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Singapore: Round up of latest ESG regulations and policies

The Monetary Authority of Singapore (“MAS”) is progressing with its comprehensive, long-term strategy to make sustainable finance a defining feature of Singapore as an international financial centre. To recap, these efforts started as early as 2017 when the MAS convened an industry-led Green Finance Industry Taskforce (“GFIT”) and in 2019 when the MAS launched the Green Finance Action Plan, which has the following four strategic pillars:

  • strengthening the financial sector’s resilience to environmental risk;
  • developing markets and solutions for a sustainable economy;
  • harnessing technology to enable trusted and efficient sustainable finance flows; and
  • building capability and knowledge in sustainable finance.

In the first half of this year, the MAS and the Singapore Government have advanced their agenda on green financing under the Singapore Green Plan 2030 with further requirements around climate-related disclosures and fostering green solutions.

In this blog, we highlight the following key developments:

Second Consultation Paper on Green Taxonomy – 12 May 2022

On 28 January 2021, the GFIT issued a proposed taxonomy for Singapore-based financial institutions to identify activities that can be considered “green” or transitioning towards green (“Green Taxonomy”).

On 12 May 2022, building on the proposed taxonomy, the GFIT released for public consultation a second consultation paper on the proposed Green Taxonomy (“Second Consultation Paper”). The Second Consultation Paper sets out threshold criteria for economic activities in three sectors - energy, transport, and real estate. These sectors have been prioritised as they are determined to have the highest environmental impact in Singapore. The Second Consultation Paper covers the climate change mitigation objective – the other four environmental objectives that may ultimately be included in the Green Taxonomy are (i) climate change adaptation, (ii) protection of healthy ecosystems and biodiversity, (iii) promotion of resource resilience and circular economy and (iv) pollution prevention and control.

The initial consultation paper in January 2021 introduced a “traffic light” system for classifying activities as green (environmentally sustainable), amber (transition), or red (harmful) based on their contributions to climate change mitigation. The Second Consultation Paper expands the traffic light approach and adds granularity to the application and thresholds for classification of activities. Similar to the taxonomy being developed in the EU, proposing a new “traffic light” taxonomy is intended to classify sustainable activities which go to “transition” - the current “green” taxonomies leave a wide variety of economic activities unclassified and some stakeholders may interpret this non-classification or “not green” as a negative signal, which has led to fear that finance would dry up for activities that currently fall outside of the current green taxonomy but are important for “transition” to net zero.

The responses to the Second Consultation Paper have yet to be released. GFIT plans to release the criteria and thresholds for the remaining five sectors for public consultation in late 2022 and finalise the Green Taxonomy in 2023.

New ESG Registry – 18 May 2022

On 18 May 2022, a new ESG Registry – ESGpedia was launched by Fintech company, Hashstacs Pte Ltd, as part of Project Greenprint. ESGpedia is a one-stop database that enables financial institutions, corporations and regulators access to companies’ sustainability data across various certification bodies and verified sources. This platform helps mobilise capital more effectively and bridges information gaps about sustainable projects.

Other platforms to be launched under Project Greenprint include:

  • Greenprint Marketplace: an open marketplace to connect green technology providers with investors, financial institutions and corporates.
  • Greenprint Common ESG Disclosure Platform: a common platform to manage and access ESG performance data and to meet disclosure requirements locally and internationally.
  • Greenprint Data Orchestrator: a network of data platforms to aggregate and enable access to common trusted ESG data sources and sectoral/ground-up data sources.

Information Paper on Environmental Risk Management – 31 May 2022

Following the publication of the Guidelines on Environmental Risk Management for asset managers banks and insurers released in December 2020, the MAS conducted a series of thematic reviews on selected financial institutions on its implementation and released Information Papers on Environmental Risk Management (“EnRM Information Papers”) on 31 May 2022. The EnRM Information Papers highlight best practices by banks, insurers and asset manager, and identifies areas that require further work. Financial institutions must also set tangible targets to address environmental risk such as calculated portfolio exposures to geographical areas and sectors with higher environmental risk and carbon intensity of customers in high-risk sectors.

In particular, the EnRM Information Papers highlighted that financial institutions face challenges in several areas, including (i) developing risk assessment methodologies, (ii) talent shortage in sustainable finance and (iii) developing their risk management practices where the financial institution relies on their parent company to set policies and procedures at a group level, especially for financial institutions whose headquarters are not within the Singapore jurisdiction. 

The MAS recognises that financial institutions are at varying stages of adopting the environmental risk management processes and encourages them to refer to the industry practices shared in the EnRM Information Paper. The EnRM Information Papers also encourages financial institutions to translate their environmental risk strategy and risk appetite into concrete milestones and tangible targets for taking action.

Singapore Green Bond Framework – 9 June 2022 

On 9 June 2022, the Singapore Government published the Singapore Green Bond Framework (“Framework”), a governance framework for sovereign green bond issuances under the Significant Infrastructure Government Loan Act 2021 (“SINGA”). It sets out guidelines for public sector green bond issuances under the SINGA, emphasising its alignment with international standards, market principles and best practices. Proceeds from green bonds issued under the Framework will be used to finance expenditures in support of the Singapore Green Plan 2030. The Framework is intended to serve as a benchmark for the corporate green market, attract capital, green issuers, and investors, paving ways for more private sector green finance activity.

Upcoming Consultation on Introducing Mandatory Disclosure Requirements for Financial Institutions – 4 July 2022

In response to a parliamentary question on the adoption of sustainable finance amongst financial institutions on 4 July 2022, Mr Tharman Shanmugaratnam (Senior Minister and Minister in charge of MAS) announced that MAS will be conducting stress tests this year (2022) on financial institutions’ resilience against a range of long-term climate scenarios. MAS is in the process of putting in place enablers to enhance sustainability disclosures and address data challenges faced by market participants. In particular, the MAS will be consulting 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, which is expected by the end of this year.

Upcoming SGX Climate Disclosure Platform – 19 July 2022

At the “Climate Reporting in ASEAN - State of Corporate Practices” launch event held on 19 July 2022, Tan Boon Gin, the CEO of SGX RegCo, stated that the biggest threat to accurate climate reporting is "greenwashing". To tackle "greenwashing", he suggested that regulators must make information available, comparable and trusted. SGX is also intending to develop ESGenome - a single ESG disclosure platform to guide companies to provide the necessary climate disclosures.

MAS’ Sustainability Report 2021/2022 – 28 July 2022

On 28 July 2022, the MAS has released its annual sustainability report (2021/2022) which provides a detailed account of the various initiatives to (a) strengthen the financial sector’s resilience to climate risk, (b) develop a vibrant sustainable finance ecosystem, (c) build a climate-resilient official foreign reserves portfolio, including targets to reduce the weighted average carbon intensity of the equities portfolio, and (d) reduce MAS’ own carbon footprint, including targets to reduce greenhouse gas emissions by 2030.

Such policies include:

  • long-term climate scenarios as part of this year’s stress tests for the financial industry;
  • requiring listed companies to disclose their climate-related risks, based on TFCD recommendations, from 2023 onwards;
  • a consultation on the mandatory climate-related disclosures for major financial institutions when the international standards set by the International Sustainability Standards Board is finalized;
  • a set of disclosure and reporting guidelines for retail ESG funds, which will take effect from January 2023;
  • a plan to engage financial institutions on their transition plans towards net-zero or other relevant emission targets;
  • the issuance of further thresholds and criteria for another 5 sectors in relation to these sectors’ environmental objectives and taxonomy by the GFIT;
  • the launch of an ESG disclosure platform by MAS and SGX (under Project Greenprint);
  • the implementation of a climate overlay programme starting next year to tilt the MAS’ equity investments towards exposures that are less carbon-intensive and more aligned with the low-carbon transition; and
  • setting further targets by the MAS to reduce its own carbon emissions across its physical location and vendors.

In the Media Conference accompanying the release of the sustainability report, Mr Ravi Menon (Managing Director of the MAS) also commented that greening the economy is more important than growing the green economy, and green finance alone is not enough as transition finance is also necessary.

Disclosure and Reporting Guidelines for Retail ESG Funds – 28 July 2022

On 28 July 2022, the MAS published its circular: CFC 02/2022 Disclosure and Reporting Guidelines for Retail ESG Funds (“ESG Circular”). The ESG Circular will apply to (1) holders of a capital markets services licence in respect of fund management, and (2) trustees approved under section 289 of the Securities and Futures Act 2001 (to act as approved trustees in relation to certain collective investment schemes). The ESG Circular will take effect on 1 January 2023 and sets out the MAS’ expectations on how existing requirements under the Code on Collective Investment Schemes and the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations would apply to retail ESG funds, and the applicable disclosure and reporting guidelines. In essence, funds that are sold to retail investors in Singapore under the ESG label will now have to provide relevant information to better substantiate the label. Some of the required information includes details on the ESG fund’s investment strategy; criteria and metrics used to select investments; and risks and limitations associated with the fund’s strategy.

What is the Singapore Green Plan 2030?

The Singapore Green Plan 2030 was unveiled in February 2021 to advance Singapore’s sustainable development agenda and charts Singapore’s green targets over the next decade. The Green Plan includes targets for Singapore to become a leading centre for green finance in Asia and globally. Various requirements were identified for green finance to work effectively: a consistent set of global disclosure and reporting standards must be implemented; the quality, availability and comparability of data must be improved; and taxonomies for green and transition activities must be developed.

What is Project Greenprint?

MAS launched Project Greenprint in December 2020, which aims to harness technology to support green finance in conjunction with the financial industry – establishing data platforms to mobilise capital for green projects, facilitating the acquisition and certification of climate-relevant data, and monitoring the financial industry’s commitments to emissions reductions.

(Thanks to Jennifer Lim and Mandy Ho for support in writing this article).


climate change and environment, sustainable finance, singapore, blog posts