The Monetary Authority of Singapore (MAS) has issued a set of three consultation papers on its proposed Guidelines on Environmental Risk Management for financial institutions (FIs) including banks, insurers and asset managers.

The aim of the guidelines is to enhance the financial institutions’ resilience to environmental risk, and to strengthen the financial sector’s role in supporting the transition to an environmentally sustainable economy, in Singapore and in the region. The initiative is part of MAS’ Green Action Plan, introduced in 2019, with the aim of making Singapore a leading center for green finance in Asia and globally.

The Guidelines were co-created with FIs and industry associations, and set out MAS’ supervisory expectations for banks, insurers and asset managers in their governance, risk management, and disclosure of environmental risk, including:

  1. Governance – 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.
  2. Risk Management – FIs should put in place policies and processes to assess, monitor, and manage environmental risk.
  3. Disclosure – FIs should make regular and meaningful disclosure of their environmental risks, so as to enhance market discipline by investors.

Mr Ong Chong Tee, Deputy Managing Director, MAS, said:

“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. 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.  MAS is grateful to our industry partners for helping to co-create these Guidelines.”

MAS has invited interested parties to submit their comments on the proposed Guidelines by 7 August 2020.

Click on the following links to see the public consultation papers for banks and finance companies, insurers, and for asset managers.