# SEC confirms Thailand ESG funds investment compliant with rules

- Link: https://www.thailand-business-news.com/markets/151474-sec-confirms-thailand-esg-funds-investment-compliant-with-rules
- Published: 2024-07-17T08:58:00+07:00
- Author: The Securities and Exchange Commission Thailand

**The Securities and Exchange Commission (SEC) has confirmed that Thailand ESG Funds
are in compliance with investment regulations. Notably, shares of Energy Absolute(
EA) make up 0.35% of the Net Asset Value (NAV) of these funds. Despite EA being 
removed from the SET ESG Ratings due to allegations of fraud against its executives,
the funds continue to adhere to the established guidelines.**

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Bangkok, 15 July 2024 – The Securities and Exchange Commission (SEC) reaffirms the
investment practices of all Thailand ESG Funds comply with the diversification and
investment rules, with the investment proportion in shares of Energy Absolute Public
Company Limited (EA) accounting for 0.35 percent of the net asset value (NAV) of
all Thailand ESG Funds combined. Following the recent criminal complaint filed against
EA directors and executives, the SEC is emphasizing that all asset management companies
are required to strictly comply with the Principles of Integrity, Diligence and 
Fiduciary Duty when selecting companies with good corporate governance to invest
for Thailand ESG Funds as well as other types of mutual funds.  

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Pursuant to the SEC’s rules, all Thailand ESG Funds are required to invest in companies
operating sustainably and receiving SET ESG Ratings as eligible assets* at an average
proportion of at least 80 percent of the NAV during any financial year. This is 
part of the mechanism driving Thailand’s sustainable development. However, in any
event that an asset management company considers that any company has inappropriate
corporate governance practice despite having received SET ESG ratings, as required,
the asset management company must exercise its fiduciary duty and not consider such
company as eligible asset for ESG investment in the average proportion of 80 percent
of the NAV. In any case, the remaining ESG investment must remain in compliance 
with SEC’s investment rules for Thailand ESG Funds.

In any event that an investee company is found to be lacking sustainability qualifications
according to the rules governing Thailand ESG Funds, such investee company may remain
in the Thailand ESG Fund portfolios as non-eligible assets at an average proportion
of not more than 20 percent of the NAV during any financial year.  

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At the end of May 2024, all Thailand ESG Funds have the collective NAV of 6,844 
million baht. Of this, the investment value of EA shares totaled 24 million baht,
accounting for 0.35 percent of the total NAV of all Thailand ESG Funds. The public
can rest assured that all Thailand ESG Funds comply with the SEC’s investment rules
regardless of EA shares not considered eligible assets for Thailand ESG Funds.  

For other mutual funds, the investment value in EA securities is equivalent to 0.06
percent of the total industry AUM. In all cases, asset management companies must
exercise caution when considering appropriate investments. 

Mrs. Waratchya Srimachand, SEC Deputy Secretary-General, said: “Today, the Stock
Exchange of Thailand (SET), by the Sustainable Investment Committee, has resolved
to remove EA securities from the SET ESG Ratings List due to the company’s failure
to meet the criteria. However, this will not affect investments of Thailand ESG 
Funds under the specified criteria. The SEC has been monitoring the situation and
found that Thailand ESG Funds as well as other types of mutual funds have only a
small proportion of investment in EA securities comparing to the AUM of the whole
industry. But in any case, asset management companies must exercise discretion when
selecting companies to invest, as deemed appropriate.” 

**Source** : [SEC confirms investment of Thailand ESG funds complies with the governing rules](https://www.sec.or.th/EN/Pages/News_Detail.aspx?SECID=10938&rand=113627)