Regulatory Bodies

Regulatory bodies play a crucial role in defining compliance frameworks and enforcing ESG standards to ensure transparency, accountability, and sustainable business practices. These organisations establish guidelines, reporting requirements, and compliance frameworks tha companies must follow to align with ESG principles.

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Key Organisations

  • Monetary Authority of
    Singapore (MAS): Green
    Finance Resource Portal
  • Singapore Exchange
    Regulation (SGX RegCo):
    Sustainability Regulation Hub
  • National Environment Agency
    (NEA): Corporate
    Sustainability Portal
  • Ministry of Sustainability and
    the Environment

Key Initiatives

  • Green Finance Industry
    Taskforce (GFIT) coordinated
    by MAS
  • SGX Sustainability Advisory
    Committee
  • Interagency Sustainable
    Finance Working Group
  • ACRA-SGX Joint Sustainability
  • Reporting Implementation
    Task Force
  • Singapore-Asia Taxonomy

The Green Finance Industry Taskforce

Coordinated by MAS, the Green Finance Industry Taskforce (GFIT) aims to accelerate the development of green finance through four key initiatives: (a) develop a taxonomy; (b) enhance environmental risk management practices of financial institutions; (c) improve disclosure; and (d) foster green finance solution. GFIT developed the Singapore Asia taxonomy for Singapore-based financial institutions, to create a system of classification or standards for green and transition activities, increase transparency between financial market participants, and reduce the risk of greenwashing. GFIT has issued four taxonomy consultation papers setting out its recommendations:

SGX Sustainability Advisory Committee

The growing interest in ESG issues globally has led to a call to provide greater transparency and assurance on companies’ ESG-related information, which investors and other stakeholders can incorporate into their decision making. The Accounting and Corporate Regulatory Authority and Singapore Exchange Regulation have set up a Sustainability Reporting Advisory Committee (SRAC) to carry out two main functions:

  • Advise on a sustainability reporting roadmap for Singapore-incorporated companies, beyond SGX-listed companies; and
  • Provide inputs on the suitability of international sustainability reporting standards for implementation in Singapore.

Singapore-Asia Taxonomy

Launched by the Monetary Authority of Singapore (MAS) in December 2023, the Singapore-Asia Taxonomy for Sustainable Finance (Singapore-Asia Taxonomy) is essentially a classification framework that defines what qualifies as green, transition, or ineligible economic activities in the context of sustainable finance across eight focus sectors: Energy, Real Estate, Transportation, Agriculture and Forestry/Land Use, Industrial, Information and Communication Technology, Waste/Circular Economy, Carbon Capture and Sequestration.

Key Objectives

Climate change mitigation is a key environmental objective for Singapore and the ASEAN nations as seen in their nationally determined contributions under the Paris Agreement. In alignment with these commitments, the Singapore-Asia Taxonomy identifies climate change mitigation as a key focus and seeks to[1]:

  1. Provide clarity via a common language for financiers, issuers, policymakers and regulators.
  2. Help translate commitments to the Paris Agreement and other sustainable investment goals for investors.
  3. Provide clarity and consistency for financiers, companies and government agencies.
  4. Support understanding of risk and opportunities based on environmental factors and support different investment styles and strategies for green and transition investment.
  5. Put environmental data in context and make it easier to understand how companies are working towards a low-carbon transition and building resilience to climate change.
  6. Help investors avoid reputational risk by screening out economic activities that undermine broader environmental, climate and social objectives.
  7. Incentivise companies by helping them access finance for R&D by using science and evidence-based framework to define what is environmentally sustainable.

How It Works

The Singapore-Asia Taxonomy uses a ‘traffic light’ system to classify activities:
  • Green: Activities that contribute substantially to Ineligible climate change mitigation by operating at near zero emissions, or are on a 1.5°C-aligned pathway
  • Amber (Transition): Not yet green, but on a credible path toward 1.5°C pathway. In some sectors of the taxonomy, Amber (measures) have been proposed to provide additional options for users.
  • Ineligible: Activities that do not presently meet the sustainability thresholds. They either do not comply with green or amber criteria, or are directly unsustainable activities.
[1] Singapore-Asia Taxonomy, at pp. 10-13.