Green Growth and the Financial Sector: Singapore’s Early Steps

Associate Professor Simon TayChairman

Singapore Institute of International Affairs (SIIA)23 July 2018

Sustainable Development and the Financial Sector

• Global agenda on climate change and sustainable development

• Possibility of “stranded assets”

• Major economies in the West and in Asia have started to move and take leadership on green finance

Credit: COP PARIS/Flickr

Green Finance in ASEAN and Asia

• China: green finance part of its 13th Five-Year Plan (2016-2020); launched five pilot zones to promote green finance

• Indonesia: Sustainable Finance Roadmap in 2014; first Asian country to sell “green” bonds internationally

• Malaysia: largest Sustainable and Responsible Investment (SRI) market in Asia ex-Japan; second-largest Islamic fund market globally

Credit: Indonesia Financial Services Authority (OJK)

Singapore’s Motivations for Green Finance

• Singapore’s commitment to the Paris Agreement

• Transboundary Haze Pollution Act 2014

• Financial hub and infrastructure opportunities in the region

Credit: Tan Yi Han

Singapore’s Green Finance Efforts

Some examples include:

• The Singapore Exchange (SGX)’s Sustainability Reporting on a “comply or explain” basis

• Early examples of Green Bond issuances

• Monetary Authority of Singapore (MAS)’s Green Bond Grant Scheme

Other measures to achieve Green Growth

Some examples include:

• Carbon Tax

• Repricing water and energy resources

• Increase adoption of solar power

Credit: National Climate Change Secretariat (NCCS)

The Collaborative Initiative for Green Finance in Singapore• Started in 2017 by the SIIA and the UN Environment Inquiry

• Report: the Collaborative Initiative for Green Finance in Singapore: Singapore as a Green Finance Hub for ASEAN and Asia

Overall Findings

• The Singapore Government has signalled the intention to shift the economy towards sustainable development

• Only a small number of financial institutions might be considered at the leading edge of change towards sustainability

• Majority in the insurance sector are just starting to understand and explore the need for sustainability and related disclosures

Credit: Energy Market Authority of Singapore

Key Findings from the Banking Sector

• The Association of Banks in Singapore (ABS) released its Guidelines on Responsible Financing in 2015

• Singapore banks have received external training from institutions such as the World Wildlife Fund (WWF)

• MAS has included the banks’ sustainability practices in its supervisory assessments

Credit: The Association of Banks in Singapore

Recommendations and next steps

• Incentivise and expand bank lending with special allocations of capital

• Work towards an acceptable range or “band of green” definition or practices

• Capacity building throughout the value chain from creation to sales