In today's rapidly changing world, marked by advances in technology, shifts in social structures, changes in consumption patterns, and the effects of climate change, the operations of banks and the businesses of their customers are impacted both positively and negatively. These factors are also interconnected with the overall economic system. Therefore, it is crucial for organizations to incorporate sustainability factors into their decision-making processes.

Krungthai, as a financial institution serving the Thai people, recognizes its role and responsibility towards society. The bank's vision, "Growing Together for SUSTAINABILITY", drives its efforts to integrate governance, social and environmental issues into its business processes. Krungthai also adheres to national and international sustainable banking guidelines to promote a systematic transition to a low-carbon economy and build a quality society. By focusing on preventing negative impacts and promoting environmentally friendly business practices, the bank aims to support its customers, partners, employees, and shareholders in meeting these challenges while creating new business opportunities through the development of innovative financial products and services.

KrungThai Bank’s Responsible Lending Policy

The Bank has developed Responsible Lending Guidelines, which integrate the assessments for social, governance, and environmental risks into the loan evaluation process. In accordance with this commitment, the Bank applies the framework of the internationally recognized Equator Principles for sustainable project financing and the International Finance Corporation’s (IFC) environmental and social performance standard. These frameworks are carefully applied to various types of bank loans, including project finance and corporate finance, to ensure appropriateness and alignment with best practices.

The Bank first assesses loans through the Exclusion List, which outlines loan types not supported, and the Inclusion List, detailing potential industries. Additionally, Sector-Specific Guidelines for credit assessment are applied to particular sectors and client groups deemed to be high-risk. These guidelines include provisions for offering green loans in accordance with the Green Loan Principles of the Asia Pacific Loan Market Association (ALPMA) and the Loan Market Association (LMA).

These loans must undergo a loan screening and loan review process, which incorporates considerations of ESG issues to evaluate their impact based on criteria related to ESG practices, as well as their business approach to ESG. Examples of the Bank’s ESG criteria are as follows:

Environment

• Does the business pose a risk to the environment? For example, does it emit pollution that affects biodiversity, water resources, and forests?
• The business or project has prepared an Environmental Impact Assessment (EIA) or an Environmental and Health Impact Analysis (EHIA) based on the size of the business as determined by the government.

Social

• Is the business at risk of violating human rights, for example, by hiring illegal labor or child labor?
• Does the business negatively impact the community’s way of life?

Governance

• Does the business operate under the principles of good governance and have no history of involvement in fraud or corruption?

The Bank also continuously evaluates risks and opportunities in collaboration with its customers, fostering support for and advancement of responsible and sustainable business practices and development.

Exclusion List

The Bank requires consideration of the loan applicant’s characteristics as well as the type of business or project in which the customer is currently employed. The Bank does not intend to support the following loans:

For other industries, the Bank may consider making additional changes to promote environmentally sustainable business practices that generate positive environmental and social impact.

Furthermore, the Bank prioritizes customers who demonstrate a commitment to conducting business with social and environmental responsibility by establishing beneficial loan evaluation criteria for these customers. The Bank evaluates the commitment based on various factors, including ESG ratings derived from internationally recognized standards, greenhouse gas emissions reduction efforts, the use of renewable energy, and operations that support the United Nations Sustainable Development Goals (SDGs).

Sector-Specific Guidelines

The Bank provides additional guidelines for businesses or projects that may have significant impacts on the quality of the environment, natural resources, and community occupational health. To align its operations with national and international goals for transitioning to a low-carbon economy, the Bank requires risk management at both the portfolio and transactional levels. Businesses and projects seeking funding must obtain permits or complete an Environmental Impact Assessment (EIA) or Environmental Health Impact Assessment (EHIA) in accordance with established legal criteria.

Credit approval Process and ESG Risk Screening (ESG Integration in Loan Screening Process)

The Bank incorporates ESG issues into its credit approval process. In addition, the bank monitors credit limits and line utilization according to specific objectives and conditions. Credit reviews are conducted periodically to ensure that clients are taking effective steps to manage ESG issues and comply with requirements throughout the duration of their credit lines.