Banks and ESG: Change and Importance in Today's Era

In an era where the world is facing environmental, social, and transparent management problems. The importance of ESG (Environmental, Social, and Governance) principles has increased significantly. Many sectors are beginning to realize the need to adopt ESG as a guideline for business operations. And the banking sector is no exception. This article will introduce you to ESG and explore how banks apply these principles to their industry.

What is ESG?

ESG stands for Environmental, Social, and Governance, which means environment, society, and management. with the following meanings:

Environmental refers to managing natural resources and their impact on the environment, such as reducing greenhouse gas emissions. Using renewable energy and waste management

Social is caring for the welfare and well-being of employees, customers, and communities, as well as promoting equality. Prevention of human rights violations and community development.

Governance means having a transparent management system that is responsible and in compliance with the law and ethics.

How to apply ESG in the banking sector.

Banks have begun to apply ESG principles to their business operations. Here are some examples:

Sustainable Investing Many banks are beginning to look for investment opportunities that not only generate financial returns but also have a positive impact on the environment and society, such as investing in renewable energy projects, and lending to businesses that adhere to ESG principles.

Environmental and social risk management Banks have begun to consider environmental and social risks in lending decisions, such as examining the environmental impacts of projects applying for loans and checking that companies applying for loans comply with human rights standards.

Promoting transparency and accountability The bank has improved management to be more transparent and accountable by disclosing information related to ESG compliance and establishing a committee to oversee sustainability.

The importance of ESG for banks

ESG is important for banks in several ways:

Risk reduction Consideration of environmental and social risks can help reduce long-term financial risks.

Building trustworthiness Transparent and responsible business practices help build credibility and trust among customers, investors, and society.

Increasing business opportunities Investing in sustainable projects and promoting ESG practices can open up new business opportunities and increase long-term returns.

Conclusion

The application of ESG in the banking sector is a response to the needs of a changing world and creates sustainability in terms of environment, society, and management. In the future, banks will be able to effectively apply ESG to their businesses. It will be a bank that is ready to face challenges and can grow sustainably.

References

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นารินทิพย์ ท่องสายชล. (2565). ESG การลงทุนในโลกยุคใหม่. [ออนไลน์]. สืบค้น วันที่ 14มิถุนายน 2567, เข้าถึงได้จาก https://www.setinvestnow.com/th/knowledge/article/165-tsi-invest-in-esg-stocks-in-new-investment-era

สมาคมบริษัทหลักทรัพย์ไทย ASCO. (2559). ESG… ปัจจัยสำคัญสู่แนวทางการประกอบธุรกิจตามหลักความยั่งยืน. [ออนไลน์]. สืบค้นวันที่ 14มิถุนายน 2567, เข้าถึงได้จาก www.asco.or.th/uploads/upfiles/files/ASCO%20article_ESG_ed.pdf