It’s no exaggeration to say that 2017 has been a successful year for The Stock Exchange of Thailand (SET). From the 40th spot in 2013, SET climbed to 10th place amongst the most sustainable stock exchange annually ranked by Corporate Knights. In addition to that, Thai firms outnumbered their ASEAN peers in 2017 Dow Jones Sustainability Indices (DJSI).
“What are good case practices to be shared by SET?” To answer these questions, we interviewed Nareerat Santhayati – Deputy Vice President, Sustainable Development Department of The Stock Exchange of Thailand.
Having earned a master’s qualification in sustainability management, from Columbia University in New York, Nareerat is currently based in the Stock Exchange of Thailand. Responsible for promoting environmental, social, governance (ESG) disclosure, and sustainable investing. Nareet is experienced in conducting sustainability assessments for Thai-listed firms. Her role involves advising large companies on how they can be listed in the Dow Jones Sustainability Indices (DJSI).
Nareerat’s body of work also includes advisory work with the United Nations Sustainable Stock Exchanges (SSE) initiative, stemming from her passion for sustainable development.
SET has become a role model in Southeast Asian countries, for high quantitative and qualitative sustainability reporting. Can you share with other stock exchanges in the region the successful initiatives that promote sustainability reporting?
The first key factor is having a long-term plan as it takes time to convince the market. SET has relentlessly promoted the uptake of sustainability disclosure and reporting since CSR was still the common term. Becoming a partner of United Nations Sustainable Stock Exchange (SSE) initiative in 2014 was a stepping stone for SET. After half year, we hosted the first SSE regional dialogue where good case practices from stock exchanges in the regions were shared. We understood from the first day that our efforts wouldn’t show results after 1-2 years. In fact, it takes some time for our collective efforts to yield.
A second significant factor is our educational program. We invested in free training/workshops, and sustainability reporting forums in order to raise awareness of sustainability management and disclosure amongst listed companies.
Our efforts go beyond education. A sustainability assessment program covering all environmental, social and governance (ESG) issues is conducted every year for listed companies. More importantly, SET provides all companies that participate in the assessment with useful feedback to advance their sustainability performance. Companies can also request one to one consultations with SET if they wish to know more on how they can improve.
From last year’s assessment, SET shortlisted 65 companies which demonstrated outstanding ESG performance in the Thailand Sustainable Investment (THSI), called “ESG Stock List”.
“Our Efforts Go Beyond Education”
What were the challenges for SET trying to convince Thai companies to report on sustainability?
Most companies viewed that sustainability reporting was an unnecessary exercise. Some large companies perceived sustainability reporting as a burden. While, medium and small companies compared themselves with larger enterprises and argued that they didn’t have sufficient resources. SET had striven to create a better understanding of the value of sustainability reporting as a management tool that offers a more holistic view about companies’ operations and processes. Also, the report itself could serve as an effective communication platform for stakeholders, particularly investors who now take ESG aspects into consideration.
We approach companies with a very consistent message “start from what you have”. We encourage companies to start from something small and report on what they have been doing so far to avoid being overwhelmed by global standards.
For some companies which are ready to develop sustainability reporting in line with international standards, SET encourages them to use GRI Standards and map the indicators with the Sustainable Development Goals.
Up till now, a total of 93 listed companies published their sustainability reports in accordance with GRI guidelines.
“We Approach Companies with A Very Consistent Message:
Start from What You Have”
What is the next stage that SET is directing companies towards to?
If we are to put all of the listed companies in a sustainability pyramid with regard to market capitalization, the large companies that fall in the top section are advanced in sustainability performance. However, they account for a small number. SET’s current priority is to help raise sustainability performance of companies in the middle and bottom sections of the pyramid.
A much more simple and user-friendly guideline for beginner companies is being created. The tool, expected to be introduced to the market by September 2018, would offer simple and material ESG indicators. Hence, we can expect to see a shift to a more quantitative reporting manner that could reflect corporate ESG performance and the bottom line for business.
