Singapore’s central bank has allocated $1.8 billion with five asset managers as part of moves to protect its portfolio from climate change risks and aid the city-state’s efforts to promote environmentally sustainable projects.
Climate change and other green issues are a top priority for many governments, and financial regulators are also changing rules to force companies to better disclose their environmental impact.
At a news conference on Wednesday, Ravi Menon, managing director of Monetary Authority of Singapore (MAS) said the funds were placed from Singapore’s official foreign reserves as part of the central bank’s green investment program.
“We aim to reduce risks to the portfolio across different climate scenarios, seize investment opportunities from the transition to a lower carbon future and support the transition of portfolio companies,” he said.
MAS’ officials said the asset managers, whose names were not disclosed, will manage new equity and fixed income mandates focused on climate change and the environment. They will also set up Asia-Pacific sustainability hubs in Singapore and launch new environmental, social and governance thematic regional funds.
“This is just the beginning, there is more to come,” said Menon.
While outlining the central bank’s inaugural annual sustainability report, Menon said MAS will conduct stress tests on the financial industry by end-2022 under a range of climate change scenarios.
On Tuesday, the Bank of England launched its climate stress tests for banks and insurers following the world’s first climate stress test run by the Bank of France.
Menon said MAS will consult the industry later this year on mandatory climate-related disclosures by banks, insurers and asset managers to align them to a single, international standard.
“Data is the bigggest challenge and biggest impediment to green finance. It is the biggest impediment to meaningful disclosures,” said Menon.