“Have we ever asked our clients or partners…

‘Does your organization have ESG policies or sustainability standards that you expect us to comply with?’”

ESG (Environmental, Social, and Governance) is no longer just a sustainability concept—it is the minimum global standard that businesses of all sizes must meet in order to survive in the international supply chain. Governments, investors, and trade partners now assess organizational credibility and risk primarily through ESG lenses. For instance, global research shows that 77% of SMEs worldwide prioritize sustainability, while European regulations such as the CSRD and CSDDD require large corporations to report ESG data throughout their entire supply chain. This shift transforms ESG into a non-negotiable business imperative. Any business that “ignores” these standards is increasingly perceived as environmentally, socially, or ethically risky—and will face consequences ranging from operational setbacks to market exclusion and funding denial.

If our clients already practice ESG, are we prepared to become part of their sustainability vision?

Have we asked ourselves what ESG criteria they use to evaluate partners?

What proof or strategy do we have to demonstrate that we are a reliable long-term partner?

If we receive ESG checklists or forms—what information can we confidently provide in response?

Have we ever compared our own practices to the expectations of our global clients?

We must understand the broader ESG picture, because it now defines the rules of the global economy. ESG is no longer confined to CSR departments or branding—it is a structural issue. If we don’t know what ESG is, who sets the rules, and how it impacts each stakeholder, we won’t be able to respond when we are assessed, rejected, or excluded without notice. Ignoring ESG doesn’t just affect your company—it harms your workers, partners, customers, and the national economy. Today’s buyers, investors, and global markets all use ESG as the filter to decide who deserves to do business in the future. If we fail to see the bigger picture now, we may not even have a place in tomorrow’s economy.

ISO 20400, serving as a core evaluation tool of the SSA Program and aligned with national taxonomies, is a globally recognized framework for sustainable procurement. It redefines procurement from merely seeking the lowest price to prioritizing the environmental, social, and governance (ESG) impacts of products and services across the entire supply chain. Designed for organizations of all sizes—whether buyers or suppliers—ISO 20400 allows any business that can demonstrate clear sustainability policies, measurable impacts, and transparent practices to be recognized as “aligned with ISO 20400.” Today, this alignment has become the minimum threshold for entry into the value chains of global companies committed to ESG.

The accompanying diagram illustrates the systemic transformation of the global economy towards sustainability. If your business cannot provide tangible proof of ESG commitment—such as GHG Scope 1–3 reduction, fair labor practices, or sustainable procurement policies—you will be automatically excluded from financial and business opportunities. Not because you lack capability, but because you do not “speak the language of the new global system.” ISO 20400 is no longer just a guideline—it is a passport to international recognition and a gateway for Thai businesses to thrive with credibility in the ESG-driven global economy.

Neglecting ESG is not just a failure of social and environmental responsibility—it is a gateway to systemic business risk. This is true for both small enterprises and large corporations, especially within economies dependent on international trade and foreign direct investment.

1. Impact on Small and Medium Enterprises (SMEs)

SMEs in Thailand—such as food processors, agricultural suppliers, and support service providers—often serve as the upstream links in larger supply chains. If they fail to align with ESG principles, the impact is both immediate and severe:

They will be excluded from supply chains.
Large corporations increasingly select suppliers based only on ESG-compliant practices. Global research indicates that when a supplier is linked to an environmental or social scandal, major clients reduce procurement by as much as 30% (some studies show up to 31.8%). SMEs that fail to improve their production or labor practices risk being silently dropped, even if their prices or quality are competitive. Especially in export markets, ESG certification has become a core requirement—meaning SMEs can be disqualified outright.

They face limited access to capital and markets.
Global financial institutions and investors view ESG performance as a credibility benchmark. Banks and funds now prioritize lending to ESG-aligned companies. SMEs without proper documentation or sustainability records may be denied loans or investment, offered smaller credit limits, or excluded from international funding opportunities. Meanwhile, new-generation consumers—especially Millennials and Gen Z—are willing to pay more for sustainable goods. Without green innovation or eco-friendly branding, ESG-lagging SMEs become less competitive and risk being left behind.

In summary: What was once considered “optional” is now a matter of business survival for SMEs.

2. Impact on Large Corporations in Thailand

Thai conglomerates, especially in export-heavy sectors like food, electronics, automotive, and energy, face escalating risks if they fail to manage ESG in their supply chains:

They may violate international laws.
The EU and US have introduced strict laws targeting labor and environmental issues. For example, the EU’s Forced Labour Regulation bans imports of any product linked to forced labor—regardless of where in the supply chain the abuse occurs. Thailand’s government has confirmed that seven major Thai export commodities—livestock, timber, palm oil, soy, coffee, cocoa, and rubber—are under scrutiny under the EU Deforestation Regulation (EUDR). Products lacking certified traceability risk being banned or losing trade privileges.

They are under pressure from investors and civil society.
Large institutional investors—such as pension funds and global asset managers—now integrate ESG into every decision, including shareholder voting. If companies ignore issues like human rights or environmental damage, they face divestment or financial blacklisting. For instance, in 2025, the US revoked visas of several Thai officials over the forced return of Uyghur refugees to China—an act cited as exposing individuals to torture and disappearance. While this was a government incident, it underscores how quickly businesses in related supply chains can be flagged as high-risk.

They risk rejection from global partners.
International buyers (especially from the US, EU, and Japan) now enforce strict ESG criteria before onboarding suppliers. Thai companies that fail to meet these standards are denied business opportunities or barred from participating in international tenders. For large Thai corporations, inaction on ESG is no longer an option—it directly threatens access to trade, capital, and investor trust.

3. Case Studies and Lessons from the Past

Thailand’s agri-food sector offers a sobering case.
Years ago, reports emerged of forced labor within Thai shrimp supply chains. As a result, the U.S. and EU imposed severe scrutiny and trade restrictions. The EU suspended Thailand’s GSP (Generalized System of Preferences) benefits on shrimp products, raising import tariffs from 4.2% to 12% overnight. Thai shrimp exporters saw their EU market share plunge from 20–25% to around 5%, all due to poor labor governance.
This case illustrates how failure to address ESG risks—especially in labor and supply chains—can result in trade exclusion, lost competitiveness, and reputational damage.

Internationally, top global brands are tightening supply chain protocols.
The EU’s Deforestation Regulation bans the import of any goods linked to deforestation—covering palm oil, timber, cocoa, rubber, etc. A single violation can lead to import bans or heightened tariffs. Brands like H&M and Nike have faced global backlash for alleged connections to forced labor in Xinjiang. Investors dumped shares, and consumer trust plummeted. These examples underscore a critical truth: Supply chain transparency is no longer negotiable. A single ESG breach can cost a company its market position and investor base.

4. Global Legal and Systemic Pressures

International regulations and financial norms make ESG non-optional:

Stringent international laws:
The EU Forced Labour Regulation prohibits imports tied to forced labor. The EU Deforestation Regulation requires comprehensive traceability for at-risk commodities like palm oil and rubber. In the U.S., the UFLPA ban blocks imports made with Uyghur forced labor. Additionally, global frameworks like the EU CSRD (Corporate Sustainability Reporting Directive) and SEC climate risk disclosures push companies to account for environmental, social, and governance risks in detail.

Institutional investors are prioritizing ESG:
Global funds like BlackRock, Temasek, and Norges Bank have embedded ESG into core investment strategies. For example, the Decarbonization Partners fund from BlackRock and Temasek targets low-carbon technologies. Reports show companies with high ESG scores get better loan rates—around 6.8%, compared to 7.9% for lower-rated peers (source: MSCI). Financial institutions now favor companies with verified ESG credentials, and these demands cascade down to even the smallest suppliers.

5. International Certification and Global Acceptance Mechanisms

The key to global market access for Thai businesses lies in international certification and integration with global platforms:

Standards and certifications:
International standards like ISO 14001 (environment) and ISO 26000 (social responsibility) validate a company’s ESG practices. In Thailand, MASCI (Management System Certification Institute) plays a pivotal role in certifying such systems. Recently, MASCI was formally recognized by STNSM.org (Sustainism Initiatives) as a regional partner in ESG verification—marking a milestone in building credibility for Thai firms in global markets.

International recognition:
Companies adopting global standards gain easier entry into international tenders and partnerships. Certification provides proof of ESG alignment to buyers and regulators across regions. United Nations-aligned networks like STNSM Sustainability Services connect certified Thai businesses to global opportunities, ensuring that ESG excellence is not just recognized, but rewarded.

6. Mechanisms of Foreign Investment Driven by ESG

Foreign investors now rely heavily on ESG as a primary investment filter. Companies that demonstrate clear environmental and social responsibility consistently attract more capital.
For example, firms with high ESG ratings enjoy lower financing costs. Studies show that companies with robust ESG disclosures receive cheaper loans—averaging 6.8% interest versus 7.9% for those with weak ESG records (source: MSCI).

Major development banks and global funds—such as Norges Bank, financial institutions in China and Hong Kong, and the Asian Development Bank (ADB)—scrutinize ESG credentials before approving loans or partnerships. Companies without credible ESG evidence are increasingly excluded from large client lists or denied access to institutional finance.
In short, capital now flows toward sustainability, and ESG has become a prerequisite for survival in a competitive funding environment.

7. Conclusion: ESG Is No Longer a Choice—It’s Survival

ESG is not just a rising trend; it is the new non-negotiable operating system of the global economy. If your client has pledged to reach Net Zero by 2030, but you— as their supplier or service provider—don’t even have a basic ESG roadmap, you are the weakest link, and they will be forced to drop you.
Large Thai corporations are already facing international ESG audits. Their SME suppliers will follow—and without preparation, many will be cut off without notice. ESG is not something a business can build overnight; it takes time, systems, verification, and long-term investment.

Firms that ignore ESG are walking into a dead end.
In contrast, those building their ESG systems today are securing a future of resilience, relevance, and regional leadership.
The world is no longer waiting for the laggards.
It is giving the stage to those who act now.