Industry Taskforce launches Third Consultation on Green and Transition Taxonomy

The Monetary Authority of Singapore (MAS) has published a news release to announce that the Green Finance Industry Taskforce (GFIT) has issued another, a third consultation paper as regards a Green and Transition Taxonomy in Singapore.
To recall in a first consultation paper the Taskforce proposed a classification system for activities that are considered sustainable. The classification would be based on a „traffic-light” system which sets out how activities can be classified as green (mitigating the risks of climate change), yellow (transition), or red (not contributing to carbon neutrality) according to their level of alignment with prescribed environmental objectives. Such classification shall be used by financial institutions when adopting and implementing environmental risk management policies and measures.
In a second consultation, the Taskforce sought feedback on corresponding metrics for the following key industries: energy, transport, and real estate. Activities in these sectors account for nearly 90% of greenhouse gas emissions and were therefore up for classification first. This consultation also included guidelines as to how asset managers, banks, and insurance undertakings are expected to take into account these classifications, e.g. for purposes of loan strategies, portfolio alignments, or product offering by insurers.
In this third consultation now, the GFIT seeks comments on a proposed metrics for the classification of activities in the remaining industrial sectors, namely:
• The (Production) Industry,
• Information and Communications Technology,
• Waste & Water,
• Agriculture & Forestry, and
• Carbon Capture and Storage.
Unlike in the second consultation, the third document does not yet contain any corresponding guidance for asset managers, banks, or insurance undertakings. Also up for consultation is a new „Do No Significant Harm (DNSH) criteria list“ which identifies – for each noted activity in the metrics – conditions that must be met in order not to cause any significant adverse impact on the other environmental objectives, namely
1. the adaptation to climate change, that is efforts of third parties to also adopt measures to mitigate climate change,
2. the protection of healthy ecosystems and biodiversity,
3. the promotion of resource resilience and circular economy (e.g. via recycling or the production / use of long lasting goods, and
4. the prevention of pollution.
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The consultation closes on March 15, 2023.