Krungsri (Bank of Ayudhya PCL) has partnered with Thai Union Group, the world's seafood leader and i-Tail Corporation PCL, one of the leading global pet food manufacturers to introduce the ESG-Linked Foreign Exchange (FX) program, marking a significant step for both organizations' sustainability initiatives in Thailand. The pioneering program represents international standard ESG-Linked FX offering, reinforcing both companies' leadership positions in the sustainable finance while advancing the development of innovative sustainable financial products in Thailand.
The ESG-Linked FX program integrates Environmental, Social, and Governance (ESG) principles into foreign exchange transactions by aligning financial terms, such as hedging costs, to the achievement of specific sustainability goals. Under this program, customers who achieve pre-defined ESG targets, such as those related to reducing carbon emissions or improving social responsibility metrics, can benefit from financial incentives, such as reduced costs for hedging.
Through this program, the Bank integrates the Key Performance Indicators (KPIs) as well as Sustainability Performance Targets (SPTs) from the Company's Sustainability-Linked Financing Framework into foreign exchange hedging. The KPIs and SPTs will be validated by a third-party verification agent to ensure compliance with international standards. This integration enables more effective currency exposure management by incorporating sustainability factors into the financial strategies, while also potentially reducing foreign exchange transaction costs.
Mr. Hirotaka Kuroki, Krungsri Head of Global Markets Group said "We are delighted to partner with Thai Union and i-Tail on this ESG-Linked FX program. As a financial institution deeply committed to sustainable finance markets, we have assembled a dedicated team of ESG Finance specialists who work proactively and closely with our customers. Recognizing the growing demand for innovative
ESG-Linked products, we have launched ESG-Linked Derivatives earlier in 2024, followed by this
ESG-Linked FX offering. This innovative solution integrates ESG principles into foreign exchange transactions, extending beyond traditional FX risk management to incorporate sustainability factors into the financial strategies, supporting both organizations' sustainability objectives."
Mr. Prakob Phiencharoen, Krungsri Head of Corporate and Investment Banking Group said "Krungsri and Thai Union Group share a successful history of collaboration in blue finance initiatives. Together we have achieved significant milestones in Thailand's ESG finance landscape, including the first Sustainability-Linked Loans (SLL) in Thailand and Japan in 2021 and Thailand's pioneering first Sustainability-Linked Bond (SLB) in Thailand in the same year. This momentum continues to drive market innovation today. Our successful partnership highlights Krungsri's market-leading position in ESG financing and underscores our commitment to supporting customers in achieving their ESG objectives."
Mr. Yongyut Setthawiwat, Managing Director, Group Treasurer - Treasury and Finance Shared Services Thai Union Group stated "At Thai Union and i-Tail, sustainability resides at the very core of our business. Guided by our purpose "Healthy Living, Healthy Oceans", we have integrated our SeaChange(R) 2030 strategy across global operations to drive transformative change and help reshape the seafood industry with solutions across people and planet that better sustain a future for all. As part of our commitment to sustainability, Thai Union aims to have 75 percent of the Group's long-term financing to be sustainable finance by 2025, supporting the Blue Finance agenda. This collaboration underscores our steadfast commitment to strengthening resilience, enhancing competitiveness, and pioneering financial innovations that promote a balanced approach to environmental, social, and governance (ESG) priorities."