Explicitly promote broad dissemination and implementation of due diligence in accordance with the OECD Due Diligence Guidance for RBC. Several events were organised to support these objectives, as well as promotional activities such as letters circulated to companies and financial advisors (see section below). RBC standards play an important role in the context of sustainable finance as they provide authoritative and widely accepted recommendations for identifying, managing and reporting on environmental, social and governance impacts associated with clients or investments. The SET maintains a Social Responsibility Centre (originally set up in 2007 as Corporate Social Responsibility Institute) which has a mandate to build a strong foundation for the sustainable growth of the capital market in the long run. A promising trend has been the inclusion of RBC provisions in a recent wave of new investment strategies and laws. It is important to note that the acceptance of the case at this stage means that the UK NCP will offer mediation/conciliation and does not indicate any determination of the case. 1. Promoting Responsible Business Conduct (RBC) in the financial sector is vital tobuildinga sustainable global economy. COVID-19 recovery plans will place governments in a particularly strategic position to steer the economy toward long-term value creation (including reduced greenhouse gas emissions, worker skills and benefits and emergency preparedness). Responsible Business Conduct for Institutional Investors(2017), Factsheet: RBC for institutional investors, Due Diligence for Responsible Corporate Lending and Securities Underwriting (2019), Responsible Business Conduct Due Diligence for Project and Asset finance transactions. Another finding from the OECD review is that stock markets are increasingly integrated. See also Saijel KishanandEmily Chasan (13 March 2020), Older ESG Funds Outperform Their Newer Rivals in Market Tumult, Bloomberg https://www.bloomberg.com/news/articles/2020-03-13/older-esg-funds-outperform-their-newer-rivals-in-market-tumult?sref=winqcnxe and Jon Hale (16 March 2020), Sustainable Equity Funds are Outperforming in Bear Market, Morningstar https://www.morningstar.com/articles/972475/sustainable-equity-funds-are-outperforming-in-bear-market, 5. Praxis Labs (2019), Tracking Progress: Assessing Business Responses to Forced Labour and Human Trafficking in the Thai Seafood Industry, Humanity United and Freedom Fund, http://www.praxis-labs.com/uploads/2/9/7/0/29709145/09_hu_report_final.pdf. RBC issues are a challenge for many sectors and jurisdictions. Another example are the efforts by the Securities and Exchange Commission (SEC) which was an early champion of sustainability, notably connecting the topics of corporate governance, ESG, sustainability, and anti-corruption, in the Sustainability Development Roadmap which was adopted as part of the SEC Strategic Plan 2013-2015. For example, the EU trade strategy Trade for all: Towards a more responsible trade and investment policy uses RBC as a pillar. For example, since 2013, the SEC requires issuing companies and listed companies to comply with disclosure requirements under Notification of the Capital Market Supervisory Board 44/2556 Re: Rules, Conditions and Procedures for Disclosure regarding Financial and Non-financial Information of Securities Issuers under chapter 3 clause 29. OECD/FAO (2019), OECD-FAO Pilot project on the implementation of the OECD-FAO Guidance for Responsible Agricultural Supply Chains: Final Report, http://mneguidelines.oecd.org/Pilot-project-on-the-implementation-of-the-OECD-FAO-Guidance-for-Responsible-Agricultural-Supply-Chains-FINAL-REPORT.pdf. Clear information on the UN Guiding Principles and the OECD Guidelines should be communicated as part of the services that the Federation of Thai Industries and the Board of Trade provide for outward investments. Stock markets have declined over 30% and volatility has spiked to crisis levels (OECD, 2020b). For example, companies can consider Global Reporting Initiative (GRI) format in the One Report from 2022 onwards. EU (2016b), Human Rights and Sustainable Development in the EU-Vietnam Relations with specific regard to the EU-Vietnam Free Trade Agreement, European Commission, http://trade.ec.europa.eu/doclib/docs/2016/january/tradoc_154189.pdf, EXIM Thailand (2018), Annual Report 2018, https://www.exim.go.th/getattachment/Annual-Reports/aaa/EXIM_Annual_Report_2018_Eng.pdf.aspx, G20 (2017), G20 Hamburg Climate and Energy Action Plan for Growth, http://unepinquiry.org/wp-content/uploads/2017/07/Climate_and_Energy_Action_Plan_for_Growth.pdf. As mentioned earlier in this report, food is by far the largest manufacturing sector in Thailand, both in terms of value added (19%) and employment (22%), followed by motor vehicles with 12% of total value added and, in terms of employment, fabricated metals with just 7%. Morgan Stanley (2018), Sustainable Signals, www.morganstanley.com/assets/pdfs/sustainable-signals-asset-owners-2018-survey.pdf. It is also important to highlight that labour issues also concern other sectors of the economy. As ASEAN policymakers continue to build a more resilient, inclusive, people-oriented and people-centred community, one integrated with the global economy, RBC can play a role in increasing absorptive capacity and participation in global value chains (GVCs), while contributing to meeting the future competitiveness and skills challenges head on (for more analysis in this regard, see OECD, 2019a). ThaiPBS World (2019), GPF signs Collaborative Engagement Declaration with 32 institutional investors, August 19 2019, https://www.thaipbsworld.com/gpf-signs-collaborative-engagement-declaration-with-32-institutional-investors/. 9 and 14), with the OECD Guidelines specifically mentioned in art. Risk aversion in the financial markets due to COVID-19 has reached levels not seen since the global financial crisis. Integrating practices like due diligence for environmental and social risks, improving processes related to stakeholder engagement, and promoting disclosure and transparency, could go a long way in mitigating risks. Resolving challenges with ESG data will be an ongoing process that requires collaboration across policymakers, investment practitioners, ESG data providers and corporates. For more information, see the new OECD project on RBC and public procurement http://www.oecd.org/governance/public-procurement/procurement-and-rbc/. At the June 2019 meeting of the ASEAN Inter-governmental Commission on Human Rights (AICHR) Interregional Dialogue: Sharing Good Practices on Business and Human Rights, AICHR representatives noted the relevance/intersectionality of RBC for more sustainable and impactful free trade agreements during a discussion focused on RCEP and AEC (AICHR, 2019). This means ambitious mitigation action to reduce emissions and to strengthen their climate resilience in order to address and adapt to the physical and transition risks of climate change on their direct operations and supply chains including impacts on workers, local communities and the natural environment. Furthermore, efforts in the banking sector have also been undertaken recently. Building on the support for the NAP and the swell of support for RBC, Thailand is in a unique position to promote bold and consistent implementation of RBC principles and standards across the economy. RCEP (2019), Joint Leaders Statement On The Regional Comprehensive Economic Partnership, 4 November 2019,https://asean.org/storage/2019/11/FINAL-RCEP-Joint-Leaders-Statement-for-3rd-RCEP-Summit.pdf. Furthermore, the environmental and social impacts of concrete a major input are well-documented. ShareAction (2018), Pensions in a Changing Climate, https://aodproject.net/wp-content/uploads/2019/01/AODP-PensionsChangingClimate.pdf. The agriculture sectors (including forestry, livestock, and fisheries) employ 30% of Thailands workforce in 2018 and contributed to 8% of GDP (UNDP/FAO, 2019). RBC-related activities in Thailand have also been undertaken by the private sector and civil society. RBC means integrating and considering environmental and social issues within core business activities, including throughout the supply chain and business relationships. The efforts by the Thai government to set RBC policy direction through the NAP, including specific actions and indicators of success are commendable, but the real test will be in implementation. UNDP/FAO (2019), Integrating Agriculture in National Adaptation Plans: Thailand Case Study, UNDP, Bangkok, www.adaptation-undp.org/naps-agriculture. The new SEC Strategic Plan 2020-2022 includes sustainability as one of its priorities, to promote alignment with and achievement of the SDGs, and includes a direct reference to promoting business and human rights. These services include organising overseas business visits, business seminars and dialogue with business associations of other countries. The new regulation sets out how financial market participants and financial advisors must integrate ESG risks and opportunities in their processes, including reporting on adherence to internationally recognised standards for due diligence. Increasingly strong political ties with China and concrete infrastructure development plans could help Thailand become a regional logistics hub and lower related costs. Strong cooperation with China is also strengthening Thailands role in the implementation of the Master Plan on ASEAN Connectivity 2025. Another challenge is the tension between ESG objectives (which are viewed as important to long-term value creation) and the investment horizons (which seek to maximise shareholder value in the short-term). This will be especially relevant in COVID-19 recovery. The government could direct SOEs to implement the OECD due diligence guidance in the first instance. Investment projects are mostly concentrated in mining and energy, the food industry, and in construction and real estate development projects. The NHRCT found that among complaints received about business-related adverse impacts from 2001 to 2018, the three most frequent complaints were environmental pollution on human health, forced evictions of communities with no or inadequate compensation, and lack of or inadequate public consultations with communities affected by large-scale development projects (ASEAN Post, 2019). Thai regulators have already been attempting to address these issues in several ways. Surface water quality outside the OECD is expected to deteriorate in the coming decades, through nutrient flows from agriculture and poor wastewater treatment. The NHRCT has also played a key role when it comes to overseas investments and activities of other enterprises. Ethical investment products or strategies that are dictated by certain ethical or moral considerations. Promoting and enabling responsible business conduct (RBC) is of central interest to policy-makers wishing to attract and keep quality investment and ensure that business activity contributes to broader value creation and sustainable development (see also Chapter 4). SEC (2017a), Corporate Governance Code for Listed-Companies 2017, Securities and Exchange Commission, https://www.sec.or.th/cgthailand/TH/Documents/Regulation/CGCode.pdf. Joint Leaders Statement On The Regional Comprehensive Economic Partnership, 4 November 2019, https://www.sec.or.th/EN/Pages/News_Detail.aspx?SECID=7497&NewsNo=64&NewsYear=2019&Lang=EN, https://www.sec.or.th/cgthailand/EN/Pages/OVERVIEW/CGANDSUSTAINABLEBUSINESSDEVELOPMENT.aspx, https://www.sec.or.th/cgthailand/TH/Documents/Regulation/CGCode.pdf, https://www.sec.or.th/cgthailand/EN/Pages/RulesRegulation/ICodeII.aspx, https://www.set.or.th/sustainable_dev/en/sr/about/about_p1.html, https://aodproject.net/wp-content/uploads/2019/01/AODP-PensionsChangingClimate.pdf, www.ssga.com/investment-topics/environmental-social-governance/2018/04/esg-institutional-investor-survey.pdf, https://www.tba.or.th/wp-content/uploads/2019/08/Guidelines-ResponsibleLending.pdf, https://www.thaipbsworld.com/gpf-signs-collaborative-engagement-declaration-with-32-institutional-investors/, https://www.gov.uk/government/publications/uk-ncp-initial-assessment-complaint-from-idi-ec-and-licadho-against-bonsucro-ltd/initial-assessment-by-the-uk-national-contact-point-for-the-oecd-guidelines-for-multinational-enterprises-complaint-from-idi-ec-and-licadho-against, https://ap.ohchr.org/documents/dpage_e.aspx?si=A/73/163, https://documents-dds-ny.un.org/doc/UNDOC/GEN/G16/091/71/PDF/G1609171.pdf?OpenElement, www.ohchr.org/Documents/Publications/GuidingPrinciplesBusinessHR_ EN.pdf, https://www.unglobalcompact.org/engage-locally/asia/thailand, https://www.ohchr.org/documents/Publications/TheOtherInfrastructureGap_FullLength.pdf, https://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=22915&LangID=E, https://www.ohchr.org/EN/NewsEvents/Pages/DisplayNews.aspx?NewsID=23095&LangID=E, https://www.ohchr.org/_layouts/15/WopiFrame.aspx?sourcedoc=/Documents/Issues/FAssociation/InfoNoteSLAPPsFoAA.docx&action=default&DefaultItemOpen=1, https://www.state.gov/wp-content/uploads/2019/06/2019-Trafficking-in-Persons-Report.pdf, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/october/ustr-announces-gsp-enforcement, https://susba.org/pdfs/report-2019-compressed.pdf, https://www.bloomberg.com/news/articles/2020-03-31/esg-stock-resilance-is-paving-the-way-for-a-surge-in-popularity, https://www.bloomberg.com/news/articles/2020-03-13/older-esg-funds-outperform-their-newer-rivals-in-market-tumult?sref=winqcnxe, https://www.morningstar.com/articles/972475/sustainable-equity-funds-are-outperforming-in-bear-market, https://investorsforhumanrights.org/sites/default/files/attachments/2019-04/IAHR_Making%20Finance%20Work%20for%20People%20and%20Planet_FINAL.pdf, https://www.imvoconvenanten.nl/pensioenfondsen?sc_lang=en, https://data.consilium.europa.eu/doc/document/ST-7571-2019-ADD-1/en/pdf, http://www.oecd.org/governance/public-procurement/procurement-and-rbc/, https://www.manilatimes.net/2018/08/03/opinion/analysis/asias-evolving-free-trade-deal-may-not-benefit-workers/426159/426159/. SEC efforts are notable in this regard. This gap has meant that investors and other financial institutions have had to interpret for themselves the extent to which responsible investment strategies are possible or permitted (OECD, 2017a). At the same time, while negative impacts are serious, agriculture can also positively affect the environment, for instance by trapping greenhouse gases within crops and soils, or mitigating flood risks through the adoption of certain farming practices (OECD, 2019d). Notably, due consideration should be given to how RBC expectations can be reflected in the implementation of the Public Procurement and Supplies Management Act of 2017 and whether amendment is necessary. As Thailand embarks on Thailand 4.0, increasing awareness, capacity and uptake of due diligence approaches in the financial sector; promoting cohesive, streamlined and internationally-aligned approaches to sustainable finance amongst practitioners and policy makers; and addressing existing challenges and facilitating RBC for the financial sector, will both support future development and help ensure that it does not come at a social or environmental detriment. Out of the 16 RCEP partners, ASEAN policymakers have already recognised the importance of RBC in certain policy areas. Experience from the pilot project with companies in Southeast Asia to implement the OECD-FAO Guidance for Responsible Agricultural Supply Chains shows that many companies do have existing issue-specific policies and practices, including technical environmental standards; however, cross-cutting issues that enable responsible business across all areas of company operations are less common. Thai Institute of Directors Association also promotes sustainability as part of its work programmes and promotion of good corporate governance and offers a Board of the Year Award with sustainability and stakeholder views included in the criteria. For example, such efforts are underway in the EU as part of the EU Sustainable Finance Action Plan which includes establishing an EU classification system for sustainable activities (Action 1); creating standards and labels for green financial products (Action 2); developing and harmonising sustainability benchmarks related to carbon (Action 5); and strengthening sustainability disclosure and accounting rule-making (Action9). OECD research shows that three out of four international investment agreements concluded in 2008-13 include language on RBC (mainly free trade agreements with investment protection provisions) and virtually all of the investment treaties concluded in 2012-13 include such language (Gordon et al., 2014). The implementation of international RBC standards across sectors and not in silos will be important. Select one or more items in both lists to browse for the relevant content, Browse the selectedThemes and / or countries. The SOE Guidelines further recommend, and rely in this regard on the Board of Directors to the executive management, extensive measures to report on foreseeable risks, including in the areas human rights, labour, the environment, as well as risks related to corruption and taxation. OECD iLibrary your login credentials do not authorize you to access this content in the selected format. is the online library of the Organisation for Economic Cooperation and Development (OECD) featuring its books, papers, podcasts and statistics and is the knowledge base of OECD's analysis and data. Governments are expected to lead by example by incorporating RBC standards in their purchasing policies, to safeguard the public interest and ensure the accountability of public spending. Thailand has expressed in numerous public statements and at the highest political levels that it intends to be a regional champion of RBC. As discussed in Chapter 11, Thailands presence in ASEAN as an outward investor has been steadily rising in recent years, accounting for a third of outward FDI and increasingly concentrated in Cambodia, Lao PDR, Myanmar and Viet Nam (CLMV). Thai financial institutions and policy makers have been proactive in responding to some of these challenges and may draw further inspiration from experience of other governments and practitioners. Not only would this set an example for other enterprises, it would also increase disclosure and transparency, and could help address some concerns in priority sectors such as infrastructure. RBC activities are supported by the EU-ILO-OECD Responsible Supply Chains in Asia Programme.1. The Guidance promotes a common understanding of RBC due diligence across sectors and has been recognised also by the ILO and the UN Working Group on Business and Human Rights. According to the 2019 OECD Equity Market Review of Asia, the average annual amount of equity capital raised by Asian companies increased from USD 46 billion (2000-08) to USD 67 billion (2009-18). For example, a recent epidemiologic review published in the International Journal of Occupational and Environmental Health looked at health impacts of semiconductor production. It also envisions an implementation plan and indicators for monitoring and evaluation. Make RBC due diligence a standard operating procedure in special economic zones and the EEC, including promoting transparency around selection of projects and the establishment and operations of zones, as well as meaningful stakeholder engagement with affected communities. This is of particular relevance to Thailand in the context of efforts to promote Thailand 4.0 and higher value-added industries. USTR (2019), USTR Announces GSP Enforcement Actions and Successes for Seven Countries, Press Release, 25 October 2019, https://ustr.gov/about-us/policy-offices/press-office/press-releases/2019/october/ustr-announces-gsp-enforcement, WWF (2019), Sustainable Banking in ASEAN, https://susba.org/pdfs/report-2019-compressed.pdf. 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