MAS releases Sustainability Report 2021/2022 highlighting importance of transition finance

30 August 2022

On 28 July 2022, the Monetary Authority of Singapore (“MAS”) released its Sustainability Report 2021/2022 (“Report”). Among other things, the Report sets out MAS’ strategy on climate resilience and environmental sustainability to strengthen the resilience of Singapore’s financial sector to environmental risks and develop a vibrant green finance ecosystem.

In a speech given at the launch of the Report, MAS Managing Director Ravi Menon highlighted some of the initiatives MAS has undertaken, together with the financial industry, in pursuance of those objectives. One of the themes which features prominently in the Report is the importance of transition finance.

The following are some of the initiatives outlined in the Report.

A climate-resilient financial sector

MAS has published papers highlighting good practices in environmental risk management by banks, insurance companies, and asset managers. These good practices were drawn from a review of how some financial institutions were implementing MAS’ guidelines on environmental risk management issued in 2020.

MAS has incorporated a range of long-term climate scenarios as part of this year’s stress tests for the financial industry. The climate scenarios take reference from those developed by the Network for Greening the Financial System (“NGFS”).

MAS plans to engage financial institutions on their transition plans towards net-zero or other relevant emissions targets. MAS is working with NGFS to examine the role of supervisors in assessing financial institutions’ transition plans.

A vibrant sustainable finance ecosystem

MAS aims to promote blended finance solutions to help fill Asia’s transition financing gap and will be hosting a pre-COP27 conference on blended finance on 4 October 2022. The conference will bring together key public and private stakeholders to develop innovative solutions to de-risk and channel funds to green and transition projects in the region.

MAS is supporting the development of an industry-led green and transition taxonomy. The Green Finance Industry Taskforce (“GFIT”) defined the environmental objectives of the taxonomy and identified eight focus sectors in the first phase of its work. In the second phase, GFIT published detailed thresholds and criteria to classify activities as green or amber for economic activities in the energy, building, and transportation sectors. In the next phase of its work, GFIT will consult on the thresholds for the remaining five sectors by end 2022.

MAS is also engaged in work on inter-operability across national taxonomies. For example, MAS is involved in developing a multi-tier ASEAN taxonomy to guide transition financing flows in the region.

To facilitate financial institutions’ access to clear and reliable environmental, social and governance (“ESG”) data, MAS is working with industry partners on Project Greenprint to develop relevant digital infrastructures. Project Greenprint is a collection of initiatives that aims to harness technology and data to enable the greening of the financial sector. Recent initiatives under Project Greenprint include:

  • an ESG registry, launched in May 2022, which uses distributed ledger technology to record and maintain the provenance of green certifications issued by various competent bodies, allowing banks to access these for their green and sustainable financing decisions; and
  • an ESG disclosure platform, to be launched later this year, to allow listed companies in Singapore to upload corporate sustainability data in a structured and efficient manner, accessible by external stakeholders upon consent.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg: