Singapore's Efforts in ASEAN to Lead Green Economy and Counter Climate Change

Mr Saktiandi Supaat asked the Minister for the Environment and Water Resources (a) whether he can provide an update on Singapore's efforts and strategy in ASEAN to lead and boost the green economy and counter climate change; and (b) whether the Ministry will consider working with other agencies to build a bigger climate financing ecosystem here via incentives and lowering bank capital requirements for climate-friendly investments.

Located in a region with long coastlines and heavily-populated low-lying areas, ASEAN Member States (AMS) are vulnerable to the impacts of climate change. ASEAN's efforts to tackle climate change have been directed toward sustainable development and the building of smart and efficient cities, which also support the growth of a green economy.

ASEAN cooperation on climate change is under the purview of the ASEAN Working Group on Climate Change (AWGCC). As Chair for the period 2017 to 2019, Singapore works closely with AMS and international development partners to drive the implementation of the AWGCC Action Plan (2016-2025), which covers climate adaptation and mitigation, capability building, climate finance, and cross-sectoral coordination. AMS are currently working on 18 projects and activities endorsed by the AWGCC. Singapore also launched the Climate Action Package at the Special ASEAN Ministerial Meeting on Climate Action last July, to provide training and capacity building for participating countries to take climate mitigation and adaptation measures, which in turn also help to make their economies more resilient.

Singapore has also been driving action at the city level. One of our key initiatives as ASEAN Chair last year was the establishment of the ASEAN Smart Cities Network (ASCN), a collaborative platform for AMS to work towards smart and sustainable development. Singapore will continue to support Thailand as the current Chair of ASEAN to advance this work under its "Advancing Partnership for Sustainability" agenda.

However, Governments cannot tackle climate change alone. We need to mobilise private capital to support sustainable development and facilitate the region's transition to a low-carbon and climate resilient economy. My Ministry works closely with the Monetary Authority of Singapore (MAS) to promote sustainable financing in Singapore and the region. Let me outline our efforts in three key areas.

First, non-bank financing solutions like green bonds can play a bigger role in the financing of green investments. MAS introduced the Green Bond Grant Scheme in 2017 to spur the use of capital markets instruments for green financing and to promote the adoption of standards for green investment products. The grant helps to offset the cost of obtaining an external review to ensure that the green bonds are aligned with internationally accepted standards. In February this year, the grant scheme was expanded to include social and sustainability bonds, and renamed the Sustainable Bond Grant Scheme (SBGS). To date, over SGD 6 billion of green bonds have been issued in Singapore. MAS has also lowered the minimum issuance size requirement for the SBGS, which will allow more qualifying issuers to access the grant.

Second, MAS is working closely with banks to strengthen their management of environmental risks and support sustainable financing. Over the past years, the banks have been enhancing their relevant policies and processes. In April this year, our local banks announced their decisions to cease financing of new coal-fired power plants, and are working with their customers to make the transition to cleaner forms of energy production. As a member of the Network for Greening the Financial System, MAS works closely with our international counterparts to develop best practices for banks to manage environmental risks and seize opportunities. These international forums are studying the use of capital and other regulatory requirements to promote sustainable financing. As capital requirements are intended to ensure that banks have sufficient capacity to withstand losses, any reduction in capital should be justified by lower risks posed by exposure to sustainable financing.

Third, MAS is working with local and international partners to strengthen the capability and capacity of the financial sector to support sustainable financing activities. For example, MAS has signed a Memorandum of Understanding with the International Finance Corporation, which aims to raise the awareness and knowledge of green bonds through capacity building workshops.

The continued growth of sustainable financing requires a coordinated and collective effort involving the financial sector, businesses, the Government and civil society. My Ministry will continue to work closely with the MAS and other government agencies to support our sustainable financing efforts and drive climate action in Singapore.