Finance for Net Zero

As the devastating effects of the climate crisis unfold across many parts of the world, decarbonisation has become an utmost priority. The increased global momentum around the net zero transition is encouraging. As of October 2022, 85 countries have announced their net zero aspirations. Singapore has also announced our new national climate target to reach net zero by 2050, as well as revised our Nationally Determined Contribution, pledging to reduce emissions to around 60 MtCO₂e in 2030 after peaking emissions earlier.

However, the current state of play will not get the world to net zero by 2050. The recent Intergovernmental Panel on Climate Change's ("IPCC") Sixth Assessment Report provides a harrowing reminder that unless the world raises the level of climate ambition and action, we will likely exceed the 1.5 degrees Celsius temperature goal. The urgency to act bolder and faster to catalyse the climate transition is clear.

This is especially the case for Asia. The region accounts for about half of global greenhouse gas emissions, and 84% of the region’s energy supply still comes from fossil fuels. A just and inclusive transition to net zero in Asia will go a long way in charting the path to a low-carbon world.

Finance is a critical lever in accelerating Asia’s transition to a greener future, but the world is simply not investing enough in transition.

Over the past year, MAS has worked with industry and other partners on key sustainability initiatives, expanding on the refreshed Finance for Net Zero ("FiNZ") Action Plan launched in April 2023. The FiNZ Action Plan sets out MAS’ strategies to mobilise financing to catalyse Asia’s net zero transition and decarbonisation activities in Singapore and the region. It expands the scope of MAS’ Green Finance Action Plan ("GFAP") launched in 2019 to include transition finance, which is vital for funding the necessary infrastructure and technology required to decarbonise the economy.

Key initiatives in 2022/2023 include:

• Climate Resilient Financial Sector: Announced plans to set supervisory expectations on credible transition planning by financial institutions; and conducted climate scenario analysis exercise for key banks and insurers under Industry-Wide Stress Test;
• Data, Definitions & Disclosures: Launched public consultations on Singapore-Asia Taxonomy to align definitions of green and transition activities; and issued disclosure and reporting guidelines for retail Environmental, Social and Governance ("ESG") funds to mitigate greenwashing risks;
• Green & Transition Solutions and Markets: Enhanced MAS’ Sustainable Bond and Loan Grant Schemes to support transition instruments; and launched Convergence’s Asia Climate Solutions Design Grant to scale blended finance; 
• Green FinTech: Announced plans to extend ESGenome’s capabilities to support SMEs’ sustainability disclosures.

Internally, MAS is working towards a sustainable organisation through internal initiatives aimed at reducing MAS’ own carbon footprint. This includes initiating a net zero building feasibility study for the MAS Building and Currency House to achieve net zero carbon emissions for our buildings’ operations by 2045, incorporating environmental sustainability criteria in evaluation of large tenders, and implementing initiatives such as carbon budget for air travel and “Fit-for-Gifting” currency notes to reduce MAS’ Scope 3 carbon emissions. 

As the guardian of Singapore’s official foreign reserves, MAS will continue to strengthen the climate resilience of the investment portfolio, through a new “Too Little, Too Late” climate scenario to better gauge the long-term impact on portfolio returns, initiating a small allocation to two climate indices in the equities portfolio under the Climate Transition Programme, and integrating ESG considerations into the evaluation process of External Fund Managers.

Download FiNZ Action Plan Infographic (2.62 MB)