Singapore yesterday underlined its resolve to help reduce greenhouse gas emissions, with its central bank committing US$1.8 billion ($2.4 billion) of the country's official foreign reserves to climate-related investment opportunities.
The Monetary Authority of Singapore also said it was working to safeguard the financial sector against environmental risks and to promote green finance.
"Finance is key to unlocking a sustainable future," said MAS managing director Ravi Menon yesterday. "It can support the transition to a less carbon-intensive economy and channel capital to green technologies and infrastructure."
As the guardian of Singapore official foreign reserves, he said, MAS is integrating climate risks and opportunities into its investment framework.
That is why it is placing US$1.8 billion with five asset managers to help Singapore build its capabilities in green finance. The announcement came alongside the release of MAS' first sustainability report, which outlines plans to help Singapore make an orderly transition to a low-carbon economy.
This makes MAS the first central bank in Asia, and the second globally after the Bank of England, to publish a standalone sustainability report covering environmental risk and sustainability efforts across all its functions and operations.
Sustainability was one of the key focus areas that will provide future growth opportunities, as highlighted by the Emerging Stronger Taskforce last month.
The five asset managers will drive regional sustainability efforts by launching new thematic funds around environmental, social and governance concerns.
They will also build capabilities in green finance through training programmes.
The asset managers will generate deeper green finance research customised for the region and explore green fintech solutions.
They are ramping up plans to build their Asia-Pacific hubs here and MAS expects they will be able to do so over the next few months.
Asset managers manage funds for individuals or organisations. The five picked by MAS were not named, in line with its practice.
MAS also seeks to enhance climate-related financial disclosures by firms. MAS already expects all banks, insurers and asset managers to make climate-related financial disclosures from June next year.
It will consult the industry later this year on how to transition these expectations into legally binding requirements.
The Singapore Exchange will also consult stakeholders on enhancing sustainability reporting guidelines for listed firms.
"We need to urgently enhance the quality and consistency of climate-related disclosures," said Mr Menon. He said these were critical for better pricing of climate-related risks.
MAS has also issued guidelines on environmental risk management to all financial institutions. It will conduct a review later this year on the progress in implementing the guidelines, Mr Menon said.
Meanwhile, the report gave updates on Singapore's efforts to develop as a green finance hub.
More than $11 billion of green, social and sustainability bonds have been issued here since 2017. Over $22.5 billion of green and sustainability linked loans have also been issued here from 2017 to last year.
The MAS chief said: "The climate crisis demands urgent, collective action to drastically reduce greenhouse gas emissions.
"The coming green revolution will involve all segments of the economy and society. Governments, businesses and individuals will all need to do their part."
