What is green credit?

What is green credit?

          Countries around the world are preparing themselves to deal with climate change in their attempts to solve the global warming crisis before it is too late. Many countries have announced consistent strategies and domestic policies to achieve the “carbon neutrality” goal.

          The financial sector plays an important role in allocating resources to achieve the business sector’s goal in transforming a company into a green business that focuses on sustainable investments. Financial institutions engage in responsible lending, and many financial institutions therefore offer “green credit,” a long-term, ultra-low-interest loan with the conditions related to climate change and monetary policy implementation. The objective of green credit is to encourage the business sector to pay attention to the environment, including the principles of good governance and humanitarian principles.

          In Thailand, there are many financial institutions that offer green credit to support the business sector for the improvement of the production quality to meet environmentally friendly standards, as well as the improvement of the quality of life of employees. In addition, the fund can be used for business expansion. 

          For example, Bangkok Bank offers Bualuang Green loans to support SMEs that want to improve their business processes to save energy, reduce costs, and conserve the environment in order to meet sustainable business practices, and want to invest in renewable energy or waste management for environmental protection. The loan amount is 1 million baht or more per project, and the interest rate does not exceed MLR per year throughout the loan term.

          In addition, the Bank for Agriculture and Agricultural Cooperatives (BAAC) has a green credit project providing loans to farmers, juristic persons, farmer groups, community enterprises, or agricultural cooperatives in economic tree planting, such as monoculture forestry plantations, mixed forestry plantations, agroforestry, plant breeding, or seed for distribution under specified conditions.