MAS invites feedback on proposed green finance guidelines
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Businesses which do not manage their environmental risk adequately could find themselves facing higher borrowing costs or limits on their loans down the road, if proposed guidelines by the Monetary Authority of Singapore (MAS) yesterday are accepted and implemented.
Boards and senior management of financial institutions are also expected to incorporate environmental considerations into their strategies, business plans and product offerings, and to maintain effective oversight of the management of environmental risk, said MAS. It launched a public consultation yesterday on these guidelines, which were co-created with financial institutions (FIs) and industry associations, and are set out in three consultation papers on environmental risk management for banks, insurers and asset managers.
MAS said the guidelines aim to enhance FIs' resilience to environmental risk and strengthen the financial sector's role in supporting the transition to an environmentally sustainable economy here and in the region.
Banks should develop a risk-management framework, and put in place "robust policies and processes" to manage the financial and reputational impact of environmental risk. In this regard, banks should identify, assess, mitigate and monitor material environmental risk at a customer and portfolio level, said MAS.
For transactions with higher environmental risk, MAS proposed that banks undertake enhanced due diligence, and escalate to an internal committee or appointed individual for approval, where applicable. The public consultation papers are on MAS' website and comments on the proposed guidelines can be submitted by Aug 7.
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