Challenges to sustainable financing in Singapore can be mitigated: Indranee

[SINGAPORE] Mobilising sustainable finance has its challenges, but Singapore is taking measures to mitigate them, said Indranee Rajah, Minister in the Prime Minister's Office, on Monday (Nov 29).

Speaking at a conference here, she said global leaders at the recent COP26 meetings in Glasgow had highlighted the importance of mobilising finance to achieve the net-zero emissions target.

However, it would be insufficient to rely on public funding alone, given that Covid-19 has strained fiscal resources worldwide, she said in her keynote address at the 5th German-Singaporean Financial Forum at the Conrad Centennial Hotel. The event was organised by the Singaporean-German Chamber of Industry and Commerce (SGC).

"Sustainable financing will therefore play a key role in crowding in private capital to facilitate the orderly transition of economies towards renewables and low emission sectors," noted Ms Indranee, who is also Second Minister for Finance and National Development.

She said one of the major challenges to developing a credible sustainable finance market is greenwashing, which refers to misleading information provided by a company or bond issuer on its environmental, social, and governance (ESG) credentials.

"To mitigate this risk, Singapore has been working with industry and international partners to put in place key enablers for credible disclosures," she added. "We are also harnessing technology to enhance access to trusted, high-quality climate-related data."

She highlighted the Greenprint initiative of the Monetary Authority of Singapore (MAS), under which MAS is partnering the industry to develop interoperable platforms that will provide the data needed by the green finance ecosystem.

She said MAS and the Singapore Exchange are also setting up road maps for mandatory climate-related financial disclosures by financial institutions and listed entities.

Finally, Singapore is also contributing to the development of globally interoperable taxonomies to improve sustainability disclosure. A taxonomy for sustainable finance refers to a set of criteria that provides the basis for an evaluation of whether and the extent to which a financial asset will support given sustainability goals.

Ms Indranee said that as an international financial centre, Singapore can catalyse the flow of capital towards sustainable development in Asia. Between 2017 and 2020, S$22.5 billion worth of green and sustainability-linked loans have been issued here, accounting for close to 50 per cent of cumulative green bond and loan issuances in the Asean region. These loans cover a broad range of sectors such as agriculture, commodities, energy and financial services.

The government is also leading the way to promote sustainable financing by issuing its own sovereign green bonds and laying the framework and rules for green financing, she said.

The Republic plans to issue green bonds on selected public infrastructure projects and have identified up to S$19 billion worth of public-sector green projects for this.

For instance, the National Environment Agency issued its first green bond in September this year, while the Ministry of Finance has set up the Green Bonds Programme Office to develop a national Green Bond Framework, assist statutory boards with the development of their own green bond programmes, engage the industry, and manage investor relations.

Niall Bohan, director of asset and financial-risk management for the Directorate-General for Budget in the European Union, said the European Commission, on behalf of the EU, raised 12 billion euros ($18.5 billion) in October in the first NextGenerationEU green bond transaction - the world's largest ever.

This transaction opens the way for the largest green bond programme in the world, said the president of SGC Jens Ruebbert.

Douglas Foo, president of the Singapore Manufacturing Federation (SMF) said that manufacturers can contribute in a big way to the goals of ESG.

He said SMF has been advocating to include ESG considerations in business models, and is paving the way for that through dialogues, webinars and discussions with agencies, organisations and other trade associations.

THE STRAITS TIMES