The Securities and Exchange Commission of Thailand (“SEC”) has updated regulations for the Thailand ESG Fund (“Thai ESG Fund”) to broaden investment options and encourage investments in companies excelling in sustainability and environmental conservation.
Key Highlights of the Amendments:
- To expand the investment scope:
- Allowing Thai ESG Fund to invest in shares of listed companies assessed by ESG rating providers beyond the Stock Exchange of Thailand (“SET”). This change is intended to give Asset Management Companies (“AMCs”) more flexibility and a wider range of options when making investment decisions, provided these external ESG evaluators follow internationally recognized standards.
- Providing that Thai ESG Fund can also invest in companies demonstrating strong corporate governance. These companies must set clear goals, have value enhancement plans, and disclose their progress on environmental action plans to investors.
- To reinforce the responsibilities of AMCs in managing Thai ESG Fund, AMCs are required to fulfill their fiduciary duty by diligently incorporating ESG factors throughout the investment process to protect and benefit unitholders. This includes integrating ESG considerations into their investment strategies, policies, and the selection and monitoring of investments.
These changes follow a Cabinet decision on 30 July 2024, that also introduced tax benefits to promote sustainable investments. Individuals investing in Thai ESG Fund can receive a tax deduction of up to 30 percent of their assessable income, with a maximum limit of 300,000 baht per year. To qualify, investments must be made between 1 January 2024 and 31 December 2026. These investment units must be held for at least five years from the date of purchase.
The updated regulations for the Thai ESG Fund have been in effect since 16 August 2024.