Singapore sets up new office under Ministry of Finance to catalyse sustainable financing

SINGAPORE: A new office that will help to catalyse sustainable financing and investments has been set up under the Ministry of Finance, as Singapore looks to expand its green finance ecosystem.

Finance Minister Lawrence Wong announced this during his opening address at the Singapore Sustainable Investing and Financing Conference on Thursday (Sep 30).

The Green Bonds Programme Office will develop a framework and work with statutory boards, as well as perform industry engagement and manage investor relations, he said.

To grow the supply and demand for green investments, Mr Wong said the Government will lead the way by laying out the framework and rules, test run them with its issuances, and find ways to convene and connect the different stakeholders.

Last month, the National Environment Agency (NEA) announced the establishment of a S$3 billion Multicurrency Medium Term Note (MTN) Programme and Green Bond Framework, the first statutory board to do so.

Meanwhile, to help individuals, SMEs and large corporates access sustainable financing, the Monetary Authority of Singapore will facilitate the issuance of sustainable financing instruments, including green and sustainability-linked bonds and loans, said Mr Wong.

“This will support corporates in accessing financing as they invest in green projects and transition towards more sustainable business practices,” he added.

Last month, the United Nation’s Intergovernmental Panel on Climate Change (IPCC) released a major report detailing the latest scientific assessments of climate change.

It highlighted the increasing urgency for climate action as well as green investment funds and sustainable financing to help the environment. 

Speaking at the conference, Mr Wong said the banking, finance and investment community plays a critical role in facilitating investments in renewable energy solutions and carbon-neutral technologies.

As public efforts alone will not cover the scale of climate change mitigation in the region, Mr Wong strongly encouraged more in the private sector to continue identifying opportunities and to leverage on partnerships in the blended finance space.

With a "huge" market for voluntary carbon credits, Mr Wong said Singapore has the potential to become a carbon services and trading hub for the region.

“Carbon markets today tend to be fragmented and complex, Asia will need a voluntary carbon market that is large, transparent, verifiable and environmentally robust ... we will do our utmost to support the development of such a market in Singapore,” he said, adding that the government is happy to support private sector initiatives to develop a carbon credits market in the country.

BUILDING CAPABILITIES AND EXPERTISE

To support green finance, Singapore’s finance community will also need to build strong capabilities and expertise, said Mr Wong.

These include specialised expertise in quantifying environmental benefits and costs of projects, estimating how environmental costs can translate into future default risks, as well as developing tools for sustainability reporting in projects and businesses.

“Our Institutions of Higher Learning are attuned to these needs, and are updating their curriculums to ensure their graduates are equipped with the relevant skills,” said Mr Wong.

At the same time, sustainable finance Centres of Excellence such as the National University of Singapore's Sustainable and Green Finance Institute, have been established to meet the demand for expertise and Asian-centric research.

Concluding his speech, Mr Wong called on all stakeholders to do their part to create a greener and more sustainable future for Singapore and the region. 

“The COVID-19 pandemic has reminded us of the fragility of our expanding, resource-hungry civilisation, and our reliance on massive but unfortunately, unsustainable infrastructure for food and water on a planet with finite resources,” he said.

“Our response to this pandemic gives us a reason to be hopeful too, because we’ve seen through this pandemic that it’s possible to change our ways when we must; we’ve seen how the indomitable human spirit will prevail against tough odds,” he added.

“So we have an opportunity now – to get off the path of climate distress and onto a healthier path for humanity.”