A Financial Sector Resilient to Environmental Risk

MAS, as Singapore’s integrated financial regulator, is responsible for well-functioning financial markets and fostering a sound financial sector through its prudential oversight of financial institutions (FIs) in Singapore. To strengthen our FIs’ resilience to environmental risks, MAS published a set of supervisory guidance on how FIs should manage such risks. MAS also works with FIs to enhance their environmental risk management capabilities, and to promote market transparency and investor protection through high quality sustainability-related disclosures by securities issuers. We aim to support the financial sector’s successful transition to a low-carbon economy.

Environmental Risk Management Guidelines

MAS issued Guidelines on Environmental Risk Management to enhance financial institutions’ resilience to environmental risks

The Guidelines, issued in December 2020, cover environmental risks beyond climate change, including pollution, loss of biodiversity and changes in land use. They set out our supervisory expectations for banks, insurers and asset managers on their governance, risk management and disclosure of environmental risks, and are calibrated to each sector’s business activities. The Guidelines also aim to strengthen financial institutions’ (FIs) role in supporting the transition to an environmentally sustainable economy, in Singapore and in the region.

Through virtual townhalls, MAS has actively shared with the industry our policy thinking and supervisory approach in working with FIs to implement the Guidelines. We have also provided detailed responses to the feedback received from the public consultation on the Guidelines.

MAS has provided FIs with a transition period of 18 months, up to Q2 2022, to implement the Guidelines. Meanwhile, MAS will continue to engage key FIs on their implementation progress and incorporate environmental risk in our supervisory assessment of FIs.

Enhance environmental risk management practices

The Green Finance Industry Taskforce (GFIT), convened by MAS, also issued an Environmental Risk Management handbook in January 2021. The handbook offers guidance to banks, insurers and asset managers on best practices in environmental risk management and supports the financial industry’s efforts to implement MAS’ Guidelines on Environmental Risk Management. GFIT is also working with industry associations to conduct workshops for FIs, to help strengthen their capabilities in environmental risk management.

Improve climate-related disclosures 

GFIT has issued a detailed implementation guide for climate-related disclosures, which sets out best practices that are aligned with the recommendations of the Financial Stability Board’s Task Force on Climate-Related Financial Disclosures (TCFD). The guide also outlines specific disclosure practices for the banking, insurance and asset management sectors, taking into consideration the different approaches that individual sectors could take. The guide will help to enhance the quality of climate-related disclosures and facilitate more consistent and comparable disclosures across FIs.