Illustrative photo (Photo: straitstimes.com) Singapore (VNA) – The Monetary Authority of Singapore (MAS)has announced that to decarbonise the economy, Singapore will expand its focus, which is now solely on green finance, to the one that also includestransition finance by mapping out clear definitions, encouraging innovation andextending grants.
The policies that MAS intends to implement include developingsustainable debt markets through green and transformational solutions,improving the quality of data, and disclosure of information on environment,society, and governance while ensuring that financial institutions havereliable transition plans in place.
The authority will expand the scope of its sustainable bond and loan grantschemes to include transition bonds and loans, with safeguards in place tomitigate the risk of “transition-washing” and ensure alignment withinternationally recognised taxonomy and transition finance principles.
To promote transparency in the sustainable debt market, MAS willincentivise the early adoption of entity-level sustainability disclosures byissuers or borrowers. MAS has set aside 15 million USD over the next five yearstill the end of 2028 for the enhanced grant schemes.
It will extend the Insurance-Linked Securities (ILS) GrantScheme till the end of 2025 to support the continued growth of catastrophebonds and additional climate risk financings instruments such as sidecars andcollateralised reinsurance arrangements. This will enable additional financingfor protection against disaster risks to be raised from the capital markets.The 15 million USD grant will defray the cost of issuing catastrophe bonds andthe expanded suite of insurance-linked securities that focus on Asia risks.
The agency will scale blended finance, in partnership with the privatesector and philanthropic foundations, to mobilise financing for the decarbonisationof carbon-intensive sectors, for example, managed phase-out of coal-fired powerplants. In addition, MAS will support the development of carbon services andcarbon credit markets in Singapore, to channel financing towards carbonabatement and removal projects in Asia.
It has strongly promoted the financing of the transitionover the years, as non-green activities make up the bulk of the global economy,especially in Southeast Asia, which remains heavily dependent on coal toproduce electricity.
This new strategy could help Singapore become a transformativefinancial hub in the region. It can also connect the financial needs ofdeveloping economies with investors in developed capital markets. This is astrong signal showing that Singapore is serious about its commitment to a crediblegreen transition in Asia./.
