MAS announced launch of the Green and Sustainability-Linked Loan Grant Scheme (GSLS), which will be effective as of January 01, 2021. The scheme seeks to support corporates of all sizes to obtain green and sustainable financing by defraying the expenses of engaging independent service providers to validate the green and sustainability credentials of the loan. The grant encourages banks to develop green and sustainability-linked loan frameworks to make such financing more accessible to small and medium-size enterprises (SMEs). In addition, MAS will expand the scope of the existing Sustainable Bond Grant Scheme (SBGS) to include sustainability-linked bonds, effective immediately. Beyond grant support for pre-issuance costs, the enhanced SBGS will now cover the post-issuance costs of engaging independent sustainability assessment and advisory service providers to obtain external reviews or report for bonds under the scheme.
The GSLS will enhance the ability of corporates to obtain green and sustainability-linked loans. The grant will cover expenses incurred by corporates to engage independent sustainability assessment and advisory service providers to develop green and sustainability frameworks and target, obtain external reviews (which includes a second party opinion, verification, certification or rating), and report on the sustainability impact of the loan. MAS will defray up to SGD 100,000 of these expenses per loan. The grant will also cover expenses incurred by banks to engage independent sustainability assessment and advisory service providers to develop frameworks, obtain external reviews, and report on the allocated proceeds of loans originated under the framework. MAS will defray up to 60% of these expenses, capped at SGD 120,000 for such green and sustainability-linked loan frameworks. MAS will also defray by 90% the expenses incurred by banks to develop frameworks specifically targeted at SMEs and individuals, capped at SGD 180,000 per framework. This is to intended further encourage banks to provide greater support to SMEs and enable individuals to contribute to the sustainability agenda by integrating sustainability considerations in their financing decisions.
The GSLS is an initiative under Green Finance Action Plan of MAS and will support the aim to develop green and sustainable financial markets and products to support the transition of Asia to a low-carbon future. MAS will require corporates to engage independent sustainability assessment and service providers and obtain independent external reviews on these loans to demonstrate alignment with internationally recognized standards. Accompanying the launch of the GSLS, BNP Paribas, OCBC Bank, and UOB have introduced innovative green and sustainability-linked loan frameworks that will qualify for the scheme. The banks’ frameworks feature standardized criteria and processes, which will streamline assessments of green and sustainable lending to corporates, and support the banks’ clients, including both SMEs and large corporates, in financing circular economy projects, renewable energy initiatives, and energy efficiency activities, in addition to promoting sustainable supply chain practices. Through these frameworks, the banks seek to direct financing to activities that promote sustainable development in Singapore and Asia.
Keywords: Asia Pacific, Singapore, Banking, GSLS, Sustainable Finance, ESG, Low-Carbon Economy, Credit Risk, MAS
Previous ArticleFCA Announces Enhancements to New Data Collection Platform RegData
BIS Innovation Hub published the work program for 2021, with focus on suptech and regtech, next-generation financial market infrastructure, central bank digital currencies, open finance, green finance, and cyber security.
In an article published by SRB, Mairead McGuinness, the European Commissioner for Financial Services, Financial Stability, and Capital Markets Union, discussed the progress and next steps toward completion of the Banking Union.
EBA finalized the two sets of draft regulatory technical standards on the identification of material risk-takers and on the classes of instruments used for remuneration under the Investment Firms Directive (IFD).
EC published, in the Official Journal of the European Union, a notification that the European Court of Auditors (ECA) has published a special report on resolution planning in the Single Resolution Mechanism.
BoE published a scenario against which it will be stress testing banks in 2021, in addition to setting out the key elements of the 2021 stress test, guidance on the 2021 stress test, and the variable paths for the 2021 stress test.
PRA published a consultation paper (CP3/21) proposes rules regarding the timing of identity verification required for eligibility of depositor protection under the Financial Services Compensation Scheme (FSCS).
FSB published the work program for 2021, which reflects a strategic shift in priorities in the COVID-19 environment.
FCA announced that 50% firms have started using the new data collection platform RegData, which is slated to replace the existing platform known Gabriel.
Bundesbank published Version 5.0 of the derivation rules for completeness check at the form level, with respect to the data quality of the European harmonized reporting system.
FED finalized a rule that updates capital planning requirements to reflect the new framework from 2019 that sorts large banks into categories, with requirements that are tailored to the risks of each category.