S'pore sets new rules to reduce risk of greenwashing by banks

Move aims to offer more clarity on what constitutes sustainable financing: MAS

- Cheryl Tan

DUBAI - To boost climate mitigation across eight key sectors, Singapore has set new criteria for banks and financial institutions on the financing of green business activities, and transitional activities that are currently not green but are on a pathway to net-zero emissions.

This will reduce the risk of green or transition washing by banks and financial institutions, and ensure that transition activities will meet the green criteria over time.

The Singapore-Asia Taxonomy was launched by the Monetary Authority of Singapore (MAS) on Dec 3 at the ongoing United Nations COP28 climate conference in Dubai.

Speaking at the launch at the Singapore Pavilion, MAS managing director Ravi Menon said: "The world needs not just green finance for solar panels and wind farms. It needs transition finance to provide the funding support for businesses and sectors that are not so green, to adopt cleaner technologies, increase energy efficiency and become greener over time." Senior Minister Teo Chee Hean, who was also at the launch, said the Government will be prepared to provide catalytic capital as part of a US$5 billion (S$6.7 billion) blended finance platform to channel much-needed funding towards greening the region.

Catalytic capital could come in the form of grants and loans with lower interest rates. This would then help to attract commercial capital.