Country
Thailand
Local Project Partner
Bank for Agriculture and Agricultural Cooperatives (BAAC), state-owned bank with a focus on agriculture
German Project Partner
--
Donor
GIZ
Duration
01.09.2025 - 30.11.2026
Thailand's rice sector, the largest agricultural emitter of greenhouse gases, faces significant climatic risks itself due to water shortages and rising temperatures. Small farmers, many of them women, are particularly affected. Climate-smart cultivation methods could help but require financing. However, banks are hesitant because climate risks increase credit risk. The Bank of Thailand now requires banks to systematically record and manage these risks. However, without access to finance, farmers cannot act against climate risks. BAAC's mandate is to promote the agricultural sector - by strengthening climate-friendly lending, it contributes to the reduction of GHG emissions and at the same time reduces risks in the loan portfolio.
Integration of Climate Smart Lending into BAAC's lending policy (strategy and risk management) Development of credit policy and credit procedures for climate-friendly lending in BAAC Build lending capacity within BAAC that considers climate-friendly practices and products Facilitating the continuation, expansion and adaptation of BAAC's Climate Smart Lending Strengthening the exchange of knowledge between national and regional stakeholders
Task
Introduction of an integrated ESG risk management framework for the Bank for Agriculture and Agricultural Cooperatives (BAAC) in Thailand. The aim is to provide transitional financing for rice farmers and ensure the institutional sustainability of the banks. The BAAC was selected because of its role in lending to farmers and its willingness to identify ESG risks. The framework enables BAAC to develop loan products for climate-friendly and resilient agricultural techniques. These products and an ESG risk-sensitive lending policy are intended to promote the adoption of climate-friendly techniques by rice farmers in Thailand, increase their income and resilience, and reduce their contribution to climate change.
