SINGAPORE (THE BUSINESS TIMES) - In a move to guide companies through a green transition, the Green Finance Industry Taskforce (GFIT), convened by the Monetary Authority of Singapore (MAS), issued a proposed taxonomy to help Singapore-based financial institutions identify green activities.
Of the proposed definitions, a "traffic-light" system was suggested to help classify activities as green, yellow (transition) or red, according to their level of alignment with environmental objectives.
It also identified several environmental objectives and focus sectors to encourage financial institutions to adopt greener practices.
GFIT has invited interested parties to submit their comments on the taxonomy, which is available on the website of the Association of Banks in Singapore, by March 11.
"The transition to a low-carbon economy calls for collective action across sectors, where financial institutions such as banks play a key enabling role," said GFIT chairman Tony Cripps, who is also chief executive of HSBC Singapore.
Additionally, the task force also released a handbook on environmental risk management. This comes after MAS published a guideline last year on management of environmental risk to encourage banks to adopt a greener business model.
GFIT also said that it would work with industry associations to conduct workshops for financial institutions to help strengthen their capabilities in environmental risk management.
Mr Ravi Menon, managing director of MAS, said: "Our goal to make Singapore the leading green finance hub in Asia rests strongly on close public-private partnership.
"With MAS setting the expectations for sound environmental risk management and the industry coming together with practical solutions on how to meet these expectations, we will develop a more climate-resilient and environment-friendly financial system," he added.