MAS Taskforce Issues Guide for Climate-Related Disclosures
The MAS-convened Green Finance Industry Taskforce, or GFIT, issued a detailed implementation guide for climate-related disclosures by financial institutions. The Taskforce also published a whitepaper that outlines recommendations and lays out a roadmap for scaling green finance in the real estate, infrastructure, fund management, and transition sectors; these include a green securitization platform to scale sustainable infrastructure investments in the region and recommendations for the use of transition bonds and loans in certain sectors, to support more sustainable practices.
The guide on implementing climate-related disclosures sets out best practices that are aligned with the recommendations of the FSB's Task Force on Climate-Related Financial Disclosures (TCFD). The guide outlines disclosure practices for the banking, insurance, and asset management sectors. In each industry, recommendations are presented in line with the TCFD framework, which is divided into the four pillars—governance, strategy, risk management and metrics and targets—and 11 supporting recommended disclosures. For each key recommendation under the TCFD framework, three levels of reporting maturity have been identified to propose a pathway for reporting excellence. The pathway is represented by Type A disclosures, Type B disclosures and Type C disclosures, in order of increasing reporting maturity. Type A disclosures generally represent disclosures that most financial institutions have taken as a first step in reporting. Type B disclosures generally comprise more extensive or involved disclosures. Type C disclosures generally represent "best in class" reporting to date, which financial institutions may aim to achieve over time. The guide is not intended to be a disclosure standard or reporting framework. Rather, this guide is a practical reference document to assist financial institutions in preparing their disclosures, regardless of the standard or framework they use.
The Taskforce has also published the framework for green trade finance and working capital, which provides a principles-based approach for banks to assess eligible green trade finance transactions and specific guidance on recommended industry certifications for trade finance activities to qualify as green. Guided by this framework, HSBC and UOB [United Overseas Bank] have piloted four green trade finance transactions for renewable energy, recycling, agriculture, and farming activities, to support businesses in greening their supply chains. Another initiative from the Taskforce is a series of workshops for financial institutions and corporates, from May 2021 to April 2022, to build capacity in green finance. These programs aim to strengthen the capabilities of banks, insurers, and asset managers in environmental risk management, enhance their environment-related disclosures, deepen knowledge of green finance instruments, and enable financial institutions and corporates to customize green financing solutions for transition sectors.
The Green Finance Industry Taskforce, convened by MAS, comprises representatives from financial institutions, corporates, non-governmental organizations,, and financial industry associations. Its mandate is to help accelerate the development of green finance through four key initiatives: develop a taxonomy, enhance environmental risk management practices of financial institutions, improve disclosures, and foster green finance solutions. In January 2021, the Taskforce had proposed a taxonomy and launched an environmental risk management handbook.
Keywords: Asia Pacific, Singapore, Banking, Insurance, Securities, Climate Change Risk, ESG, TCFD, Disclosures, Reporting, GFIT, Sustainable Finance, MAS
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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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