Thailand is on the cusp of a major policy shift as regulators prepare to pass the country’s first Climate Change Act – a landmark law expected to introduce rules to govern carbon taxes and a compliance-based emission trading system. While new disclosure requirements and transition pressures loom, Thai companies are meeting the moment with characteristic adaptability.
The country’s private sector has always shown remarkable agility in adapting to shifting global tides, whether it is supply chain shocks during the Covid-19 pandemic or new international sustainability standards that exporters now need to meet, observed Chow Wong Yuen, chief sustainability officer (CSO) of UOB Thailand. The Singaporean, who took up the regional bank’s first Thailand-based CSO role in , said that strong local demand for green finance and a culture of collaboration are helping Thai firms turn transition risks into opportunities.
“I think Thai companies are realising that they need to be competitive and be ready to do business anywhere,” said Chow. “It has also meant that more companies are focusing their efforts on direct emission reduction to gain that competitive edge in the global trade arena.”
For now, the draft Climate Change bill is in the final review phase including final inputs from the finance ministry on the setup of a National Climate Fund, before being formally presented to the Cabinet for approval. have said the Act will shift the country from voluntary pledges to legal obligations, injecting clarity that will drive Thai businesses and financial institutions to align with global environmental, social and governance (ESG) standards and help the country reach its climate targets.
With Thailand’s interim Prime Minister’s announcement of new national climate targets, the country aims to achieve net zero emissions by 2050. A markedly more ambitious direction than previous targets of carbon neutrality by 2050 and net zero emissions by 2065.
Thailand’s energy transition is also gaining momentum, but challenges remain, said Chow in an interview with Eco-Business. Renewable energy currently accounts for just , with solar and biomass leading growth. A new Power Development Plan (PDP) is expected to chart the path toward higher renewable penetration and more accessible clean power for businesses.
Energy affordability and security remain priorities for policymakers and the balancing act between accelerating renewables and maintaining economic stability continues to shape Thailand’s climate strategy, Chow explained.
For financiers, the balance could present both risk and opportunity. UOB Thailand, which has grown its sustainable financing portfolio significantly in recent years, is positioning itself to support clients through this shift, from sustainable loans for clean energy projects to transition financing for small and medium-sized enterprises (SMEs). Chow says the bank’s focus is on helping businesses move beyond compliance to build long-term competitiveness.
Eco-Business also spoke with Chow about Thailand’s shifting investor expectations and how a maturing green finance market could change the country’s sustainability landscape.
Thailand’s regulators are in the final stages of passing the country’s first Climate Change Act and have it implemented to support its net zero emissions goal. At the same time, global headwinds could weigh on the ESG sector. What are your thoughts on Thailand’s sustainable finance outlook?
If we look at the momentum over the past few years, we are seeing very strong signals – and a convergence of [ESG] goals for both the public and private sectors. Thailand is the first country in Asia to issue a and the bond was three times oversubscribed. I think it is quite clear that there is strong support to help the country meet its Nationally Determined Contributions (NDCs).
Across the financial sector, over the past two years, we have seen clear sustainable finance aspirations from major Thai banks. UOB is also tracking this portfolio; in 2024, we hit S$58 billion (US$44.5 billion) in sustainable financing across all markets, including Singapore and Thailand, up per cent from the year before.
There is also strong demand from the businesses. According to the UOB Thailand Business Outlook Study 2025, based on responses from over 500 businesses, the share of firms that view limited green finance as a barrier to sustainability has fallen from last year.
A key shift over the past year though would be that there are now regulatory tailwinds. The Bank of Thailand, Thailand’s central bank, has been driving all the major Thai banks as well as some of the larger non-domestic systemically important banks (D-SIBs) to set green pledges and targets and getting banks to participate in climate stress testing. Bank of Thailand has announced a plan for financing the transition, of which UOB Thailand is one of the signatories, to help SMEs with transition planning or to invest in decarbonisation technologies.
The Climate Change Act is the big piece that will impact our clients. Thailand’s new Power Development Plan (PDP) is also something to watch as it is expected to provide businesses with clarity on the access to renewable energy, and there will be more clarity in the coming years. [Editor’s note: PDP is the government’s long-term strategy outlining how the country will generate, transmit and manage electricity to meet future demand.
With global trade tensions and the uncertainties that come with shifting supply chains, I think Thai companies are realising that they need to be competitive and be ready to do business anywhere. It has also meant that more companies are focusing their efforts on direct emission reduction to gain that competitive edge in the global trade arena, for example to gain access to the European market.
It’s great that Thai businesses see decarbonisation as a plus and are pushing forward on the ESG transition. Can you share more about how they view the impact from changing carbon emissions reporting requirements?
The Climate Change Act will be a major driving force [for businesses to step up in reporting] and we are having that conversation with our clients now. Under the draft Bill, there are also provisions on the Thailand Carbon Border Adjustment Mechanism (CBAM) that will apply similar principles and provisions from the European Union CBAM that will make it more cost-competitive for Thai corporates.
Over the past few years, Thailand has also been a strong supplier for the region and the world. Thai exporters have been very agile and quick in diversification. They have been very resilient to the supply chain shocks, whether these were caused by the Covid-19 pandemic or other global events. Thai businesses coped by sourcing locally or regionally. Thailand is connected closely with its neighbours and trade partners. Businesses also have very high levels of digital readiness. According to our business outlook survey, four out of 10 businesses are using data analytics to drive their sourcing decisions. In fact, as they adapt to the changes, we believe most Thai companies do not see climate change as a burden anymore and the new Climate Change Act will further level the playing field to give support to companies that have that competitive edge. For UOB, one of our goals is to become the number one cross-border trade bank in Asean and we are very cognisant of how we need to navigate these new shifts with our customers.
You were appointed UOB Thailand’s first CSO in 2023. How has the experience been like working with Thai companies on their sustainability journey?
Thai companies are very agile. Before my appointment as CSO, I was already working with our Thai clients on their sustainability during the Covid-19 pandemic. For example, UOB had been supporting some of the Chinese auto manufacturers expansion in Asean, focused on developing Thailand’s electric vehicle (EV) market. We worked to address the clients’ concerns in loan structuring and at the turnaround speed they needed for financing support. These companies are attracted to Thailand both because of the country’s infrastructure development, and also its potential, given the attention to sustainability. They then help to build and strengthen the local supply chains in Thailand, instead of just relying on resources from their home country or existing supply chains.
In 2024, we conducted a closed-door CSO roundtable and one thing that came up was the issue of the misalignment of goals across internal teams, despite the fact that there is now a common language spoken among sustainability officers. For example, the finance or procurement teams in the same companies might see things differently, and hence sustainability end up not being prioritised. But the CSOs also observed that in the long term, partly due to the upcoming Climate Change Act, a common language would also be developed across all the teams and things could change.
Were there other pain points or challenges brought up by the CSOs at the roundtable?
We discussed many issues, and a critical challenge we spoke about was the need to address gaps and inaccuracies in the data provided by suppliers. For the large companies, they have thousands of suppliers to manage, and data reliability is a huge issue. Often, these suppliers are small businesses that have yet to measure their carbon footprint or do not even prioritise sustainability. This is understandable as many of them are fighting for survival. However, this also means data fragmentation. The large companies thus have to use proxies and references to do a proper baseline for their Scope 3 emissions. So we discussed the best ways to influence and guide supplier behaviour.
Chow Wong Yuen (left) speaking on a panel on financing the EV manufacturing value chain in Southeast Asia. Image: UOB Thailand
I believe data fragmentation is also a challenge for financial institutions and UOB Thailand would need to track whether a client’s decarbonisation plan is ambitious enough and if there is tangible progress before you provide any financing? What is the missing puzzle piece in this for Thai financial institutions?
The idea of having a centralised database is not new and there are already countries with a greenhouse gas inventory. The challenge, however, remains on ensuring that the data is accessible and independently verified, to create efficiency, ensure standardisation and alleviate cost pressures. It would also solve questions like how emissions are calculated. Thailand is likely to see developments in this area in the coming years and with data submitted to a national centralised platform, we believe it will ease the difficulty and boost confidence in data reliability.
For banks, there would then be more visibility then on whether a company is really committed to emissions reduction. With credible data, we can more accurately structure our sustainability-linked loans and there can be more product innovation.
Financiers in Southeast Asia are increasingly scrutinised for whether they consider the importance of a just transition. In Thailand, there are also non-governmental organisations that are quite active in advocating for just and fair financing. How important is this for UOB Thailand?
Thailand achieved 100 per cent access to electricity for its population in 2021. Among the countries in the region, Thailand has also done well in ensuring energy affordability, maintaining electricity rates at a level accepted by the local population.
However, these factors might also impede the development of renewable energy options in Thailand and impede investments coming in. It will be a balancing act. From the government’s perspective, they are very aware of the energy trilemma – the need to ensure energy security, affordability and environmental sustainability.
Water is also coming under the spotlight. There are many industrial manufacturing parks in Thailand and water use is high. The government is interested in data centre-related investments. Thailand is also unique in that its agricultural sector uses approximately 80 per cent of the nation’s fresh water, a statistic that reflects its heavy reliance on water. Yet it is facing climate-related impacts like floods. The country will need to adapt quickly.
Through financing, advisory and engagement with various ecosystem players, UOB Thailand is committed to supporting the country in its fair and just transition.
Tell us more about your experience working in Thailand’s ESG sector as a Singaporean. What makes it interesting?
I am starting to see Thailand’s unique culture and understand the importance of resilient community ties. The fact that people are able to work together very closely is also why Thai businesses are so agile and adaptive. They do not compete against each other so much but work together for a bigger goal or to deal with external competition or changes. The bigger companies also want to help the SMEs. Of course, as a Singaporean, it means that I have to assimilate into this different culture of working and know what is needed to get things done.
Thailand is similar to Singapore in that it is very reliant on trade and cross-border investments too. For Thailand, tourism is also a huge contributor to its gross domestic product (GDP) and so it is very friendly to foreigners. Doing business with Thai companies becomes easier too. It is something I really like about Thailand.