Singapore Private Banking Industry Develops Industry guidelines for Sustainable Private Banking and Wealth Management Practices
The Association of Banks in Singapore (ABS) has put out the ABS Sustainable Private Banking and Wealth Management Guidelines. These are rules that private banks can use to make their business models and practices more environmentally friendly.
At the same time, the Sustainability Taskforce of the Private Banking Industry Group (PBIG) worked with the Institute of Banking and Finance Singapore (IBF) and the Monetary Authority of Singapore (MAS) to create a common industry training benchmark for private banking relationship managers to improve their skills in the area of sustainability. The benchmark was based on the IBF-MAS Sustainable Finance Technical Skills and Competencies (SF TSCs), which are part of the Skills Framework for Financial Services (SFFS).
These actions show how serious the private banking industry is about switching to a low-carbon economy.
The Guidelines, developed with technical input from WWF-Singapore (World Wide Fund for Nature (Singapore) Limited), establish a baseline for sustainability practices to be integrated into private banks’ business models and will cover private banking activities comprehensively, from wealth planning and investments to financing.
The Guidelines are meant to make things clearer and more open between private bankers and their clients. They do this by defining sustainable investment approaches as:
Exclusion – Excluding and avoiding sectors, activities, and/or companies from the investment universe based on criteria such as norms and standards, business conduct, or values/ethical principles.
Integration – Including environmental, social, and governance (ESG) factors in the analysis and decision-making of investments clearly and systematically to balance ESG risk management with expected returns.
Thematic – Investing to contribute to environmental or social factors, with fundamental investment objectives considered.
Impact – Investing to generate positive, measurable social and environmental impact alongside a financial return.
Mrs Ong-Ang Ai Boon, Director, ABS, said:
“This set of Guidelines will help private banks and their clients in the transition towards a low-carbon economy. The Association will continue to support our members by facilitating capacity building and sharing of best practices in sustainable private banking and wealth management.”
The PBIG Sustainability Taskforce has looked at the 12 SF TSCs and says that four of them should be put at the top of the list because they are so important for relationship management in private banking.
The four prioritised TSCs are Sustainable Investment Management, Carbon Markets and Decarbonisation Strategies Management, Non-Financial Industry Sustainability Developments and Climate Change Management.
Private banks represented on the PBIG Executive Committee are committed to completing the training and upskilling of their banks’ client-facing employees in the four prioritised TSCs within the next three years or earlier.
Private banks are urged to align their training frameworks with the ABS Sustainable Private Banking and Wealth Management Guidelines and the four TSCs that are most important.
Gillian Tan, Assistant Managing Director (Development and International), MAS and cochair of PBIG, said:
"The demand for sustainable investments is growing among high-net-worth individuals and family offices. The launch of a Sustainable Finance training benchmark for private banking professionals will improve their ability to advise their clients on sustainable investments and help wealth flow to good causes. I encourage all private banks to use this benchmark as a guide as they find or make training to deepen their knowledge of sustainable finance."