Thai corporate need to look at ESG in more holistic way to avoid a greater divide in society

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Thailand’s disparity of the haves and have nots would likely continue to rise as the less fortunate are unlikely to be able to have access to the kind of resources that big corporations have, and thus these corporate houses need to have uplifting of the society as part of their environmental, social and governance (ESG) policies, former Bank of Thailand governor said.

Veerathai Santiprabhob, whose 5-years as the governor of Bank of Thailand ended on September 30, 2020, came out to say that the new age of digital transformation would likely push the disparity to greater levels as the opportunities for the less fortunate would be more limited than those to the more well off and/or larger corporates.

He expressed concern that the digital divide and access to digital technology services will increase the disparity in opportunities.

“We see large, socially illustrious businesses gaining access to technology at a very low cost, giving them a huge leap in competitiveness compared to people at the lower levels of society,” he said.

This he said during a seminar yesterday titled – ‘Step Forward Together…to a Sustainable Step’ organized by ThaiPublica, could give unfair advantage to the larger businesses and eventually could lead to big businesses having greater edge to their smaller peers.

“In addition, we also see business circles with unfair economic competition. It’s not just big fish eat small fish, sometimes we may even see giant fish eat small fish,” he said.

Veerathai said that such things could lead to consumer exploitation from the power of big capital, and it is something that needs to be watched closely so as not to further raise the fragility of the society.

At the same time, the problem of inequality among people in society is also important issue that the country’s government and corporate sector needs to address.

Veerathai warned not to let the cross-generational or intergenerational inequality and opportunity inequality step over the tipping point.

“When talking about the inequality in society, in the past, the conversation would be about the inequality of assets or income inequality, but if the disparity is allowed across generations and opportunities, this would be even more frightening,” Veerathai added.

And another aspect to be aware of is the household debt problem, which is very fragile and can lead to inequality across generations in society if not looked out for carefully, he claimed.

“These inequalities have led to differences in the minds of many groups, with differences of thought leading to divisions of thought, making Thai society fragile and preventing us from creating a collective force that causes social change to keep up with new challenges.”

As an example, he said that such disparity is clearly visible in the country’s education, the social ladder, today, seems to offer fewer opportunities for people born into less wealthy families than those who are wealthier.

Wholesome ESG

Veerathai, who currently serves as Executive Chairman and Secretary General of the Mae Fah Luang Foundation under the Royal Patronage of His Majesty the King, that corporates looking to undertake ESG need to take a lot of things into consideration and not just do things for public relations value or just a corporate social responsibility (CSR).

He added that the ESG framework that businesses in the capital market are familiar with could be one that is a replica of the sustainability framework in the Western world, and that these may be more geared towards environmentally friendly, but Thailand’s problem is that these corporate must pay attention to and it encompasses other aspect such as social and governance, which may be more important.

He said that if the issue of social and governance problems cannot be resolved, and these problems are allowed to beyond the tipping point, Thailand will never be able to protect the environment, therefore, the strategy for Thai society is to place holistic thinking, look at the connection of these issues, and seriously take care of the sustainability.

“People often say that solving environmental problems is the duty of the government. But I think that’s not enough considering the size and challenges we’re facing,” he stated.

Veerathai Santiprabhob

Address Root Cause of Problems

Veerathai, who sits as a board of director for many companies such as PTT Exploration & Production Plc (PTTEP) and Bangkok Dusit Medical Services Plc (BDMS), said that companies need to understand the root cause of the problems in order to be able to offer the ESG program that matches the needs of each individual company.

“The solution to any problem must be directed to the root cause of the problem. The problem of sustainability is caused by all businesses; therefore, it is a sharing problem for all of us because if we can’t take care of it, it will be the cost of all our lives,” he said.

“Businesses must place environmental issues as a corporate strategy not just CSR, but it needs to be analyzed, monitored, understood, and the effort to create change.”

He came out to say that the sustainability situation in Thailand was worrying even if there is no food shortage as the climate change is severe, which Thailand is classified as a country that has been severely affected by climate change because half of Thai people’s livelihoods relied on agriculture as well as many industrial sectors in coastal and low-lying areas, and the tourism service industry in coastal areas.

Citing the example of the sinking of Bangkok as an impact from Climate Change, he said that Thailand only recently starting to talk about a low-carbon society, and even then it is not a full hearted talk and action but more focused on giving a face saving way to for big businesses to be able to get some recognition.

There was also a very little talk about the climate change adaptation plan, which inevitably affects everyone’s lives, he said. Unlike in foreign countries where there are plans to support the circumstance, Thai society is still ignorant on the matter.

Meanwhile, the social and governance crisis may be closer to the tipping point. The tipping point that has already been stepped over is the greenhouse gas emissions that cause global warming, and another thing is the demographic change that makes Thailand slowly but surely step into a complete aging society.

In addition, the issue that Thailand must be careful not to cross the tipping point in terms of society and governance is the issue of corruption. If corruption is regarded as an acceptable norm in society, it will be difficult to solve and have far-reaching consequences.

He said that the data suggests that Thailand’s ranking in clean governance has been gradually eroding and the latest Corruption Index of Thailand in the past five years has been steadily decreasing every year from 2018 when the country ranked 96th to 2021 when Thailand was ranked at 110th. A decline Veerathai said, shows that the country has some serious problem.

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