MAS Unveils Net Zero Finance Action Plan
Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance, along with the Monetary Authority of Singapore (MAS) Deputy Chairman, announced the launch of MAS' Finance for Net Zero (FiNZ) Action Plan at the inauguration of the Sustainable and Green Finance Institute of the National University of Singapore.
The FiNZ Action Plan outlines MAS' strategies to mobilise financing to accelerate Asia's transition to net zero and decarbonisation efforts in Singapore and the region. It expands on MAS' Green Finance Action Plan introduced in 2019 by including transition finance, which encompasses investment, lending, insurance, and related services to progressively reduce carbon emissions in sectors such as power generation, buildings, and transportation.
The FiNZ Action Plan aims to achieve four strategic outcomes:
Data, Definitions & Disclosures: MAS will continue to promote consistent, comparable, and reliable climate data and disclosures to guide financial market participants in decision-making and safeguard against greenwashing risks.
MAS is working with the industry to co-create a code of conduct that will require ESG ratings and data product providers to disclose how transition risks are factored into their products. A public consultation to gather wider feedback will be conducted in the second half of the year.
MAS will also collaborate with relevant counterparts and stakeholders to enhance the interoperability of taxonomies across jurisdictions to facilitate cross-border green and transition financing flows.
Additionally, MAS has been working with the Singapore Exchange and other government agencies to establish a roadmap for key financial institutions (FIs) and listed companies to make disclosures aligned with the International Sustainability Standards Board (ISSB) on a risk-proportionate basis. MAS will partner with relevant bodies to enhance companies' capabilities in sustainability reporting.
Climate Resilient Financial Sector: MAS will engage with FIs to foster sound environmental risk management practices, deepen climate scenario analysis and stress testing to identify climate-related financial risks, and incorporate evolving international best practices in the supervision of FIs' transition planning.
Credible Transition Plans: To support FIs' adoption of science-based transition plans, MAS will collaborate with international partners such as the International Energy Agency to develop credible regional sectoral decarbonisation pathways. FIs can reference these pathways when setting emissions reduction targets and engaging with clients on decarbonisation initiatives.
Green & Transition Solutions & Markets: MAS will promote innovative and credible green and transition financing solutions and markets to support decarbonisation efforts and climate risk mitigation.
MAS will expand the scope of its sustainable bond and loan grant schemes to include transition bonds and loans, with safeguards in place to mitigate the risk of "transition-washing" and ensure alignment with internationally recognised taxonomy and transition finance principles. To promote transparency in the sustainable debt market, MAS will incentivise early adoption of entity-level sustainability disclosures by issuers or borrowers. MAS has set aside SGD15 million over the next five years until the end of 2028 for enhanced grant schemes. More details on these changes will be released shortly.
MAS will also extend the Insurance-Linked Securities (ILS) Grant Scheme until the end of 2025 to support the continued growth of catastrophe bonds and additional climate risk financing instruments such as sidecars and collateralised reinsurance arrangements. This will enable additional financing for protection against disaster risks to be raised from the capital markets. The SGD 15 million grant will defray the cost of issuing catastrophe bonds and the expanded suite of insurance-linked securities that focus on Asia risks.
Building on past efforts, MAS will scale blended finance in partnership with the private sector and philanthropic foundations to mobilise financing for the decarbonisation of carbon-intensive sectors, such as the managed phase-out of coal-fired power plants. In addition, MAS will support the development of carbon services and carbon credits markets in Singapore to channel financing towards carbon abatement and removal projects in Asia.
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