainable Development Goals and the goals of the Paris Agreement.
Materiality
In 2024, Thailand experienced severe impacts from climate change, with widespread flooding affecting several areas in the north and south, while many provinces faced extreme droughts. These events caused damage to the agricultural, industrial and service sectors, as well as to people’s livelihoods and property. Additionally, Thailand is confronting urgent environmental issues that pose widespread risks to public health, particularly air pollution, including the harmful effects of PM 2.5 particles. In the trade sector, the European Union introduced the Carbon Border Adjustment Mechanism (CBAM) for certain goods. This measure will require exporters of these goods to the EU to adapt by reducing carbon emissions in their production processes to remain competitive. Furthermore, several other countries are considering the implementation of similar carbon-related mechanisms in the future. Thailand has already introduced carbon pricing through excise taxes on fuel, and is in the process of drafting the Climate Change Bill aimed at providing effective incentives for carbon reduction within the business sector. This includes both regulatory measures, such as the Emission Trading System (ETS), and supportive measures, such as the Climate Fund to promote green activities. These initiatives will inevitably impact business operations moving forward. Companies that respond proactively will gain a competitive advantage over those that adapt more slowly.
The increasing trend of conducting business with a focus on environmental and social responsibility, the transition to Net Zero, and climate change adaptation presents an opportunity for the Bank to support financial knowledge, introduce financial and investment products, and enhance customer engagement. These efforts will help drive businesses toward their sustainability goals. Additionally, the Bank has implemented a credit underwriting process that prioritizes environmental, social, and governance (ESG) risks to prevent potential environmental and social impacts arising from projects or activities supported by the Bank.
Management Approach
Enhancing Sustainable Finance
The Bank collaborates with various sectors to continuously advance sustainability initiatives within the banking sector. In 2024, the Bank participated in the Financing the Transition: Financing for Sustainability Adaptation event, organized by the Bank of Thailand, to launch loan products designed to support Thai businesses in their transition toward environmental sustainability. During the event, the Bank introduced the Bualuang Green Financing for Transition to Environmental Sustainability loan which is a loan product designed to support our customers in the areas of climate change mitigation, climate change adaptation, and pollution reduction. The Bank aims for this product to facilitate the transition of businesses to more environmentally responsible operations and help them comply with new global trade regulations that give importance to environmental sustainability and climate change, as well as forthcoming domestic regulations.
In addition, the Bank is committed to enhancing employees’ in-depth understanding of key ESG issues relevant to the business sector, with the goal of providing valuable and practical advice to customers. This is accomplished through ongoing educational initiatives including seminars and the dissemination of news and articles via internal communication channels. In 2024, the Bank organized knowledge sharing activities covering a wide array of pertinent topics, such as Global Warming and Biodiversity Loss: Impacts on Customers and the Bank, Carbon Credits: Opportunities for SME, Carbon Pricing Measures: Who is Affected and How to Respond, Energy Management in Buildings: Sustainable Alternatives for the Future, and Opportunities and Challenges in Transitioning to a Low-Carbon Automotive and Component Industry in Thailand
Responsible Lending
The Bank has established a responsible lending policy as a guideline for the credit assessment and underwriting process with due consideration of ESG issues, as well as for guiding environmentally and socially responsible loans. The Bank has also developed an exclusion list of loan applicants or activities for which it does not provide credit. The policy and practices have been communicated to the relevant departments, and ongoing training is provided to emphasize the importance of considering ESG risks in the credit underwriting process for employees in the relevant units. The Bank encourages stakeholders to share their feedback on the potential ESG impacts arising from its lending activities through the Bank’s communication channels. This feedback will be used as input for reviewing and updating the responsible lending policy and practices.
Metrics and Compensation of Executives
The number of knowledge sharing activities and the amount of green and transition loans are used, as part of an annual performance evaluation, to determine compensation of executives in related HR and business units.
The Bank collaborates with various sectors to continuously advance sustainability initiatives within the banking sector. In 2024, the Bank participated in the Financing the Transition: Financing for Sustainability Adaptation event, organized by the Bank of Thailand, to launch loan products designed to support Thai businesses in their transition toward environmental sustainability. During the event, the Bank introduced the Bualuang Green Financing for Transition to Environmental Sustainability loan which is a loan product designed to support our customers in the areas of climate change mitigation, climate change adaptation, and pollution reduction. The Bank aims for this product to facilitate the transition of businesses to more environmentally responsible operations and help them comply with new global trade regulations that give importance to environmental sustainability and climate change, as well as forthcoming domestic regulations.
In addition, the Bank is committed to enhancing employees’ in-depth understanding of key ESG issues relevant to the business sector, with the goal of providing valuable and practical advice to customers. This is accomplished through ongoing educational initiatives including seminars and the dissemination of news and articles via internal communication channels. In 2024, the Bank organized knowledge sharing activities covering a wide array of pertinent topics, such as Global Warming and Biodiversity Loss: Impacts on Customers and the Bank, Carbon Credits: Opportunities for SME, Carbon Pricing Measures: Who is Affected and How to Respond, Energy Management in Buildings: Sustainable Alternatives for the Future, and Opportunities and Challenges in Transitioning to a Low-Carbon Automotive and Component Industry in Thailand
Responsible Lending
The Bank has established a responsible lending policy as a guideline for the credit assessment and underwriting process with due consideration of ESG issues, as well as for guiding environmentally and socially responsible loans. The Bank has also developed an exclusion list of loan applicants or activities for which it does not provide credit. The policy and practices have been communicated to the relevant departments, and ongoing training is provided to emphasize the importance of considering ESG risks in the credit underwriting process for employees in the relevant units. The Bank encourages stakeholders to share their feedback on the potential ESG impacts arising from its lending activities through the Bank’s communication channels. This feedback will be used as input for reviewing and updating the responsible lending policy and practices.
Metrics and Compensation of Executives
The number of knowledge sharing activities and the amount of green and transition loans are used, as part of an annual performance evaluation, to determine compensation of executives in related HR and business units.
Business Loans and Project Loans
We have incorporated ESG considerations into our business and project loan approval process, starting from Know Your Customer (KYC) and Customer Due Diligence (CDD) procedures. This includes addressing issues such as money laundering, financial support for terrorism, and the proliferation of weapons of mass destruction, as well as running background checks and reviewing any negative ESG-related histories of loan applicants. This may involve assessing severe environmental and natural resource destruction, labor or community rights violations, human rights abuses, corruption, unfair trade practices, and intellectual property or personal data rights infringements. These measures are designed to prevent legal risks, evaluate the customer’s ability to repay, and safeguard the Bank’s reputation. Business and project loan applications are meticulously reviewed in accordance with the Bank’s established credit underwriting standards, with appropriate control and monitoring mechanisms tailored to the level of risk involved.
We place high importance on projects that may cause severe adverse social and environmental impacts, such as mining, power plants and building infrastructure systems. Therefore, the Equator Principles are applied as part of the credit underwriting process and we require comprehensive environmental and social due diligence for each project. This includes consideration of greenhouse gas emissions (Scope 1 and 2) data and the attainment of environmental and social management certifications at either the national or international level, such as the ISO 14001 Environmental Management System, ISO 45001 Occupational Health and Safety Management System, or OHSAS 18001. Additionally, the management of environmental and social risks and impacts is also a factor for consideration in the credit underwriting process. The Bank’s guidelines for project finance are outlined as follows:
The Bank stipulates that project loan applications which may pose potential environmental and social impacts must include appropriate and sufficient measures to prevent and mitigate such impacts. For loan applications categorized under Category A, an independent expert in environmental and social matters must be engaged to review the risks and impacts assessment as well as the environmental and social risk management system of the project. Furthermore, the Bank requires higher approval criteria based on the level of risk. After a project loan has been approved, the Bank’s officers will regularly monitor compliance with the environmental and social impact mitigation measures during the credit limit review process throughout the term of the project financing.
Project Finance Results in 2024
Guidelines for Project Finance
We place high importance on projects that may cause severe adverse social and environmental impacts, such as mining, power plants and building infrastructure systems. Therefore, the Equator Principles are applied as part of the credit underwriting process and we require comprehensive environmental and social due diligence for each project. This includes consideration of greenhouse gas emissions (Scope 1 and 2) data and the attainment of environmental and social management certifications at either the national or international level, such as the ISO 14001 Environmental Management System, ISO 45001 Occupational Health and Safety Management System, or OHSAS 18001. Additionally, the management of environmental and social risks and impacts is also a factor for consideration in the credit underwriting process. The Bank’s guidelines for project finance are outlined as follows:
- Project loan applications are classified according to the level of environmental and social risks and impacts into three categories:
- Category A refers to projects that may have high environmental and social impacts.
- Category B refers to projects that may have moderate environmental and social impacts.
- Category C refers to projects that may have low or no environmental and social impacts.
- In cases where the project loan application is classified under Category A or Category B, a comprehensive assessment of the environmental and social risks and impacts must be conducted in accordance with the criteria set by the Bank, as follows:
- The Customer is required to manage environmental and social risks and impacts of the project and submit an Environmental and Social Impact Assessment (ESIA) report for the project that meets acceptable standards.
- The Bank’s officers must review the customer’s environmental and social impact assessment report and other related documents to identify significant environmental and social risks and impacts, as well as measures to prevent and mitigate these risks and impacts. The results of such a review will be used as information for considering credit underwriting and determining the terms and conditions of the loan as appropriate.
- The Customer is required to manage environmental and social risks and impacts of the project and submit an Environmental and Social Impact Assessment (ESIA) report for the project that meets acceptable standards.
The Bank stipulates that project loan applications which may pose potential environmental and social impacts must include appropriate and sufficient measures to prevent and mitigate such impacts. For loan applications categorized under Category A, an independent expert in environmental and social matters must be engaged to review the risks and impacts assessment as well as the environmental and social risk management system of the project. Furthermore, the Bank requires higher approval criteria based on the level of risk. After a project loan has been approved, the Bank’s officers will regularly monitor compliance with the environmental and social impact mitigation measures during the credit limit review process throughout the term of the project financing.
Project Finance Results in 2024
|
Risk Category |
Number of Projects |
|
Category A |
1 |
|
Category B |
16 |
|
Category C |
7 |
|
Total |
24 |
|
Outcome |
Number of Projects |
|
Approved |
20 |
|
Declined |
0 |
|
Under consideration |
4 |
Personal Loans
The Bank integrates ESG factors into the loan approval process for personal loans, starting with Know Your Customer (KYC) and Customer Due Diligence (CDD) procedures. The ESG factors considered include issues relating to money laundering, financial support for terrorism, and the proliferation of weapons of mass destruction. Furthermore, the purpose of the loan application must not violate any legal requirements and should not result in severe social or environmental impacts. In addition, the Bank assesses the customer’s ability to repay the loan based on the Bank’s criteria, terms and internal regulations, considering the net cash remaining after all debt obligations to ensure it is sufficient to cover basic living expenses. This is aimed at preventing customers from accumulating excessive debt that could adversely affect their quality of life, particularly for vulnerable groups such as the elderly, low-income individuals and first jobbers. Once a loan is approved, the Bank monitors the customer’s spending and repayment behavior to ensure that the credit limit remains aligned with their repayment capacity. The Bank also closely monitors economic, social, natural disaster, and pandemic risks that may impact a customer’s ability to repay debt, in order to identify appropriate mitigation measures to assist affected customers.
In line with the Responsible Lending principles of the Bank of Thailand, in 2024 the Bank supported a sustainable solution to Thailand’s household debt problems by focusing on loan management throughout the debt cycle. This covers the period leading up to indebtedness and the period after, the affordability of the debt payments, prosecution of legal action, promoting financial discipline to customers, providing all information and warnings relating to terms and conditions that the customers should know about, and nudging to alter customer behavior. The Bank communicates such principles to executives and employees at all levels, and organizes training about the guidelines in compliance with Responsible Lending principles to employees in related units.
In line with the Responsible Lending principles of the Bank of Thailand, in 2024 the Bank supported a sustainable solution to Thailand’s household debt problems by focusing on loan management throughout the debt cycle. This covers the period leading up to indebtedness and the period after, the affordability of the debt payments, prosecution of legal action, promoting financial discipline to customers, providing all information and warnings relating to terms and conditions that the customers should know about, and nudging to alter customer behavior. The Bank communicates such principles to executives and employees at all levels, and organizes training about the guidelines in compliance with Responsible Lending principles to employees in related units.
Sustainable Financial Products
The Bank provides a diverse array of financial products that support environmentally-sustainable activities, thereby assisting customers to achieve their sustainability objectives and reduce greenhouse gas emissions. This initiative helps to achieve the Sustainable Development Goals (SDGs) and Thailand’s climate targets.
Corporate Customers
Corporate Customers
- Loans for Renewable Energy
The Bank supports renewable energy power plant businesses to strengthen energy security while reducing greenhouse gas emissions in the power generation sector, a major source of emissions. This is accomplished by providing financing to corporate customers for investments in the production and transmission of electricity from renewable energy sources, both domestically and internationally, including solar, wind, hydroelectric and biomass power plants. - Sustainability-linked Loans
The Bank incentivizes corporate customers, both domestic and international, to achieve their sustainability goals by providing sustainability-linked loan initiatives. Customers will receive special privileges upon successfully meeting the sustainability targets, such as goals related to GHG reduction, energy efficiency improvement, and the reduction of natural resource usage. - Loans for Electric Mass Transit System Project
We provide support for the development of electric mass transit systems to enhance public transportation convenience, alleviate traffic congestion, and reduce greenhouse gas emissions associated with the use of fossil fuel-powered vehicles. - Loans for Environmentally-friendly Real Estate Projects
We provide loans for real estate projects, both domestic and international, that are designed with a focus on efficient use of resources and energy, reducing greenhouse gas emissions, promoting the health and wellbeing of building occupants, and adhering to internationally recognized green building standards, such as the LEED certification by the United States Green Building Council (USGBC). - Loans for EV Businesses
The Bank supports the transition of the automotive industry from the production of internal combustion engine vehicles to electric vehicles, with the aim of reducing air pollution and lowering greenhouse gas emissions from the burning of fossil fuels. This initiative also aligns with the government’s policy to establish Thailand as a regional hub for electric vehicle manufacturing. We provide financing to electric vehicle manufacturers and importers, as well as loans to support the development of the electric vehicle ecosystem, such as EV charging stations. - Loan for Energy and Environmental Preservation
The Bank encourages large enterprises overseas to operate their businesses in an environmentally-friendly manner, reduce pollution, and use resources efficiently by providing loans for various activities, such as recycling materials, waste treatment through biological methods, energy efficiency improvements, the installation of solar panels, and the purchase of zero-emission vehicles. - Bualuang Green Loan and Bualuang Green Solar Energy Loan
The Bank encourages SME to operate in an environmentally-friendly manner and supports the country’s Bio-Circular-Green (BCG) Economy development policies. This is done through the offering of the Bualuang Green loan for SME that invest in the following objectives:
- Investment in renewable energy, energy reduction initiatives, and the production of electric vehicle and motorcycle components.
- Investment in waste management for recycling or reuse.
- Investment in the production or use of biodegradable materials to replace environmentally harmful chemicals.
- Bualuang Transformation Loans
In 2024, the Bank launched the special loan program, Bualuang Transformation loan, for SME seeking to increase liquidity and recover businesses impacted by the Covid-19 pandemic, enabling them to continue operations. The program also supports investments to help businesses adapt to changes in the modern world. The loan provides support for investments in three areas: 1. Digital technology, 2. Green, and 3. Innovation. - Bualuang Green Financing for Transition to Environmental Sustainability Loans
We are committed to being part of Thailand’s efforts to achieve Net Zero carbon emissions, while supporting businesses in their timely transition to low-carbon operations. In 2024, we introduced the Bualuang Green Financing for Transition to Environmental Sustainability loan to support investments aimed at reducing greenhouse gas emissions, adapting to climate change, and minimizing pollution. This loan is available to both large corporates and SME. - Bualuang Poonphol Green Loan
We support the improvement of homes to be environmentally-friendly, energy-efficient, and suitable for elderly and disabled residents through the Bualuang Poonphol Green loan. In 2024, We collaborated with partners, including the Provincial Electricity Authority (PEA), CRC Thaiwatsadu, and SCG Living & Housing Solutions, to offer a range of exclusive benefits for Bualuang Poonphol Green loan customers. These benefits include free design and surveys for solar rooftop installations, as well as special discounts on the purchase of solar panels, to motivate home renovations that are both environmentally-friendly and cost-efficient in terms of electricity usage. - Bualuang Poonphol Green Loan
To address the growing demand for energy-efficient and environmentally-friendly housing, the Bank has introduced Bualuang Green Home loans for purchasing new homes equipped with rooftop solar panels from real estate projects partnered with the Bank. These include prominent developers such as Sansiri, Pruksa, Supalai, Britania, Sena and Property Perfect. Interested customers can find a list of participating real estate projects on the Bank’s website.
Furthermore, we have extended the Bualuang Green loan to support entrepreneurs investing in the installation of solar panel systems on the rooftops of their businesses, through the Bualuang Green Solar Energy loan. This initiative is designed to help entrepreneurs reduce electricity costs while simultaneously decreasing greenhouse gas emissions.
Individual Customers
ESG Bonds
The Bank plays a pivotal role in continuously supporting fundraising efforts for projects and activities that benefit both society and the environment in the public and private sectors. This is achieved through our role as an underwriter of green bonds, social bonds, sustainability bonds, and sustainability-linked bonds that meet international standards. Additionally, the Bank also acts as a green structuring advisor on the issuance of green bonds and sustainability bonds for businesses seeking to raise capital through the capital markets. In 2024, the total value of sustainability bonds issued in the Thai capital market amounted to Baht 106,332 million, of which Baht 62,000 million, representing 58.31% of the total ESG bonds issued, was underwritten by the Bank.
Mutual Funds for Sustainability
The Bank supports businesses that are environmentally and socially responsible with strong corporate governance practices. In collaboration with our asset management subsidiary, we select and offer sustainable investment products. In 2024, we introduced three new funds: Bualuang Sovereign Instruments Thailand ESG Fund (B-SI-THAIESG), Bualuang Equity Thailand ESG Fund (B-EQ-THAIESG), and Bualuang Mixed Thailand ESG Fund (B-MIXED-THAIESG). As a result, by the end of 2024, we offered a total of 12 sustainable funds with net assets under management amounting to Baht 16,479.39 million.
|
Funds |
Investing Strategy |
Details |
AUM Unit: Million Baht |
|
ESG Integration |
Invest in companies that support society in four areas: environmental, social, good governance and anti-corruption. The fund donates 40 percent of income from fund management fees to a foundation or a social development organization. |
272.36 |
|
|
Bualuang Thai Equity CG Fund (B-THAICG), |
ESG Integration |
Invest in companies with good corporate governance by considering the CG Scoring from the Thai Institute of Directors or other relevant agencies. The Bualuang Thai Equity CG Fund (B-THAICG) also considers companies that are certified as members of Thailand’s Private Sector Collective Action Against Corruption (CAC). |
5,813.21 |
|
Bualuang Sustainable Investing Portfolio (B-SIP), Bualuang Sustainable Investing Portfolio RMF (B-SIPRMF) and |
Thematic Investing |
Invest in companies worldwide that are sustainably managed with concern on social and environmental impact in every step of the production of goods and services. |
4,756.40 |
|
Thematic Investing |
Invest in securities or financial instruments of businesses engaged in sustainable innovations such as clean energy, electric vehicles, the circular economy, waste management, and energy storage. |
419.97 |
|
|
Bualuang Top-Ten Thailand ESG Fund (B-TOP-THAIESG) and Bualuang Equity Thailand ESG Fund (B-EQ-THAIESG) |
ESG Integration |
Invest in equities of listed companies on the Stock Exchange of Thailand (SET) and the Market for Alternative Investment (mai) that are recognized for their outstanding credentials in environment or sustainability practices. |
2,144.66 |
|
Bualuang Sovereign Instruments Thailand ESG Fund (B-SI-THAIESG) |
ESG Integration |
Invest in Thailand government securities, including green bonds, sustainability bonds and sustainability-linked bonds. |
2,697.79 |
|
ESG Integration |
Invest in equities of listed companies on the Stock Exchange of Thailand (SET) and the Market for Alternative Investment (mai) that are recognized for their outstanding credentials in environment or sustainability practices, as well as in Thai government securities, including green bonds, sustainability bonds and sustainability-linked bonds, which disclose information as required by the Securities and Exchange Commission (SEC). |
375 |
Engagement with Customers on ESG Issues
We engage with both business and individual customers on opportunities and challenges related to ESG issues or sustainability by offering financial products and services that support environmentally and socially responsible activities and businesses. This includes providing customer consultations, as well as offering ESG or sustainability-related knowledge through seminars, workshops and online communication channels.
Business Customers
We engage with business loan customers by supporting sustainable loan products and loans linked to sustainability practices. We also provide consultations regarding the potential impacts of new trade regulations, such as the European Union’s Carbon Border Adjustment Mechanism (EU CBAM) and the regulation regarding deforestation-free products from EU Deforestation Regulation (EUDR), carbon footprint assessments, investments aimed at reducing greenhouse gas emissions, and strategies for adapting to climate change. Furthermore, we advise on suitable sustainable loan products that align with customers’ investment needs. In terms of capital market fundraising, we support financing for projects or activities that benefit society and the environment by acting as the green structuring advisor for bond issuances in compliance with international standards. We also offer advisory services for the issuance of green bonds and sustainability bonds for businesses seeking to raise funds from the capital markets. In addition, we share our expertise on environmental risks and opportunities, including climate change, through seminars organized in collaboration with our partner network.
Individual Customers
We actively engage with individual customers by building awareness and understanding about sustainability issues that are significant to them, such as introducing the Bank’s sustainable financial products, retirement planning, debt management, energy-efficient homes, and solar panel rooftop installations. Customers are offered consultations at branch locations or via phone. Additionally, we regularly disseminate ESG or sustainability knowledge through various digital communication channels, such as the website, Facebook, LINE Official, mobile banking, and ATM. The Bank also participates in events such as the Sustainability Expo 2024, Green Technology Expo 2024, and the 24th Money Expo Bangkok. These platforms allow us to showcase sustainability efforts, offer guidance on sustainable financial products, and provide financial planning consultations to customers and the general public.
Business Customers
We engage with business loan customers by supporting sustainable loan products and loans linked to sustainability practices. We also provide consultations regarding the potential impacts of new trade regulations, such as the European Union’s Carbon Border Adjustment Mechanism (EU CBAM) and the regulation regarding deforestation-free products from EU Deforestation Regulation (EUDR), carbon footprint assessments, investments aimed at reducing greenhouse gas emissions, and strategies for adapting to climate change. Furthermore, we advise on suitable sustainable loan products that align with customers’ investment needs. In terms of capital market fundraising, we support financing for projects or activities that benefit society and the environment by acting as the green structuring advisor for bond issuances in compliance with international standards. We also offer advisory services for the issuance of green bonds and sustainability bonds for businesses seeking to raise funds from the capital markets. In addition, we share our expertise on environmental risks and opportunities, including climate change, through seminars organized in collaboration with our partner network.
Individual Customers
We actively engage with individual customers by building awareness and understanding about sustainability issues that are significant to them, such as introducing the Bank’s sustainable financial products, retirement planning, debt management, energy-efficient homes, and solar panel rooftop installations. Customers are offered consultations at branch locations or via phone. Additionally, we regularly disseminate ESG or sustainability knowledge through various digital communication channels, such as the website, Facebook, LINE Official, mobile banking, and ATM. The Bank also participates in events such as the Sustainability Expo 2024, Green Technology Expo 2024, and the 24th Money Expo Bangkok. These platforms allow us to showcase sustainability efforts, offer guidance on sustainable financial products, and provide financial planning consultations to customers and the general public.
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