Singapore taskforce to identify 'green finance' projects

Out-Law News | 04 Feb 2021 | 7:37 am | 1 min. read

Singapore's financial regulator will identify projects with environmentally sound objectives as a way of identifying what can be funded by 'green finance', it has said.

The Monetary Authority of Singapore (MAS) is consulting on setting up the Green Finance Industry Taskforce (GFIT), seeking views on the taskforce's environmental objectives, focus sectors, and its traffic-light system. This will categorise activities into green, yellow for transition and red, which indicates asset or project is not compatible with a low carbon economy. The consultation will be closed on 11 March.

Nicholas Hanna of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said: “Singapore, arguably the leading financial smart city in South East Asia, is once again promoting innovation with its focus on green finance. Environmental, social and governance (ESG) and impact factors with negative connations like companies seeking short-termism, excessive focus on short term goals at the expense of long-term objectives, are now forming part of policy making considerations and best practices.”

“MAS and the GFIT will be actively seeking to make recommendations as to how to measure project finance from an environmental standpoint. We are starting to witness green projects in Asia receiving greater interest from banking institutions, pension funds and the like in London which have adopted similar policies. It is likely that if in the future, Singapore does implement a green policy measuring environmental impact, this may well boost economic activity in the region,” he said.

The taskforce published guidance to be applied by banks, insurers and asset managers.

GFIT includes representatives from financial institutions, businesses, non-governmental organisations, and associations in financial industry.