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Singapore’s Financial Sector Takes a Step Towards Sustainability with New Environmental Risk Management Framework

In a significant move towards sustainable finance, the Monetary Authority of Singapore (MAS) has issued guidelines for environmental risk management in the financial sector. The guidelines set out the roles and responsibilities of boards and senior management in managing environmental risks, as well as the resources and expertise required to do so.

Key Provisions

  • Asset managers must embed environmental risk considerations into research and portfolio construction processes
  • Boards and senior management have specific roles and responsibilities in managing environmental risks
  • Asset managers must monitor, assess, and manage material environmental risks on individual investments and portfolios
  • Transparency and disclosure are essential, with asset managers required to disclose their environmental risk management approach to stakeholders

Implementation Timeline

The MAS has extended the transition period from 12 months to 18 months. Asset managers can implement the guidelines in phases, but are expected to demonstrate evidence of their implementation progress over the transition period.

Next Steps

  • The Singapore Exchange will soon include the Task Force on Climate-related Financial Disclosures (TCFD) Recommendations in its reporting guidance for listed companies
  • The MAS is working on developing a taxonomy for Singapore-based financial institutions covering both green and transition activities
  • Asset managers and other financial institutions can expect more developments relevant to sustainable finance in the coming months

About Mayer Brown

Mayer Brown is a global legal services organization with offices in key jurisdictions around the world. Our lawyers provide strategic counsel and comprehensive representation to clients across multiple practice areas, including environmental risk management and sustainable finance.

This move by the MAS marks a significant step towards Singapore’s goal of becoming a leader in sustainable finance. The development of a taxonomy for Singapore-based financial institutions covering both green and transition activities is also an important area of focus.