The International Finance Corporation (IFC) on May 11 announced its commitment to help increase access to financing for climate-smart and blue-economy projects in Thailand with an investment in a blue bond to be issued by TMBThanachart Bank (ttb) – the first commercial bank in Thailand to do so.
IFC will subscribe up to US$50 million for the blue bond that will enable ttb to grow its financing towards eligible blue assets. It will also help the bank in structuring the bond and assist in developing a blue finance strategy and framework. IFC is likewise supporting ttb’s broader sustainability agenda, including subscribing to a green bond offering of up to US$100 million dedicated to financing customers’ purchase of electric vehicles (EVs).
In announcing its commitment to climate-smart financing in Thailand, IFC says there is a rapid increase in carbon dioxide emissions in Thailand, especially within the transport sector. Fossil-fuel-driven vehicles are one of the primary contributors, accounting for 17% of the total emissions. In response, establishing a vibrant EV industry in Thailand will be key to achieving the country's climate goals – a 40% reduction in greenhouse gas (GHG) emissions by 2030, among others.
Another significant climate challenge for Thailand is the threat to its blue economy, which IFC says accounts for about 30% of the country’s GDP. Thailand is estimated to be among the top six countries globally in terms of contributing to marine plastic pollution. Promoting sustainable development of the blue economy is a priority for Thailand.
Commenting on the IFC investment, ttb chief executive officer Piti Tantakasem says the bank’s strategy and business operations are always aimed towards a sustainable banking framework with climate finance as a strategic focus. “IFC’s support will help ttb’s green finance portfolio for EVs and build capacity in identifying eligible blue assets,” he notes. “This will enable us to focus on critical areas such as marine plastic recycling, water conservation and wastewater treatment projects, which are key to the country’s economy.”
IFC has been at the forefront of creating green and blue financing markets in Asia. In April it announced that it was subscribing up to US$100 million to a blue bond to be issued by the Philippines’ biggest lender BDO Unibank, which also represented the country’s first blue bond offering. IFC will also help BDO identify projects that can be funded by the blue bond while building its capacity in terms of monitoring the impact of these projects.
With the investment in ttb, IFC expects to establish new asset classes in Thailand’s debt market and leverage more investments in the blue and green economy to support the country's sustainable development and address its key climate challenges, says IFC managing director Makhtar Diop.