There has never been a more significant moment for countries, companies, and individuals to move towards a more sustainable future. Since 2015 when the United Nations established the 17 Sustainable Development Goals (SDGs) to be accomplished by 2030, governments and businesses around the world have ramped up efforts and joined forces to tackle the environmental, social and economic challenges of today, all with the aim of creating a better and brighter future.
This article is an extraction of the TechTalk Webinar “Green Tech: Exploring Sustainability & Climate Technology” presented by the British Chamber of Commerce Thailand’s Digital Technology Group (DTG), joined by James Moore, CEO of Wave Exponential PCL, Nattinee (Dora) Sae Ho, CEO of Thrive Venture Builder, and Bob Gallagher, CEO of Appsynth. For future DTG events check the BCCT calendar here.
The Current State of Green Tech in Thailand
There has been a positive shift towards sustainability in Thailand, mainly driven by increased corporate involvement and global events like COP. Five years ago, most of the conversation around green technology in Thailand was merely recycling. Today, it has broadened into the area of decarbonisation.
Despite the advancement, it’s important that companies and business leaders extend focus beyond carbon reduction, and address Thailand’s social and agricultural challenges. Sustainability is more than just decarbonisation, and companies serious about sustainability shouldn’t focus solely on ESG efforts, but also contribute towards the aforementioned SDGs.
Increasing Pressures for Businesses to Become More Sustainable
Businesses in Thailand and across the region are now feeling the pressure. Companies lacking adaptability and a clear roadmap for decarbonisation are finding themselves at a disadvantage in competition. The pressures faced by companies can be categorised into 3 levels; the global, regional and local scale.
The significance of COP28 is widely recognised, with each participating country committing to pledges for their 2030 targets, carbon neutrality, and net zero emissions. These commitments extend down to companies, compelling them to align their pledges with their respective countries to support the achievement of climate targets.
The interconnected nature of the global supply chain intensifies pressure along the supply chains, leading to the second level of pressure —the regional pressure.
The carbon tax initiated by Europe and the US extends to other countries in the region. Europe has implemented the Carbon Border Adjustment Mechanism (CBAM), meaning that if the emissions from goods exported to Europe exceed the set limit, a penalty must be paid. This poses a challenge for manufacturers based in Thailand. While product prices may have been competitive before, failure to decarbonise operations may render Thai companies less competitive. The Clean Competition Act (CCA) in the US is also under development and could further affect businesses.
Climate targets are becoming a prerequisite for vendor qualifications, making supply chain sustainability a significant concern for companies in Thailand.
Greenhouse gas emissions are categorised into three scopes; Scope 1 for direct emissions, Scope 2 for energy usage from the grid, and Scope 3 for the supply chain. Many global companies have pledged to reduce emissions by 2030, putting pressure on their supply chains to follow suit. In Thailand, companies are starting to face disqualification from vendor lists of global leaders, and there has been more pressure both downstream in logistics and upstream in raw materials sourcing.
In Thailand, the carbon legislation is currently being drafted, and is expected to be completed within the next few years. This indicates that in the future, companies that are not compliant may face penalties, and may also find it hard to compete locally.
While the carbon legislation is underway, there are regulatory frameworks that are set out by major institutions. For example, the Bank of Thailand (BOT) has issued a green taxonomy, which essentially means that companies that fail to adapt by 2040 will find it extremely difficult to access financing from banks. Another example is the Stock Exchange of Thailand (SET) and the Security and Exchange Commission (SEC) making it mandatory for companies to disclose their carbon footprint within their sustainability reports.
Another emerging key trend in Thailand is coming from consumers. People are becoming more conscious about their carbon footprint, and are taking into consideration a brand’s carbon footprint when making a purchase decision.
Regulatory Frameworks Underway
Thailand is transitioning from a voluntary market towards a mandatory market. Currently, companies have the option to either meet the pledge or reduce their footprint. There are no penalties. However, as the country progresses towards a mandatory market, companies that are unable to comply with the legislation will likely face penalties. This will not happen overnight, but is likely to occur in phases until the 2030 milestone is reached.
Listed below are examples of organisations across Thailand that are taking on the role of providing supporting companies and providing advice, and creating regulations.
- Department of Climate Change and Environment:
In the process of approving the Climate Change Act. The department will begin placing a cap on high-emitting companies and also high-energy consumption companies in Thailand. If in the future brands exceed the ceiling they have put in place, they will likely face a penalty.
- Thailand Greenhouse Gas Management Organisation (TGO):
Provides information and advice to companies on how to decarbonize and reduce their footprint, helping companies adapt to the changes.
- Bank of Thailand (BOT):
Launched the green taxonomy to define and classify economic activities based on their environmental impact (Failure to comply will hinder firms access to financing from financial institutions.)
- Revenue Department:
Provides tax incentives on projects that support the green economy. (The tax exemption released is related to tax based on the sale of carbon credits. Any capital gains taxed from the sale of carbon credits will be waived by the Thailand Revenue Department.)
- Customs Department:
Drafting the carbon tax regulations to impose environmental tax on high carbon emitting products, mainly oil, gas and automotive (similar industries to CBAM in Europe), and provide tax incentives on electric vehicles, imported electric vehicles and EV automotive parts.
- Thailand Board of Investment (BOI):
Offers 3-year tax holidays for green projects (For example, machinery upgrade and carbon absorbing technology). They also provide investment support to local organizations involved in developing sustainable agricultural activities.
- The Stock Exchange of Thailand (SET):
Updates disclosure reporting standards on sustainability to reflect company ESG practices.
- Security and Exchange Commission (SEC):
Conducts analysis on sustainable practices, trends and opportunities to support sustainable development of listed companies.
- Department of Trade and Negotiations:
Liaises on worldwide carbon taxes such as the Carbon Adjustment Mechanism (CBAM) and the Clean Competition Act (CCA) in the US to negotiate terms and ensure fairness for companies in Thailand
Other associations in Thailand participating to support organisations in this transition include the Federation of Thai Industries (FTI), Thailand Carbon Neutral Network (TCNN), and Thai Renewable Energy (RE100), among others.
How Brands Should Approach ESG Initiatives To Create Real Impact
To create real impact and consistently drive change, it is important for organisations to look at ESG on a strategic level rather than for CSR initiatives. Companies must identify what it is they are interested in and where the business is headed towards in the longer term to be able to effectively tie-in and develop a meaningful ESG strategy.
An interesting perspective shared by Dora, the CEO of Thrive Ventures is the circular economy. This is where products and services are designed in a way that allows them to be reused, either in the biological or technical cycles. With this principle, products are restorative and regenerative by design, and its components and materials are kept at their highest utility and value. For businesses to truly commit to sustainability efforts at a strategic level it is important to find how this can also support the company’s financial performance, and circularity is one such way of connecting the dots.
In Thailand, more education is needed for a wider understanding of the circular economy and sustainability in organisations to allow for change to occur as effectively as in Europe and the US.
The Road to Going Green: Steps Companies in Thailand are Taking on Their Decarbonisation Journey
Having worked closely with businesses across Thailand and the region, James, CEO of Wave Exponential PCL shares a step-by-step approach companies in Thailand are taking with their support.
- Baseline Calculations
Companies should first understand their carbon footprint, both for the organisation and the products they export. This helps identify emission hotspots like energy consumption or logistics.
- Gap Analysis
After verifying the carbon footprint, businesses can then create a gap analysis to see where emissions occur and develop projects to reduce them. This includes looking at investments, payback periods and estimated emission reductions.
- Draft a Blueprint
This is where brands develop their decarbonisation journey and develop a strategy.
- Develop Targets
Set out realistic targets based on capacity and draft goals like being carbon neutral or achieving net zero emissions. Targets and KPIs are then cascaded down to different business units.
- Support Supply Chain
Companies also support their supply chain, either by imposing strict policies for vendors or by providing support for decarbonisation and offering carbon credits.
- Implementation and Monitoring
This is when companies implement projects and track emission reductions. If they can’t meet targets, they consider offsetting, but the focus is on science-based targets – meaning efforts to reduce emissions should come before offsetting.
How Small to Medium Enterprises Can Start Measuring Their Carbon Footprint
Smaller enterprises face a key challenge in addressing carbon taxes and efficiently managing their supply chain. Calculating and reducing carbon footprints involves significant costs, and so it’s important for brands to first understand the true business needs.
Various carbon accounting software is emerging in Thailand, such as the TGO and PEA offerings. The market will likely see an increase in applications focusing on behavioral change among employees. These applications can help individuals calculate their carbon footprints and encourage green activities, such as using public transportation and adopting eco-friendly practices.
In terms of employee education, there are websites like www.footprintcalculator.org, which engages users with questions to determine their ecological impact. This can be a useful tool for companies aiming to educate their employees about resource usage and environmental impact.
The Application of Tokenisation and Blockchain in Corporate Sustainability Initiatives
Companies are now leveraging blockchain to improve transparency and accountability in the carbon credit market. Previously, the lack of a reliable tracking system caused fraudulent practices, such as double-selling land credits. This undermines the credibility of ownership claims. Blockchain addresses this issue by providing a secure and decentralised ledger, enabling companies to trace and verify the origin of credits.
Tokenisation and blockchain are being used to tackle the challenges associated with carbon credit methodologies. The random sampling methods that have been in use often face criticism for their lack of precision and accountability, resulting in disputes over emission reduction calculations. The integration of these two technologies aim to mitigate these risks, ensuring a more reliable and transparent approach to measuring emissions reduction, thus creating greater trust in nature-based carbon credits.
Resources on Corporate Sustainability for Companies in Thailand
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