Singapore’s MAS Introduces Taxonomy to Define Green and Transition Activities

Singapore’s MAS Introduces Taxonomy to Define Green and Transition Activities

BY  
Jordy Leo  
- December 6, 2023

Singapore’s Monetary Authority of Singapore (MAS) has released the Singapore-Asia Taxonomy for Sustainable Finance to provide clear definitions for sustainable and transition financing, as reported by ESG Today on December 4. The taxonomy sets out detailed thresholds and criteria for defining green and transition activities that contribute to climate change mitigation across eight key sectors, which together are responsible for 90% of greenhouse gas (GHG) emissions in the Asia-Pacific (APAC) region. The MAS noted that the taxonomy would enable financial institutions to identify and disclose the alignment of their financed activities and labeled investment products with the sustainable criteria, thus reducing the risks of greenwashing.

The taxonomy represents the first globally to introduce a “transition” category. It defines transition activities through two new approaches: a traffic light system and a measure-based strategy. The traffic light system categorizes activities in the eight key sectors as green, transition, or ineligible. ‘Transition’ refers to activities that do not meet the green thresholds now but are on a pathway toward net-zero outcomes. The measure-based strategy is designed to encourage capital investments in decarbonization measures that will help reduce the emissions intensity of activities and enable them to meet the green criteria over time. Furthermore, to enhance interoperability with global taxonomies, the MAS is seeking to map the Singapore-Asia Taxonomy to the International Platform for Sustainable Finance’s (IPSF) Common Ground Taxonomy (CGT), which currently covers the EU Taxonomy and People Bank of China’s (PBOC) Green Bond Endorsed Project Catalogue.

Sources:

https://www.esgtoday.com/singapore-launches-taxonomy-to-define-green-and-transition-activities-across-key-sectors/

https://www.mas.gov.sg/news/media-releases/2023/mas-launches-worlds-first-multi-sector-transition-taxonomy

https://www.esginvestor.net/singapore-finalises-sustainable-finance-taxonomy/

http://www.greenfinance.org.cn/displaynews.php?id=3503

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