MAS-Led Consortium Develops AI-Powered System to Support Sustainable Finance in Real Estate Sector

The Monetary Authority of Singapore (MAS) has published a press release to inform of the introduction of a new minimum viable product (MVP) to aid banks in utilizing artificial intelligence (AI) for issuing sustainability-linked loans (SLLs) in real estate. Developed by the NovA! consortium, which was launched in 2022 as part of the National AI Programme in Finance, this MVP aims to address challenges faced by banks in setting accurate sustainability performance targets (SPTs), combating greenwashing, and improving efficiency in loan processes.
The first phase of Project NovA! tackled these challenges by creating an AI-powered system with three key features:
(1) Facilitating target setting: AI technology uses data from various sources to help banks set key performance indicators (KPIs) and establish practical SPTs by comparing properties and industry benchmarks.
(2) Monitoring performance: The system continuously compares a building’s energy consumption data with agreed SPTs of borrowers, allowing banks to swiftly identify discrepancies to ensure that green loans perform as intended and so to prevent greenwashing.
(3) Enhancing processing: Utilizing natural language processing, the system extracts sustainability information from diverse sources, including information on carbon emissions of borrowers. This aids banks in making informed decisions without manual processing disclosure documents of borrowing firms.
MAS‘ next phase will involve collaborating with the Building and Construction Authority (BCA) to integrate data from BCA’s Super Low Energy Building database. This integration will allow NovA! to access country-wide data on green buildings, aiding in identifying green projects, monitoring SPTs relating to buildings in real-time, and accelerating green financing in the real estate sector. Furthermore, NovA! aims to extend its AI capabilities to support sustainable financing in other sectors like power and manufacturing.