The Monetary Authority of Singapore (MAS) said on June 8, 2023, that it will establish rules to direct financial institutions’ transition planning procedures in order to support, in turn, the genuine decarbonization efforts of their customers.
In order to manage climate-related financial risks and facilitate the move towards net zero, the recommendations will include the governance structures of financial institutions and client engagement procedures.
The MAS emphasizes in particular that financial institutions shouldn’t arbitrarily de-risk from certain industries. Instead, if the relevant client’s transition plans are legitimate, financial institutions should evaluate them and provide the finance required for the shift. The Senior Minister, Coordinating Minister for Social Policies, and Chairman of MAS, Mr. Tharman Shanmugaratnam, emphasized the significance of motivating financial institutions and their clients to promote longer-term climate good results. Such incentives could include temporary increases in the emissions that the financial institutions fund as a consequence of efforts promoting more long-term favorable climate outcomes.
Furthermore, MAS said that it will collaborate with the financial sector to form the Singapore Sustainable Finance Association (SSFA). To create a thriving ecosystem for green and transition finance, the SSFA will comprise members from financial institutions, financial industry groups, relevant corporations, and service providers such ESG rating agencies. The SSFA will first concentrate on projects to scale blended finance, transition finance, and voluntary carbon markets.