Prepare to deal with changes regarding ESG in Thai family businesses.
flow ESG is not a trend or choice, but it is the “survival” of the next generation of family businesses. Preparation for implementing the above comments It will help family businesses cope with ESG changes that occur and develop sustainably.
“Currently, environmental issues are having a profound impact on family businesses, especially in foreign countries. There are legal changes that will make it difficult for family business operators who export. It will increase the cost of doing business.”
I have written an article about this. “ESG is a choice without a choice. What role should directors play?” ใน Journal of Finance and Banking March 2566 issue with environmental issues (Environment) and society (Social) including corporate governance (Governance) that requires listed companies to comply with and can use ESG issues as business opportunities In addition to having risk management clauses
There is a question: What about small medium-sized family businesses? Is it necessary to prepare for changes in ESG matters, especially environmental issues (E) and social issues (S) that family business owners face? Must be prepared to face the changes that will already occur. Will such preparation be a cost that will reduce profits? And should I do it or not?
Current truth about environmental issues It is going to have a profound impact on family businesses. Especially in foreign countries, there have been legal changes. that will make family business operators who export It will increase the cost of doing business. Especially recently, the European Union or EU has issued legal measures to get member countries to reach their goals and Net-Zero Emissions by wanting to reduce greenhouse gas emissions. Net Zero Carbon in 2050, provided that the global temperature must not increase by more than 1.5 to 2 degrees.
By adopting measures called Measures to reduce carbon dioxide or greenhouse gas emissions by 55% by 2030, called the European Green Deal, which makes exporters Product manufacturer or importers of products in Europe You must prepare for the impacts that may occur. both in health Competition in production as well as the entire supply chain because of importing products into Europe. Must go through a mechanism called Mechanism for adjusting carbon prices before crossing borders, or CBAM, also known as Carbon Border Adjustment Mechanism.
This will come into effect by October 1, 2566. In general, the EU has required exporters to report. Greenhouse gas emissions at the end of the quarter From now until December 31, 2568, then on January 1, 2569, it will actually come into effect. That is, there will be taxation. and making reports This is an example of environmental change.
Therefore, entrepreneurs and industrial producers who are family businesses of all sizes must prepare to export and compete in the European market. Although in the initial phase the first 6 export products will be iron and steel, aluminum, cement, fertilizer, electricity and hydrogen, if and when As the law has been extended to other product groups, it will inevitably cause Thai business operators to have higher costs.
From the information in the seminar on cross-border carbon taxes or CBAM, it will have an impact on Thai industry and adjustment. that were jointly organized between The Office of Industrial Economics and the Ministry of Industry have stated that the measure will be a trade protectionist measure. This will cause additional costs every time it is exported. By making Thai products More expensive that arises from the purchase of certificate fees or CBAM for each product, causing
- The price of importing Thai products is more expensive.
- This makes it possible to send fewer products to the EU and
- It affects the cost of producing Thai products and will have an impact on Thai industry as well.
Currently, more than 440 private sector companies in Thailand have joined the project to reduce emissions by trading approximately 400,000 tons of carbon credits, although there are approximately 14 million tons of carbon credits that have not yet been traded. And the government, namely the Greenhouse Gas Management Organization, a public organization, will encourage and encourage only those involved to participate in reducing gas emissions and increasing the area to absorb greenhouse gases. in order to achieve the goal and increasing the potential for Thailand to compete in the market It is proposed that the government step in to promote SME entrepreneurs to access capital. in reducing greenhouse gas emissions (Details see Prachachat Turakij Weekly, April 18, 2566)
In addition, in the future, lending by financial institutions The Bank of Thailand has set guidelines for lending to businesses that must not have an impact on the environment. including interest calculation It will make it difficult and expensive for entrepreneurs to access funding sources. Those who follow ESG principles will receive low interest rates.
The above example is one example of future legal changes in the environment. (Environment) that will affect family business operators who carry on the business of exporting products to Europe. or access to loans from financial institutions in Thailand If we don't adapt and understand ESG fully, it will be an obstacle to doing business in the future.
Currently, the Stock Exchange of Thailand and the SEC have stipulated that companies listed on the stock exchange must report matters. ESG in the annual report And an ESG Academy has been established to provide knowledge to those involved. Family business operators must therefore pay attention.
In addition, in the past, some family business owners used to focus on CSR through donations. Nowadays, the issue of CSR in family businesses. It is not related to donations in any way. But it is integration. In order for businesses to be socially responsible in terms of the environment By reducing inequality in society and must have good corporate governance Understanding ESG matters for family businesses For the sustainability of the family business is inevitable.
How do you prepare? : Supports ESG
In preparation for the family business In order to cope with the aforementioned changes in ESG matters, I have a proposal that family business owners should consider taking the following actions.
1. Study and gain knowledge about ESG. Understand the opportunities, impacts, and risks of ESG of your own business. Using data sources from the Stock Exchange's ESG Academy The business owners, executives and employees must have knowledge. Very good understanding too.
2. Create a policy on ESG. To develop and implement ESG matters in line with the values and goals of the family business that have been set. and the process and duration should be clearly defined. that will be done on various issues To be completed within what time? See how ESG can be a business opportunity.
3. Set goals and indicators (KPIs). related to ESG elements, for example, reducing green house gas, not doing business that affects the climate or environment Promoting diversity among employees and creating transparency in governance
4. There is a continuous evaluation and monitoring of environmental and social impacts on one's business. For example, it is clearly stated that the use of carbon credits will be reduced or In the organization, how is it expanded or focused? Social activities How will the impact be in reducing inequality as well as strengthening good corporate governance? Arrange for reporting on operations according to ESG, which must be included in the annual report or financial statement report similar to listed companies, which can be used as an example. Because in the future, financial institutions may need to request such information.
5. Promote participation of stakeholders. This includes employees, business partners, and communities where they live. They should ask for opinions in the evaluation and participation in the ESG decision-making process to build confidence among those involved. Integrated work will therefore have an important effect.
6. Invest for sustainable operations By finding new opportunities to connect or integrate ESG sustainability practices into business operations. Whether it is saving electricity or energy using technology Reducing water use Including purchasing raw materials to be used in business operations With a process Reduce energy use and circulation Don't think of it as an unprofitable expense. Because those investments will have returns in forms other than money.
Important examples in matters of society (Social) and the environment. (Environment) to reduce impacts, such as choosing a format Business operations of social enterprises in doing business To answer the questions of ESG, it may be one solution. Entrepreneurs can As I once wrote an article on “Social enterprise companies and foundations: alternative models of ESG for sustainable development” in the Finance and Banking Journal, February 2566
7. Organize training employees on the importance of ESG and having employees participate in sustainable business operations to create a culture of true ESG responsibility
8.Determining the inheritance and transfer of ESG knowledge. with the next generation of heirs who will continue to ensure the sustainability of the business
9. Create cooperation with business operators of the same type By finding a network Partners to work together to create good practices (Best Practice) by learning from each other in creating ESG or ESG coalitions, including partnering for the achievement of ESG work, such as jointly selecting communities to reduce Inequality in various fields, tree planting
10. Follow the progress of ESG matters, laws, and various connections. in line with international standards and practice planning Consider the short-term and long-term effects.
The ESG trend is not a trend or a choice, but a “survival” for the next generation of family businesses. Preparation for implementing the above comments It will help family businesses cope with ESG changes that occur and develop sustainably.
