Thai companies are preparing for a major regulatory shift as the country moves closer to passing its first Climate Change Act. Rather than seeing climate regulation as a burden, many businesses are treating decarbonisation as a way to stay competitive in global markets.

The proposed law is expected to introduce mandatory emissions reporting, carbon taxation rules, and a compliance-based emissions trading system.

Regulators say the Act will move Thailand from voluntary climate pledges to legally binding obligations.

Thailand Climate Change Act Set to Reshape Corporate Strategy

The draft Climate Change Act is currently in its final review phase, including input from the finance ministry on the creation of a National Climate Fund.

Once approved by the Cabinet, it is expected to accelerate corporate alignment with global environmental, social, and governance standards.

Thailand has also raised its national ambition, targeting net zero emissions by 2050. This is a more aggressive timeline than previous targets of carbon neutrality by 2050 and net zero by 2065.

Decarbonisation Gains Momentum Across Thai Companies

Thai firms have demonstrated resilience in adapting to global disruptions, from Covid-19 supply chain shocks to new sustainability requirements for exporters.

According to Chow Wong Yuen, chief sustainability officer of UOB Thailand, strong demand for green finance and collaboration across industries are driving progress.

“I think Thai companies are realising that they need to be competitive and be ready to do business anywhere,” said Chow.

“It has also meant that more companies are focusing their efforts on direct emission reduction to gain that competitive edge in the global trade arena.”

Energy Transition and Policy Clarity Remain Key Challenges

Renewable energy currently accounts for a limited share of Thailand’s power mix, with solar and biomass leading growth.

A forthcoming Power Development Plan is expected to clarify how businesses can access more renewable energy in the years ahead.

Energy affordability and security remain central concerns for policymakers, shaping how quickly renewable capacity can expand without disrupting economic stability.

Sustainable Finance Expands as Regulatory Tailwinds Build

UOB Thailand has significantly expanded its sustainable financing portfolio, supporting clean energy projects and transition financing for small and medium-sized enterprises. In 2024, UOB reached S$58 billion in sustainable financing across all markets.

The Bank of Thailand has also introduced climate stress testing and transition financing initiatives, pushing banks to set green targets.

Chow said these regulatory tailwinds are strengthening investor confidence and encouraging companies to move beyond compliance toward long-term competitiveness.

PHOTO: WORLDBANK

This article was created with AI assistance.

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