The Monetary Authority of Singapore (MAS), through its Green Finance Industry Taskforce (GFIT), has issued a consultation paper that proposes a taxonomy for Singapore-based financial institutions to identify activities that can be considered green or moving towards green activities.
The latest taxonomy includes transition activities that allow for a shift towards greater sustainability while taking into account starting positions and supporting inclusive economic and social development, says MAS.
The taxonomy, which references international best practices that are adapted to the Asian context where relevant, also sets out a system where activities can be classified as green, yellow (transition) or red, according to their level of alignment with environmental objectives.
At the same time, the taskforce launched a handbook that details best practices in environmental risk management for banks, insurers and asset managers.
The handbook will support the financial industry’s efforts to implement MAS’s Guidelines on Environmental Risk Management.
In addition, the taskforce will conduct workshops, with the help of industry associations, with financial institutions to strengthen their capabilities in environmental risk management.
The taskforce is also exploring technology solutions for financial institutions to enhance the quality of their climate-related disclosures, as well as introduce innovations to solve current challenges in mobilising green finance across sectors.
On the initiatives, Ravi Menon, Managing Director, MAS, said, “Our goal to make Singapore the leading green finance hub in Asia rests strongly on close public-private partnership.”
“With MAS setting the expectations for sound environmental risk management and the industry coming together with practical solutions on how to meet these expectations, we will develop a more climate-resilient and environment-friendly financial system. I congratulate GFIT for providing our financial institutions a clear taxonomy and a practical toolkit to manage environmental risks and support Asia’s journey towards greater sustainability,” he adds.
“The transition to a low-carbon economy calls for collective action across sectors, where financial institutions such as banks play a key enabling role,” says Tony Cripps, CEO of HSBC Singapore and chairman of the taskforce.
“This is where the GFIT comes into play – bringing together industry leaders, experts, and practitioners across banking, insurance, and asset management to help realise the Republic’s vision to be a leading green finance centre that helps finance Asia’s transition to a sustainable future,” Cripps adds.
