Featured Product

    MAS Consults on Guidelines for Management of Environmental Risk

    June 25, 2020

    MAS launched three consultations on the guidelines for management of environmental risk by banks, insurers, and asset managers. The guidelines, which were co-created with financial institutions and industry associations, set out the supervisory expectations of MAS for financial institutions in their governance, risk management, and disclosure of environmental risk. The comment period for these consultations ends on August 07, 2020. MAS also proposed to provide a transition period of 12 months after the guidelines are issued, for financial institutions to assess and implement the guidelines as appropriate to reflect the evolving nature and maturity of risk management practices.

    The guidelines are tailored to each sector based on the business activities and risk management practices. In the banking sector, the guidelines apply to all banks, merchant banks, and finance companies. MAS recognizes that the scale, scope, and business models of banks can be different. A bank should implement these guidelines in a way that is commensurate with the size and nature of its activities as well as its risk profile. MAS proposes to apply the guidelines to banks’ extension of credit to corporate customers and underwriting for capital market transactions. A bank should also apply the guidelines to other activities that expose it to material environmental risk. In particular, banks with material investment activities should refer to the relevant sections of the Guidelines on Environmental Risk Management for Asset Managers, for sound practices on the management of environmental risk with respect to investments. The following are the key highlights of the proposed guidelines for banks:  

    • Governance—MAS also proposes that the Board ensure that environmental risk, where material, is addressed in the bank’s risk appetite framework, so that environmental risk exposures beyond the bank’s risk appetite can be promptly recognized and addressed. MAS further proposes that where environmental risk is deemed material to a bank, the bank should designate a senior management member or a committee to oversee environmental risk.
    • Risk management—MAS proposes that banks should identify, assess, mitigate, and monitor material environmental risk at both the customer and portfolio levels. MAS also proposes for the bank to develop capabilities in scenario analysis and stress testing to assess the impact of environmental risk on its risk profile and business strategies, and explore its resilience to financial losses.
    • Disclosures—MAS proposes that a bank disclose, at least annually, its approach to managing environmental risk and the potential impact of material environmental risk on the bank. The latter includes quantitative metrics such as exposures to sectors with higher environmental risk. A bank’s disclosure may be consolidated at the group or head office level. MAS also proposes that banks take reference from international reporting frameworks, including the FSB’s Task Force on Climate-related Financial Disclosures (TCFD), to guide their environmental risk disclosures. The TCFD recommendations provide a useful framework for the disclosure of climate-related risks.

    The guidelines aim to enhance the resilience of financial institutions to environmental risk and to strengthen the role of the financial sector in supporting the transition to an environmentally sustainable economy, in Singapore and in the region. This is part of the Green Finance Action Plan of MAS to become a leading global center for green finance. The guidelines serve as a call to action for financial institutions to help drive the transition to an environmentally sustainable economy, by enhancing the integration of environmental risk considerations in financial institutions' financing and investment decisions and promoting new opportunities for green financing. 

     

    Comment Due Date: August 07, 2020

    Keywords: Asia Pacific, Singapore, Banking, Insurance, Securities, ESG, Governance, Disclosure, Green Finance Action Plan, Climate Change Risk, MAS

    Related Articles
    News

    ECB Amends Guideline on Temporary Collateral Easing Measures

    ECB published Guideline 2021/975, which amends Guideline ECB/2014/31, on the additional temporary measures relating to Eurosystem refinancing operations and eligibility of collateral.

    June 17, 2021 WebPage Regulatory News
    News

    EIOPA Releases Report on Artificial Intelligence Governance Principles

    EIOPA published a report, from the Consultative Expert Group on Digital Ethics, that sets out artificial intelligence governance principles for an ethical and trustworthy artificial intelligence in the insurance sector in EU.

    June 17, 2021 WebPage Regulatory News
    News

    HKMA to Increase Focus on Suptech and Regtech Cloud Adoption

    HKMA published the seventh and final issue of the Regtech Watch series, which outlines the three-year roadmap of HKMA to integrate supervisory technology, or suptech, into its processes.

    June 17, 2021 WebPage Regulatory News
    News

    EC Consults on Improving Transparency in Secondary Markets for NPLs

    EC launched a targeted consultation to improve transparency and efficiency in the secondary markets for nonperforming loans (NPLs).

    June 16, 2021 WebPage Regulatory News
    News

    BIS and Nordic Central Banks Launch Innovation Hub in Stockholm

    BIS, Danmarks Nationalbank, Central Bank of Iceland, Norges Bank, and Sveriges Riksbank launched an Innovation Hub in Stockholm, making this the fifth BIS Innovation Hub Center to be opened in the past two years.

    June 16, 2021 WebPage Regulatory News
    News

    FDIC Tech Sprint Aims to Explore Technologies to Reach Unbanked

    FDITECH, the technology lab of FDIC, announced a tech sprint that is designed to explore new technologies and techniques that would help expand the capabilities of community banks to meet the needs of unbanked individuals and households.

    June 16, 2021 WebPage Regulatory News
    News

    EC Releases Sustainable Finance Taxonomy Compass

    EC released the EU Taxonomy Compass, which visually represents the contents of the EU Taxonomy starting with the EU Taxonomy Climate Delegated Act.

    June 16, 2021 WebPage Regulatory News
    News

    FDIC Proposes Amendments to Real Estate Lending Standards

    FDIC is seeking comments on a rule to amend the interagency guidelines for real estate lending policies—also known as the Real Estate Lending Standards.

    June 15, 2021 WebPage Regulatory News
    News

    EIOPA to Consider Liquidity Risk in Stress Test for 2021

    EIOPA published its annual report, which sets out the work done in 2020 and indicates the planned work areas for the coming months.

    June 15, 2021 WebPage Regulatory News
    News

    ESRB Paper Discusses Measurement of Impact of Bank Failure via Lending

    The ESRB paper that presents an analytical framework that assesses and quantifies the potential impact of a bank failure on the real economy through the lending function.

    June 15, 2021 WebPage Regulatory News
    RESULTS 1 - 10 OF 7116