SINGAPORE - The Singapore Exchange (SGX) will spend $20 million on a multi-year plan to enhance its environmental, social and governance (ESG) capabilities and initiatives.
Half of this amount will go towards new ESG-focused products, services and platforms - spanning across asset classes including fixed income, equities, commodities and indices, said Mr Loh Boon Chye, chief executive officer of SGX on Tuesday (Dec 15).
The other half will be channelled into capacity building for the local financial ecosystem to catalyse change for a sustainable future, strengthening SGX's internal capabilities and increasing its corporate social responsibility commitments, he said at a virtual media briefing.
In a separate statement, SGX said all sustainability initiatives will be housed under a newly launched platform - SGX First (Future in Reshaping Sustainability Together).
SGX First is Asia's only multi-partner, multi-asset exchange-led sustainability platform, it said.
Mr Loh said initiatives under the $20 million plan, including ESG-focused investment and risk management products, will be rolled out in the next two to three years - starting with the launch of four futures contracts in partnership with FTSE Russell in January 2021.
"We want to and can push the sustainability agenda further, and as a market operator and regulator, we can influence and drive greater commitment to sustainability and greener financial markets," he said.
SGX said the new futures contracts are subject to regulatory approvals and based on ESG-themed indices such as the FTSE Emerging Markets, FTSE Asia ex-Japan, FTSE Emerging Markets Asia and FTSE Blossom Japan.
The FTSE ESG indices will have risk and return characteristics similar to benchmark market-cap weighted indexes. They will maintain industry neutrality and deliver added benefit of improved ESG metrics.
These contracts will act as risk management tools to facilitate ESG integration into investment strategies and provide investors with a hedging instrument for ESG-tracking investments.
In the fixed income market, SGX will form an exclusive partnership in Asia for the Nasdaq Sustainable Bond Network Initiative.
The network is a source of information on green, social and sustainability bonds, both listed and unlisted, and helps global investors conduct due diligence, selection and monitoring of these bonds.
SGX plans to enhance data access and transparency of sustainable bonds in Asia Pacific by bringing regional issuers onto the network.
Ms Gillian Tan, assistant managing director for markets development at the Monetary Authority of Singapore, said that SGX's planned roll-out of new ESG investment and risk management products across different asset classes will help accelerate sustainable development in Asia.
"SGX can play a critical role as the gateway for global investors to access the significant opportunities presented by Asia's transition to a low carbon sustainable future," she said.
