​​​Credit Policy on Environment, Social and Governance and
Sector-Specific Guidelines


Financial institutions can either encourage or discourage businesses that may harm the environment and society, at an early stage. They also play a vital role in promoting the transition to a low-carbon economy so as to create positive impacts while also mitigating negative impacts from their own operations. Financial institutions can develop financial innovations that generate both income and trustworthiness, alike.

KBank has recognized the importance of managing environmental and social impacts through the provision of financial support via lending and investment. Credit policy on environment, social and governance (ESG) has thus been established. In alignment with international practices, ESG factors are incorporated as criteria for credit underwriting of corporate/project finance and investment in debt instruments. We establish an exclusion list and sector-specific guidelines while having in place measures for risk management appropriate for high-risk customers to ensure that credit supported by KBank will involve effective management of environmental and social impacts, thus promoting stable business growth and generating sustainable returns for all stakeholders over the long term. Moreover, these measures will help prevent KBank from being exposed to risk that may affect its image and operations.


Exclusion List

KBank requires that consideration be made for characteristics of credit applicants and types of businesses. Credits on the exclusion list are as follows:

  • Applicants with a record of being involved with or that are suspected of being involved with offences under the Anti-Money Laundering Act, for example, offences related to narcotics, public fraud, embezzlement, or cheating and fraud involving assets, acts of dishonesty or deception, terrorism, gambling, exploitation of natural resources or the environment through the illegal use or taking possession of natural resources for commercial purposes, weapons and war materials, as well as human trafficking
  • Offences related to illegal activities or activities that risk violation of laws including domestic environmental laws and international agreements, for example:
    • Trade of wild animals and protected wildlife products under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)
    • Exports and imports of waste that violate the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal (Basel Convention) or related rules and regulations
    • Manufacturing, use or trade of pharmaceutical products, chemicals, insecticides, atmosphere-destroying substances and other hazardous substances which are being or have been discontinued under international agreements or national laws. For instance, imports and exports of extremely hazardous chemical substances under the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade, or chemical substances that produce pollution under the Stockholm Convention on Persistent Organic Pollutants (POPs)
    • Manufacture or sale of living modified organisms (LMO): These activities may be allowed upon the granting of permission by importing countries and compliance with regulations of the Cartagena Protocol.
    • Manufacturing related to activities in the fields of genetic materials and genetic engineering which do not conform with the UN Convention on Biological Diversity and Bonn Guidelines or Nagoya Protocol
  • Credits related to destroying or encroaching upon important ecosystems such as mangrove forests and conservation areas, for example:
    • Natural parks, conservation areas and animal sanctuaries per related public notifications
    • UNESCO World Heritage Sites
    • Conservation areas under the Ramsar Convention on Wetlands
    • Protected areas specified by the International Union for Conservation of Nature (IUCN) and High Conservation Value (HCV) areas
    • Wetlands, swamps or other areas with high carbon stock
  • Credits related to destroying or encroaching upon cultural areas, such as archeological sites and cultural heritage sites
  • Credits related to violation of human rights, human trafficking, forced labor, illegal migrant labor, child labor or occupational conditions that do not meet related standards
  • Credits in support of activities contrary to morality or social norms, such as massage parlors, love hotels, prostitution, pornography, gambling and media related to racism
  • Activities believed to have been approved to carry out such operations as procurement, and to receive a concession or license via misuse of public and political office for private gain or bribe, brokerage fee or remuneration in other forms
  • Bid bonds for government projects wherein the bidders connive among themselves to allow one of them to win the bids
  • Credits related to speculation
  • Credits related to arms trade with importing from or exporting to the Socialist People’s Libyan Arab Jamahiriya
  • Credits related to manufacturing or trading of weapons of mass destruction, for example:
    • Anti-personnel land mines
    • Cluster munitions
    • Nuclear weapons
    • Biological and chemical weapons
    • Lethal Autonomous Weapons Systems: LAWS
  • Credits for projects in foreign countries that may create extensive environmental and social impacts, and do not comply with the host countries’ environmental requirements or those of related national agencies, as well as other globally accepted standards, such as the Equator Principle, IFC Performance Standards & Environmental, Health, and Safety Guidelines (EHS Guidelines), ADB Safe Guard Policy, JBIC’s Guidelines for Confirmation of Environmental and Social Considerations, EBRD Performance Requirements – Environmental and Social Sustainability (European Standard)
  • Credits for hydropower generation from dams that generate significant impacts on the environment and society, without management measures or work plans in accordance with the Equator Principles and without support from international financial institutions for development or foreign financial institutions that have accepted the Equator Principles
  • Stop financing projects of new coal-fired power generation, unless there is a strategy to add or change to other low-carbon energy sources
  • Any credits that may adversely affect KBank’s reputation

Sector-Specific Guidelines

KBank has developed the loan consideration guidelines for specific industrial sectors in accordance with environmental and social impacts that they create, by including ESG factors in credit consideration for each industry in addition to other factors, to ensure that risk management at the credit portfolio and transaction levels comply with the target to achieve a low-carbon economy, especially for the industries with risks of environmental and social impacts.


Power Utilities Industry

KBank supports the following operators:

  • Renewable energy plants, e.g. solar energy and wind energy
  • Power plants using other fuels, e.g. biomass and waste, with environmental impact assessment in accordance with the business types, information disclosure, greenhouse gas emissions plan, prevention of environmental impacts, and monitoring and examination of environmental quality for the business premises and surrounding communities

KBank does not support the following operators:

  • Nuclear power plants
  • Hydropower plants from dams without management measures and work plans in accordance with the Equator Principles, and without support from international financial institutions for development or foreign financial institutions
  • New coal-fired power generation, unless there is a strategy to add or change to other low-carbon energy sources

KBank will gradually reduce provision of existing loans to coal-fired power plants to zero by 2030.


Mining Industry

KBank supports mining operators who have passed the Ministry of Industry’s green mining regulations and standards. Green mining is defined as mine processes that are implemented as a means to reduce the environmental impacts and use related resources in a sustainable manner, without the exploitation of children unless they voluntarily propose themselves to do so. The mine processes must reduce the impacts of noise, vibration, contaminated water, and particle pollution. Transportation controls, sound dust control solutions for transportation routes, as well as storage systems must be stringently put in place.

KBank does not support the following business:

  • Asbestos mining and businesses related to production or trade of unbounded asbestos fibers
  • Mining that pollutes freshwater and marine water resources
  • Mountaintop removal mining
  • New coal mine projects, and coal infrastructure, including the expansion of existing coal mines.
  • Corporate finance unless customers have trustworthy strategies or goals for a transition towards low-carbon.

KBank will gradually reduce provision of existing loans to coal mines to zero by 2030.


Oil & Gas Industry

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KBank does not support any exploration and production projects of unconventional resources such as tar sands, shale oil & gas, and ​​Arctic oil & gas.


Agricultural Industry

Agriculture

KBank does not support

  • Operators that encroach on protected forest areas or conduct slash-and-burn farming practices. An inspection of land ownership documents is required as part of credit underwriting.
  • Operators that conduct businesses related to animal hunting and trapping, foraging, charcoal production in forests, and processing of products from animal bones, husks, plus animals and plants under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

Livestock

Livestock (not including aquatic animals)

KBank supports the following operators (not including aquatic animals):

  • Businesses located far from communities and equipped with appropriate waste management systems, with a specific focus on biogas system for wastewater treatment and odor minimization
  • Businesses certified with Good Agricultural Practice (GAP) by the Department of Livestock Development (DLD) and other agencies certified by DLD

Aquatic animal businesses

KBank supports aquatic animal businesses with the following management:

  • Environmentally friendly farm management that can be tracked through the entire supply chain
  • Appropriate production systems and products per Good Aquaculture Practice (GAP) standards in line with the Department of Fisheries’ Code of Conduct (CoC) and sustainable aquaculture standards of the Aquaculture Stewardship Council (ASC)*
    (*The Aquaculture Stewardship Council (ASC) establishes protocol on farmed seafood while ensuring sustainable aquaculture.)

Palm Oil

  • KBank supports oil palm growers, including those in the related supply chains such as refinery and fractionation plants along with traders, in complying with sustainable palm oil production criteria of the Roundtable for Sustainable Palm Oil (RSPO)*. If they do not pass such criteria, they are required to put related plans in place to obtain a certification from the RSPO in the future.
    (* The RSPO has developed a set of environmental standards for oil palm cultivation. These, including oil palm plantations, must not involve deforestation and harm the environment. Palm oil processing must not affect the environment and involve the employment of illegal labor. It must be responsible for employees and communities, as well.)
  • KBank does not support oil palm cultivation that involves deforestation.

Fishery

  • Support for businesses Conducting sustainable fishery in accordance with international standards of the Marine Stewardship Council (MSC) that can be tracked through the entire supply chain
  • No support for businesses conducting unlawful operations, with no reporting or control, or Unregulated Fishing (IUU Fishing), or using unlawful fishing equipment, catching restricted animals or animals included in the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES)

Forestry and related businesses that process products from forests such as printer paper.

KBank supports operators that practice sustainable forestry in line with the regulations of various forest organizations such as:

  • The Forest Stewardship Council (FSC) or the Program for the Endorsement of Forest Certification Scheme (PEFC)
  • Standards of the Forest Industry Organization, ISO 14061 SUSTAINABLE FOREST MANAGEMENT SYSTEM:SPECIFICATION DOCUMENT (SFM)
  • Forest Management Standard (FM) (TIS. 14061)
  • Chain of Custody (CoC), TIS. 2861

Agro-processing, Food and Beverage Industries

KBank supports business operators with the following management:

  • Procurement of raw materials with consideration of environmental impacts and in compliance with the accepted standards of the industry
  • Being equipped with standardized wastewater treatment, and lawful elimination of waste and odor
  • Compliance with the appropriate practices of slaughterhouses as required by national standards of agricultural products and food, and lawful operations related to slaughterhouses
  • Environmental management international standards such as environmental management system (ISO 14001) and occupational safety and hygiene systems (ISO 45001), as well as the minimum labor standards per legal requirements
  • Businesses related to palm oil in the entire value chain, including growers, traders, extractors and refineries that comply with Roundtable for Sustainable Palm Oil (RSPO)’s standards
  • Processed seafood export businesses that meet with the standards accepted by the importing countries, e.g. Aquaculture Stewardship Council (ASC)’s standards

KBank does not support business operators that buy agricultural products grown in the areas of forest encroachment or practicing slash-and-burn farming practices.


Chemicals, Tanning, Bleaching and Other Manufacturing Industries

KBank supports business operators with environment management that should meet ISO 14001 standards and be equipped with occupational safety and hygiene systems per the ISO 45001 standards, as well as minimum labor standards as required by law.

KBank does not support the following:

  • Use of refrigerant, classified as CFC (R11 and R12) (Chlorofluorocarbon)
  • Customers who use HCFC (R22) (Hydro Chlorofluorocarbon). They must have plans in place to reduce the use of this refrigerant.

Metal and Non-Metal Smelting and Melting Industries

KBank supports business operators with the following management:

  • Management of garbage and unused materials, with sustainable management and recycling of metal scraps to add economic value
  • Management of air pollution from production processes, e.g. Sulfur Dioxide (SO2), Carbon Monoxide (CO), Carbon Dioxide (CO2), and other pollution, e.g., heat, noise, and vibration
  • Planning to implement or to be certified with the ISO 14001 for environmental management, ISO 45001 for occupational safety and hygiene management and SA 8000 for social responsibility standards

Real Estate Industry

KBank supports construction and improvement of energy-saving and environmentally friendly buildings per the standards; ie. LEED, TREES etc.

For low-rise housing projects, KBank supports those that are energy efficient, use materials and have structural systems in line with the principles of an energy-efficient home as outlined by the Ministry of Energy’s Department of Alternative Energy Development and Efficiency, or the Label No. 5 housing development project, initiated by the Electricity Generating Authority of Thailand in partnership with the Ministry of Energy’s Department of Alternative Energy Development and Efficiency.

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