New fund to be created for sustainable development looking at environmental, social factors and governance
Environmental Social and Governance – or ESG – will be the factor driving listed companies in the Stock Exchange of Thailand (SET) to achieve sustainable growth in the long term, SET chairman Sathit Limpongpan said in an interview with The Nation.
The SET also plans to promote social enterprise to become a feature of SET-listed companies, and to launch new rules for asset management firms creating the Social Enterprise Fund in the next few years.
The fund will invest in social enterprise firms and help these firms to have enough capital to drive sustainable growth in the long term, he said.
He said that this road map for firms doing business through concerns about environment, social factors, and corporate governance has three steps.
The first is to promote listed companies to invest in social enterprise business, supported through their main business strategy. They would develop their business structures to match the standards of the Dow Jones Sustainability Index (DJSI).
Currently, only three listed firms are in this index. They include PTT, SCG Group, and PTT Global Chemical, while Thai Oil is a list member of DJSI Emerging markets.
“Being selected as A DJSI component boosts attractiveness of these companies among domestic and international investors and firms up their confidence that the companies operate business with social and environment concerns, together with making good returns, resulting in sustainable growth and long-term benefits for investors,” he said.
The DJSI tracks globally the financial performance of leading sustainability driven companies worldwide, and leading funds use the DJSI as a gauge for making prudent long-run investment decisions.
The DJSI invites more than 3,000 publicly traded companies to report annually on their sustainability practices. Selection to the DJSI is based on market capitalisation and in-depth analysis of a company’s economic, environmental and social aspects, with a focus on long-term development of corporate value. S&P Dow Jones Indices and RobecoSAM announce their annual review every September.
This year, DJSI has selected 30 listed firms and one non-listed company to submit sustainable reports for DJSI consideration. They include: Advance Info Service, Airports of Thailand, Banpu, BEC World, Bangkok Dusit Medical Services, Bank of Ayudhya, Bangkok Bank, Bumrungrad Hospital, Big C Supercenter, BTS Group Holding, CP All, Total Access Communication, Glow Energy, Charoen Pokphand Foods, Central Pattana, IRPC, Intouch Holdings, Kasikorn Bank, Krungthai Bank, Indorama Ventures, Siam Commercial Bank, PTT, PTT Exploration and Production, PTT Global Chemical, Siam Cement, Minor International, Thai Oil, TMB Bank, True Corporation, Thai Union Frozen Products, and Thai Beverage.
The next step will be to promote social enterprise business to listed firms and also encourage social enterprise to be applied to listed companies.
Sathit said that social enterprise means corporations do business with concern for social issues and the community. Businesses will operate by providing benefits to society and at the same time generate net profit over the long term.
For example, the Doi Tung business model promotes and supports farmers who grow coffee to replace opium. Farmers will gain new careers while the country has quality coffee beans for domestic consumption – reducing the importing of coffee, and also exporting products overseas. This is a win-win situation model for the farmer, the entrepreneur, and the country.
“We believe that all listed firms in the SET now can be social enterprises when they restructure their business through concern for social issues. This will support them to gain sustainable growth in the long term,” he said.
Meanwhile, the country also benefits from the social enterprise model to create jobs and develop communities to be sustainable over the long term, he added. Investors will also learn to understand sustainable enterprise and to promote the social enterprise fund, which will raise capital from investors for social enterprise business.
This will be the way in which social enterprise growth will develop in Thailand in the long term.
At present, global investors are interested in expanding their investment in social enterprise firms because they can develop sustainable growth worldwide. This partly reduces the income gap in social activities and also helps develop sustainable growth globally in the long term.
“Social enterprise business can generate profit and also provide benefit for society. This is a challenge for entrepreneurs and corporations to do business for the long term and not be concerned only in generating high profit,” he said.
“We will see social enterprise listed companies in the SET and also have a social enterprise fund within the next three to five years,” he said.