LocationsThailand’s Path to an Inclusive Green Transition: Engaging the Private Sector in Investing in Planet
October 17, 2024
Recently, the world has raised USD 45 billion per year from the private sector, while 73 public and partially public climate funds are in place.
However, these efforts are insufficient, and countries are off-track in their progress toward the Sustainable Development Goals (SDGs) by 2030.
We need much more investment flowing into the planet and the people, from billions to trillions, as the World Bank proposes.
The Asia-Pacific Region, including Thailand, is no exception.
In the Asia-Pacific, no goal is on track to be achieved by 2030. With its current trajectory, the SDGs will not be achieved before 2062, at least 32 years behind schedule. Moreover, among the seventeen goals, SDG 13 on Climate Action is the only goal that exhibits ongoing regression.
Asia-Pacific remains both a victim and a major driver of climate change.
Thailand is a clear example of being one of the most vulnerable places to climate change despite emitting less than 1 percent of greenhouse gas emissions. With significant economic growth, infrastructure has been developed nationwide, but it needs to be adequately resilient to climate disasters and natural hazards.
The rising sea level is eroding the 3,000-km-long coastline of Thailand’s Gulf in the south, while northern Thailand is facing severe and unpredictable storms that have led to floods and deaths.
UNDP supports Thailand in stopping investing in harmful subsidies and starting to shift its focus to protecting and restoring nature, building resilient infrastructures where people and the planet are put at the center, and implementing business operations that consider nature.
SETTING BUSINESS OPERATIONS RIGHT WITH REGULATORY FRAMEWORK
One strategic initiative has been integrating environmental considerations into Thailand’s regulatory framework, specifically through the Securities and Exchange Commission (SEC). Publicly listed companies in Thailand must adhere to Environmental, Social, and Governance (ESG) principles, reporting their business practices to the SEC to maintain access to capital. With approximately 800 listed companies in Thailand, UNDP sees this as an entry point for building leverage.
In 2023, UNDP partnered with the SEC to introduce the SDG Guidebook for Business, which provides valuable guidance to Thai companies on how they can contribute to the country’s achievement of the SDGs. As Prime Minister Srettha Thavisin remarked during the launch:
"Sustainable development is a mega-trend that has established a new norm and order in conducting business. If any business cannot adapt to this new trend, it will lead to loss of opportunities, affecting the country’s competitiveness."
This guidebook has laid a strong foundation for expanding the SEC’s regulatory framework to cover climate and biodiversity, areas where UNDP is now providing technical support.
Building on SEC regulations for ‘Social’ and ‘Governance,’ which have already raised awareness on anti-corruption and human rights with support from UNDP and the European Union, UNDP is now working to introduce measurable environmental outcomes, such as carbon credits and biodiversity credits, into business reporting.
Carbon credits represent the reduction or removal of one ton of CO2, while biodiversity credits reflect efforts to conserve or restore ecosystems. For instance, a company might purchase carbon credits from a wind farm to offset emissions and biodiversity credits from a forest restoration project to support habitat conservation.
We are also ensuring that social aspects, like human rights in the context of climate change, are considered.
The potential for greenwashing in the use of carbon and biodiversity credits is a concern that UNDP is addressing in its work with stakeholders. One approach being discussed is to have third-party verifiers oversee and validate environmental claims made by businesses, ensuring authenticity and transparency.
UNDP’s Biodiversity Finance Initiative (BIOFIN) brings tested, globally reviewed principles and methodologies that ensure the environmental impact is real. These methodologies are trusted by the private sector and provide a strong position for UNDP to work closely with businesses.
BRING BUSINESSES TO INVEST MORE IN NATURE-BASED SOLUTIONS
Given the insufficient government budget to address climate change and biodiversity loss, UNDP BIOFIN’s mission in Thailand is to identify potential investments from the private sector and facilitate finance solutions with them. One successful collaboration has been with the KrungThai Bank, and this partnership is based on four key success factors:
- Aligned Visions and Policies: KrungThai Bank’s vision for environmental protection was aligned with national goals, and UNDP supported the development of an action plan that strengthened their contribution to biodiversity during the global travel ban caused by COVID-19.
- Tangible Returns: Private sector engagement often depends on demonstrating clear, actionable plans and returns. For KrungThai Bank, UNDP showed how their investment in a crowdfunding platform on Koh Tao could protect marine life, improve waste management, and support local jobs, preventing biodiversity loss on the island.
- Leveraging Strengths: KrungThai Bank’s digital platform became a focal point for financial mechanisms tailored to support their existing operations, such as a crowdfunding model for environmental conservation.
- Investing in Long-Term Partnerships: As businesses realize the benefits of these partnerships, long-term engagement becomes essential. KrungThai Bank’s role in the biodiversity finance initiative grew stronger as the partnership evolved, showing the importance of building lasting relationships.
“To enhance sustainability, a fund was established for each profession on the island, providing financial management education. Collaboration with the local municipality led to the creation of an environmental conservation fund, supporting divers in exploring and maintaining Fish Aggregating Devices alongside local fishermen,” explained Nuansiri Vaidyanuvatti, Deputy Managing Director of KrungThai Bank.
UNDP’s approach to engaging businesses also differs based on their size:
- Corporate and Large Companies: Although these make up only about 1% of all companies, they have a significant impact due to their investment value. UNDP engages them by demonstrating global market trends that reward companies with a positive environmental impact.
- SMEs: For smaller enterprises, UNDP shows how their business practices are critical to supply chains and corporate partners who must align with global environmental standards.
- Community-Based Social Enterprises: These organizations often adapt quickly, making them key partners in UNDP’s bottom-up approach to achieving national and global biodiversity goals.
CHANGE THE MINDSETS OF BUSINESSES FOR LONG-LASTING IMPACT
UNDP is also working to change the mindset of businesses through environmental cost-benefit analysis, helping them see the long-term benefits of investing in climate adaptation and biodiversity conservation. This framework shows companies how they can contribute to local communities, creating a positive feedback loop that benefits both the environment and their bottom line.
For example, the UNDP’s GCF-funded project has introduced multi-size companies to the value of climate adaptation, such as disaster risk reduction and community livelihood enhancement. Similarly, the UNDP’s mangrove management project in collaboration with the Blue Carbon Society and UNDP BIOFIN, focused on sustainable mangrove management, has worked with local communities in Phetchaburi to protect mangrove forests, which act as natural buffers to storm surges and flooding, helping Thailand adapt to climate change more effectively.
Through these multi-level interventions, UNDP is ensuring that Thailand’s private sector makes better decisions on where and how they invest. From business strategies to materials used in construction, companies are becoming active contributors to Thailand’s nationally determined contributions, aiming to increase biodiversity areas by 30% by 2030 and adapt to climate change through resilient practices.
Note: This blog was written with the interviews and support of colleagues from UNDP BIOFIN in Thailand, the Business and Human Rights Project funded by the European Union, and UNDP's GCF-funded project.
Focal Point for Climate Portfolio: khan.ram-indra@undp.org
Project Manager, BIOFIN Thailand: niran.nirannoot@undp.org
Project Manager, Business and Human Rights: tarinee.suravoranon@undp.org