As part of a vision to make Singapore the leading centre for green finance in Asia, MAS will incorporate climate-related scenarios in its annual stress tests “within the next two years”.
The MAS (Monetary Authority of Singapore) has revealed some of the next steps it will take as part of its Green Finance Action Plan, initially launched late last year.
In a keynote speech at the Financial Times Investing for Good Asia Digital Conference, on Tuesday (13 October 2020), MAS Managing Director Ravi Menon detailed some of the initiatives Singapore is taking to facilitate Asia’s transition to a green future.
“Within the next two years, MAS will incorporate climate-related scenarios in our annual stress tests for the financial industry,” Menon said.
Earlier this year, the MAS co-created a set of guidelines to assess how financial institutions incorporate environmental risk management in their business operations. The guidelines for banks included the development of capabilities in scenario analysis and stress testing to assess the impacts of environmental risk to their risk profiles and business strategies.
Menon said disclosure of risks also applies to non-finance corporates to facilitate investors and asset managers in building sustainable portfolios. To that effect, he highlighted that SGX (Singapore Exchange) already requires listed companies to produce annual sustainability reports on a comply-or-explain basis.
In addition, SGX will “soon” include the TCFD (Taskforce on Climate-related Financial Disclosures) recommendations in its existing guidance to assist listed companies with their climate-related financial disclosures, Menon said.
As a central bank and financial regulator, the MAS aims to practice what it preaches, and is working on a roadmap to better integrate environmental risks across all its business functions.
“This will include measuring, reducing and disclosing our own carbon footprint,” Menon said. “Next year, as we mark MAS’ 50th anniversary, we will share in greater detail our strategies towards a more sustainable MAS.”
Menon also discussed the Green Investments Programme, which was launched by the MAS last year and is set to receive USD 2 billion in funds which will be placed with asset managers that focus on sustainability.
“We have short-listed several asset managers with a view to appointing the successful applicants early next year,” he said. “The aim is to grow the pool of asset managers that are committed to deepen green finance activities and capabilities in Singapore.”
Menon also announced the launch of the Singapore Green Finance Centre (SGFC), Singapore’s first research centre for green finance and talent development in the field.
The SGFC was formed in collaboration with Singapore Management University (SMU) and Imperial College Business School, supported by MAS along with nine founding partners.