The Government Savings Bank (GSB) is encouraging businesses to focus more on addressing poverty and inequality issues as well as to shift from implementing conventional CSR (corporate social responsibility) programmes to CSV (creating shared value).
GSB President and Chief Executive Vitai Ratanakorn made the call at the GSB Forum 2023 on the theme “ESG: Social Pillar Driven” held at Siam Kempinski Hotel Bangkok on November 21
With investment in ESG (environmental, social and governance) a growing global trend, many organizations are putting significant emphasis on environmental goals such as net zero emissions or banks’ issuance of green loans.
However, there is still a lack of full-fledged efforts to introduce social contribution projects that create lasting and positive change, said Vitai in his speech on “How does a social bank work on the journey towards sustainability?”.
“I believe poverty and inequality are the nation’s structural problems, so I’d like to raise these issues separately from the adoption of ESG practices, which seem to focus on net-zero plans,” Vitai said.
“We (businesses and brands) need to work together to tackle social issues including helping the poor and alleviating poverty and inequality problems across all dimensions. These issues are very close to all of us and have a genuine impact.”
He also urged businesses to transform their CSR programmes, which come at a cost and fail to create sustainable solutions, to CSV.
“The CSV approach incorporates social problems into business models and adjusts the way we do business to help solve social problems while making the revenue and profit pie bigger. By doing this, social projects would no longer be seen as a cost and end without meaningful impact. They would finally create consistency and sustainability,” Vitai explained.
GSB has positioned itself as a social bank that aims to make a real impact on society and create balance in three aspects, namely people, planet and profit.
The 110-year-old bank uses profits generated from its normal banking businesses to subsidise investment in smaller social business projects designed to help people at the grassroots level and improve their quality of life. Some social projects start with expected losses and the break-even point is not taken into account, according to Vitai.
GSB data show some 17.8 million low-income households are facing financial difficulties from insufficient income to cover expenses. Of the total, 51% are indebted and 7-8% of them owe money to loan sharks.
GSB launched a total of 63 social projects between 2020 and June 2023 which extended assistance to 17 million people in various forms, including providing loans at fair interest rates to 8.5 million people.
The initiatives provided 3.2 million people with no or poor credit scores access to funding sources and offered career development schemes in 3,600 communities.
“The bank’s social businesses undertaken to help people may seem small in terms of loan value because the (low-income) borrowers sought loans of only 10,000-30,000 baht and community projects such as career building are not calculated in the loan portfolio. However, in terms of head count we can help millions of people,” the GSB chief added.
GSB is expected to post a profit of about 33 billion baht for this year, higher than the pre-COVID years, and has the highest level of reserves for bad debts since its founding.
“The net-zero emission goals and green loans are good already, but let’s work together to build a stronger society by helping people and reducing inequality and social problems. And let’s move from CSR to CSV,” Vitai concluded.
The forum also featured two keynote speakers: Prof. Dr. AKM Saiful Majid, Honorable Chairman of Grameen Bank, who spoke on the topic of “Grameen Bank, The Financial Service to Eradicate Poverty”; and Ms. Fiona Stewart, Lead Financial Sector Specialist of the World Bank, who commented on “Creating Shared Values: Role of Sustainability-Linked Financing”.
The Bangladesh-based Grameen Bank is a microfinance organization founded in 1983 to provide loans to poor people who cannot access mainstream banks. The bank has since inspired similar programmes worldwide. Grameen Bank founder Muhammad Yunus, a Bangladeshi economist, won the Nobel Peace Prize in 2006 with Grameen Bank.
Prof. Dr. Majid said Grameen Bank embodies the sustainable human development approach by being people-centered. For example, it offers collateral-free banking services to the rural poor, notably destitute and marginalized women; establishes a beggar-free country by providing interest-free loans to more than 87,000 beggars; eliminates exploitation of the poor by loan sharks; and creates opportunities for self-employment.
“Almost one-third of the beggar borrowers gave up begging and came back to dignified lives. We’ve also been working actively to eliminate the dowry system in Bangladesh,” Prof. Dr. Majid said.
Nine of the bank’s 13-member board are women, underlining its commitment to promoting women’s empowerment and economic participation.
Stewart said the World Bank believes sustainability-linked bonds (SLBs) could contribute to creating shared values and meeting the UN’s 17 Sustainable Development Goals (SDGs) and the Paris Agreement on climate change.
“These goals are giving us a common set of standards that we’re all working toward. And we need to do this together,” she said.
“I often think the 17th SDG, the last one, is often the forgotten one and it’s about partnership. I think the number 17 should actually move up and be number one.”
The World Bank expert said many corporates have started to issue SLBs, which remove the use of proceeds constraints, over the last few years and the market has grown very rapidly. At the sovereign level, the SLBs could be an important complement for use-of-proceeds bonds issuance.
The World Bank recently updated the ‘E’ indicators, incorporated natural capital/wealth accounting and income-bias correction tools and added more benchmarking tools to its sovereign ESG data framework to improve quality, scope and transparency.
By Thai PBS World
