In December 2020, MAS issued the Guidelines on Environmental Risk Management (the Guidelines) that established a common understanding on the management of environmental-related risks in a risk-proportionate manner. The Guidelines set out MAS’ supervisory expectations on the effective governance, robust risk management and meaningful disclosure of environmental-related risks. MAS actively engages FIs on their progress towards adhering to the Guidelines. MAS also partners GFIT to collectively uplift industry practices in environmental risk management.

Climate-related events and their associated risks are subject to significant uncertainty in terms of their timing, frequency, or severity. Given these uncertainties, stress testing and scenario analysis are useful tools for assessing the potential impact of climate risks on financial institutions and the broader economy. MAS continues to encourage the development of climate-related risk assessment capabilities by featuring thematic climate scenarios in the Industry-Wide Stress Test. Given the nascent stage of research in quantifying climate risks, MAS’ work on climate stress testing and climate-related modelling will involve a multi-year iterative process in partnership with industry.

Having consistent, comparable and reliable disclosures from corporates will allow FIs to better understand and assess the impact of environmental and climate-related risks, on their underwriting and asset portfolios. MAS continues to take steps to enhance environmental and climate-related disclosure standards to promote market transparency and facilitate the reallocation of capital toward sustainable outcomes. Given the interconnected nature of the global financial system, it is not practical or effective to improve corporate sustainability-related disclosures in isolation. It is of paramount importance that Singaporean corporates and FIs align their sustainability reporting practices with recognised international frameworks and standards, such as the TCFD recommendations and the upcoming International Sustainability Standards Board (ISSB) standards, to ensure comparable and consistent disclosures globally. To this end, MAS will consult on introducing mandatory disclosure requirements for FIs, as soon as a global baseline sustainability reporting standard is established by the ISSB, as expected by the end of this year. MAS also works with international organisations like the International Organization of Securities Commissions (IOSCO) to enhance the quality of sustainability-related disclosures and securities issuers worldwide.

Network for Greening the Financial System (NGFS)

MAS Managing Director, Mr Ravi Menon, was appointed as the Chair of the NGFS for a two-year term starting in January 2022. The NGFS was established in 2017 and comprises a voluntary grouping of central banks and supervisors. As of 14 June 2022, the NGFS consists of 116 members and 19 observers. It has been playing a leading role to expand and strengthen the global efforts towards greening the financial system. NGFS’ efforts are focused on improving the resilience of the financial system to climate-related and environmental risks, and encouraging the scaling up of the financing flows needed to support the transition towards a sustainable economy. To this end, NGFS defines and promotes best practices to be implemented within and outside of the Membership of the NGFS and conducts or commissions analytical work on green finance. 

MAS is one of the eight founding members of the NGFS and has been an active participant in its steering committee and across its workstreams. 

In 2021, MAS led the workstream on microprudential and supervision, which provides guidance for supervisors on incorporating climate and environmental risks within their supervisory framework. These efforts culminated in the issuance of a progress report on the NGFS’ Guide for Supervisors that highlighted the progress made by supervisors in the integration of climate-related and environmental risks in their supervisory activities, a report on the progress in capturing Climate-related Risk Differentials, and further development of the NGFS’ training programme for supervisors.

MAS supports the Climate Training Alliance (CTA), a portal for training on climate risks for central banks and supervisors coordinated under the COP26 agenda and supported by the NGFS’ capacity building programme. 

International Association of Insurance Supervisors (IAIS)

The IAIS is the global standard-setting body responsible for developing and assisting in the implementation of principles, standards and other supporting material for the supervision of the insurance sector. In September 2021, the IAIS established the Climate Risk Steering Group (CRSG). The CRSG is responsible for the overall coordination of the IAIS’ work on climate risk. MAS was appointed as the chair of the CRSG.

The CRSG has formed three workstreams, which have respectively undertaken: (i) a gap analysis of the Insurance Core Principles and supporting material to consider whether changes need to be made to address climate risks; (ii) a stocktake of member jurisdictions’ work on climate scenario analysis to assess the need for further work to support insurance supervisors to better assess climate risks; and (iii) an assessment of data elements that could be added to the IAIS’ Global Monitoring Exercise to provide an annual insight of risks to the insurance sector from climate change.

Sustainable Insurance Forum (SIF)

MAS is a founding member of the UN-convened SIF. Launched in 2016, SIF is a global network of insurance supervisors and regulators, and a platform for international collaborative action on sustainability issues including climate change risks, and works closely with the IAIS.

The SIF work programme for 2021-2023 includes mainstreaming of climate risks into actuarial processes, studying the impact of climate-related risks on the insurability of assets and developing a report on how biodiversity loss can translate into financial risks for the insurance sector. The report on biodiversity loss was published in November 2021. MAS has been actively involved in the development of SIF’s reports.

Basel Committee on Banking Supervision (BCBS)

The BCBS is a global standard-setter for the prudential regulation of banks and provides a forum for regular cooperation on banking supervisory matters. Its membership comprises central banks and bank supervisors from 28 jurisdictions. MAS participates in the BCBS Task Force on Climate-Related Financial Risks (TFCR), which has published analytical reports on transmission channels and measurement methodologies of climate-related financial risks.  MAS is co-leading the supervision workstream, which has published the Principles for the effective management and supervision of climate-related financial risks in June 2022. The Principles aim to promote a principles-based approach to improving both banks' risk management and supervisors' practices related to climate-related financial risks.

Financial Stability Board (FSB)

The FSB is an international body that coordinates national financial authorities and international standard-setting bodies as they work toward developing strong regulatory, supervisory and other financial sector policies. MAS is a member of the FSB Steering Committee and Plenary as well as the FSB Standing Committee on the Assessment of Vulnerabilities (SCAV) Climate Vulnerabilities and Data Group, which supports SCAV’s work on climate-related vulnerabilities analysis and data.

The FSB has developed a comprehensive roadmap for addressing climate-related financial risks, which was endorsed by the G20 Finance Ministers and Central Bank Governors meeting in July 2021. The roadmap covers four main interrelated areas:

• Firm-level disclosures, as the basis for the pricing and management of climate-related financial risks at the level of individual entities and market participants;

• Data, using consistent metrics and disclosures, which provide the raw material for the diagnosis of climate-related vulnerabilities;

• Vulnerabilities analysis, which provides the basis for the design and application of regulatory and supervisory frameworks and tools; and

• Regulatory and supervisory practices and tools, that allow authorities to address climate-related risks to financial stability in an effective manner. 

International Organization of Securities Commissions (IOSCO)

MAS co-led a Technical Expert Group (TEG) with the US SEC within the IOSCO Sustainable Finance Task Force (STF), to inform IOSCO’s potential endorsement of future standards issued by the ISSB.  The ISSB, established on 3 November 2021, aims to develop a comprehensive global baseline standard for high-quality sustainability-related disclosures. It has received support from the Finance Ministers and Central Bank Governors of 41 jurisdictions, including Singapore. IOSCO’s endorsement would facilitate IOSCO members’ use of the ISSB standards in their respective jurisdictions, and enhance the consistency and comparability of sustainability-related disclosures. 

International Platform on Sustainable Finance (IPSF)

The IPSF published its inaugural annual report in October 2020 which outlines global trends and efforts in member jurisdictions to scale up the mobilisation of private capital towards environmentally sustainable investments. MAS represents Singapore at the IPSF Steering Committee and taxonomy workgroup.

G20 Sustainable Finance Working Group (SFWG)

The G20 re-established the Sustainable Finance Study Group and upgraded it to the G20 SFWG in 2021. Singapore, represented by the MAS and MOF, participates in the G20 SFWG which seeks to scale up sustainable finance, to support the objectives of the 2030 Agenda for Sustainable Development and goals of the Paris Agreement. The group has developed a multi-year Sustainable Finance Roadmap (“the Roadmap”), with an initial focus on climate.

ASEAN Finance Ministers and Central Bank Governors (AFMGM)

The ASEAN Finance Cooperation track helmed by the AFMGM is committed to strengthen economic growth and promote financial stability, by forging greater economic and financial integration within the ASEAN Economic Community. The sustainable finance related work is primarily carried out by four sectoral bodies in the ASEAN Finance Cooperation track. These are:

• The ASEAN Capital Markets Forum (ACMF)The ACMF is a high-level grouping of capital market regulators from all 10 ASEAN jurisdictions, which aims to develop a deep, liquid and integrated regional capital market. and the Working Committee on Capital Market Development (WC-CMD)The WC-CMD comprises senior officials from ASEAN capital market regulators, Ministries of Finance, and Central Banks. The WC-CMD is tasked with implementing capital market development and capacity building initiatives to achieve the long-term goal of a more integrated ASEAN capital market. that cover the capital markets sector;
• The ASEAN Insurance Regulators Meeting (AIRM)The ASEAN Insurance Regulators’ Meeting (AIRM) is a grouping of the ASEAN insurance regulators. that covers the insurance sector; and
• The ASEAN Senior Level Committee (SLC)The ASEAN Senior Level Committee (SLC) for Financial Integration is a high-level grouping of the ASEAN central banks on Financial Integration that covers the banking sector.

The ACMF aims to promote corporate sustainability and institutional investor disclosures, explore transition standards, develop sustainable fund standards and improve market access for sustainable products. 

The WC-CMD is implementing the recommendations in the Report on Promoting Sustainable Finance in ASEAN. These include developing a conversation pack to promote “Sustainable Finance First for Sustainable Projects”; increasing engagement with the private sector through the setting up of the Industry Advisory Panel (IAP) jointly with the ACMF.
   
MAS is the chair of the AIRM in 2021/22. Sustainability featured prominently at the November 2021 AIRM discussions. AIRM will enhance capacity building for regional insurance regulators to improve their technical knowledge and proficiency on climate risk issues, and has identified sustainability/climate risk as a priority technical assistance need in the ASEAN Insurance Training and Research Institute’s workplan for 2022.  

The SLC has prioritised sustainable banking as one of its key agenda items, and has established a Task Force for Sustainable Finance to take forward the recommendations from the Report on the Role of ASEAN Central Banks in Managing Climate and Environment-related Risks. MAS has assumed Co-Chairmanship of the SLC in April 2022. In the coming year, the SLC will be ramping up capacity building for sustainable finance for regulators and central bank personnel; developing an ASEAN Green Map for a coherent approach to manage climate and environment-related risks; and supporting the development of the ASEAN Taxonomy under the auspices of the ASEAN Taxonomy Board (ATB).

Executives’ Meeting of East Asia-Pacific Central Banks (EMEAP)

EMEAP is a cooperative forum of eleven central banks and monetary authorities in the East Asia and Pacific region.

The EMEAP Monetary and Financial Stability Committee (MFSC) has identified Sustainable Finance as a key area of strategic interest for EMEAP members. As co-Vice Chair of the MFSC, MAS takes the lead in curating the Sustainable Finance agenda at MFSC meetings, where the impact on environmental risks and vulnerabilities in financial stability, as well as the implications of climate change on monetary policy have been discussed.   

BIS Innovation Hub Singapore Centre 

MAS and the BIS Innovation Hub Singapore Centre are collaborating on Project Viridis, which aims to help financial sector supervisors develop deeper understanding and insights on banks’ exposures to green/non-green assets. This will serve as a basis for supervisory discussions with banks on their climate risk measurement and methodologies, including the requisite data sources, and the means to assess regulatory exposure data for climate-related risks.