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Singapore’s financial watchdog, the Monetary Authority of Singapore (MAS), is planning to deal with greenwashing issues through regulations and technologies, as reported by Bloomberg on November 7. Banks in Singapore will have to conduct stress tests that included climate-related scenarios from 2022 while making required disclosures to ensure they are managing risks related to climate change and other environmental issues. This approach is part of the strategy that the MAS has adopted to promote green finance, cope with the potential increase of greenwashing issues, as well as allocating more funds to sustainability projects.
A study estimated that a 2℃ rise in temperature could cause a write-down in value of USD1.7tr financial assets, and by 2050, up to USD20tr worth of assets across the energy, industry, and construction sectors globally would become stranded, according to a MAS executive. EU adopted its Sustainable Finance Disclosure Regulation (SFDR) in March 2021, setting requirements for global lenders and investors that have businesses or clients in Europe. To align with the EU approach, Singapore’s mandatory disclosure regulations will also involve ESG fund products sold to individual investors. Local banks in Singapore have started to reduce risk exposures to some of the industries highly linked to climate change, such as coal. For instance, DBS Group Holdings [DBS:SP], Oversea-Chinese Banking Corporation [OCBC:SP], and United Overseas Bank [UOB:SP], Singapore’s three major banks and also three largest banks in Southeast Asia by assets, pledged in April 2019 to end financing new coal power projects and switch to renewable energy projects.
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