Singapore’s central bank and financial regulator, the Monetary Authority of Singapore (MAS), has launched a green finance initiative – Finance for Net Zero (FiNZ).

The action plan – which was rolled out by Lawrence Wong, deputy prime minister, minister for finance and MAS deputy chairman – sets out the city-state’s strategy to mobilize green financing in an attempt to accelerate net-zero transition and decarbonization activities in Singapore and its wider region. 

The FiNZ Action Plan expands the scope of the MAS’ original Green Finance Action Plan launched in 2019 to now include transition finance – investment, lending, insurance and related services – with the aim of progressively decarbonizing areas like power generation, buildings and transportation.

Wong, in his speech at the opening of the Sustainable and Green Finance Institute of the National University of Singapore, says the new plan aims to achieve strategic outcomes in four key areas involving:

• data, definitions and disclosures
• establishment of a climate resilient financial sector
• credible transition plans
• green and transition solutions and markets.

In the area of data, definitions and disclosures, the MAS will continue to promote consistent, comparable and reliable climate data and disclosures to guide decision-making by financial market participants and safeguard against greenwashing risks.

The MAS, Wong notes, has been working with the industry to co-create a code of conduct that will require environmental, social and governance ratings and data product providers to disclose how transition risks are factored into their products.

To establish a climate resilient financial sector, Wong states that the MAS will continue to engage with financial institutions (FIs) to foster sound environmental risk management practices and to deepen climate scenario analysis and stress-testing to identify climate-related financial risks.

In the area of credible transition plans, the MAS, the deputy chairman points out, will engage international partners, such as the International Energy Agency, to support the development of credible regional sectoral decarbonization pathways. The FIs will be able to reference these pathways when they set emissions reduction targets and when they engage with clients on initiatives to decarbonize their businesses.

And finally, with regard to green and transition solutions and markets, the MAS, Wong states, will promote innovative and credible green and transition financing solutions and markets to support decarbonization efforts and climate risk mitigation.

As well, in the plan, the regulator commits to expanding the scope of its sustainable bond and loan grant schemes to include transition bonds and loans with safeguards in place to mitigate the risk of “transition-washing” and ensure alignment with internationally recognized taxonomy and transition finance principles.

To promote transparency in the sustainable debt market, the MAS, Wong adds, will incentivize the early adoption of entity-level sustainability disclosures by issuers or borrowers.

The financial regulator will also extend the Insurance-Linked Securities Grant Scheme until the end 2025 to support the continued growth of catastrophe bonds and additional climate risk financing instruments like sidecars and collateralized reinsurance arrangements, which will enable additional financing for protection against disaster risks to be raised from the capital markets.

Building on its efforts in the sector, the authority, Wong notes, will scale up blended finance in partnership with the private sector and philanthropic foundations to mobilize financing for the decarbonization of carbon-intensive sectors – for example, a managed phase-out of coal-fired power plants.

In addition, the MAS will support the development of carbon services and carbon credit markets in Singapore to channel financing towards carbon abatement and removal projects in Asia.

And to enable and underpin these outcomes, Wong adds that the MAS will continue to grow and scale green fintech solutions in Singapore and invest in the development of the sustainable finance skills and capabilities of the local workforce.