The SEC has been invited to become a member of ASEAN Taxonomy Board (ATB) and has been participating in the meetings as a member from July 2024 onwards. The ATB was established and endorsed at the 7th ASEAN Finance Ministers’ and Central Bank Governors’ Meeting (AFMGM) on March 2021, in which SEC Thailand has participated in developing ASEAN Taxonomy as member of the working groups established under the ATB from the development of ASEAN Taxonomy Version 1 published in 2021 to the latest Version 3 published in April 2024*.

Ms. Pornanong Budsaratragoon, Secretary-General of SEC Thailand, said “SEC Thailand places importance on promoting and supporting the private sector in recognizing and engaging in sustainability on a continuous basis, which will support the country in achieving its goal in reducing greenhouse gas emissions and to eventually reach zero emission. In this respect, SEC Thailand is pleased to be invited to join as a member of the ATB and trusts that with SEC Thailand’s experience as an agency that jointly develops Thailand Taxonomy, SEC Thailand deeply hopes to be able to participate and support to the fullest of our potential in setting out the direction and drive the ASEAN Taxonomy that is in line with the international standards as well as conform to the economic and social context of each country in ASEAN. Furthermore, SEC Thailand believes that the taxonomy will contribute to achieving others strategic initiatives of SEC Thailand, thereby positioning the capital market to become a key mechanism in advancing the country towards SDGs”

The ATB has the role in forming and developing ASEAN Taxonomy serving as a common language for sustainable finance across the region, in which member countries in ASEAN can utilize as a tool in promoting and allocating international capital, managing risks and investments of private sector, as well as setting policy and government’s supporting measures in order to be able to achieve Sustainable Development Goals (SDGs) and climate change target.

In classifying economic activities, ASEAN Taxonomy uses Traffic Light System similar to Thailand Taxonomy, which will classify economic activities into three tiers: (1) Green tier: Activities that release zero or close to zero greenhouse gas emissions, (2) Amber tier: Activities that release high greenhouse gas emissions but will gradually reduce such emissions following the criteria set out in the Taxonomy, and (3) Red tier: Activities that do not fall into Green or Amber tier.

For Thailand, it is in the process of developing “Thailand Taxonomy Phase 2” by Working Group on Thailand Taxonomy under the collaboration of Bank of Thailand (BOT), SEC Thailand, Stock Exchange of Thailand (SET), Department of Climate Change and Environment (DCCE), and 26 related agencies both from public and private sectors.**

Furthermore, Taxonomy is one of the tools that can be used in financing activities of companies as there are clear criteria for assessing the contribution to the environment of the activities (green, amber, and red), which helps to enhance transparency and strengthen the credibility of the activities. As well, it also plays a part in helping SEC Thailand to achieve its plan on Sustainable Capital Market in order to drive the capital market to become a key mechanism in leading the country towards SDGs such as:

(1) To enable transition financing for hard-to-abate sectors so as to gradually reduce greenhouse gas emission to zero or near zero in the future. Businesses can use Taxonomy to assist them when preparing such transition plans. Further, SEC Thailand inaugurates an initiative in publicizing information on the progress of Transition and Taxonomy on its website to bolster understanding regarding Transition;  
(2) Issuers that offer and sale ESG Bond can use Taxonomy as reference to select projects for investments in order to strengthen credibility of the securities. SEC Thailand has initiatives to promote such securities by focusing on building capacity for potential businesses in various industries.    

Remark:
* ASEAN Taxonomy version 3 was published in April 2024. It is currently preparing to undergo a public consultation with content covering details of assessment and classification of activities of 2 more sectors: Transportation sector; and Construction and Real Estate sector.
** For more details, please see Joint Press Release: “Meeting of the Working Group on Thailand Taxonomy Phase 2 No.1/2024” on February 16, 2024. https://www.sec.or.th/TH/Pages/News_Detail.aspx?SECID=10563