How Thailand built Southeast Asia’s most sustainable stock exchange

Sustainability reporting is not mandatory in Thailand—and yet Thai firms outnumber their Asean peers in the latest Dow Jones Sustainability Indices. Kesara Manchusree, head of the Thai stock exchange, tells Eco-Business how she’s pushing for sustainability to take root in one of the region’s most competitive capital markets.

Kesara Manchusree, president, Stock Exchange of Thailand
Kesara Manchusree, president of the Stock Exchange of Thailand. "We have the opportunity to lead businesses to do good things for society." Image: SET

There’s a quiet, steely competitiveness about Kesara Manchusree, president of the Stock Exchange of Thailand (SET).

Speaking to Eco-Business on the sidelines of the Asia Sustainability Reporting Summit in September, she proudly notes that the number of Thai firms that featured in the Dow Jones Sustainability Indices (DJSI) this year is higher than that of other countries in the region

“Seventeen—up from 14 last year—more than any other stock exchange in Asean. Singapore had two companies [featured in DJSI], Malaysia just one,” she says. 

Since she was appointed president of SET three years ago, moving up from a role as the bourse’s chief marketer in June 2014, Kesara has been on a mission to push for more Thai listed firms to be featured in DJSI, an annual ranking of the world’s most sustainable companies. 

DJSI ranking makes a company more attractive to investors because it signals that the firm is taking a proactive approach to addressing long-term risks and opportunities, and more DJSI-ranked companies ultimately means a stronger, more sustainable stock market. This is “good for the economy, and good for society,” says Kesara. 

Competition is the best way to encourage better corporate citizenship, and DJSI is the tool SET is using to do it, she adds. 

“We write to company CEOs to let them know that DJSI is an important guide for investors,” she explains. “And we say, ‘your competitor has joined the index, would you like to follow them?’ We want the CEOs to compete with one another.” 

It is not mandatory for the 741 companies listed on Thailand’s stock exchange to report their sustainability performance, as it is for big companies in Malaysia and will be in Singapore by the end of this year. “So we have to show that reporting is a benefit and not a burden,” Kesara says. 

Siam Cement was the first Thai company to be ranked in the DJSI, in 2008. Oil and gas giant PTT came next, and then five of PTT’s group companies followed suit. Kasikornbank became the first Southeast Asian bank to join the indices in 2016. Seafood giant Thai Union has featured for the last four years. Thai Oil has led DJSI’s global energy industry category for the last three years.

“The economic reasons for sustainability reporting have to be there,” says Kesara. “Thai Oil is the global leader in its category, and can prove that they have highly efficient operations, and take care of their people.”

We say, ‘your competitor has joined the index, would you like to follow them?’ We want the CEOs to compete with one another.

The sufficiency economy

Kesara believes that Thai firms have a natural inclination to lower their environmental and social impact, because of the teachings of the late King Bhumibol Adulyadej—a hugely influential figure in every quarter of Thai society over a reign that lasted 70 years until his passing a year ago. 

In a famous speech in the late 1990s, when the region was reeling from the Asian financial crisis, King Bhumibol introduced the idea of ‘the sufficiency economy’. That is, Thailand should have enough to meet its needs, without extravagance—a Buddhist concept that been used in other parts of the world as a principle for sustainable development.

“The end result [of the sufficiency economy] is the same as sustainability,” says Kesara. “That’s why I believe that Thai businesses understand the principles; sustainability reporting is just the first step to get there.”

According to a recent study by Canadian responsible business magazine Corporate Knights, Thailand’s stock exchange outperforms any in Asia for sustainability reporting, ranking 10th out of 55 global stock exchanges for the number of firms to report their environmental, social and governance (ESG) performance. Just four years ago, Thailand ranked 40th. 

However, less than a third of listed Thai companies report their sustainability performance, and Kesara admits there is still work to be done to preach to the unconverted.

There is some way to go to improve the quality of reporting, she adds. “I think Thai people are naturally better at getting things done than writing about what they’ve done; reporting standards could be higher,” she says.

“From reading some of the companies’ sustainability reports, you’d think that they’re at an earlier stage of sustainability than they actually are,” Kesara explains. 

Next year, SET is rolling out self-assessment tools to help companies gauge how sustainable their operations are, and how they can start measuring their ESG performance.

It also plans to reach out to small to medium-sized businesses with guidance on how to work out which ESG issues are relevant to their business, and how they can be a benefit from sustainability reporting.

To drive competition among smaller businesses, SET set up the Thailand Sustainability Investment Index (THSI) in 2015, a domestic league table that ranks companies based on their ESG performance.

There were 51 companies featured last year, and Kesara is aiming for 60 or more firms to have joined by the end of this year. An award will recognise the best performer at a ceremony in November.

Kesara is also keen to highlight the role played by institutional investors in driving the sustainability agenda. She points to Thailand’s first ESG mutual fund, called Khon Thai Jai Dee or BKIND, as another “force” to push listed firms to report on sustainability.

For now though, Kesara says it’s too soon for sustainability reporting to be compulsory in Thailand.

“Once an industry sector is used to [sustainability reporting], then we can move on to regulation. But we can’t move every sector at the same time—some won’t be ready,” she says.

Big companies will be first, and smaller firms will follow eventually, Kesara reasons.

“This year, we’ll be focusing on SMEs. We believe that big companies have the intuition to report by themselves. Smaller companies need to be shown the way. Thirty per cent of Thai firms are reporting sustainability—we want 100 per cent.”

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