BOT Consults on Phase I of Sustainable Finance Taxonomy Initiative
The Bank of Thailand (BOT) announced a consultation on the draft standards for grouping economic activities that take into account the environment (the sustainable finance taxonomy). The comment period for this consultation ends on January 26, 2023, with the final document expected to be released in the first quarter of 2023.
The taxonomy will be used to assess environmentally conscious business operations and is one of the reference options for accessing financial services and tools that will support businesses to help in transition toward environmental sustainability. The taxonomy is based on a principles-based approach and categorizes environmental considerations of various activities into a three-level "traffic-light system": green, yellow, and red.
- Green refers to activities that reduce climate change problems by net greenhouse gas emissions close to or equal to current zero, based on predicted indicators.
- Yellow (amber) refers to activities that do not have net greenhouse gas emissions close to or equal to zero and is in the process of adjusting to reduce greenhouse gas emissions.
- Red refers to activities that cannot be assessed as being greenhouse gas friendly. "These activities must be activities that do not cause significant negative effects (Do No Significant Harm) toward achieving other environmental objectives while taking social impact into account (Minimum Social Safeguards)."
The grouping of economic activities in Phase 1 will begin with the energy and transport sectors, as these constitute the major economic sectors that emit a high proportion of greenhouse gases. BOT will continue to assess other important sectors in the future. The objectives include climate change mitigation, climate change adaptation, sustainable use and protection of marine and water resources, resource resilience and transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity.
Keywords: Asia Pacific, Thailand, Banking, Securities, Taxonomy, ESG, Climate Change Risk, Sustainable Finance, BOT
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Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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