Featured Product

    MAS Taskforce Proposes Green Taxonomy, Issues Risk Management Handbook

    January 28, 2021

    The Green Finance Industry Taskforce (GFIT or the Taskforce) of MAS proposed the taxonomy for Singapore-based financial institutions to identify and classify activities that can be considered green or transitioning toward green. The comment period on this consultation will end on March 11, 2021. The Taskforce also launched a handbook on implementing environmental risk management for asset managers, banks, and insurers. In addition, the Taskforce is exploring technology solutions for financial institutions to enhance the quality of their climate-related disclosures. The Taskforce aims to pilot innovations that seek to solve the challenges in mobilizing green finance across sectors. These resources will complement the taxonomy and handbook.

    Consultation on green and transition taxonomy

    The consultation seeks feedback on the Taskforce's recommendations on the environmental objectives, focus sectors, and a “traffic-light” system, which sets out how activities can be classified as green, yellow (transition), or red according to their level of alignment with environmental objectives. The consultation discusses the merits of a taxonomy for Singapore-based financial institutions, with particular relevance to those active across ASEAN, sets out a basic approach to a taxonomy, identifies economic sectors important to Singapore and Association of Southeast Asian Nations (ASEAN) and that would particularly benefit from such classification, and poses follow-up questions. The consultation provides an introduction to the directional design of a taxonomy. It discusses the environmental objectives of the taxonomy, the sectors that may be covered, the economic activities within those sectors, and the general approach to classification.

    The key purpose of developing a green taxonomy for Singapore-based financial institutions is to encourage the flow of capital to support the low-carbon transition needed to avoid catastrophic climate change and to support the environmental objectives of Singapore and the ASEAN nations, which are serviced by Singapore-based financial institutions. Compared to other taxonomies, a key feature of the proposed taxonomy is that it encompasses transition activities that allow for a progressive shift toward greater sustainability while taking into account starting positions and supporting inclusive economic and social development. The taxonomy references international best practices and adapts them to the Asian context where relevant. The Green Finance Industry Taskforce will develop, in its next phase of work, a combination of principle-based criteria and quantifiable thresholds for activities. This will provide clarity and ease the implementation of the taxonomy by financial institutions.

    Handbook on implementing environmental risk management

    The handbook on implementation of environmental risk management outlines the financial risks arising from environmental risks, the various transmission channels, and the need for a green taxonomy to help financial institutions play a key role in directing capital flows toward sustainable economic activities. The handbook also focuses on effective integration and implementation of environmental risks into the governance framework for financial institutions. Good practices in environmental risk governance include board accountability and oversight, clear delineation of roles and responsibilities for senior management, integration of environmental risk into risk frameworks and policies, board approved risk appetite, and reporting metrics and capacity building. The handbook outlines the steps that financial institutions can take to embed environmental and climate-related financial risk into their risk management processes, make informed decisions, and improve their resilience. The handbook also showcases case studies of effective environmental and climate-related financial disclosures. Effective disclosures allow financial institutions to provide greater transparency on the impact of financially material environmental risks on their business.

     

    Comment Due Date: March 11, 2021

    Keywords: Asia Pacific, Singapore, Banking, Insurance, Securities, ESG, Climate Change Risk, Climate-Related Disclosures, Disclosures, Reporting, GFIT, Sustainable Finance, Sustainable Taxonomy, MAS

    Featured Experts
    Related Articles
    News

    BIS Examines Use of Big Data and Machine Learning at Central Banks

    BIS published a paper that provides an overview on the use of big data and machine learning in the central bank community.

    March 04, 2021 WebPage Regulatory News
    News

    APRA Finalizes Reporting Standard for Operational Risk Requirements

    APRA finalized the reporting standard ARS 115.0 on capital adequacy with respect to the standardized measurement approach to operational risk for authorized deposit-taking institutions in Australia.

    March 03, 2021 WebPage Regulatory News
    News

    ECB Publishes Guide for Determining Penalties for Regulatory Breaches

    ECB published a guide that outlines the principles and methods for calculating the penalties for regulatory breaches of prudential requirements by banks.

    March 02, 2021 WebPage Regulatory News
    News

    MAS Sets Out Good Practices to Manage Operational Risks Amid COVID

    MAS and The Association of Banks in Singapore (ABS) jointly issued a paper that sets out good practices for the management of operational and other risks stemming from new work arrangements adopted by financial institutions amid the COVID-19 pandemic.

    March 02, 2021 WebPage Regulatory News
    News

    ACPR Announces New Data Collection Application for Banks and Insurers

    ACPR announced that a new data collection application, called DLPP (Datalake for Prudential), for collecting banking and insurance prudential data will go into production on April 12, 2021.

    March 02, 2021 WebPage Regulatory News
    News

    BCB Maintains CCyB at 0%, Initiates First Cycle of Regulatory Sandbox

    BCB announced that the Financial Stability Committee decided to maintain the countercyclical capital buffer (CCyB) for Brazil at 0%, at least until the end of 2021.

    March 02, 2021 WebPage Regulatory News
    News

    EIOPA Launches Study on Non-Life Underwriting Risk in Internal Models

    EIOPA has launched a European-wide comparative study on non-life underwriting risk in internal models, also kicking-off of the data collection phase.

    March 01, 2021 WebPage Regulatory News
    News

    SRB Publishes Overview of Resolution Tools Available in Banking Union

    SRB published an overview of the resolution tools available in the Banking Union and their impact on a bank’s ability to maintain continuity of access to financial market infrastructure services in resolution.

    March 01, 2021 WebPage Regulatory News
    News

    EBA Consults on Pillar 3 Disclosure Standards for ESG Risks Under CRR

    EBA is consulting on the implementing technical standards for Pillar 3 disclosures on environmental, social, and governance (ESG) risks, as set out in requirements under Article 449a of the Capital Requirements Regulation (CRR).

    March 01, 2021 WebPage Regulatory News
    News

    ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting

    ESAs Issue Advice on KPIs on Sustainability for Nonfinancial Reporting

    March 01, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 6655