Climate Change Management
Supporting the SDGs Goals
The banking sector, as an intermediary in allocating capital to the economy, plays an important role in advancing sustainable business practices. Currently, the Bank, in collaboration with the Thai Bankers’ Association, the Bank of Thailand, and other financial sector organizations, has integrated the concept of Sustainable Finance into its business strategy across all operational processes.
Stakeholders Directly Impacted
Our Goals
Thai Credit Bank Public Company Limited is committed to integrating environmental and climate change considerations into its business strategy, risk management framework, and financial product development. This is aligned with the regulatory guidelines of the Bank of Thailand (BOT). The Bank has adopted a proportional risk management approach, tailoring it to its size, complexity, and level of environmental risk, while also supporting the national goal of achieving carbon neutrality.
The Bank integrates environmental and climate change considerations into its business strategy, risk management framework, and financial product development, in alignment with the Bank of Thailand’s policy on environmental and climate risk management for financial institutions, with the objectives to:
Performance Highlights
The Proportionality Principle
Definition: The Proportionality Principle refers to the approach where financial institutions implement climate-related risk management measures that are commensurate with their organizational size, business complexity, and the specific level of environmental risk exposure they face. Rather than adopting a “one-size-fits-all” approach, institutions are encouraged to design strategies tailored to their unique operational context.
The objectives of this principle are to
- Enable seamless integration: To allow banks to adopt climate risk management guidelines in a manner that aligns with their internal processes without causing unnecessary operational disruption or imposing an undue burden.
- Enhance efficiency: To optimize resource allocation and effectiveness by prioritizing controls and oversight on material issues.
Risk proportionality principle
The Bank implements the Risk Proportionality Principle by considering factors such as organizational size, business complexity, and the level of environmental risk involved. As a medium-sized financial institution, Thai Credit Bank applies this principle by prioritizing and calibrating environmental and climate measures in accordance with:
- Business size and complexity – focusing risk management efforts on higher-risk sectors within the Bank’s portfolio
- Material environmental risks – prioritizing industries and customers with significant environmental impact or high climate vulnerability rather than applying uniform criteria to all customers
- Resource constraints – prioritizing key areas such as credit policy and risk assessment, with gradual expansion of the management framework over time
The Risk Proportionality Principle enables Thai Credit Bank to effectively integrate the Bank of Thailand’s climate-related policies without imposing unnecessary operational burdens. Through tiered risk assessment approaches, targeted green finance initiatives, and governance aligned with the Bank’s operational context, the Bank can comply with regulatory expectations while maintaining operational efficiency.
Challenge and Opportunity
Challenge
Climate change remains a critical challenge, with Thailand currently navigating a significant meteorological transition from El Niño to La Niña, leading to severe agricultural disruptions and widespread flooding across various regions. These climate-related risks encompass both Physical Risks, where natural disasters may cause direct damage to the Bank’s infrastructure and its broader supply chain, and Transition Risks. The latter includes the implementation of carbon taxation and an evolving shift in consumer behavior toward environmental consciousness, both of which could escalate operational costs for the Bank and its partners, ultimately impacting long-term business continuity.
Opportunity
The Bank has enhanced its Environment & Social Management System (ESMS) to effectively manage risks, while also establishing lending policies designed to support businesses with sustainability commitments and eco-friendly practices through Green Loans.
2025 was a year of cautious economic recovery for Thailand amid structural challenges and external risks. The ability to adapt, manage risks effectively, and advance sustainable development will be key factors in strengthening Thailand’s economic stability and long-term growth potential.
Another significant risk factor that continues to receive global attention is climate change. Thailand has been affected by climate variability resulting from the transition between El Niño and La Niña phenomena. This has caused severe impacts on the agricultural sector and many areas of the country through both droughts and floods, with flooding being one of the most frequent natural disasters in Thailand.
Addressing these risks requires adjustments in development approaches toward sustainability through investments and improvements in related infrastructure, such as water management systems, natural disaster early warning systems, and emergency preparedness planning. These efforts aim to strengthen the country’s resilience to climate change impacts and are aligned with Thailand’s commitment to greenhouse gas emission reductions under the Paris Agreement.
Management Approach and Value Creation
Thai Credit Bank recognizes that climate change poses significant risks to both financial institutions and society. As part of our commitment to sustainable business practices, we have integrated climate risk management into our governance structure, risk framework, and overall operations. This includes our Net Zero strategy, Green Financing projects for MSMEs and SMEs, and the ongoing implementation of ESG impact assessments for our vendors and service providers. The Bank is taking proactive measures to manage both physical and transition risks while remaining steadfast in our commitment to transparency and collaboration with all stakeholders to foster a sustainable financial ecosystem in Thailand. In 2023, the Bank collaborated with the International Finance Corporation (IFC) to adopt and apply the IFC Performance Standards as part of our internal Environmental and Social Management System (ESMS). This system serves as a practical guideline for the Bank to assess the environmental and social risks of our credit customers, demonstrating our firm intention to enhance our E&S performance for the maximum benefit of all parties involved.
The Bank prioritizes environment and climate action, aiming to systematically integrate climate-conscious business policies into our assessment of both risks and opportunities within our decision-making and operational processes. This alignment not only supports the national agenda for a sustainable economic transition but also elevates the Bank’s operations to meet international sustainability standards through the following actions:
The Bank’s strategic implementation and execution are driven by the following three key pillars
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1Integration of Environmental Factors into Strategic PlanningWe integrate environmental considerations into our strategic planning and review processes, including our Risk Appetite Framework and both short-term and long-term operational plans. These integrations are based on the Materiality of direct and indirect impacts on the Bank. This leads to concrete operational adjustments and includes a comprehensive Materiality Assessment conducted with all stakeholders. This assessment is reviewed regularly, at least once a year or as necessary, to ensure our strategies remain aligned with the evolving landscape.
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2Performance Evaluation and Strategic AlignmentWe have established robust processes to evaluate the achievement of our strategic plans, ensuring they remain within the Bank’s defined Risk Appetite. We set concrete goals and Key Performance Indicators (KPIs) to enable effective and timely monitoring of progress. Examples include setting specific targets for green lending within defined timeframes and establishing Science-Based Targets (SBTi) for greenhouse gas emissions reduction.
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3Supporting the Transition to an Environmentally Sustainable EconomyThe Bank actively supports the transition toward environmental sustainability by providing advisory services to raise awareness and developing Sustainable Finance products and services. We aim to incentivize customers and counterparties to adopt eco-friendly business practices through offerings such as Green Loans, Green Bonds, and Sustainability-Linked Loans (SLLs), as well as financing for renewable energy projects. To ensure appropriate adaptation, we refer to recognized Green Taxonomies, such as the ASEAN Taxonomy for Sustainable Finance and the Thailand Taxonomy. Furthermore, we may implement third-party verification for our sustainable financial products to enhance credibility and prevent Greenwashing.
