Reply To Singapore Parliamentary Question On The Adoption Of Sustainable Finance Amongst Financial Institutions

Date: For Parliament Sitting on 4 July 2022

Name and Constituency of Member of Parliament

Ms Foo Mee Har, MP, West Coast GRC

 
Question:

To ask the Prime Minister whether the Government intends to spur the adoption of sustainable finance amongst financial institutions with incentives or regulations to encourage active promotion of green financing and achieve basic competency standards in green financing.

Answer by Mr Tharman Shanmugaratnam, Senior Minister and Minister in charge of MAS:

1. MAS has taken a multi-pronged approach to promoting sustainable finance, namely to: (i) strengthen the financial sector’s resilience to environmental risks; (ii) enhance climate-related disclosures and data; (iii) support sustainable finance market development; and (iv) build sustainable finance knowledge and capabilities. 

2. First, MAS has issued guidelines on how environmental risks are to be managed by financial institutions. These guidelines were recently complemented by a set of information papers highlighting good practices by financial institutions and identifying areas where further work is needed. MAS will be conducting stress tests this year on financial institutions’ resilience against a range of long-term climate scenarios. 

3. Second, MAS is putting in place enablers to enhance sustainability disclosures and address data challenges faced by market participants. 

a. MAS will consult on introducing mandatory disclosure requirements for financial institutions, as soon as a global baseline sustainability reporting standard is established by the International Sustainability Standards Board (ISSB), as expected by the end of this year.

b. SGX has set out a roadmap for mandatory climate-related financial disclosures by listed entities. Listed companies in sectors where climate-related disclosures are the most relevant will be required to provide these disclosures for the financial year commencing 1 January 2023. More sectors will be added to the mandatory disclosure list for the financial year commencing 1 January 2024 [1] . SGX has indicated its intention to work towards aligning its reporting requirements with the ISSB standards after they are finalised [2] . 

c. SGX and ACRA have also convened a Sustainability Reporting Advisory Committee to advise on a sustainability reporting roadmap for all Singapore-incorporated companies. 

d. An industry task force convened by MAS [3] is developing a taxonomy to help  financial institutions in Singapore classify activities as environmentally sustainable, harmful, or in transition. 

e. MAS’ Project Greenprint [4] will leverage technology-based solutions to enhance access to trusted and high-quality ESG data for decision-making. 

4. Third, to encourage firms to invest in sustainable projects and assets and adopt sustainable business practices, MAS has introduced the Sustainable Bond Grant Scheme (SBGS) and Green and Sustainability-Linked Loan Grant Scheme (GSLS) to help corporates defray the additional costs incurred in conducting external reviews aligned with internationally-recognised principles. The GSLS also encourages banks to develop green and sustainability-linked loan frameworks to make such financing more accessible to small and medium-sized enterprises. 

5. Finally, MAS and the Institute of Banking and Finance (IBF) launched the Sustainable Finance Technical Skills and Competencies (TSCs) earlier this year to support the financial industry, businesses and individuals in deepening their sustainable finance capabilities. The TSCs set out robust, common standards of proficiency and knowledge that are needed to perform various job roles in sustainable finance. MAS is also developing a strong sustainable finance research and talent development ecosystem, comprising centres of excellence in our universities, reputable training providers, and Asia Pacific sustainability hubs established by financial institutions. This will deepen and expand Asia-focused climate research and training and develop a strong pipeline of local sustainable finance talents. 

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1. [1] (i) Agriculture, food and forest products, (ii) energy and (iii) the financial industry will have mandatory reporting as of FY2023. (iv) Materials and buildings industry and (v) transportation industry will have mandatory reporting as of FY 2024. These five industries are likely to be most affected by climate change and the transition to a lower-carbon economy. Listed companies not in these industries will have to provide climate reporting on a ‘comply-or-explain’ basis.

1. [2] The ISSB targets to finalise its standards by year-end 2022.

1. [3] The Green Finance Industry Taskforce (GFIT) comprises representatives from financial institutions, corporates, non-governmental organisations, and financial industry associations. Its mandate is to help accelerate the development of green finance through four key initiatives: (i) develop a taxonomy, (ii) enhance environmental risk management practices of financial institutions, (iii) improve disclosures, and (iv) foster green finance solutions.

1. [4] Project Greenprint is a collection of initiatives that aims to harness technology and data to enable a more transparent, trusted and efficient ESG ecosystem to enable green and sustainable finance. It consists of four common utility platforms: (i) Common Disclosure Portal, (ii) Data Orchestrator, (iii) ESG Registry, and (iv) Greenprint Marketplace, that will aggregate new and existing sustainability data across multiple sectoral platforms and industry players; and enable sharing of data across different stakeholders.