APEC 2022 is the Asia-Pacific Economic Cooperation Forum. Which will be held in Thailand throughout 2022, with a highlight at the APEC Leaders Summit between 18 and 19 November 2022
Another meeting that is equally talked about is The 2022 Business Advisory Council meeting and the private sector business leaders’ summit, such as the APEC CEO Summit 2022, will be held from 17 to 18 November 2022, with the Business Advisory Council A. 2022 specification (ABAC 2022) and representatives of the private sector, such as the Joint Committee of the Private Sectors of 3 Institutions or CRC, served as chairman and host of the meeting.
APEC Business Advisory Council It is a private agency established in 1995 acting as a representative of the private sector to deliver recommendations to the APEC leaders in the annual negotiations. and provide advice to the business sector on various important issues
One of the issues that have been raised is that finance and banking are of great importance in the regional economy. ABAC offers five recommendations for businesses in the banking and finance sector, which are:
- Facilitating Cross-border Digital Financial Services
- Supporting Just and Affordable Transition
- Financing Sustainable Innovation (financial innovation for sustainability)
- Promoting Interoperable Central Bank Digital Currencies (interoperability with central bank digital currency systems)
- Facilitating Cross-border Data Flows in Financial Services
The meeting has passed. It will be interesting to see how banks view this recommendation. What format does it apply to? So we asked to talk to Ms. Kattiya Indaravichai CEO of Kasikorn Bank Director of the Thai Bankers’ Association and speakers on the APEC CEO Summit 2022 stage to share their views on these recommendations. Including sustainability issues that have been discussed a lot in the past APEC forum. How has Kasikorn Bank adapted? and how to achieve our goal of becoming the leading sustainability bank in Southeast Asia.
ESG issues in banking operations Is it different from other business sectors?
To work in a bank, we must have a Bank License. If you don’t have a license, you cannot do it. Second, you must have a Social License or a license to do business in any society or in the world. You must not destroy the environment. must respect human rights Must be accepted by society If you don’t follow this rule, you can’t live in society. On the one hand, we are a company that is responsible for reducing greenhouse gas emissions. We aim that by 2030, the Bank’s internal operations will be Net Zero. Thousands of our vehicles will gradually be converted to EVs (Electric Vehicles), and our buildings and branches will be gradually equipped with solar cells. A roof that has the potential to be installed and use some energy The rest goes to buy carbon credits. It’s a change that takes time.
On the other hand, we are a bank, a Financial Enabler, supporting funds, credits, and information for entrepreneurs. Let him use the capital to change the production process, selling methods, raw materials or good partners. to qualify This plays an important role in being a sustainable bank. We have a loan portfolio of 2 trillion baht. We aim for this to be Net Zero, in line with Thailand’s goals. and will speed up the process where possible It seems like a long time, but it’s very difficult. We have to do it in phases. The first group is fossil-fueled power plants. This group emits 43 percent of our entire portfolio of greenhouse gases. If you want to go fast, you have to start from this group first. We need to talk to our customers that we’re going to stop lending to coal-fired power plants. You have to modify your technology. Otherwise, we won’t let go and slowly move on to the next group.
Financial Enabler: How important is it to the future of finance?
It is the duty of every bank. Not to mention sustainability yet. Customers want funds to expand their business. But we try to look at ourselves beyond money, for example, to educate about discipline in using money. Especially those who have difficulty accessing financial services. have to borrow outside the system have to put him back in the system must make him have some savings Or if you are addicted to credit bureaus, how will you pay back 3 years, 5 years and it’s all gone?
What about looking at Financial Enablers from a sustainability point of view?
We have to make our customers aware of this. If customers don’t adapt, they won’t survive, we won’t survive either. So why didn’t he survive? Because one day soon, Europe, America or any product importer from Thailand will set the criteria for sustainability. There has to be carbon emissions like this. Must not use child labor Or how many women does your management team consist of? or other gender diversity If this criteria is not met do not export Today we export 6 percent to the EU, 9 percent to the US. The value of exports to the US is 1.2 billion baht. If the exporter is hit, the whole supply chain will be hit. People who sell raw materials are all hit. It’s very dangerous if we don’t adapt.
If the exporter does not adjust to the standards, the goods will be rejected by the destination country. And if the bank does not adjust Still giving out the same credit Will there be any problems?
If we give credit to manufacturers who don’t want to change That means he doesn’t have to think about exporting. His product did not meet the criteria from the thought of selling it. When this criterion arises, he cannot sell anything. We won’t be able to pay our debts. So we shouldn’t give him credit in the first place.
How has Kasikorn Bank adapted to become a bank of sustainability?
Whether it’s sustainability or human rights. It is something that we have always prioritized. Now just gathering it together to be the same story. in the issue of lending Our employees must act ethically. not taking advantage of others We must help each other to take care of those who have not yet accessed financial services. And which customer doesn’t respect human rights or does business that is wicked? We do not give loans because it is against our policy.
How will the bank know he’s doing gray business?
If you want to borrow, you must have had some deposits with us. We use this information to check where the money came from. What is the form of money in and money out? If there is a lot of money coming in on the 1st and the 16th, it’s weird. We know the accounts of that way. You can check who has transferred money to that account.
Had to cut off this cake.
We have to be patient for a bit. It’s a short-term pain for long-term gain. Boards must understand and see the same picture as us. Otherwise it will be very difficult to work. Get the policy from the board, talk to the shareholders to understand. When our target is clear that we do not go to fossil fuels, do not go to evil, then cut them off altogether. That we won’t be dealing with fossil-powered power plants anymore.
Does the board understand this?
understand and want us to go very fast But we may not be able to go very fast. Because it has to wait for the operator to be awake too. Sustainability is not just affecting exports. But it also affects domestic sales. from the survey of many places at the Kasikorn Research Center as well It turns out that 76 percent of our customers said they would never choose an ungreen product. We set our Net Zero goal of 2030 in our operations, but we need to start today. Today, big organizations have to start first. Because a small organization is not ready yet, but in the end, Thailand will not be Net Zero at all if we use the method to do it for friends. Everyone has to help each other.
Almost every sustainability forum talks about Green Finance, what does the business sector need? And what can the bank help support?
If entrepreneurs are awake and want to change Which standards are called green? In Thailand, it has not yet been determined. And who has to do Taxonomy here? The Ministry of Industry is right. If it’s about EVs, the Ministry of Transport is right. And then there are many other agencies. in the corner of the bank We have to look at how we can fund it to avoid green laundering. Is lending to companies that claim to be green, but actually not, this specification is not environmentally friendly at all. If the loan is released first Then one day, the relevant agencies issued standards and found that they did not pass. it will be risky
Kasikorn Bank has this money already. We set a target of 1 – 2 billion baht. Are entrepreneurs ready? What standard will it go to? If the entrepreneur borrows money to improve the factory to be greener Machine has been modified. he has to pay interest Returns will decrease. Profits will decrease. Shareholders must understand. If it’s in the stock market, it’s even more important to understand. Bank shareholders must understand that if we want the world to be greener Take care of people who are unable to access more financial opportunities, there will be a short-term pain.
Is the interest rate on a green loan cheaper than a conventional loan?
No, it’s difficult because the cost we get is equal to normal loans. Our bank has issued several fundraising bonds for this sum. Interest is the same as regular bonds. It depends on the investor. Research data shows that 86 percent of investors are reluctant to invest in something that doesn’t meet sustainability criteria. But that’s not about the price. Investors still want the same return. But from the statistics it’s interesting. Globally, $1 trillion in Green Social Sustainable Bonds has been issued, a 15-fold increase from 2015, but still representing just 2 percent of the global bonds issued. It was only released in North America, Western Europe, Eastern Asia. and the Pacific has China as the main In ASEAN, there is only Brunei and Singapore. All the money earned was used only in their own country. So there are many more opportunities.
The APEC Thai Business Advisory Council has 5 recommendations for the banking sector. How does the Kasikorn Bank view this advice?
First Facilitating Cross-border Digital Financial Services (Cross-border digital financial services) The question is how to make financial services accessible to everyone across borders. international money transfers Now every bank is working with the Bank of Thailand. We do it together with DBS, transferring money to Singapore will have a very cheap fee or transferring via K PLUS, the price is ok. The problem is to make it accessible, convenient, anywhere.
Second, Supporting Just and Affortable Transition. If our country wants Net Zero soon, the agricultural sector will not receive financial support at all. Because rice fields emit the most methane, if it’s really Net Zero, we don’t have to export rice anymore. We also need to understand the country’s context, we need to gradually adjust to change. Or lending to small people, you have to do it gradually because there are a lot of bad debts as well. It has to go hand in hand with educating the public about finances. he must understand Financial discipline takes time.
Third, Financing Sustainable Innovation (financial innovation for sustainability) is something that we try very hard. both about payment Lending to small people, which requires a lot of data. Including we help make applications for universities like Chulalongkorn University, such as the CU NEX app and hospital applications like Chulalongkorn University, Rajavithi Police Station, Thammasat University, Chonburi Prasat Institute, as well as hospitals under the Bangkok Metropolitan Administration.
The last two topics, Promoting Interoperable Central Bank Digital Currencies (Interoperable with Central Bank Digital Currencies) and Facilitation Cross-border Data Flows in Financial Services, we Haven’t done much yet.
In the 3 years that you have been in the role of CEO, there have been many changes. Was it a difficult time for you?
I have to say it’s a lot of fun. Before Covid, the bank made a business plan once a year. During COVID, we had to adjust the numbers every quarter. Management doesn’t have to think beyond tomorrow. Everything is new. We must live in the present keep your sanity When COVID starts to subside, we have to rethink what the world will be like next. We must prepare the organization to be ready to adapt a lot according to the goals. Along the way, it was ready to change.
Where are you taking your running team?
We want to be at least a meaningful financial services bank for the AEC regional economy. And we aim to be the leading bank in sustainability in Southeast Asia. It has its indicators. But we can’t just look at ourselves. must be compared to the goals of other banks as to where he will go The goals we set compared to others, can we be leaders? We are like cars driving on the streets of Thailand. How good is the car? But the road is not ready, we cannot lead. It therefore requires cooperation from all parties. Entrepreneurs need to change their minds. New standards must be created. Shareholders and investors must understand. we must take it together To be a leader in change
