MAS to Set Expectations on Credible Transition Planning by Financial Institutions

The Monetary Authority of Singapore (MAS) has published a press statement in which it reveals its plans to provide a new guidance for financial institutions in connection with their transition planning processes „to support credible decarbonization efforts by their clients“.
The guidelines will encompass both governance and institution’s client engagement procedures, aimed at effectively handling climate-related financial risks and facilitating the transition towards a net-zero economy. MAS will expect institutions to assess their clients‘ transition strategies diligently and on an individual basis and offer the necessary financing for credible plans, rather than engaging in across-the-board „de-risking“ measures.
When evaluating the implementation of transition plans by financial institutions, MAS will take into account that temporary growth in financed emissions might occur as a result of actions supporting favorable long-term climate outcomes. MAS expects to consult on the guidance later this year.
In same press statement, MAS also announces the establishment of the new Singapore Sustainable Finance Association (SSFA), which will consist of representatives from financial institutions, financial industry associations, relevant corporations, and service providers like ESG rating agencies. The Association of Banks in Singapore is taking the lead in coordinating and establishing the SSFA. The association’s primary objective is to „build a vibrant ecosystem for green and transition finance“ with an initial focus primarily on „voluntary carbon markets, transition finance, and blended finance“.
Speaking of blended finance, MAS also informs that together with other government agencies and industry partners it will explore platforms through which large amounts of blended financing can be provided for transition and green infrastructure projects in the region. MAS intends to mobilize capital from a variety of sources, including multilateral development banks and development finance institutions, which shall help attract conventional infrastructure financiers such as banks and institutional investors to Singapore. Further details will be published in due course, once more information is available.