Speech by Mr Masagos Zulkifli, Minister for the Environment and Water Resources, at the Inaugural Forum on “Unlocking Capital for Sustainability", 9 February 2018

Distinguished guests

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, climate change.  

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”.

 3. Having 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.

Role 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 2030 in 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 sukuk, compliant with Sharia principles.

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:

a. In 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.

b. SGX has made it mandatory for listed companies to undertake sustainability reporting on a ‘comply or explain basis’ from financial year 2017.

c. Last 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.

Green bond market

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 some possibilities:

a. First, 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,[1] 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 Singapore.

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. 

b. Second, 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.  

c. Third, set goals for reducing your carbon footprint, such as by using more renewable energy.

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 pledge.


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 future.

18. I wish all of you a fruitful discussion.

[1] These 8 industries include agriculture, chemicals, defence, energy (including coal), forestry, infrastructure, mining and minerals, and waste management.

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