Singapore’s Green Finance Industry Taskforce (GFIT), backed by the country’s financial watchdog Monetary Authority of Singapore (MAS), has proposed a green taxonomy for financial firms operating in the country. The GFIT has also launched a handbook on implementing environmental risk management for asset managers, banks, and insurers.
The proposed taxonomy is aimed at identifying activities that can be considered green or moving towards green. The mandate of the GFIT is to develop green finance through four key initiatives: 1. develop a taxonomy, 2. enhance environmental risk management practices of financial institutions, 3. improve disclosures, and 4. foster green finance solutions.
A vital feature of the proposed taxonomy is that it includes transition activities to allow for a progressive shift toward better sustainability while taking into account starting positions and supporting inclusive economic and social development.
The GFIT seeks feedback on the environmental objectives, focus sectors, and a “traffic-light” system that classifies activities as green, yellow (transition), or red, based on their level of alignment with environmental objectives. The taxonomy includes global best practices that have been adapted to the Asian context where needed.
In its next phase of work, the GFIT will develop a combination of principle-based criteria and quantifiable thresholds for green initiatives. This will provide clarity and ease the implementation of the taxonomy by financial institutions. The GFIT’s handbook will give financial companies and professional guidance on the best practices to be followed in environmental risk management. It will support the financial industry’s efforts to implement the MAS Guidelines on Environmental Risk Management.
In addition, the GFIT is exploring technology solutions to help financial institutions enhance the quality of their climate-related disclosures and support pilot innovations that can solve current challenges in mobilizing green finance across sectors. These resources will complement the taxonomy and handbook.
Click here to read the original article published by the Monetary Authority of Singapore (MAS).
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