Analysing the sustainability reporting of Thailand’s largest, listed companies - By Dr Rory Sullivan and Robert Black
Analysing the sustainability reporting of Thailand’s largest, listed companies
By Dr Rory Sullivan and Robert Black
The Thai Stock Exchange (SET) is home to many multi-billion dollar energy, electronics and food companies. But how well are those firms reporting on the environmental, social and governance (ESG) factors that affect them?
The World Bank has worked extensively with financial regulators and policy makers to develop a sound, stable, resilient and inclusive financial sector in Thailand. This programme of work has included supporting efforts by Thai pension funds to incorporate ESG issues into their investment decisions, encouraging companies to embed ESG factors into their operations and value chains in line with international standards, national policies and guidelines.
As part of this programme of work, Chronos – working closely with the World Bank and the Securities and Exchange Commission (SEC), Thailand – has completed an assessment of current ESG disclosure practice among leading companies listed on SET.
A key objective of this report was to encourage companies to provide the information on their ESG issues that can be used by investors when assessing ESG-related risks and opportunities in their investment decisions.
Strong Social Reporting
Overall, ESG disclosure levels across the universe of 61 companies were good, suggesting that these companies are well placed to respond to requirements to manage and report on ESG issues. Unsurprisingly, the largest companies provided better – more comprehensive, better quality, more contextual information – disclosures than the smaller companies. Somewhat unusually relative to other markets, companies disclosed best on human rights and social indicators, followed by governance and environmental indicators. This reflects the recent introduction of mandatory annual disclosure requirements (“One Report”) for listed companies, which places a strong emphasis on human rights and on carbon emissions.
In terms of climate-related disclosures our analysis highlighted ‘Industrials’ and ‘Resources’ as the best disclosing sectors.
The report also offered recommendations to the SEC and other regulators on how to improve corporate reporting. The central recommendations were that they should ensure that (a) the information corporates are reporting is of sufficient scope and quality to allow domestic and international investors to integrate ESG data into their investment decisions, (b) domestic disclosure requirements are aligned with international best practices and frameworks (e.g. ISSB, the ASEAN Taxonomy), and (c) corporate disclosures deliver or enable real world outcomes in relation to international and Thai sustainability goals.
Our Reflections
This type of structured, systematic analysis allows policymakers to understand:
· Whether there are cohorts of companies that are well positioned for new reporting obligations (and the points at which the quality of reporting tails off).
· Where the strengths and weaknesses in reporting practice are (e.g. social issues reporting is a particular strength in Thailand).
· The reporting capacity and expertise in the market (in companies, in investors, in the wider ecosystem).
· The gap between domestic Thai reporting practice and international standards.
Perhaps the key insight is that – as seen in Thailand and as we have also seen in other jurisdictions including Peru, Colombia, Malaysia and South Africa – developing markets often have a reasonably large cohort of companies that already provide good ESG reporting, and often have a solid public policy framework (e.g. mandatory disclosure requirements, voluntary reporting frameworks, corporate governance codes, stewardship code) which can be built on as they move to align with international frameworks.
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Read the report: ESG Disclosure Assessment of Thailand’s Listed Companies and Recommendations for Policy Development