‘How Thai Banks are Adapting to Climate Change’ Comparative Case Study: Financial Disclosures by Thai Banks under TCFD Recommendations in 2024

Countries globally must now urgently transition to a low-carbon economy to address climate change, which continues to intensify and becoming a more serious issue. Here, financial institutions—as the main capital allocators for the business sector—play an indispensable role. Their contributions include focusing on financing low-carbon businesses, reducing financing for carbon-intensive businesses, and supporting their corporate clients to transition to low-carbon production. Simultaneously, the financial institutions themselves also face the same risks from environmental and climate change, like other organizations.

The Task Force on Climate-Related Financial Disclosures (TCFD) is the world's most credible body of standards for the preparation and disclosure of financial information on risks and opportunities from climate change. In 2024, the standards and TCFD were consolidated and currently are under the supervision of the International Sustainability Standards Board (ISSB Board) under the International Financial Reporting Standards Foundation (IFRS), as it was recognised that the IFRS S2 Climate-related Disclosures are in line with the four core elements of TCFD’s recommendations.

Overall, Thai banks have become increasingly attentive to assessing climate-related financial risks and opportunities arising from climate change, pursuant to the TCFD’s recommendations. Particularly after the Bank of Thailand (BOT) encouraged banks to disclose information in alignment with internationally recognised frameworks or standards at least once a year, citing those of the TCFD and the ISSB as examples. Currently, both standards have been integrated into the aforementioned IFRS S2.

For this report, Fair Finance Thailand assessed the TCFD-aligned disclosure practices of six Thai banks at the end of October 2024, encompassing four core elements according to the TCFD’s recommendations: Governance, Strategy, Risk Management, and Metrics and Targets. In addition, the research team conducted interviews with the banks to collect their opinions on the TCFD-aligned disclosure. The interviewed banks can be categorised into: (1) five banks that complied with TCFD’s recommendations, consisting of four commercial banks, one Specialized Financial Institution (SFI); and (2) one bank that had not yet conducted TCFD-aligned disclosure. The research team also interviewed two regulatory agencies that played an important role in the process of TCFD-aligned disclosure by Thai banks, namely the Securities and Exchange Commission (SEC) and BOT.

In the overview, the research team found that there are six Thai commercial banks that have prepared and published reports on climate change in alignment with TCFD recommendations. Ranging from the highest to lowest proportion of disclosure, the banks that conducted TCFD-aligned disclosure are:

1. Siam Commercial Bank (SCB) and Kasikornbank (KBank) disclosed 39 out of the total of 60 items of recommendations (65%)

2. Bangkok Bank (BBL) disclosed 32 items of recommendations (53.3%).

3. TISCO Bank (TISCO) disclosed 31 items of recommendations (51.7%).

4. TMBThanachart Bank (ttb) disclosed 20 items of recommendations (33.3%).

5. Government Savings Bank (GSB) disclosed 14 items of recommendations (23.3%).

Key disclosure topics summarized according to the TCFD recommendations

1. Governance

Most banks disclosed the processes and frequency of climate-related discussions at the board or subcommittee level. These were typically outlined in work plans assigning ESG (Environmental, Social, Governance) risk monitoring responsibilities—climate-related risks included—to designated subcommittees on a regular basis. However, the frequency of such meetings varied across institutions. Only a few banks indicated that climate-related issues were incorporated into their annual budgeting processes or business planning.

2. Strategy

All six banks analyzed both physical and transition risks arising from climate change to develop strategies for mitigating potential financial impacts. Most banks have developed environmentally friendly financial products and services, established exclusionary lending policies, and defined sector-specific strategies to control greenhouse gas (GHG) emissions in high-emission industries. Furthermore, all six banks disclosed their transition plans toward a low-carbon economy, including emission reduction targets and descriptions of key activities intended to lower GHG emissions. However, none of the banks described how their strategies would be managed under evolving climate scenarios.

3. Risk Management

Most banks disclosed their approaches to identifying and assessing climate-related risks, along with expected impacts. They also outlined risk management strategies for each risk category, based on timeframes determined by the banks themselves.

4. Metrics and Targets

All six banks have announced targets to reduce Scope 1 and Scope 2 GHG emissions. However, only four have set net-zero GHG emissions targets. Among them, Kasikornbank and Siam Commercial Bank aim to reach net-zero emissions by 2030, while TISCO Bank and Government Savings Bank have set their targets for 2050.

In addition, five banks have established goals to reduce or limit lending to high-emission industries such as coal mining, coal-fired power generation, and the oil and gas sector. Three of these—Kasikornbank, Siam Commercial Bank, and TISCO Bank—have also committed to reducing Scope 3 emissions, which include financed emissions from their client base.

Challenges and Opportunities in Implementing the TCFD Recommendations

Based on interviews with representatives from banks and relevant regulatory agencies, four key themes emerged regarding the challenges and opportunities associated with implementing the TCFD recommendations:

1. Compliance with TCFD requires significant resources and time.

To date, only large banks have been able to fully disclose climate-related information. However, the Bank of Thailand (BOT) has organized capacity-building programs for banks and mandated that they conduct climate stress testing to develop transition plans and set greenhouse gas (GHG) reduction targets. It is expected that all banks will be able to comply with TCFD by 2025.

2. SMEs, as key banking clients, face constraints in disclosing GHG emissions.

Accurate climate-related disclosures by banks depend on the availability of emissions data from clients. Yet, SMEs—which make up a significant portion of banks’ client base—continue to face cost and capacity limitations that hinder data collection. As a result, most banks rely on proxies to estimate GHG emissions. Several stakeholders have proposed the development of a national open data platform, along with enhanced support to help SMEs adapt to climate change in parallel with banks.

3. Integration and coordination among relevant agencies is essential.

Effective climate-related disclosure requires coordinated efforts from all involved agencies to ensure consistency in disclosure frameworks. In particular, the creation of a robust, accessible national GHG emissions database would be a critical enabler of comprehensive and streamlined disclosures.

4. Elevating disclosure practices to meet more stringent global standards.

TCFD-aligned disclosure serves as an important starting point for the banking sector in preparing for more rigorous standards, such as IFRS S2, which focus on financial impacts from climate change. Therefore, strengthening the capacity of financial institutions to comply with these standards, alongside the development of comprehensive data systems and disclosure frameworks, is essential for long-term success.