The regulator last week issued a set of three consultation papers on its proposed guidelines on environmental risk management for asset managers, as well as banks and insurers.
“Even as FIs, regulators and policymakers grapple with Covid-19 and its impact, it is crucial to keep our focus on environmental issues as they pose clear challenges for our economies and financial systems,” Ong Chong Tee, deputy managing director at MAS said in the statement.
The guidelines focus on three categories: governance, risk management and disclosure.
The governance recommendation is that boards and senior management of FIs are expected to incorporate environmental considerations into their strategies, business plans, and product offerings, and maintain effective oversight of the management of environmental risk.
The risk management guideline suggests that FIs should put in place policies and processes to assess, monitor, and manage environmental risk.
As for disclosure, MAS encourages FIs to make regular and meaningful disclosure of their environmental risks, so as to enhance market discipline by investors.
“It is important for FIs in Singapore to have a good understanding of environmental risk and improve their resilience against environmental-related events, as part of their business and risk management strategies,” he added.
The guidelines were co-created with FIs and industry associations, which include the Association of Banks in Singapore, General Insurance Association of Singapore, Life Insurance Association Singapore, Singapore Reinsurers’ Association and Investment Management Association of Singapore.
Earlier this month, MAS’s deputy managing director Jacqueline Loh suggested that asset managers operating in Singapore should consider launching more ESG and sustainable funds as demand for such products is gaining traction.
Speaking at the Asian Venture Philanthropy Network Virtual Conference in Singapore, she argued that “asset managers should seize this opportunity to launch robust green and sustainable focused fund strategies, in anticipation of rising demand from investors in a post-Covid-19 world”.
In Asia, arguably Hong Kong has been the most determined to develop an accountable and transparent ESG regime for companies, FIs and investors.
For example, in March Hong Kong Stock Exchange (HKSE) published new guidelines on ESG reporting and launched its updated ESG e-training program, to help issuers better navigate the evolving standards on ESG reporting. The new reporting regime will take effect from 1 July, and its key change is the mandatory disclosure of governance structure to strengthen board involvement in managing ESG issues.
HKSE has also said that it will further promote the visibility, transparency and accessibility of sustainable and green securities across asset classes and product types available in Hong Kong.
