MAS Launches Finance for Net Zero Action Plan

The Monetary Authority of Singapore (MAS) has published a press statement to inform that it has finalized its new Finance for Net Zero Action Plan (FINZ) which builds upon its 2019 Green Finance Action Plan and expands its scope to cover transition financing. According to MAS, transition financing refers to „investment, lending, insurance, and related services to progressively decarbonise areas such as power generation, buildings, and transportation“.
The key outcomes MAS seeks to achieve with its new FINZ plan are the following:
(1) Data, Definitions & Disclosures: A key objective of MAS is to ensure that data and disclosures on climate change are consistent, comparable, and reliable so that financial market players can make informed decisions and avoid the risks associated with greenwashing. To achieve this objective, MAS is working on the creation of a code of conduct for ESG ratings and data product providers to require them to disclose „how transition risks are factored into their products“. Additionally, MAS will work with other regulatory authorities and international organizations to ensure that corresponding taxonomies are aligned cross-border. Finally, in collaboration with the Singapore Exchange and other government agencies, MAS is developing a roadmap to support key financial institutions (FIs) and listed companies in making ISSB-aligned disclosures (International Sustainability Standards Board – aligned disclosures).
(2) Climate Resilient Financial Sector: In an effort to foster sound environmental risk management practices among financial instititions, MAS will continue to work with FIs to ensure that they are able to adequately identify climate-related financial risks, e.g. by conducting climate scenario analysis and stress testing. Also, MAS plans to adopt some best practices for the industry based upon international standards.
(3) Credible Transition Plans: MAS will work with international partners like the International Energy Agency to facilitate the creation of reliable regional sectoral decarbonization pathways. These pathways may be used by FIs in adopting or adjusting their own transition plans as regards emission reduction or when engaging with clients about their targets in that matter.
(4) Green & Transition Solutions & Markets: MAS will foster and promote transition financing, e.g. by expanding or extending several existing grant schemes. Specifically, MAS will „expand the scope of its sustainable bond and loan grant schemes to include transition bonds and loans“ and extend the current Insurance-Linked Securities (ILS) Grant Scheme up to year-end 2025. Latter provides that the government assumes certain costs related to the issuance of catastrophe bonds. Finally, MAS will also engage with stakeholders to support further financing arrangements for the decarbonization of carbon-intense industries and will support the setup of the carbon credits market, among others, to facilitate the development of carbon removal projects.
To conclude, MAS states that is aware that these goals are hardly achievable without further FinTech developments and a far reaching knowledge base among the workforce. Thus, it will put a key focus on these areas, including further investments.