Singapore Green Bond Framework introduced for issuance of sovereign green bonds

15 June 2022

On 9 June 2022, the Singapore Government published the Singapore Green Bond Framework (“Framework”). The Framework lays the foundation for the issuance of green bonds by the Singapore Government under the Significant Infrastructure Government Loan Act 2021 (“SINGA”) and serves as a reference for statutory boards’ respective green bond frameworks. The Framework details the Singapore Government’s intended use of green bond proceeds, governance structure to evaluate and select eligible projects, operational approach to manage green bond proceeds, and commitment to post-issuance allocation and impact reporting.

Key features of the Framework

Alignment with internationally recognised market principles and standards

To ensure that it will serve as a benchmark for the corporate green bond market, the Framework is aligned with internationally recognised market principles, standards and best practices. The Framework is developed and structured in alignment with the core components and key recommendations of the International Capital Market Association (“ICMA”) Green Bond Principles 2021 and the ASEAN Capital Markets Forum ASEAN Green Bond Standards 2018.

Use of proceeds

Proceeds from green bonds issued under the Framework will be used to finance expenditures in support of the Singapore Green Plan 2030. This facilitates the transition to a low-carbon economy in Singapore and advances the United Nations Sustainable Development Goals.

The Framework lists eight categories of green projects (“Eligible Green Expenditures”) that may be financed by the Singapore sovereign green bonds: (1) renewable energy; (2) energy efficiency; (3) green buildings; (4) clean transportation; (5) sustainable water and wastewater management; (6) pollution prevention, control and circular economy; (7) climate change adaptation; and (8) biodiversity conservation and sustainable management of natural resources and land use.

The eligibility criteria have been developed with reference to internationally recognised market principles and standards such as the ICMA Green Bond Principles and the Climate Bond Initiative Taxonomy and Sector Criteria.

Governance and oversight of project selection and allocation of proceeds

The Second Minister for Finance chairs the Green Bond Steering Committee, which assumes overall responsibility for proper governance and implementation of the Framework. The Singapore Government will commit to annual post-issuance allocation reporting and impact reporting on environmental benefits and, where possible, social co-benefits of the Eligible Green Expenditures. This will provide transparency and accountability for investors and other interested parties.

External review

Morningstar Sustainalytics, an independent ESG research firm, has provided a Second-Party Opinion on the Framework, and is of the view that the Framework is aligned with the ICMA Green Bond Principles 2021 and the ASEAN Green Bond Standards 2018.

Inaugural issuance of Singapore sovereign green bond

To support Singapore’s transition to a low-carbon economy and spur Singapore’s development as a green finance hub, the Singapore Government announced at Budget 2022 that the public sector will issue up to S$35 billion of green bonds by 2030. This will include bonds issued by the Singapore Government as well as its statutory boards, to finance public sector green infrastructure projects.

The Singapore Government will be issuing its inaugural sovereign green bond under the SINGA in the coming months. These bonds, known as Green SGS (Infrastructure) bonds, will be used to finance nationally significant infrastructure which meet the green criteria under the Framework. Such infrastructure projects are expected to provide long-term environmental benefits to both the current and future generations.

The Monetary Authority of Singapore (“MAS”) will undertake the issuance and management of the Green SGS (Infrastructure) bonds on behalf of the Singapore Government and will provide more details closer to the issuance date.

Reference materials

The following materials are available on the MAS website www.mas.gov.sg and the Ministry of Finance website www.mof.gov.sg: