Green Finance Trends
While your company is concerned with macroeconomic instabilities like rampant inflation, it’s easy to ignore another looming threat: climate change. With rising sea levels and burning forests due to surging global temperatures, the climate crisis is real.
We’re not spared from its consequences. An alarming heatwave has spread throughout South-east Asia since April 2023—temperatures soared to a 40-year high of 37 degrees Celsius in Singapore last week. In the face of this pressing emergency, what is your company doing to mitigate climate change? Do you need extra resources to go green?
Introduction To Green Finance
Green finance refers to any investment that promotes eco-positive activities, whether it be the construction of green infrastructure or the purchase of environmentally-friendly goods and services. This is meant to eliminate key barriers of entry—such as limited resources and overhead costs—which companies may face when achieving their sustainability goals.
It is a rapidly expanding market—over S$39.8 billion of green and sustainability-linked loans have been issued in Singapore from 2018 to 2021. Singapore is ASEAN's largest sustainable finance market, accounting for nearly 50% of cumulative ASEAN sustainability-linked bond and loan issuances.
Recent Developments In Green Finance
A fervent supporter of environmental sustainability, the Monetary Authority of Singapore (MAS) launched the Green Finance Action Plan (GFAP) in 2019. The GFAP’s ultimate objective is to achieve net zero carbon emissions in Asia by 2050.
Last month, the MAS released the Finance for Net Zero Action Plan (FiNZ Action Plan) which expands the scope of the GFAP. Its focus is now not only green finance but also transition finance—a form of financial assistance to help “brown” companies decarbonise and become greener via ongoing initiatives.
Furthermore, the MAS has pledged to set aside S$15 million to enhance and extend the sustainable bond and loan grant schemes till 2028. By tapping on these schemes, your company can lower the costs of issuing sustainable bonds or loans.
How The FiNZ Action Plan Will Impact Your Business
Under the FiNZ Action Plan, there are stringent criteria in place to prevent greenwashing or “transition-washing”. This is the MAS’ way of ensuring that proceeds will not be misused. To qualify for the grants, all transition instruments must be aligned with internationally recognised taxonomy and transition finance principles. Your company also has to provide a comprehensive entity-level transition plan.
Singapore-listed companies in the finance, agriculture, energy, and transport sectors are required to make climate disclosures aligned with the International Sustainability Standards Board (ISSB) standards. If your company is a privately held SME, sustainability reporting is not mandatory. Nonetheless, you are highly encouraged to do so because sustainability is a key driver of business survival.
Due to heightened environmental awareness, consumers are increasingly supporting organisations which actively seek to reduce their carbon footprint. For instance, a bus fleet management company may potentially lose clients if it does not switch over to using electric buses.
Therefore, you will have to seek out the right expertise in this field. Consider hiring a Sustainability Specialist—or even an entire team—to spearhead sustainability initiatives within your company!
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