Sustainable investments have gone mainstream, and Singapore is taking steps to match the demand by growing a green bond market, National Development Minister Lawrence Wong said yesterday.

A green bond grant scheme will be introduced from June to kick-start the introduction of such bonds as a new asset class.

Green bond issuers give investors the assurance that their funds will go to projects that deliver environmental benefits.

Mr Wong told a gathering of asset mangers at the Investment Management Association of Singapore's (IMAS) annual conference: "The global green bond market has grown rapidly over the years, reaching more than US$80 billion (S$112 billion) in 2016."

China, for example, has fuelled the growth of the green bond market, with the development of green finance featuring strongly in its latest five-year plan.

Under the green bond grant scheme, issuers can offset up to $100,000 of costs incurred from obtaining an independent review based on international green bond standards. To qualify, the bonds can be denominated in any currency but must be issued in Singapore, with a minimum size of $200 million and tenure of at least three years.

Mr Tony Lewis, head of HSBC Securities Services Singapore, said: "Green finance is a rapidly growing field, spurred on by consensus that more needs to be done to combat climate change. Encouraging more issuers to tap into the green bond market should help kick start interest in this asset class."

Green bonds are just the first among a wider range of sustainability-oriented benchmarks, funds and products that the Monetary Authority of Singapore (MAS) is seeking to promote here, said Mr Wong, who is also Second Minister for Finance.

He also urged asset managers to start incorporating sustainability factors into their investment processes. "The global sustainable investment market has nearly doubled in size over the last two years.

"A recent study by Morgan Stanley found that more than 70 per cent of investors surveyed were interested in sustainable investments," he said.

In a separate initiative to grow Singapore's asset management industry, MAS has also begun a public consultation to introduce a new corporate structure for investment funds.

By building a framework to accommodate open-ended investment companies, Singapore will be able to attract asset managers to domicile more of their funds here, instead of in London, for example.

IMAS executive director Michael Lim, said: "We welcome MAS' leadership on this issue and look forward to contributing to the consultation process."