Strategy
Overview
Strengthening Financial Sector Resilience to Environmental Risk
The financial sector is exposed to environmental risks through its financing, insurance, and investment activities. The financial impact on banks, insurers and asset managers (collectively, financial institutions) can materialise through physical and transition risk channels. As Singapore’s integrated financial regulator, MAS is committed to play a leading role to bolster the financial sector’s resilience to environmental risks.
MAS continues to integrate environmental risk into its supervisory framework and processes at both the individual firm and system-wide levels. MAS seeks to (i) uplift environmental risk management practices of financial institutions through ongoing supervision and industry engagement, (ii) deepen climate risk assessment capabilities through climate scenario analysis, and (iii) enhance climate-related disclosure standards to promote market transparency.
- MAS Information Papers, published on 31 May 2022, on Environmental Risk Management
- MAS Guidelines, published on 8 December 2020, on Environmental Risk Management for Banks
- MAS Guidelines, published on 8 December 2020, on Environmental Risk Management for Asset Managers
- MAS Guidelines, published on 8 December 2020, on Environmental Risk Management for Insurers
Engage FIs on building strong risk management and sound transition planning practices
In October 2023, MAS issued a set of consultation papers proposing Guidelines on Transition Planning by banks, insurers and asset managers. Building on MAS’ existing supervisory guidance to financial institutions, the proposed Guidelines focus on financial institutions’ internal strategic planning and risk management processes to prepare for both risks and potential changes in business models associated with the global transition to a net zero economy and the expected physical effects of climate change. Financial Institutions are expected to: (i) take a multi-year perspective to facilitate a more comprehensive assessment of climate-related risks, (ii) engage rather than indiscriminately withdraw credit, insurance coverage, or investments from customers/investee companies, which could impede them from securing the financial support they need to transition in an orderly manner, (iii) provide the necessary transparency for accountability, and (iv) consider the important interdependencies between climate and nature-related risks. The proposed Guidelines are expected to be finalised in 2H 2024.
- MAS Media Release, published on 18 October 2023, on MAS Guidelines for Financial Institutions on Transition Planning for a Net Zero Economy
- MAS Consultation Paper, published on 18 October 2023, on Proposed Guidelines on Transition Planning for Banks
- MAS Consultation Paper, published on 18 October 2023, on Proposed Guidelines on Transition Planning for Insurers
- MAS Consultation paper, published on 18 October 2023, on Proposed Guidelines on Transition Planning for Asset Managers
Enhance sustainability-related disclosures
MAS supports aligning disclosure requirements to the International Sustainability Standards Board (ISSB) Standards to enhance the consistency, comparability, and reliability of climate-related information. This in turn enhances market discipline, investor protection, and access to new business opportunities.
MAS welcomes the announcement by Singapore Exchange Regulation (SGX RegCo) and ACRA on mandatory climate-related disclosures (CRD) that are aligned with ISSB Standards for listed issuers from FY2025 and large non-listed companies from FY2027. This is in line with the recommendations from the industry-led Sustainability Reporting Advisory Committee.
MAS is working with SGX RegCo on implementing mandatory ISSB-aligned CRD for listed issuers, as well as the development of a comprehensive capacity building programme for listed issuers to support them in their sustainability reporting journey.
MAS will review sector-specific requirements set out by international standard setting bodies such as the Basel Committee on Banking Supervision, which issued a public consultation on a climate-related Pillar 3 disclosure framework in November 2023, as well as the International Association of Insurance Supervisors (IAIS) Climate Disclosures Workstream, and consult on MAS’ requirements for financial institutions in due course.
Strengthen collaborations with other central banks and supervisors, including in developing guidance for transition planning and promoting use of ISSB Standards
MAS continues to actively contribute to global efforts on sustainable finance through our participation in, and leadership of, international committees and platforms on climate-related risks. In particular, MAS chairs the International Association of Insurance Supervisors (IAIS)’s Climate Risk Steering Group, the Sustainable Insurance Forum (SIF), the Basel Committee on Banking Supervision (BCBS)’s Transition Planning workstream and the ASEAN Capital Markets Forum (ACMF)’s Working Group on Disclosure Standards. MAS also co-chairs the IOSCO Sustainable Finance Taskforce Transition Plan workstream.
Network for Greening the Financial System (NGFS)
MAS is a Steering Committee member of the NGFS and participates actively in various NGFS initiatives. MAS recently contributed to the work by the NGFS’ Workstream on Supervision on examining the relevance of financial institutions' transition plans to micro-prudential authorities’ role and mandate. In April 2024, the NGFS published three thematic deep dive reports on the topic, which serve to enhance micro-prudential authorities’ understanding of the broader context within which financial institution transition planning takes place.Basel Committee Taskforce on Climate Related Financial Risks (BCBS TFCR)
MAS is active in the BCBS TFCR, which is taking a holistic approach to addressing climate-related financial risks to the global banking system across all three pillars of regulation, supervision and disclosure. On regulation, the BCBS TFCR is undertaking analytical work to assess the materiality of gaps in the existing Basel framework. On supervision, the BCBS TFCR is monitoring the implementation of Principles for the effective management and supervision of climate-related financial risks, and is also studying potential complementary work related to banks' transition planning and use of climate scenario analyses. On disclosure, the BCBS TFCR has consulted on a set of bank-specific Pillar 3 disclosure requirements. MAS is co-leading the workstream on transition planning to consider the role of transition planning in risk management and potential risks to banks, as well as the role of prudential supervisors vis-à-vis transition planning.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. MAS chairs the IAIS’ Climate Risk Steering Group (CRSG), which oversees the IAIS’ work on climate risks. The CRSG has:- reviewed the IAIS’ supervisory material and is integrating climate-related risk considerations into the Insurance Core Principles guidance. Three public consultation documents have been issued to date;
- incorporated climate data elements in the annual IAIS Global Monitoring Exercise to provide a global baseline of climate risk data for the insurance sector;
- issued guidance on climate scenario analysis for the global insurance sector; and
- reviewed climate-related risk disclosure material for the insurance sector, and will issue a public consultation in 2H 2024.
Sustainable Insurance Forum (SIF)
MAS chairs the SIF and the SIF’s Capital and Supervisory Frameworks Working Group, and participates actively in the SIF’s Transition Plans Working Group. The SIF is a platform for international collaborative action on sustainability issues through a global network of insurance supervisors and regulators. They work together to strengthen their understanding of, and responses to, sustainability issues facing the insurance sector. The SIF’s work includes research on emerging issues and knowledge-sharing on supervisory practices.International Organisation of Securities Commissions (IOSCO)
MAS is active in the IOSCO Sustainable Finance Task Force (STF), which seeks to address issues of transparency, market integrity and investor protection related to sustainable finance. MAS led the review of the ISSB’s climate disclosure standard as part of the IOSCO STF’s Technical Review Coordination Group, whose assessment informed IOSCO’s eventual endorsement of the ISSB Standards in July 2023. IOSCO’s endorsement facilitates IOSCO members’ use of the ISSB standards in their respective jurisdictions to enhance the consistency and comparability of sustainability-related financial disclosures. MAS co-chairs the Transition Plans Workstream, which aims to identify the core components of transition plans disclosures that market participants need for decision making and product design, through the lens of investor protection and ensuring market integrity.ASEAN Capital Markets Forum (ACMF)
MAS leads efforts within the ACMF, a regional grouping of securities regulators, to promote corporate sustainability disclosures in the ASEAN region. As part of this, the ACMF is working towards assessing the feasibility of adopting ISSB Standards based on each jurisdiction’s own legal and regulatory arrangements with respect to international standards, in a way that promotes consistent and comparable sustainability disclosures across jurisdictions.To aid in this evaluation, ACMF has established a collaboration platform with the ISSB - the ACMF-IFRS Foundation Dialogue on IFRS Sustainability Disclosure Standards (AID). A protocol was signed in October 2023 to serve as a guide for future engagements as part of the AID, with capacity building for ACMF members and stakeholders on the ISSB Standards being a key objective.