In Thailand, a signiﬁcant spotlight is now directed toward the adoption of Environmental, Social, and Governance (“ESG”) principles, attracting the attention of regulators, investors, and other stakeholders. This resonates with the global implementation of ESG-related regulations and societal expectations. Thailand’s ESG policy framework consists of a series of guidelines that may be observed by enterprises in those relevant sectors.
Presently, ESG-related disclosures are mandatorily required only for listed companies and sustainable and responsible investing funds (“SRI Funds”). Listed companies must comply with the guidelines set out by the Thai Security Exchange Commission (“SEC Reporting Guide”). This comprehensive guide encompasses all aspects that must be reported annually through the 56-1 form (“One Report”), with a speciﬁc focus on areas like climate change, environmental preservation, low carbon footprint, and inequality reduction. The disclosures are on a “comply-or-explain” basis. For instance, if a listed company does not disclose its GHG emissions, the company must clarify its reasoning for not making the disclosure. Listed companies are not required to align with international standards, although are encouraged to do so. Furthermore, asset managers overseeing SRI Funds are subjected to stringent reporting requirements to prevent instances of greenwashing.
In addition, The Bank of Thailand has introduced a policy on the business operations of ﬁnancial institutions related to the environment and climate change. Although not mandatory, ﬁnancial institutions may be expected to make ESG disclosures under this policy as the adoption will allow ﬁnancial institutions to manage risks, attract investors and customers, and contribute to long-term business viability in a sustainability-focused landscape.
In parallel, to facilitate the implementation of ESG policies, the country has established various sustainability policies, such as mobilizing transition ﬁnance for decarbonization projects and implementing the Bio-Circular-Green framework. Additionally, private companies are voluntarily reassessing their practices to prevent human rights violations, implement stringent corporate governance measures to prevent corporate oversight and engage in initiatives related to carbon credits aimed at reducing their carbon footprint.
A noteworthy recent development is Thailand’s introduction of the Thailand Taxonomy, aligned with the ASEAN and EU taxonomy. In its initial phase, this framework will adopt a targeted approach, focusing on the energy and transportation sectors. While not mandatory for companies to formulate transition plans, listed companies have the option to utilize the Thailand Taxonomy as a means of showcasing their commitment to sustainability, which can encompass transition plans, among other aspects.