The Stock Exchange of Thailand (SET) has partnered with index provider FTSE Russell to provide a sustainability scoring framework that will enhance standards among listed corporates in Thailand.

Through the partnership, SET will adopt a new scoring framework for environmental, social and governance (ESG) standards, using FTSE Russell’s ESG Data Model, which will replace the SET ESG Ratings currently being used by the exchange, from 2026.

To ensure that all stakeholders will be ready for the new framework, the adoption will be initially implemented through a pilot phase in 2024-2025. The move will help to align the Thai capital market with international best practices for sustainability disclosure and investing.

The SET ESG Ratings are currently voluntary for listed companies, and they must meet rating criteria evaluated through questionnaire responses and the qualification requirements.

The criteria and assessment process of the SET ESG Ratings are approved by the exchange’s sustainable investment committee, which comprises various corporate governance and sustainability development experts.

Questionnaire fatigue

Through FTSE Russell's ESG Data Model, eligible companies will have their sustainability efforts assessed through publicly available data. This methodology is already used to evaluate more than 8,000 companies in 47 countries, helping them to build credibility, enhance transparency, and reduce the sustainability questionnaire fatigue for companies.

Investors can also benchmark their results against both domestic and international peers using the same standards. The FTSE ESG Data Model is overseen by an independent advisory committee, which includes the corporate sector, investors, non-governmentaI organizations, the academia and beyond, with its assessment methodology reflecting the views of a diverse stakeholder base.

According to exchange president Pakorn Peetathawatchai, the SET has prioritized developing the Thai capital market to excel in sustainability and gain international recognition. To uplift the SET ESG Ratings and better align with international standards, the exchange has been exploring global ESG assessment approaches since 2022 and has recently agreed to partner with FTSE Russell.

FTSE Russell products are used extensively by investors to comprehensively and transparently assess listed companies and their ESG operations, against globally recognized standards. Approximately US$15.9 trillion is benchmarked to its indexes.

“This partnership between SET and FTSE Russell marks a significant milestone for the Thai capital market,” Pakorn says. “It will encourage Thai listed companies to raise their sustainability practices to international levels and support investors in integrating ESG into their investment decisions, in line with sustainable investment trends.”

The SET and FTSE Russell will undertake a series of workshops to assist listed companies and investors in better understanding the new framework, and ensure a smooth transition.