The Monetary Authority of Singapore (MAS) published amendments to Notice 635, which sets out requirements that a bank in Singapore has to comply with when granting an unsecured non-card credit facility to individuals. The effective date for the amendments is May 14, 2022. In yet another development, the Green Finance Industry Taskforce (GFIT) of MAS is consulting, until June 23, 2022, on the second version of green and transition taxonomy.
The consultation builds on Green Finance Industry Taskforce’s earlier proposed taxonomy in January 2021 and seeks feedback on the detailed thresholds and criteria for economic activities in the energy, transport, and real estate sectors. Out of the eight focus sectors, the three sectors covered in this consultation collectively account for nearly 90% of the Association of Southeast Asian Nations (ASEAN) greenhouse gas emissions. The proposed thresholds and criteria can be used to classify an economic activity as green, amber, or red, using a traffic light system, to differentiate its contribution to climate change mitigation. A green classification represents activities that either contribute substantially to climate change mitigation by operating at net zero or are on a pathway to net zero by 2050. Additionally, an amber classification represents transition and includes activities that are either transitioning toward green within a certain timeframe, or facilitating significant emissions reductions in the short term while a red classification refers to harmful activities that are not compatible with a net zero trajectory.
The proposed taxonomy from the Taskforce accompanies a user guide for financial institutions and companies to apply the taxonomy. The user guide sets out details on the reporting of a company’s revenue, capital expenditures, and operating expenditures that are aligned with the taxonomy criteria. The Green Finance Industry Taskforce aims to release the criteria and thresholds for the remaining five sectors for public consultation in late 2022 and then subsequently finalize the full taxonomy in 2023. The remaining five sectors are Agriculture and Forestry/Land Use, Industrial, Information and Communications Technology, Waste/Circular Economy, and Carbon Capture and Sequestration.
Comment Due Date: June 23, 2022
Keywords: Asia Pacific, Singapore, Banking, ESG, Climate Change Risk, Sustainable Finance, Green Taxonomy, GFIT, MAS Notice 635, Unsecured Credit Facilities, Taxonomy, Disclosures, Credit Risk, Credit Limit, Lending, MAS
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.
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