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17 Dec 2024

Thai Economy

Sustainable Finance: From Green to Transition Finance (Current Issue No.3539)

คะแนนเฉลี่ย

Sustainable Finance: From Green to Transition Finance
  • A new type of sustainable finance, known as transition finance, began to gain attention over the past 2-3 years. Unlike traditional sustainable finance, which focuses on the purpose of fund utilization, transition finance may benefit hard-to-abate sectors, such as  cement, steel, and petroleum. These sectors are often ineligible for green finance yet remain critical to the economy.
  • The global value of transition finance has grown over sixfold since 2020, largely driven by Japan’s policies of helping key high-GHG-emitting industries, such as steel, petroleum, cement, and automotive sectors, achieve long-term GHG reduction goals.
  • KResearch is of the view that transition finance will be important for Thailand's  industries, particularly those key economic drivers. Meanwhile, Thailand currently lacks specific guidelines or frameworks for transition finance products. However, sectors that could benefit from transition finance account for 82 percent of the country’s GHG emissions and contribute 38 percent to GDP. Thai businesses can utilize tools such as the Thailand Taxonomy alongside international standards, including the IEA Net Zero Roadmap, Japan Climate Transition Bond Framework, and ASEAN Transition Finance Guidance, to develop transition finance solutions.

Thai Economy

Sustainable Finance