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20 Jan 2023

Thai Economy

Challenges related to ESG that businesses should watch out for in 2023 (Current Issue No.3382)


        In 2023, countries around the world are grappling with economic uncertainty and stagnation, which may in turn affect sustainability or ESG operations of the business sector. We at KResearch have compiled a number of issues and challenges related to ESG that the business sector should watch out for in 2023, as follows:

  1. High uncertainty and potential slowdown seen in the economy as a result of interest rate hikes globally, volatile energy prices and limited access to funding due to hefty debts, thus undermining ESG operations and investment decisions of the business sector.
  2. Thailand taxonomy, a common guideline in classifying environmentally friendly activities, in the energy and transportation sector. Economic activities are classified into three groups, based on  climate change mitigation: Green List, Amber List and Red List. A business can use this classification to gain access to funding. Those classified in the Green List or Amber List may have easier access to funding than those in the Red List.  
  3. Environmental measures globally will likely be more stringent, including Carbon Border Adjustment Mechanism (CBAM), the European Union’s draft law for deforestation-free products, the US Clean Competition Act (draft) and disclosure requirements of regulatory agencies around the world. Additionally, although several US States may propose  anti-ESG legislation, it is seen as a political tool because it may not be practically enforceable.   

        However, aside from such challenges, the development and advancement of technologies such as carbon capture, usage and storage (CCUS), plus those for fuel, renewable energy and clean energy production and consumption, may substantially help companies advance ESG operations and eventually achieve their climate change mitigation goals as planned.  

Thai Economy