Risk Management
Overview
As funds continue to flow into sustainable products and investments, it is critical to guard against the risk of greenwashing to maintain investor confidence in the sustainable finance market and ecosystem. Greenwashing can occur at the firm level and product level, such as the overstatement or lack of clarity about a firm’s sustainability commitments, or lack of alignment between the product’s stated sustainability objective versus its actual investment allocations.
MAS’ efforts to mitigate greenwashing in the financial system are focused on these enablers: (i) taxonomies to serve as an established, science-based and common reference for financial institutions to determine if an economic activity is treated as green or transition; and (ii) enhancing comparability and consistency of climate-related disclosures at the firm and product level to support investors’ decision-making.
Over the past year, MAS has built on these efforts to mitigate greenwashing, including publishing an information paper on Good Disclosure Practices for Retail ESG Funds and an information paper on the Singapore Asia Taxonomy and its application for the financial and corporate sectors. MAS has also worked with the Singapore Exchange (SGX) to start to incorporate the climate-related disclosure requirements of the IFRS Sustainability Disclosure Standards for SGX-listed issuers from FY2025.
MAS Information Note on Singapore-Asia Taxonomy (SAT) and its application for the financial and corporate sectors
On 17 March 2025, MAS published an Information Note setting out how the Singapore-Asia Taxonomy for Sustainable Finance (SAT) is being used by various market participants and the progress in its adoption since its launch in December 2023. The Information Note serves as a complementary resource to showcase how the SAT supports market participants towards achieving their green and transition financing objectives.
Since its launch, the SAT has seen a good range of users across public agencies, local and global banks and asset managers as well as local and international corporates. Financial products have been developed based on the SAT’s classifications, portfolios have been aligned with the SAT’s criteria and corporate’s sustainability strategies have been formulated with reference to the SAT. By ensuring that these financial products meet credible standards such as SAT, alongside internationally recognised standards such as the ICMA Green Bond Principles, financial institutions seek to mitigate the risks of greenwashing and uphold Singapore’s reputation as a trusted financial centre.