Speech by Mr Chia Der Jiun, Managing Director, Monetary Authority of Singapore, at the Launch of the Singapore Sustainable Finance Association on 24 January 2024 (2024)

1.Ladies and Gentlemen, good evening.

2.I am delighted to join you today, to celebrate the launch of the Singapore Sustainable Finance Association (SSFA).

3.It is remarkable that we have over 150 representatives from diverse sectors gathered here – from the financial sector, corporates, industry bodies, non-governmental organisations, and government bodies. This gathering augurs well for the future of sustainable finance – where we need partnerships and a strong ecosystem of diverse players to support the region’s net zero transition.

Singapore: A Leading Centre for Sustainable Finance in Asia

4.Singapore has come a long way in sustainable finance in less than 10 years.

a. In 2015, the Association of Banks in Singapore launched the Guidelines for Responsible Financing.

b.In 2017, we saw the first issuance of a green bond by a Singapore company, City Developments Limited. This was followed by DBS.

c. In 2019, MAS launched the Green Finance Action Plan.

d. And we refreshed the plan last year, with the Finance for Net Zero Action Plan, expanding our focus beyond pure green to include transition finance. This is a recognition that greening the economy goes beyond just financing green activities.

5.Today, Singapore is one of the leading sustainable finance centres serving the net zero transition needs in Asia and beyond.

a. We are ASEAN’s largest market for green, social, sustainability and sustainability-linked bonds and loans. In 2022, more than S$30 billion worth of such bonds and loans were originated from Singapore.

b.We have a vibrant carbon services and trading ecosystem of over 100 firms, the highest concentration in Southeast Asia.

c. We are a key centre for climate risk financing instruments. Catastrophe bond issuances in Singapore totalled S$2.5 billion over 2021 and 2022, more than twice the total from 2018 to 2020.

d. We also house a vibrant sustainable finance research and talent development ecosystem, comprising centres of excellence in our universities, reputable training providers, and at least 20 Asia Pacific sustainability hubs established by financial institutions.

6.Singapore has also stepped up in leading change and seeding solutions. We have shaped standards and guidance, and championed innovative financing approaches for green and transition finance projects, together with international partners.

a. In October last year, MAS was one of the first jurisdictions to propose supervisory expectations for financial institutions to have sound transition planning processes. This can in turn, enable effective climate change mitigation and adaptation measures by theirclients.

b.Just last month, we launched the Singapore-Asia Taxonomy, which many of you here contributed substantively to. The taxonomy is the world’s first to pioneer the concept of a “transition” category, in recognition of Asia’s needs. It will direct greater cross-broader capital flows to green and transition activities.

c. MAS also worked with the GFANZ Asia Pacific Network and other international partners to publish the world’s first guidance to help financial institutions finance a credible phase-out of coal plants in Asia.

7.These capabilities and initiatives give us a good foundation to build on, to better serve the needs of our region in the transition to net zero. We can strengthen our contributions on three fronts – Standards, Solutions and Skills.

Strengthen Sustainable Finance Growth – Standards, Solutions and Skills

8.First, standards. Clarity and credibility in standards are foundational to a trusted sustainable finance centre. They can mitigate the risk of greenwashing and at the same time, provide greater confidence for capital to be channelled to legitimate green and transition activities.

a. For example, MAS issued guidelines for the disclosure and reporting of ESG retail funds in 2022, and an industry code of conduct for ESG Rating and Data Product Providers last year.

b. We are also working with international organisations such as the International Energy Agency to develop sectoral pathways that are contextualised to circ*mstances faced in Asia. With clearer science-based and region-contextualised sectoral decarbonisation pathways, financial institutions can develop strategies to capitalise on the financing opportunities.

9.Second, solutions. In mobilising private capital for the net zero transition, we must adopt innovative financing approaches to tackle marginally bankable or currently unbankable projects.

a. Blended finance is key to scale the financing needed for marginally bankable projects and solutions. Together with our partners, we announced a blended finance initiative called Financing Asia’s Transition Partnership, to scale the financing for green and transition infrastructure and technologies in the region.

b. The carbon market is another tool to unlock financing. Here, MAS is piloting the concept of transition credits to accelerate the early retirement of coal plants in Asia. We launched the Transition Credits Coalition and two pilot projects last month to explore the unlocks needed for this potential financing avenue to complement other regional financing initiatives.

10.Third, skills. We need a deep pool of skilled and adaptable talent. We must therefore invest in the skills and capabilities of our people and organisations.

Deepening Cross-sector Collaboration through SSFA

a.MAS, the Institute of Banking and Finance (IBF) and Workforce Singapore have embarked on a Jobs Transformation Map to study the impact of sustainability on our financial sector workforce.

b. Preliminary findings suggest that most of the jobs must be augmented by upskilling to support changes in regulations, products, and processes to better serve their clients. In addition, new and highly specialised roles such as sustainability risk analysts, will be created.

c. We will share our detailed findings, and just as importantly, the key initiatives by the MAS and IBF to support the sector’s upskilling, in April.

11.To make a difference through standards, solutions and skills, the financial sector and industry will need to come together to collaborate and leverage the deep expertise that resides in each domain.

12.The Singapore Sustainable Finance Association (SSFA) will be a key platform to achieve this.

a.In setting standards, SSFA can lead in developing industry best practices in areas such as carbon credits trading and transition finance. You will have a crucial role in channelling the industry’s perspectives as standards continue to evolve.

b.In driving innovative solutions, SSFA can bring together financial institutions and industry sectors to identify more integrated approaches to address barriers in scaling the financing needed. For example, it can combine financing solutions from different asset classes, including risk mitigation tools, to improve the bankability of projects. This applies not only in climate mitigation, but also in financing less bankable projects related to climate adaptation and biodiversity preservation.

c.In developing skills, SSFA can contribute to upskilling and capacity building initiatives by guiding the relevance of sustainable finance courses. This includes training courses offered by Institutes of Higher Learning (IHLs) and other training providers. In tandem, SSFA can also promote the take-up of IBF’s skills certification schemes, and organise capacity building workshops in areas not readily offered by the training providers. For example, carbon markets, taxonomy application and blended finance.

Conclusion

13.Sustainable finance is a key thrust of Singapore’s development as a leading international financial centre. We have made a good start and are on a promising trajectory.

14.Let us continue to strengthen partnerships across the financial sector and with industry to support the region’s low-carbon transition. The SSFA will be instrumental in coordinating this.

15.Everyone here today has something to offer.

a. Financial institutions, businesses, academia, government agencies - bringing financial or scientific know-how, decarbonisation solutions or needed funding.

16.I look forward to the SSFA playing a key role in galvanising partnerships and collective efforts to shape the future sustainable finance landscape for years to come.

17.Thank you.