Assessment Criteria for Projects Financed by Green Bonds issued by Singapore Government
Ministry of FinanceSpeakers
Summary
This question concerns the assessment criteria, transparency, and taxonomy timeline for projects financed by green bonds issued by the Singapore Government. Mr Kwek Hian Chuan Henry inquired about publishing ESG standards and environmental impact reporting using internationally recognised accounting principles. Minister Lawrence Wong noted that $19 billion in projects have been identified for financing through sovereign and Statutory Board green bonds. He stated that the Government is establishing standards and reporting requirements based on international benchmarks, which will be published when ready. Minister Lawrence Wong also stated that a green and transition taxonomy will undergo further consultation in 2022 and be finalised by year-end.
Transcript
88 Mr Kwek Hian Chuan Henry asked the Minister for Finance whether the Ministry will consider (i) publishing the assessment criteria and Environmental, Social and Governance standards that will apply to projects financed by green bonds issued by the Government (ii) ensuring transparency about the carbon and other environmental impacts of these projects using internationally recognised accounting principles and (iii) outlining the timeline for finalising Singapore’s green and transition taxonomy.
Mr Lawrence Wong: Climate change is real, and the Singapore Green Plan 2030 is a major policy priority for the Government. Green Finance is an important enabler of the Singapore Green Plan 2030. Green bonds are a type of borrowing where proceeds will be exclusively applied to finance projects that are deemed environmentally sustainable. We announced at Budget this year that the Government has identified about $19 billion worth of projects that can be financed by green bonds, as a start. Eligible large-scale projects can be financed through sovereign green bonds under the Significant Infrastructure Government Loan Act (SINGA), while smaller scale green projects, such as Tuas Nexus, will be financed through the issuance of green bonds by the respective Statutory Boards.
We will build on the trust that investors have in us, by setting and observing high standards for our green bond issuances. We are in the midst of working with the Monetary Authority of Singapore (MAS), bond issuing agencies and industry partners to establish the standards, assessment criteria and reporting requirements for our green bond issuances, taking into account international standards. These details will be published when ready.
As a financial centre, Singapore has a special role to channel capital to investments that fulfil environmental objectives, which in turn would create new jobs and opportunities in the green economy. MAS’ Green Finance Action Plan sets out its intentions to support Singapore’s and Asia’s transition to a sustainable future, by strengthening the resilience of the financial sector to environmental risks, developing green finance markets, harnessing technology to support green finance solutions and building knowledge and capabilities.
MAS is working closely with the industry to mainstream green finance and has convened an industry-led Green Finance Industry Task force to develop a taxonomy for Singapore-based financial institutions to identify and classify activities that can be considered green or in transition. The task force recently concluded a consultation in March 2021 on the proposed environmental objectives, focus sectors and approach for classifying green and transition activities, and is studying the feedback received. In its next phase of work, the task force will develop a set of principle-based criteria and quantifiable thresholds to set out how activities can be classified according to their level of alignment with environmental objectives. A further consultation will be issued in 2022 before finalising the taxonomy by end-2022.