The Monetary Authority of Singapore (MAS) has announced its intention to establish supervisory expectations aimed at guiding financial institutions'(FIs) transition planning processes and facilitating credible efforts by their clients to decarbonise their operations.

The move comes as MAS seeks to incentivise both financial institutions and their customers to take early action in support of long-term climate-positive outcomes.

Speaking at the Financing Asia's Transition (FAST) Conference, Mr. Tharman Shanmugaratnam, Senior Minister and Coordinating Minister for Social Policies and Chairman of MAS, emphasised the importance of financial supervisors incentivising institutions to align their strategies with longer-term climate goals. MAS will issue a consultation paper later this year outlining guidance on transition planning that will cover governance frameworks and client engagement processes.

The guidance will focus on helping financial institutions manage climate-related financial risks and enable the transition toward a net-zero economy. Instead of indiscriminately de-risking specific sectors, institutions will be encouraged to carefully assess clients' transition plans and provide necessary financing where those plans are deemed credible. Recognising that short-term emissions may increase during the transition, MAS will review institutions' implementation of these plans from a broader perspective.

In collaboration with other government agencies, MAS is exploring platforms to channel blended finance at scale into transition and green infrastructure projects within the region. The aim is to bring together patient, concessionary capital from various sources, including philanthropies, multilateral development banks, development finance institutions, and donor partners. This collaboration will help attract more conventional infrastructure financiers, such as banks and institutional investors, further supporting sustainable projects.

Building upon the successes of the Green Finance Industry Taskforce, MAS and the financial industry are working to establish the Singapore Sustainable Finance Association (SSFA). This association will foster a vibrant ecosystem for green and transition finance, with a particular focus on scaling voluntary carbon markets, transition finance, and blended finance. Representatives from financial institutions, industry associations, relevant corporates, and ESG rating agencies will form the SSFA, led by the Association of Banks in Singapore.

The FAST Conference, jointly organised by MAS, BlackRock, and Temasek, brought together key decision-makers from financial institutions and the real economy to drive the advancement of green and transition finance. Discussions at the conference revolved around climate financing opportunities, building net-zero portfolios, establishing a trusted global carbon market, phasing out coal-fired power plants in Asia, and leveraging philanthropic capital.

Alongside the FAST Conference, MAS launched the Finance for Net Zero (FiNZ) Connect series of roundtables and workshops. These events aim to facilitate in-depth discussions within specific sectors and develop financing solutions relevant to Asia's context. The series, held throughout the year, complements the FAST Conference by fostering collaboration across the ecosystem. Previous roundtables focused on achieving Singapore's 2050 net-zero goal and decarbonising the maritime sector.

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Following the FAST Conference, MAS partnered with BlackRock, Convergence, the Global-Asia Insurance Partnership (GAIP), and the Glasgow Financial Alliance for Net Zero (GFANZ) Asia Pacific Network to organise four FiNZ Connect roundtables. The discussions centred around financing solutions for decarbonising the maritime sector, the managed phase-out of coal, and the roles of insurers and philanthropies in scaling blended finance for the transition.

The FAST Conference, along with the FiNZ Connect series, was co-hosted by MAS as part of Ecosperity Week 2023. The events underscored the urgent need for synergistic collaboration among the public, private, and philanthropic sectors to mobilise capital and drive practical financing solutions that support the net-zero transition in Asia and its broader.

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Source: MAS