Industry taskforce proposes taxonomy and launches environmental risk management handbook to support green finance
Singapore, 28 January 2021… The Green Finance Industry Taskforce (GFIT), convened by the Monetary Authority of Singapore (MAS), issued today a proposed taxonomy for Singapore-based financial institutions to identify activities that can be considered green or transitioning towards green. GFIT also launched today a handbook on implementing environmental risk management for asset managers, banks, and insurers.
2 GFIT comprises representatives from financial institutions, corporates, non-governmental organisations, and financial industry associations
Consultation on green and transition taxonomy
3 GFIT has issued a consultation paper setting out a taxonomy for Singapore-based financial institutions to identify and classify activities that can be considered green or in transition. Compared to other taxonomies, a key feature of the proposed taxonomy is that it encompasses transition activities that allow for a progressive shift towards greater sustainability while taking into account starting positions and supporting inclusive economic and social development.
4 The consultation seeks feedback on GFIT’s recommendations on the environmental objectives, focus sectors, and a “traffic-light” system which sets out how activities can be classified as green, yellow (transition), or red according to their level of alignment with environmental objectives. The taxonomy references international best practices and adapts them to the Asian context where relevant.
5 GFIT will develop, in its next phase of work, a combination of principle-based criteria and quantifiable thresholds for activities. This will provide clarity and ease the implementation of the taxonomy by financial institutions.
Handbook on implementing environmental risk management
7 GFIT has also issued a handbook (
8 GFIT will work with industry associations to conduct workshops for financial institutions, to help strengthen their capabilities in environmental risk management.
9 In addition, GFIT is exploring technology solutions for financial institutions to enhance the quality of their climate-related disclosures. GFIT also aims to pilot innovations that seek to solve current challenges in mobilising green finance across sectors. These resources will complement the taxonomy and handbook.
10 Mr Ravi Menon, Managing Director, MAS, said, “Our goal to make Singapore the leading green finance hub in Asia rests strongly on close public-private partnership. With MAS setting the expectations for sound environmental risk management and the industry coming together with practical solutions on how to meet these expectations, we will develop a more climate-resilient and environment-friendly financial system. I congratulate GFIT for providing our financial institutions a clear taxonomy and a practical toolkit to manage environmental risks and support Asia’s journey towards greater sustainability.”
11 Mr Cripps said, “The transition to a low-carbon economy calls for collective action across sectors, where financial institutions such as banks play a key enabling role. This is where the GFIT comes into play – bringing together industry leaders, experts, and practitioners across banking, insurance, and asset management to help realise the Republic’s vision to be a leading green finance centre that helps finance Asia’s transition to a sustainable future.”