Singapore to invest US$2 billion in green funds to drive climate action

MAS will allocate US$100 million to the Bank for International Settlements' Green Bond, to support its global green finance initiatives.
MAS will allocate US$100 million to the Bank for International Settlements' Green Bond, to support its global green finance initiatives.PHOTO: LIANHE ZAOBAO

SINGAPORE - 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 of green finance in Asia and globally.

"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," said Education Minister Ong Ye Kung at the opening of the fourth instalment of the annual Singapore FinTech Festival (SFF) on Monday ( Nov 11) at the Singapore Expo.

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.

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

One of the initiatives is to do more in investing in green funds.

MAS will launch a US$2 billion Green Investments Programme, where it will invest in funds that have a strong green focus in their investment strategies and 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 to support its global green finance initiatives.

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

To do so, 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.

These organisations will support the development of innovative green finance solutions, deepen our understanding of climate risks and enhance climate risk management in Singapore.

They will also train and groom talent in green finance.

At the industry level, MAS will issue Environmental Risk Management guidelines across banking, insurance and asset management sectors.

These guidelines will set standards on governance, risk management and disclosure.

They will encourage the right-pricing of loans and investments, and thereby promote new opportunities for green investment, said Mr Ong.

 

MAS will publish a consultation paper on the guidelines in the first quarter of 2020.

Mr Ong added that Singapore will also harness the power of fintech to spur green finance.

Next year, green finance will be a key horizontal theme for SFF's signature Fintech Hackcelerator programme, encouraging fintech start-ups to develop solutions around sustainability issues.

Mr Ong noted that finance, innovation and technology are forces for good, to help people overcome challenges and improve lives.

"It cannot be that being green and pursuing growth are irreconcilable," he said.

"Part of this solution is to make finance green because finance mobilises the resources of the world," he added.

SFF this year is held in conjunction with the Singapore Week of Innovation and Technology (Switch), running from Monday to Friday.

It has attracted around 60,000 industry players and 1,000 exhibitors comprising technology start-ups, banks and major technology firms.