The Monetary Authority of Singapore (MAS), together with the financial industry, will establish the Singapore Sustainable Finance Association (SSFA), announced the central bank and regulator on June 8. For a start, the SSFA will focus on initiatives to scale voluntary carbon markets, transition finance and blended finance.
The Association of Banks in Singapore (ABS) is leading the coordination and set-up of the SSFA. According to MAS, the SSFA will include representatives from financial institutions, financial industry associations, relevant corporates and service providers, such as environmental, social and governance (ESG) rating agencies.
Senior Minister Tharman Shanmugaratnam spoke briefly about the SSFA in his keynote address at the inaugural Financing Asia’s Transition (FAST) Conference earlier that morning.
Tharman, who is also chairman of MAS, underscored the need for financial supervisors to incentivise financial institutions and their customers to bring forward their actions to support longer-term climate-positive outcomes.
The government is exploring how to develop a new vehicle to catalyse blended finance in Asia by working with partners around the region, says Tharman. This ranges from collaborating with government agencies to Singapore-based infrastructure financing vehicles like Clifford Capital and Pentagreen Capital, as well as commercial banks and multilateral development banks like the Asian Infrastructure Investment Bank (AIIB), the Asian Development Bank (ADB) and the World Bank, he adds.
Along with other government agencies, MAS says it is collaborating with industry players to explore platforms to channel blended finance at scale into transition and green infrastructure projects in the region. “MAS aims to bring together patient, concessionary capital from philanthropies, multilateral development banks, development finance institutions and donor partners. This will in turn help to crowd in more conventional infrastructure financiers, including banks, and institutional investors.”
MAS says further details will be announced “when the plans are more developed”.
To facilitate credible decarbonisation efforts, MAS says it will set supervisory expectations to steer financial institutions’ transition planning.
The guidance on transition planning will cover financial institutions’ governance frameworks and client engagement processes to manage climate-related financial risks and enable transition in the real economy towards net zero, says MAS. “Financial institutions should not indiscriminately de-risk from particular sectors, but instead carefully assess clients’ transition plans and provide the needed financing for transition where the plans are credible.”
See also: MAS to launch consultation on qualifying managed phase-out of coal-fired power plants
In reviewing financial institutions’ implementation of transition plans, MAS says it will recognise that a short-term increase in their financed emissions may arise due to actions supporting longer-term climate positive outcomes. MAS will issue a consultation paper later this year.
Last week, MAS announced it will launch a consultation “in the coming weeks” on its proposal to include the managed phase-out of coal-fired power plants in the Singapore-Asia Taxonomy.
Formerly referred to as the Singapore Taxonomy, the guidelines were expected to be published in June. Instead, MAS will seek feedback on additional criteria from financial institutions “within the next few weeks”, says Gillian Tan, chief sustainability officer (CSO) of MAS.
The taxonomy was developed by the Green Finance Industry Taskforce (GFIT), an industry-led initiative convened by MAS, whose mandate is to help accelerate the development of green finance.
GFIT launched its third public consultation on the taxonomy in February — then thought to be the last round to provide feedback. Speaking at a media briefing on May 30, Tan says the central bank and regulator received “extensive feedback”. “So, we definitely want to take some time to really cover it well.”
