The Monetary Authority of Singapore released its inaugural sustainability report, laying out its battle plan to green the city-state’s finance sector and lead the energy transition in Asia.
The report, which consolidates previously announced policies by the central bank, highlights Singapore’s support in the fight against climate change by eliminating harmful emissions globally by the middle of the century. Those efforts include testing the climate resilience of its official reserve investments and deploying $1.8 billion to five asset managers as part of its Green Investments Programme.
“Singapore is firmly committed to doing its part in the global effort to reduce greenhouse gas emissions,” Ravi Menon, managing director of the MAS, said in a briefing Wednesday about the report, which he said is the first of its kind by a central bank in Asia.
Asian economies have a lot at risk through 2050 as they account for about half of global greenhouse gas emissions. According to the MAS, between $2.8 trillion and $4.7 trillion in economic growth could be lost each year due to the effects of extreme heat and humidity on labor productivity, and $1.2 trillion in capital stock could be damaged by flooding in any given year.
“The world needs to prepare for the greatest economic transformation since the industrial revolution,” the MAS said in the report. “There is opportunity for Asia to turn its vulnerabilities to climate risks into a tailwind for sustainable development, job creation and economic growth.”
For the MAS, that means helping financial institutions build resilience against environmental risk; building up green finance, including a growing green bond market; using climate risk and opportunity in its own investments in the country’s currency reserves; and lowering the authority’s carbon footprint by cutting energy use in MAS buildings worldwide and reducing business travel.
As part of those efforts, Menon said Wednesday that the MAS plans to report annually on its efforts to strengthen the climate resiliency of the country’s official reserves, which it manages. He added that more information on mandatory risk disclosures for companies will be announced in the coming months, without providing details.
The MAS expects all banks, insurers and asset managers operating in the city-state to make climate-related disclosures from June 2022, Menon said. Such reporting will be in line with international frameworks including the Task Force on Climate-Related Financial Disclosures recommendations, he said. The MAS also plans to conduct stress tests on the financial industry under a range of climate-change scenarios by the end of next year, Menon said.
The authority has been building the green bond market for years, including under a “Sustainable Bond Grant Scheme” from 2017 that has propelled the issuance of almost S$11 billion ($8.3 billion) in green, social, and sustainability bonds. That includes a $1.1 billion set of green bonds issued last year by Star Energy Geothermal Group, used in part to finance geothermal energy generation facilities in West Java, Indonesia.
In the annual budget speech earlier this year, Singapore’s government announced a further commitment to issuing green bonds for big infrastructure projects, with S$19 billion in public-sector work already identified for financing through green bond issuance.