MAS Taskforce Proposes Green Taxonomy, Issues Risk Management Handbook
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

María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer

Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.

Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
Previous Article
HKMA Keeps Countercyclical Capital Buffer at 1%Related Articles
EU Agencies Update LCR Rule and Macro-Prudential Policy Recommendation
The European Commission (EC) published the Delegated Regulation 2022/786 with regard to the liquidity coverage requirements for credit institutions under the Capital Requirements Regulation (CRR).
EBA Publishes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying the criteria to identify shadow banking entities for the purposes of reporting large exposures.
EIOPA Examines Physical Climate Risk Exposure, SII Non-Compliance
The European Insurance and Occupational Pensions Authority (EIOPA) published a report assessing insurers' exposure to physical climate change risks
EC Publishes Results on Review of Web Accessibility Directive
The European Commission (EC) published the results of a public consultation, held in October 2021, on the review of the Web Accessibility Directive.
NGFS Report Explores Quantification of Climate Risk Differentials
The Network for Greening the Financial System (NGFS) published two reports to aid central banks and regulators in their oversight of the financial sector and in their central bank operations
MAS Consults on Adjustment Spreads for Conversion of SOR Contracts
The Monetary Authority of Singapore (MAS) and the SC-STS are jointly consulting, until June 10, 2022, on setting adjustment spreads for the conversion of legacy SOR contracts to SORA reference rate.
OSFI Discusses Benchmark Rate Transition, Sets Out Work Priorities
The Office of the Superintendent of Financial Institutions (OSFI) published the strategic plan for 2022-2025 and the departmental plan for 2022-23.
EBA Proposes Standards to Support Secondary NPL Markets
The European Banking Authority (EBA) is consulting, until August 31, 2022, on the draft implementing technical standards specifying requirements for the information that sellers of non-performing loans (NPLs) shall provide to prospective buyers.
EU Confirms Agreement on Rules on Cybersecurity and Banking Resolution
The European Council and the Parliament reached an agreement on the revised Directive on security of network and information systems (NIS2 Directive).
EBA Issues Standards for Crowdfunding Service Providers Under ECSPR
The European Banking Authority (EBA) published the final draft regulatory technical standards specifying information that crowdfunding service providers shall provide to investors on the calculation of credit scores and prices of crowdfunding offers.