Thailand to launch green investment trusts for forestry initiatives

Thai regulatory bodies are paving the way for the establishment of investment trusts dedicated to forestry and tree-planting initiatives. These new financial products, dubbed green investment trusts, are part of an effort to diversify the capital markets and provide financial support to sectors that align with carbon neutrality goals.

Pornanong Budsaratragoon, the secretary-general of the Securities and Exchange Commission (SEC), stated that the green trusts would be initially restricted to investments in projects yielding income from carbon credits. She added that the comprehensive rules and guidelines for these green funds are set to be finalised by the middle of the year, following consultations with a range of stakeholders.

In a recent discussion, the SEC head pointed out that the new category of trusts will cater to the rising appetite for green financial products beyond just bonds and loans.

“The offering process will be much more streamlined than that for fixed-income securities.”

Thailand’s ambitious aim of achieving carbon neutrality by 2050 spurred investment activity in both the public and private sectors. However, this has also led to heightened scrutiny, especially after certain high-profile projects were found to overstate their contributions towards conservation and emissions reduction, reported Bangkok Post.

Thailand, the second-largest economy in Southeast Asia, launched FTIX, its first carbon credit exchange, in September. Operated by the Federation of Thai Industries (FTI), the new carbon market is comprised of approximately 12,000 private firms across 45 sectors.

Addressing the issue of overcounting of carbon credits and fraudulent practices, the World Bank is implementing stricter monitoring and verification protocols. These measures aim to ensure that reforestation efforts do not lead to deforestation in other areas.

The SEC plans to set up protocols that mandate licensed green trusts to align with emissions tallies and carbon credit assessments from certified agencies, according to Pornanong. She also noted that the regulator is encouraging local companies to secure funds for green projects through tokens and other digital assets.