Indiscriminate divestment from carbon-intensive activities will not get us to a net-zero world, says Ravi Menon, MAS’s managing director. “A large part of the global economy depends on such activities for growth and jobs. Rather, financial institutions must actively support their borrowers, insured parties and investee companies to progressively decarbonise their activities through credible transition plans.”
Banks, insurers and asset managers should discuss climate-related risks with their customers and investee companies instead of divesting from them. These financial institutions (FIs) should also plan ahead and assess the sustainability of their business, and consider coming risks like loss of natural capital and biodiversity.
These are among the Monetary Authority of Singapore’s (MAS) new transition-related supervisory expectations for FIs, released on Oct 18. The financial regulator says its Guidelines on Transition Planning will enable customers and investee companies of FIs to introduce effective climate change mitigation and adaptation measures.
