Singapore launches framework for upcoming sovereign green bond issuance

SINGAPORE on Thursday (Jun 9) launched a governance framework for sovereign green bond issuances under the Significant Infrastructure Government Loan Act 2021 (Singa).

Called the Singapore Green Bond Framework, it establishes guidelines for green bonds issued by the public sector.

In a speech at the Singapore Sustainable Investing and Financing Conference on Thursday, Second Minister for Finance and National Development Indranee Rajah noted that the framework is aligned with internationally recognised market principles, standards and best practices.

“This ensures that the framework will serve as a benchmark for the corporate green bond market,” said Rajah, who is also Minister in the Prime Minister’s Office.

Under the framework, proceeds from green bonds issued should be used to finance expenditures in support of the Singapore Green Plan 2030.

This includes expenditures on renewable energy; energy efficiency; green building; clean transportation; sustainable water and wastewater management; pollution prevention, control and circular economy; climate change adaptation; and biodiversity conservation and sustainable management of natural resources and land use.

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Expenditures incurred that are already financed via dedicated funding sources, including green bond issuances under statutory boards, will not be eligible under the framework.

The Ministry of Finance (MOF) will first curate a list of potential green projects, before the Green Bond Steering Committee reviews the projects based on their use of proceeds. The projects would also need to be classified as nationally significant infrastructure, and will have to fulfil additional legislative requirements under the Singa.

The Green Bond Steering Committee will then approve the eligible green projects and allocate proceeds.

The Green Bond Steering Committee, set up by MOF, comprises senior government representatives from MOF, the Monetary Authority of Singapore, the Accountant-General’s Department, the Ministry of Sustainability and the Environment and the Ministry of Transport.

The government will take a portfolio approach for the allocation of net proceeds and allocate them in full within 2 years, although it may take up to 3 years in the initial years of the framework.

Noting that the public sector green bond issuances are a key part of Singapore’s overall sustainability agenda, Rajah expects the investments will facilitate Singapore’s transition to a low-carbon economy and advance the United Nations Sustainable Development Goals.

“Through these high-quality issuances, we hope to deepen market liquidity for green bonds, attract green issuers, capital, and investors, and catalyse sustainable financing in the region,” she added.

MOF said it will issue its inaugural sovereign green bond under the Singa in the coming months, which will be used to finance nationally significant infrastructure that meet the green criteria under the framework.