On May 19th, 2021, Singapore's Green Finance Industry Task Force (GFIT), an industry-led initiative convened by the Monetary Authority of Singapore (MAS), issued a detailed implementation guide for climate-related disclosures by financial institutions (FIs) and a whitepaper on scaling green finance in the real estate, infrastructure, fund management and transition sectors. In addition, the GFIT has established a framework to help banks assess eligible green trade finance transactions and will launch a series of ESG-related capacity building workshops and e-learning modules from May 2021 to April 2022 for FIs and corporates.
In an announcement, Ms. Gillian Tan, Assistant Managing Director (Development and International) at the MAS, said:
"GFIT's initiatives to enhance climate-related disclosures and strengthen green capabilities will enable financial institutions to effectively develop green solutions and align their portfolios towards facilitating Asia's transition to a low carbon economy. These initiatives will also contribute to global efforts to achieve greater consistency and comparability in climate-related disclosures, as well as provide investors and market participants with the necessary information for climate risk analysis and investment decision-making."
Continue reading for more details on each of these significant new developments.
The implementation guide sets out best practices for banks, asset managers and insurance companies when producing climate-related disclosures in order to enhance the quality of FIs' climate disclosures and facilitate more consistent and comparable disclosures. Amidst the proliferation of ESG disclosure standards, the guide is not intended to set out another standard or framework – rather, it serves as a reference for FIs to use when making disclosures according to their chosen standard or framework (e.g., GRI, SASB, IIRC). The guidance aligns with the Recommendations of the Financial Stability Board's Task Force on Climate-Related Financial Disclosures (TCFD), one of the world's leading frameworks for climate-related financial disclosures, and will be updated from time to time as reporting practices evolve.
Importantly, the guide highlights noteworthy real-world disclosure practices by banks, asset managers and insurers to help participants in these industries benchmark their own performance and assess areas for improvement.
The whitepaper outlines recommendations to scale green finance in the real estate, infrastructure, fund management and transition sectors. These include a "green securitization platform" to scale sustainable infrastructure investments in the region and recommendations for the use of transition bonds and loans in the oil and gas, shipping and automotive sectors to support more sustainable practices. The GFIT intends to partner with industry associations, financial institutions and businesses to develop and implement the recommended proposals.
The framework for green trade finance and working capital provides a principles-based approach for banks to assess eligible green trade finance transactions, as well as specific guidance on recommended industry certifications for trade finance activities to qualify as "green". The MAS notes that two banks have already piloted four green trade finance transactions for renewable energy, recycling, agriculture and farming activities, to support businesses in greening their supply chains.
The GFIT will also launch a series of workshops and e-learning modules from May 2021 to April 2022 for FIs and corporates. The programs are intended to strengthen the capabilities of banks, asset managers and insurers in environmental risk management, enhance their environmental disclosures, deepen knowledge of green finance instruments and enable FIs and corporates to customize green financing solutions for transition sectors. The numerous course topics cover a range of ESG-related issues from "Governance and Strategy in Environmental Risk Management", which could help FIs comply with Singapore's Environmental Risk Management Guidelines, to "Introduction to Impact Investing".
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