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29 May 2023

Singha Estate Group and Krungthai advance towards a net-zero goal with Thailand’s first carbon credit linked interest rate derivatives

Singha Estate Group and Krungthai advance towards a net-zero goal with Thailand’s first carbon credit linked interest rate derivatives

Krungthai Bank and Singha Estate Group have entered into Thailand's first carbon credit linked interest rate derivatives contract. This significant step will enhance risk management capabilities amidst an era of increasing interest rates. Moreover, the bank will support the group in obtaining carbon credits upon achievement of ESG targets, thereby cementing the bank’s position as a leading provider of ESG financial solutions and making a substantial contribution to Thailand's pursuit of a net-zero target.

          Rawin Boonyanusasna, Senior Executive Vice President of the Global Markets Group at Krungthai Bank, said that as a leading commercial bank in Thailand, Krungthai Bank is unwavering in its commitment to continuous innovation and the development of financial services that cater to all aspects of customer needs. Most recently, the bank has entered into Thailand’s first carbon credit linked interest rate derivatives contract with Singha Estate Public Company Limited. This contract represents a pioneering innovation in the Thai capital market, enabling more efficient management of interest rate risks while providing support to Singha Estate in acquiring carbon offsetting credits, contingent upon the company achieving its ESG goals. The carbon credits offered will comprise voluntary carbon credits sourced from nature-based solutions, such as afforestation and reforestation. These credits adhere to both Thailand's T-VER standards established by the Thailand Greenhouse Gas Management Organization (TGO) and the verified carbon standard set by Verra. Aligning with Singha Estate Group's vision, these carbon credits contribute to maintaining environmental and ecological balance while facilitating sustainable growth.

          "This collaboration will further strengthen our position as a leading provider of ESG financial solutions, as we continuously strive to design and develop solutions that precisely cater to our customers' business needs. This contract has been specifically crafted to address the challenges posed by rising interest rates while aligning with the current business landscape that emphasizes environmental friendliness and address the United Nations Sustainable Development Goal 13: Climate Action. Through the utilization of financial instruments, the bank ensures comprehensive finance management to effectively mitigate interest rate risks. Furthermore, if Singha Estate successfully reduces its greenhouse gas emissions and achieves its ESG targets, the bank will actively support their efforts by facilitating the acquisition of carbon credits. This approach reflects our dedication to promoting environmentally-conscious business practices, contributing to our nation's net-zero emissions ambitions, and generating sustainable growth. It is a testament to the core essence of our vision, 'Growing Together for Sustainability'," Rawin said. 

          Thitima Rungkwansiriroj, CEO of Singha Estate Public Company Limited, emphasized the significant implications of entering into this derivatives contract, particularly in the development of business plans that effectively tackle climate change while aligning with Singha Estate's mission of fostering sustainable diversity, which will lead to sustainable growth of economy, community, and environment. Last year, the company made a declaration to achieve carbon neutrality by 2030 by establishing a network of partnerships to reduce carbon emissions across its supply chain and promoting the adoption of clean energy throughout all business units. Additionally, Singha Estate is actively creating carbon-absorbing areas, with a target of one million square meters by 2030. This goal will be accomplished by planting trees in regions adjacent to national parks, which will also serve as wildfire buffer zones.

          "We are also diversifying our business portfolio to encompass environmentally-friendly sectors, which include investments in low-carbon power plants and the development of an eco-industrial estate in Angthong. Furthermore, we are actively implementing clean-energy infrastructure across our affiliates’ facilities. For instance, we have installed 1.3-megawatt solar panels at hotels within the Singha Estate Group in Thailand and the Maldives. These initiatives serve as a solid foundation for fostering partnerships with future collaborators, generating sustainable income, and simultaneously ensuring the happiness and high quality of life for the society in which we operate our business," Thitima stated.

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