“Social responsibility and sustainable profit” can go hand in hand according to the chief of Thailand’s government pension fund. The UN and some of the biggest players in the Thai economy, are working together to support efforts by the country’s finance and banking institutions to speed up the South East Asian country’s transition to a net zero carbon economy.
It is increasingly recognized that the finance and banking sectors can have a huge influence on the economy, through the way that they decide to invest in, and fund, businesses, and in Thailand, the UN is helping the government to raise awareness of the importance of sustainable finance.
Ahead of a UN-backed event aimed at encouraging Thai finance leaders to adopt sustainable business practices, Eric Usher, the head of the UN Environment Programme Finance Initiative, spoke with Srikanya Yathip, Secretary General of the Thai Government Pension Fund (GPF) and Kattiya Indaravijaya, CEO of Kasikornbank for UN News.
Eric Usher said, "When the UN Environment Programme Finance Initiative began in 1992, as one of the first partnerships with the global financial sector based on sustainable finance, it’s fair to say that it was a niche topic. After all, financial institutions don’t cut down trees, so what do they have to do with the environment? Since then, it’s understood that lending has a real impact: banks can choose whether or not to finance clients who cut down trees, so the actions and policies of banks have a big impact on the environment. Why is sustainable finance a relevant topic for your organisations?"
Srikanya Yathip said, "Because we believe that our investment decisions can have a transformational effect. If we can rebuild our world sustainably, there will no longer be a need to protect the environment or society. As a pension fund and institutional investor, we are privileged to be able to decide what and where we invest, and we make sure to align our corporate behaviour with the wider objectives of society, as well as look for long-term financial returns. For us, it’s about doing well by doing good: Social responsibility and sustainable profit can go hand in hand. And, taking the current situation into consideration, with the extreme pressures we are all facing from COVID-19, if we want to protect our bottom line, we have to protect others."
Kattiya Indaravijaya said, "We need to care about all stakeholders: customers, employees, suppliers and community. Sometimes that means a trade-off between short term pain and long-term gain. In the banking industry you need two kinds of licence. The first is a banking licence, that allows you to operate. The second is a social licence that we need to earn from the community. If the community cannot survive, neither can we. A recent survey found that 74 per cent of those surveyed do not want to support products that are not environmentally friendly. This shows that society is moving towards sustainable development. If we want to stay relevant, we can’t ignore this trend."
Eric Usher said, "There are two camps today when it comes to sustainable development. Once camp says that recovering from the crisis is the priority, and sustainability should be put on hold. The other camp says that now is the opportunity to invest sustainably, respond to the climate crisis and shift to a net-zero carbon economy. What is your view?"
Srikanya Yathip said, "In Thailand the government is producing a national masterplan, with a goal of achieving net zero. From what I understand, the government will present this masterplan at COP26. I’ve seen some drafts of the plan, and it would affect many businesses. The proposed changes include a move to more low carbon power generation, support for the electric vehicle industry, and for the circular economy. We want to be a leader in investing, and we’ve made a commitment to be a truly responsible investor. We want to join the race to net zero, and develop guiding principles for an action plan by next year."
Kattiya Indaravijaya said, "Moving to net zero is very important, and we’ve seen nations and organizations committing to reaching the goal within the next 30 years. That means that everyone knows that it’s important, but it will take time and a lot of effort to get there. Kasikornbank is willing to participate in net zero and sustainable growth, by helping our customers to do business in a more sustainable way. We have the policies in place, and the intention to make it happen. We have achieved some of our targets, but we need to speed up and do more as an industry: responsible lending practices must be part of business operations; financial institutions need to work more closely together; and businesses, regulators and consumers need to be engaged on sustainability issues."
Srikanya Yathip said, "I agree. As a corporate citizen, we have a responsibility to society. Collective efforts speak louder: alone we can do little, together we can do so much, and the sky’s the limit."
A principled response
- GPF, one of the largest investors in Thailand, is currently the only investor in the country to have signed up to the Principles for Responsible Investment, whose signatories are expected to take into account the environmental and societal implications of their decisions.
- Kasikornbank, one of the country’s top commercial banks, was the first in Thailand to sign the UN Principles for Responsible Banking. Signatory banks are committed to do business in alignment with the Paris Climate Agreement and the UN 2030 Agenda for sustainable development.
- In September, a United Nations delegation headed by Gita Sabharwal, the UN Resident Coordinator in Thailand, will co-host with Apisak Tantivorawong, the Thai Minister of Finance, Yathip and Indaravijaya, a high-level roundtable to encourage Thai banks and investors to commit to responsible, and sustainable business practices, ahead of COP26, the UN climate change conference due to be held in November.