Guide to Sustainable Financing in Thailand

In Thailand, promoting sustainable finance is one of the main priorities of Thai policymakers and financial market authorities, but there is currently no primary regulation dealing specifically with sustainable financing.

On 18 August 2021, the Fiscal Policy Office (FPO), the Bank of Thailand (BOT), the Office of Insurance Commission (OIC), the Stock Exchange of Thailand (SET) and the Security and Exchange Commission (SEC) formed a working group on sustainable finance (BOT news dated 18 August 2021 – “Joint Statement on Sustainable Finance Initiatives for Thailand”) and jointly issued guidelines entitled “Sustainable Finance Initiatives for Thailand”, to establish the direction and structure for promoting sustainable finance for the financial sector in Thailand (the “Guidelines”).

The Guidelines set out the following five key actions:

In 2020, the SEC issued a regulation to regulate the issuance and offering for sale of green bonds, social bonds and sustainability bonds (GSS Bonds) in Thailand (pursuant to the Notification of the Capital Market Supervisory Board No. TorJor. 43/2563 Re: Filing for the Offer for Sale of Bonds (No. 20) dated 17 July 2020, which is an amendment to the previously issued Notification of the Capital Market Supervisory Board No. TorJor. 10/2556 Re: Filing for the Offer for Sale of Bonds dated 11 March 2013, which regulates the issuance of bonds in general in Thailand), whereby the issuer must comply with internationally recognised standards, with the core objective being to specifically finance projects that contribute to environmental conservation and/or social development.

One year later, the SEC issued another regulation introducing the issuance and offer for sale of sustainability-linked bonds (SLBs) (pursuant to the Notification of the Capital Market Supervisory Board No. TorJor. 31/2564 Re: Application and Approval for Offer for Sale of Newly Issued Sustainability-Linked Bonds dated 27 April 2021). This regulation sets out criteria for the issuers of SLBs, distinct from GSS Bonds, with the aim being to support companies with a sustainable strategy in their fundraising, whereby the proceeds from SLBs can be used for general purposes.

A number of GSS Bonds and SLBs (collectively, ESG Bonds) have been issued in Thailand to fund sustainability-related causes in recent years.

In 2021, THB152.8 billion worth of GSS Bonds were issued, representing an increase of 77% from 2020 (THB86.4 billion) and consisting of THB28.7 billion worth of green bonds, THB4 billion worth of social bonds and THB120 billion worth of sustainability bonds. In addition, there were two issuers of SLBs (a new type of ESG Bond introduced in Thailand in 2021): Thai Union Group (THB11 billion) and Indorama Ventures (THB10 billion) (Thansettakij news dated 22 January 2022 – “THB 153 billion worth of ESG Bonds issued in Thailand in 2021”).

To serve as an information hub for ESG Bonds, the SEC and the Thai Bond Market Association (ThaiBMA) jointly designed and launched an information platform for ESG Bonds (SEC news no.201/2563 dated 21 October 2020 – “the SEC and the ThaiBMA launched the “Information Platform” for ESG bonds”), upon which information about ESG Bonds issued by Thai entities can be found, including details on a bond's key features, information of the issuer, external review report, the standards for the issuing of such bond, etc.

In November 2020, a local green bond verifier was introduced by the Thai Rating and Information Services Co. Ltd (TRIS), a credit rating agency founded by the Ministry of Finance and the BOT to support the development of the domestic bond market (Bangkok Post article: "Tris Rating debuts green bond verifier"). TRIS's verification fee per issuance is substantially less than the rates charged for international verification, leading to cost savings for the local green bond verification procedure.

As the focus begins to shift towards sustainable development, regulators have also provided incentives to create more opportunities and support companies' efforts towards sustainable finance. In 2022, the SEC has exempted ESG Bonds issued no later than May 2025 from application fees and filing fees (pursuant to the SEC Notification No. GorMor. 7/2565 Re: Waiver of Application Fees for the Offer for Sale of Green Bonds, Social Bonds, Sustainability Bonds and Sustainability-liked Bonds dated 22 April 2022 and the Notification of the SEC Office No. SorMor. 15/2565 Re: Waiver of Filing Fees for the Offer for Sale of Green Bonds, Social Bonds, Sustainability Bonds and Sustainability-liked Bonds dated 27 April 2022). The ThaiBMA also announced that the registration fees for ESG Bonds registered up until 30 June 2022 would be waived (pursuant to the Notification of the ThaiBMA Re: Setting the Registration Fees for Green, Social and Sustainable Bonds), to support companies' sustainable bond issuance and reduce the costs of fundraising, in line with the relevant SEC regulations. Moreover, annual registration fees for bonds with a maturity date exceeding seven years are also waived, to encourage long-term sustainable finance practices.

In addition, the SEC has administered a number of guidelines and incentives for ESG Bonds issuances, including the guidelines on issuance and offer for sale of GSS Bonds, to encourage the financing of projects that contribute to environmental conservation and social development and for SLBs to encourage the financing of companies with sustainability-related strategies.