The Bank of Agriculture and Agricultural Cooperatives (BACC) recently launched a financial assessment tool to help farmers cope with the impact of climate change.
The BACC, in partnership with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), an organisation working on behalf of the German government in support of the green climate fund and climate initiatives, has launched the "ESG risk radar" assessment tool for enhancing agri-financial sustainability.
The tool for environmental, social and governance (ESG) risk assessment was presented during a recent workshop to mark completion of a 3.5-year project implemented in three piloted Southeast Asian countries, namely, Indonesia, Thailand and Vietnam.
The initiative aimed to support around 40,000 Thai rice farmers in transitioning to climate-smart rice farming practices, contributing to the reduction of greenhouse gas emissions and climate change mitigation.
Suthee Visitwarakorn, senior vice president of the Risk Management Department at BAAC, said the bank has been working with regional counterparts to meet the climate risks, green credit assessment policy and the objectives of providing financial assistance to local farmers.
"The uniqueness of the ESG Risk Radar tool is the ability to clearly analyse and showcase the ESG risk based on client feedback. Such results would enable the bank to plan for risk and credit assessment and introduce financial packages that will support clients in reducing climate risk and becoming more financially resilient," Mr Suthee said.
BAAC provincial loan officers had been trained in how to use the tool to collect data from small-scale farmer clients for ESG risk assessment, he added.
The tool was introduced after BAAC and GIZ earlier this year launched over 5.3-billion baht in climate-smart subsidies and low-interest loan schemes.
GIZ' Agri-Climate Risk Financing Project Director Julian Tost said the project provides a vital platform for all stakeholders, including BAAC, to explore innovative financial solutions to enhance farmers' capacity amid emerging agricultural challenges.
Thailand is among the countries identified as highly vulnerable to the impacts of climate change over the next 30 years.
That is expected to reduce rice productivity, lead to income losses for farmers, and pose risks to farmers' livelihoods as well as global food security, Mr Tost said.
