**Bangkok**: Thai Union Group pursues sustainability at its core, advocating for traceable tuna and emission reductions while aligning with global standards. The firm strategises to secure top rankings in sustainability indices, underscoring a commitment to responsible practices and innovation in their financial operations.
Thai Union Group, the largest tuna processor globally and the owner of well-known brands such as John West and Chicken of the Sea, is increasingly focusing on sustainability as a core aspect of its business strategy. The company is advocating the traceability of its tuna supply chain to certified fisheries, accompanied by detailed processing data and carbon reduction targets. It aims to meet the growing demand, particularly from European customers who insist on traceable tuna that adheres to stringent vessel quotas and systematic monitoring.
Yongyut Setthawiwat, the Managing Director and Group Treasurer for Treasury and Finance Shared Services at Thai Union, noted the shifting paradigm in business norms, stating, “Sustainability is no longer just an option for companies. It has become a way to do business globally,” during an interview with Treasury Today from the company’s headquarters in Bangkok.
Thai Union formed a global treasury centre in Bangkok in 2015, coinciding with the launch of its SeaChange® strategy. This strategy, now entering its second and third phases, is focused on achieving targets by 2025 and 2030, which align with ten Sustainable Development Goals (SDGs) and include eleven interconnected ambitions. Setthawiwat remarked that the initial momentum for these sustainability initiatives stemmed largely from regulatory pressures. In 2014, Thailand was downgraded to Tier 3 in the US Trafficking in Persons report, a development that posed serious risks to the company’s export capabilities to the United States.
This downgrade catalysed a collaborative effort between Thai Union and the Thai government to establish stricter standards, especially regarding fishing labelling and enhanced systems to accurately account for catch numbers and vessel movements, thereby elevating both Thai Union and the broader Thai seafood industry to a level comparable with developed nations. The company’s efforts also align with European regulations aimed at curbing illegal, unreported, and unregulated fishing practices across various marine territories.
At present, Thai Union aims to achieve a 42% reduction in its Scope 1, 2, and 3 emissions by 2030, demonstrating its commitment to sustainable practices well beyond its competitors. Among other goals, the company is extending its responsible sourcing initiatives to include mackerel and sardines, showcasing its broader approach to sustainability. Setthawiwat is also collaborating closely with suppliers to reduce Scope 3 emissions, focusing on establishing a low-carbon roadmap and evaluating the potential of sustainable supply chain financing programmes that incorporate key performance indicators (KPIs).
In a significant strategic move, Thai Union emerged as the first company in Thailand to issue sustainability-linked bonds in 2021. This milestone necessitated the development of new treasury processes for setting and communicating KPIs to investors. All new issuances in 2024 and 2025 will be complemented with blue finance reflecting their commitment to the KPIs derived from their 2030 sustainability targets.
Setthawiwat elaborated on this strategic evolution, explaining that treasury operations have shifted to associate sustainability-linked borrowings with overarching company goals rather than individual projects, which proved challenging to track. Currently, Thai Union aims to secure a position in the top ten of the food companies listed on the Dow Jones Sustainability Index, where it has maintained a presence for nine consecutive years, achieving the ranking of number two in the food products sector in 2020.
Moreover, existing KPIs under this framework entail commitments to sourcing tuna only from vessels equipped with stringent monitoring systems—an initiative aimed at enhancing transparency within the fishing process. This approach has resulted in reduced borrowing costs by approximately 5-12 basis points.
Moving forward, Thai Union expects to channel around 75% of its long-term financing through blue finance by 2025, with a projected need to finance or refinance between US$600 million and US$700 million next year—a move that underscores the growing importance of sustainability in finance as banks shift their focus towards environmentally responsible lending.
Setthawiwat offered insights for other treasury teams keen on bolstering sustainability in their operations, advocating for the formulation of a strong strategy underpinned by clear and measurable KPIs. He underscored that without genuine commitment to sustainability efforts, financial alignment may prove cumbersome, discouraging interaction with banks and investors. Furthermore, having executive-level endorsement of sustainability initiatives has been a pivotal element in the success of Thai Union’s strategy, with the company’s CEO serving as Chair of the Sustainable Development Committee.
The company’s approach reflects a proactive stance towards sustainability, indicating a recognition of the opportunities that lie within environmentally responsible practices.
Source: Noah Wire Services
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