Singapore to invest $2.7b in funds with green focus

Republic will also encourage growth in sustainability-linked loans: Ong Ye Kung

Education Minister Ong Ye Kung visiting ST Engineering's booth at the Singapore FinTech Festival yesterday. With him was Mr Tan Boon Leong, a senior system consultant (data analytics) from ST Engineering.
Education Minister Ong Ye Kung visiting ST Engineering's booth at the Singapore FinTech Festival x Singapore Week of Innovation and TeCHnology (SWITCH). With him was Mr Tan Boon Leong, a senior system consultant (data analytics) from ST Engineering. ST PHOTO: GIN TAY

Singapore will invest US$2 billion (S$2.7 billion) in funds that have a strong green focus as part of its ambition to be a leading centre for green finance in Asia and the world.

"Finance fuels the economy and business. It determines investment decisions, and it drives action. We must make finance green to drive climate action - mitigate and adapt to climate change," Education Minister Ong Ye Kung said at the opening of the fourth instalment of the annual Singapore FinTech Festival (SFF) yesterday.

He unveiled several new initiatives as part of the Monetary Authority of Singapore's (MAS) green action plan, which aims to place Singapore at the forefront of creating a greener financial system.

One of the initiatives is to invest more in green funds.

MAS will launch the Green Investments Programme, in which the central bank will invest with asset managers who are committed to deepening finance activities and capabilities in Singapore.

"This programme also supports MAS' efforts to generate sustainable long-term returns on its investment portfolio," said Mr Ong.

"It complements our broader range of initiatives to accelerate the growth of Singapore's green finance ecosystem," he added.

As part of the programme, MAS will allocate US$100 million to the Bank for International Settlements' green bond fund to support its global green finance initiatives.

Green finance involves making sure financial services such as borrowing and lending, as well as investing, deliver both returns and environmentally positive outcomes.

Prime Minister Lee Hsien Loong said in August that Singapore would need to spend $100 billion over the next 100 years to fight climate change and rising sea levels.

Mr Ong said that while Singapore accounts for only 0.11 per cent of global carbon emissions, it is determined to do its part to catalyse change. "We are... the only (country) in Asia to have introduced a broad-based carbon tax to put a price on emissions," he said, adding that Singapore is one of the few countries in the world to limit its car population with a zero-growth policy.

Other than investments, Singapore is also committed to making green lending a mainstream activity, said Mr Ong, who is also a board member of MAS.

To do this, MAS will develop incentives to encourage growth in green and sustainability-linked loans. It will roll out grant schemes to help firms defray the costs for developing sustainability frameworks and engaging external reviewers.

Singapore will also gear up its capabilities in green finance as the city state develops green solutions and markets.

Mr Ong said MAS will develop a scheme to support external reviewers, and rating agencies which assess and certify green financing instruments, in expanding their operations here.

The regulator will also support the setting up of think-tanks that would contribute to Asia-focused climate research which can be applied in the financial sector.

At the industry level, MAS will issue environmental risk management guidelines across the banking, insurance and asset-management sectors. These guidelines will encourage the right-pricing of loans and investments, and thereby promote new opportunities for green investment, said Mr Ong.

He added that Singapore will harness the power of fintech to spur green finance. Next year, green finance will be a key theme of the SFF's signature Global FinTech Hackcelerator programme, encouraging fintech start-ups to develop solutions around sustainability issues.

This year's SFF, at the Singapore Expo Convention and Exhibition Centre, is held in conjunction with the Singapore Week of Innovation and Technology, which runs until Friday. The event has attracted about 60,000 industry players and 1,000 exhibitors comprising technology start-ups, banks and major technology firms.

Follow ST on LinkedIn and stay updated on the latest career news, insights and more.

A version of this article appeared in the print edition of The Straits Times on November 12, 2019, with the headline Singapore to invest $2.7b in funds with green focus. Subscribe