Ladies and Gentlemen
1. A good morning to everyone. I am
happy to be here at the inaugural forum on “Unlocking Capital for Sustainability”
organised by Eco-Business and its partners. The forum is timely and relevant in
light of the pressing environmental challenges facing the world, in particular,
The Need for Climate Action
2. We can already see and feel
the impacts of climate change. Temperature records are routinely broken. According
to the World Meteorological Organization, 2017 is the warmest year on record, among
all those years without El Niño
conditions. In 2017, the world also witnessed various extreme events, among
them hurricanes Harvey, Maria and Irma, one after another, in a matter of weeks.
We are only at the start of 2018, but already, there is a heat-wave in parts of
Australia, with temperatures reaching 47 degrees Celsius in Sydney. Cape Town is suffering from a three-year drought, bracing itself for Day Zero in two months, because people are still not used to
using less water – people still need that much water every day. Rains had been forecasted
for late 2017, but they never came. Helen Zille, premier of the Western Cape
Province in South Africa, tweeted that “climate change has destroyed
predictability of old forecasting models”.
gone through the same kind of problems that we did from 2014 to 2016, we should
also learn very quickly that we have to take these issues seriously. We are not
spared from changing weather patterns. As climate change intensifies in the
coming years, these intense weather patterns will occur more frequently.
4. Climate change cannot be
tackled by any one country alone. Global effort is needed and that is why Singapore signed on to the Paris Agreement.
To spur efforts to fight climate change, we have designated 2018 as the Year of
Climate Action. Why did we do this? Just like how one country cannot solve
climate change problems, the government alone cannot do it alone. Everyone has to
play a part in reducing our carbon footprint; be it individuals, companies, or organisations.
The Government’s Climate Action Plan since 2016 sets out how various sectors will
reduce their greenhouse gas emissions. This involves enhancing industrial
energy efficiency, expanding public transport, promoting green buildings, and
investing in solar energy. To complement
all these, we will also be implementing a carbon tax on large emitters from
2019, as announced by the Minister of Finance at last year’s Budget.
of Financial Institutions
5. Financial institutions too,
have a key role in climate action. At the basic level, financial institutions,
like any business, should encourage green practices within the company, such as
promoting energy and water efficiency, and practicing recycling.
6. But beyond that, our financial
institutions can be the change-makers for sustainability, by catalysing sustainable
finance in Singapore, the region and globally. The market is substantial. A report
on Green Finance Opportunities in ASEAN published by the DBS and UN Environment
Programme last year estimated that there is US$3 trillion in green finance
opportunities in the region from 2016 to 2030in
the areas of energy efficiency, renewable energy as well as food and
agriculture and land use.
7. I would also strongly urge financial
institutions to keep up efforts to incorporate Environmental, Social and
Governance (or ESG) principles into your business decisions. Your lending and investment decisions can
help to redirect financial flows away from environmentally destructive business
activities, and instead, promote resilient and sustainable markets. Let me elaborate.
Growth of Green Finance
8. Green finance is gaining momentum. According
to the UN Environment Programme’s green finance progress report, globally,
sustainable assets under management have increased by about 25% from 2014 to
2016. Green bond issuance doubled from 2015 to 2016. There is also increasing
demand for green investment funds and green loans.
9. The London Stock Exchange has
50 green bonds listed, raising more than $14.8 billion across seven currencies.
Closer to home, China has become one of the world’s largest issuers of green
bonds. In the first half of 2017 alone, China issued US$11.7 billion worth of
green bonds. China also launched ‘green finance’ pilot zones in five provinces in
2017, to support energy conservation and emissions reduction.
10. Financial institutions in ASEAN
are catching on. Banks in Indonesia are developing a range of green financial products
and services to facilitate renewable energy, energy efficiency, and sustainable
agriculture. This is in line with the Indonesia Financial Services Authority’s
(or the OJK’s) 2016 Master Plan. Last
year, Malaysia, with support from the World Bank, launched their first green
bond or green susuk, compliant with
Where we are in Singapore
11. Singapore too is incorporating
sustainable financing in the activities of our financial centre. I am glad that
some positive moves have been made:
2015, the Association of Banks introduced Guidelines on Responsible Financing that
required banks to disclose their senior management’s commitment to responsible
financing and to build capacity and set up processes to achieve this.
has made it mandatory for listed companies to undertake sustainability
reporting on a ‘comply or explain basis’ from financial year 2017.
year, the Life Insurance Association Singapore (LIA Singapore) reaffirmed its
support for member companies to adopt ESG principles in their decision-making
processes. Similarly, the Investment Management Association of Singapore (IMAS)
has expressed support for global and local sustainability standards and strongly
encouraged its members to adopt the Singapore Stewardship Principles.
12. To kick-start the development
of a green bond market in Singapore, the Monetary Authority of Singapore (MAS) launched
the Green Bond Grant Scheme in 2017. MAS
will also recognise the ASEAN green bond standards launched last year, as a
qualifying standard under the Green Bond Grant Scheme.
13. We have also seen an increase in
green bonds being issued in Singapore. In April 2017, City Developments Limited
financed its investments in energy saving and efficient infrastructures through
green bonds which raised S$100 million. DBS Group also issued a green bond worth
S$685 million in July 2017, followed by Manulife Financial which issued a $500
million green bond.
14. SGX has also made good
progress in attracting green bond listings, attracting over 20 local and
international listings amounting to almost $15 billion in recent years.
What the Year of
Climate Action means for Financial Institutions
15. All these initiatives are an
encouraging start for green finance in Singapore. They show that it is possible
to do well and do good at the same time. But there is much more that we can achieve.
For example, a 2017 report by the World Wildlife Fund (WWF) on Sustainable
Banking in ASEAN, highlights that banks could develop sustainable finance
guidelines; as well as require their clients to commit to sustainable
agricultural practices. In this Year of Climate Action, I urge
financial institutions to think deeply about what you can do to embed sustainability
in your businesses. Let me highlight
integrate ESG practices into your company’s core decision making processes. In
particular, financial institutions could do the following:
i. Review your clients’
sustainability profiles and work with them to improve sustainability
practices. I understand that our local
banks are currently doing so and targeting to complete the review of their
entire customer portfolios by end-2018.
ii. Prioritise activities that
pose higher risks to the environment, and undertake measures to
address sustainability risks specific to these activities. For example, DBS
Bank has recently pledged that it will stop financing new greenfield coal-fired
power generation projects in OECD and developed markets. The bank will also
cease all project financing of greenfield thermal coal mines.
iii. Actively seek opportunities to
channel financing to projects that can meet the sustainability needs of
Singapore and the region, including in renewables and energy efficiency,
sustainable infrastructure as well as food and agriculture. For example, the
United Overseas Bank (UOB) has provided financing for solar projects in
iv. Include responsible financing
disclosures in your annual reports and their websites. Here, I understand that
local banks are on track to fully implement the SGX sustainability reporting requirements this year.
continue to develop different kinds of green finance products and foster the
growth of a green asset class in the region.
i. As mentioned earlier, green
bonds are gaining traction in the region.
It offers issuers here a useful avenue to access an additional class of
international “green” investors.
ii. Banks can also explore offering
longer term loans suitable for green infrastructural projects.
iii. Insurance players can enhance
research and analytics into environmental risks in the region, for example in
natural catastrophes that can underpin the development of innovative disaster
risk financing solutions for the region.
set goals for reducing your carbon footprint, such as by using more renewable
i. For example, DBS Bank has pledged to power all
its operations in Singapore using renewable energy by 2030, while HSBC
aims to source 100 per cent of their electricity from renewable sources by 2030
and cut annual carbon emissions per employee from 3.5 tonnes in 2011 to 2
tonnes by 2020.
16. There are many possibilities. We
are limited only by our imagination and more by our will. I encourage you to
think about what you will do as an institution. Let us start by doing something
which is easy – take out your smartphone, go to MEWR’s website, and make your climate
17. In conclusion, let us work
together to make Singapore the best liveable and sustainable city to live and
do business in, now and in the future. As the saying goes, ‘money makes the world go
round’. Financial institutions have the
potential to be a powerful force for good, or otherwise. The responsibility lies
in the hands of the leaders, to shape the directions that their institutions
will take. In the face of looming challenges and risks to our planet, today’s
forum on unlocking capital for sustainability is timely and pivotal. Let us take action today, for a sustainable
18. I wish all of you a fruitful discussion.