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31 Jul 2023

Financial Institutions

Sustainable finance, 1H23: Continuing to grow, but at slower pace amid upward trend in interest rates (Current Issue No.3425 Full Ed.)


        KResearch expects that the sustainable finance products launched during 2023 will be fewer than those seen in 2022 as political uncertainty may affect public investment and delay private investment. However, when a new government is formed, and various investment projects begin to be implemented under the policy of promoting GHG reductions in various dimensions amid growing awareness of such issues within the private sector, it is expected that more sustainable finance products will be launched ahead.
        The global value of sustainable finance products (bonds and loans) during 2022 and 1H23 declined from the record high reported for 2021 as central banks worldwide continued to raise their interest rates in order to curb inflation, and due to the slowing Chinese economy.  
        In Thailand, the value of sustainable finance products continues to grow, supported by the government’s issuance of sustainability bonds for its economic relief and restoration programs as a result of the COVID-19 pandemic, as well as the issuance of sustainable finance products in the green and sustainability-linked categories as seen in other countries.  
        Looking ahead, the major challenges in developing a sustainable financial market include the complex process and the fact that the costs in issuing sustainability bonds are higher than conventional bonds. Additionally, there is a limited number of qualified and interesting projects, meaning sustainable finance in Thailand remains limited as compared to other countries. Having appropriate taxonomy and government support may help accelerate market development and support Thailand, including the private sector, to achieve sustainability goals at a faster pace.

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Financial Institutions