MAS releases Sustainability Report 2023/2024 setting out strategy on climate resilience and environmental sustainability

30 July 2024

On 4 July 2024, the Monetary Authority of Singapore (“MAS”) released its Sustainability Report 2023/2024 (“Report”). Among other things, the Report sets out MAS’ strategy on climate resilience and environmental sustainability to strengthen Singapore’s financial sector against environmental risks and develop a vibrant green finance ecosystem.

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

A climate-resilient financial sector

In October 2023, MAS issued a set of consultation papers proposing Guidelines on Transition Planning by banks, insurers, and asset managers. The proposed Guidelines focus on financial institutions’ internal strategic planning and risk management processes to prepare for both risks and potential changes in business models associated with the global transition to a net zero economy and the expected physical effects of climate change.

MAS has also conducted climate scenario analysis exercises since 2018 and integrated them into its regular assessment of financial stability. MAS now plans to collaborate with financial institutions to conduct a climate scenario analysis exercise to assess their vulnerabilities to climate physical risks and strengthen their physical risk assessment capabilities.

MAS supports aligning disclosure requirements to the International Sustainability Standards Board (“ISSB”) standards to enhance the consistency, comparability, and reliability of climate-related information. MAS is working with Singapore Exchange Regulation on implementing mandatory ISSB-aligned climate-related disclosures for listed issuers and developing a comprehensive capacity building programme for listed issuers to support them in their sustainability reporting journey. MAS will review sector-specific requirements set out by international standard setting bodies such as the Basel Committee on Banking Supervision and the International Association of Insurance Supervisors Climate Disclosures Workstream, and consult on MAS’ requirements for financial institutions in due course.

A vibrant sustainable finance ecosystem

Singapore-Asia taxonomy

In December 2023, MAS published the Singapore-Asia Taxonomy, the first taxonomy globally to pioneer the concept of a “transition” category. To facilitate the credible financing of the managed phase out of coal power in the region, the Singapore-Asia Taxonomy sets out both entity and facility-level criteria that are aligned to the goal of limiting global warming to a change of 1.5 degrees Celsius. Additionally, to enhance interoperability with global taxonomies, MAS begun mapping the Singapore-Asia Taxonomy to the International Platform for Sustainable Finance’s Common Ground Taxonomy, which currently compares the EU Taxonomy and People’s Bank of China’s Green Bond Endorsed Project Catalogue.

Code of Conduct

In December 2023, MAS published the Singapore Code of Conduct for ESG rating and data product providers (“Code”) and an accompanying checklist for providers to self-attest their compliance with the Code. The Code aims to establish baseline industry standards for transparency in methodologies and data sources, governance, and management of any conflicts of interest that may compromise the reliability and independence of the products.

Transition Credits Coalition

MAS launched the Transition Credits Coalition (“Coalition”) to identify system-wide barriers and develop solutions for transition credits to be utilised as a credible financing instrument. The Coalition, known as TRACTION, comprises members and knowledge partners across key stakeholder groups from carbon credit services, energy financing, project development, risk management, and non-governmental organisations. It is looking into three areas to scale transition credits: (i) enabling a supply of high-integrity transition credits, (ii) developing a toolkit of solutions to enhance the replicability of transition credit transactions, and (iii) building investor confidence in transition credits.

Financing Asia Transition Partnership

MAS launched the Financing Asia’s Transition-Partnership (FAST-P), a blended finance initiative done in collaboration with key public, private, and philanthropic sector partners. It aims to mobilise up to US$5 billion to de-risk and finance transition and marginally bankable green projects in Asia.

Gprnt

Gprnt, an integrated digital platform that harnesses technology to simplify how the financial sector and real economy collect, access and act upon ESG data to support their sustainability initiatives, was launched by MAS in November 2023.It will focus initially on automating basic climate reporting by SMEs, and progressively scale its automation capabilities to support the climate-related disclosure needs of larger corporates.

Sustainable Finance Jobs Transformation Map

MAS launched the Sustainable Finance Jobs Transformation Map in April 2024. It lays out the impact of sustainability trends on jobs in Singapore’s financial services sector and the emerging skills that the workforce will require to serve sustainable financing demand in the region. MAS has set aside S$35 million in the Financial Sector Development Fund to support upskilling and reskilling, and develop specialists in sustainable finance over the next three years.

Reference materials

The Report is available on the MAS website www.mas.gov.sg.