As global climate policies continue to evolve amid policy uncertainties, MAS has adopted a measured and long-term approach in building a climate-resilient portfolio. Over the past year, we shifted our approach for the Climate Transition Programme (“CTP”) equities portfolio from passive to active management. 

Climate indices offer an accessible starting point for asset owners to tilt their portfolios towards investments that are more aligned with a low-carbon transition. These indices are constructed to incorporate climate-related metrics such as carbon emissions and green revenues, on top of traditional factors such as market capitalisation and liquidity.  

Under the CTP, MAS initiated a small allocation to one off-the-shelf and one bespoke climate equity index and fine-tuned the bespoke index methodology based on implementation experience. Maintaining both benchmarks serves two important purposes. First, it allows MAS to assess portfolio resilience, implementation experience and active performance under different climate index constructions. Second, it provides flexibility to switch between benchmarks given the uncertain transition outlook. Over time, implementation insights and scenario analysis will inform whether MAS consolidates to one or maintains two long-term climate benchmarks. 

MAS has also implemented active management of the CTP portfolios against these indices, to enable MAS to observe how portfolio managers navigate the trade-offs between financial performance and climate objectives. This includes having the flexibility to respond to short-term market dislocations, while maintaining alignment with longer-term transition goals. MAS began shifting the CTP equities portfolio from passive to active management in FY2024 and completed the full transition in FY2025. 

MAS has defined a set of stewardship principles and expectations for our EFMs, which are:

• Accountability (e.g. Board/C-suite level responsibility on ESG matters)
• Integration of ESG considerations in investment process
• Stewardship (i.e. level of voting activity and engagement with portfolio companies)
• Active participation on collective engagement platforms
• Alignment with global standards e.g. UN PRI, ICGN Global Stewardship Principles
• Transparency (e.g. disclosure of progress and outcomes)

We have integrated ESG considerations into our assessment of all our existing EFMs since FY2022. This allows us to assess our EFMs’ sustainability efforts in a structured manner and identify EFMs who are relatively more advanced in their thinking and approach to sustainability. For EFMs which did not demonstrate progress, MAS’ engagements with them may escalate to more punitive actions, which may include probation, partial withdrawal, or termination of the relationship.