Collaborative Initiative for Green Finance in Singapore
Date: 15 Nov 2017
Singapore, 15 November 2017 – Singapore’s strengths as a financial centre, track record in environmental protection and connections to the region makes it well-positioned to move forward with Green Finance. This is not only for the better protection of the environment, but also for the opportunities that Green Finance has to offer in developing a greener and more sustainable future economy for Singapore.
The Singapore Institute of International Affairs (SIIA) has launched a report titled the Collaborative Initiative for Green Finance in Singapore: Singapore as a Green Finance Hub for ASEAN and Asia at the G20 Green Finance Conference Singapore. The Report is a major outcome of the Collaborative Initiative on Green Finance in Singapore – a five-month long engagement of the financial sector to establish the baseline for the country’s current level of understanding of Green Finance, outlining the opportunities and possibilities, and consolidating recommendations to develop a shared vision on how to move Green Finance forward.
Associate Professor Simon Tay, chairman of the SIIA, and one of the co-chairs of the Collaborative Initiative said, “Pursuing green finance is a logical, attainable and necessary next step for Singapore, both as a financial hub and for our contribution to the global environmental challenges.”
Fellow Co-Chair Ms. Yeo Lian Sim, who is also Special Adviser, Diversity, Singapore Exchange also said: “Many companies listed on SGX who already do sustainability reporting and the rest who will do so from 2018, are well placed to benefit from progress in green financing opportunities.”
The Collaborative Initiative is led by the SIIA, and convened in partnership with the United Nations Environment Programme Inquiry into the Design of a Sustainable Financial System (UNEP Inquiry), which lent international expertise on the subject.
In order to gather recommendations on how Green Finance in Singapore should be developed and mainstreamed, a series of meetings, comprising closed-door interviews, roundtable discussion sessions and working group meetings were conducted with 65 financial institutions across the banking and insurance sectors, and institutional investors. Members of the research community and civil society, as well as foreign and local experts were also consulted on how to shape the Green Finance agenda.
The following organisations and financial institutions lent support and funding to the Collaborative Initiative. They are the Association of Banks in Singapore (ABS), Mitsubishi UFJ Financial Group (MUFG), Monetary Authority of Singapore (MAS), BNP Paribas, Development Bank of Singapore (DBS), Oversea-Chinese Banking Corporation (OCBC) and United Overseas Bank (UOB).
“Singapore’s commitment to advancing sustainable finance is welcome given its importance as a global and regional financial hub,” said Dr. Simon Zadek, Co-Director of the UN Environment Inquiry into the Design of a Sustainable Financial System, and DSM Senior Fellow and Visiting Professor on Partnerships and Sustainable Development at Singapore Management University.
“UN Environment has been proud to support this initiative that will help to create the knowledge, collaborative and innovative foundations for Singapore to lead in aligning finance with the 2030 Agenda,” he added.
Multiple shades of green exist within Singapore’s financial sector, with some financial institutions moving faster than the other based on differing levels of will and capacity. DBS, which issued its first green bond in Singapore earlier this June, is making strides to establish itself as a market leader for Green Finance here. “The issuance of our first Green Bond is a milestone for DBS. It offers our investors an opportunity to engage in our journey towards sustainable finance and underlines DBS’ commitment to sustainability,” said Mr. Mikkel Larson, Managing Director and Co-Chairman of the DBS Sustainability Council.
Industry associations have also played a significant role in moving the needle on Green Finance. The Association of Banks in Singapore (ABS), for example, helped to formalise and kick-start the process of mainstreaming ESG considerations as part of the banks’ overall business and lending practices with the release of its Guidelines on Responsible Financing in 2015. ABS Director Mrs. Ong-Ang Ai Boon said: “ABS, together with banks in Singapore, have proactively stepped up on capacity building, disclosure and implementation.”
However, much more needs to be done in order for Singapore to become a Green Finance hub. Among the recommendations presented in the report, creating a green economy is critical and will allow Green Finance flourish. The Government must signal clear policy, commitment and resolve for this development, further supported with developing vision, know-how and capacity among key stakeholders in both the public and private sector.
Jump-starting Green Finance markets and investments is also key. This can be through encouraging institutional investors, in particular, large, influential or government-linked investors to increase their portfolio of green investments or establish “green pockets”. Encouraging greater transparency and materiality on ESG disclosure and other green criteria addresses concerns about the real impact or value of sustainability reporting, aimed at supporting informed decisions in the demand and supply of investments.
Many financial institutions have yet to recognise the value of green, and being able to distinguish the green value and measure that data over time enables financial market participants to become more discerning in the selection of avenues and candidates for financing. Working towards an acceptable range or “band of green” definition or practices for the financial sector and other industries is a step towards defining the value of green while allowing room for improvement to accommodate current capabilities. The “band of green” should also be aligned with global standards.
The bulk of opportunities associated with the green economy and Green Finance are not in Singapore itself but in the region. It is also vital for Singapore to align itself with the region’s green movements, such as establishing green finance dialogues among ASEAN and Asian partners.
Green Finance will be pivotal in preparing Singapore for the future economy, in which the environment and climate are key considerations that open up opportunities for the country and its people.
The full report is available for download from the SIIA’s website.