30 May 2023

On 20 April 2023, the Monetary Authority of Singapore (“MAS”) issued a press release and infographic on the launch of MAS’ Finance for Net Zero (“FiNZ”) Action Plan.

The FiNZ Action Plan sets out MAS’ strategies to mobilise financing to catalyse Asia’s net zero transition and decarbonisation activities in Singapore and the region. It expands the scope of MAS’ Green Finance Action Plan launched in 2019 to include transition finance, which refers to investment, lending, insurance, and related services to progressively decarbonise areas such as power generation, buildings, and transportation.

MAS will continue to grow and scale green FinTech solutions and to invest to develop the skills and capabilities of the Singapore workforce in furtherance of the FiNZ Action Plan as set out below.

Data, definitions and disclosures

The FiNZ sets out the following initiatives that MAS will undertake:

  • Continue to promote consistent, comparable, and reliable climate data and disclosures to guide decision making by financial market participants, and safeguard against greenwashing risks.
  • Continue to work with the industry to co-create a code of conduct, which will require ESG ratings and data product providers to disclose how transition risks are factored into their products. A public consultation to gather wider feedback will be conducted in the second half of 2023.
  • Work with relevant counterparts and stakeholders to enhance interoperability of taxonomies across jurisdictions, to catalyse cross-border green and transition financing flows.
  • Continue to work with the Singapore Exchange and other government agencies to set out a roadmap for key financial institutions (“FIs”) and listed companies to make International Sustainability Standards Board (ISSB)-aligned disclosures on a risk-proportionate basis. MAS will partner with relevant bodies to build up companies’ capabilities in sustainability reporting.

Climate resilient financial sector

MAS will continue to engage FIs to foster sound environmental risk management practices and deepen climate scenario analysis and stress testing to identify climate-related financial risks. MAS also undertakes to incorporate evolving international best practices in the supervision of FIs’ transition planning.

Credible transition plans

To support FIs’ adoption of science-based transition plans, MAS will engage international partners such as the International Energy Agency to support the development of credible regional sectoral decarbonisation pathways. MAS states that FIs can reference these pathways when they set emissions reduction targets, and when they engage with their clients on initiatives to decarbonise their businesses.

Green and transition solutions and markets 

MAS will promote innovative and credible green and transition financing solutions and markets to support decarbonisation efforts and climate risk mitigation.

It will expand the scope of its sustainable bond and loan grant schemes to include transition bonds and loans, with safeguards in place to mitigate the risk of “transition-washing” and ensure alignment with internationally recognised taxonomy and transition finance principles. To qualify for the grants, the transition bonds and loans must be aligned with internationally recognised taxonomy and transition finance principles and be accompanied by the disclosure of an entity-level transition plan.

To promote transparency in the sustainable debt market, MAS will incentivise the early adoption of entity-level sustainability disclosures by issuers or borrowers. MAS has set aside S$15 million over the next five years till end-2028 for the enhanced grant schemes.

MAS will extend the Insurance-Linked Securities Grant Scheme till end 2025 to support the continued growth of catastrophe bonds and additional climate risk financing instruments such as sidecars and collateralised reinsurance arrangements. This will enable additional financing for protection against disaster risks to be raised from the capital markets. The S$15 million grant will defray the cost of issuing catastrophe bonds and the expanded suite of insurance-linked securities that focus on Asia risks.

Building on past efforts, MAS will scale blended finance, in partnership with the private sector and philanthropic foundations, to mobilise financing for the decarbonisation of carbon-intensive sectors (e.g. managed phase-out of coal-fired power plants).

In addition, MAS will support the development of carbon services and carbon credits markets in Singapore, to channel financing towards carbon abatement and removal projects in Asia.