Jacqueline Loh: Keeping green and impact in focus
Keynote speech by Ms Jacqueline Loh, Deputy Managing Director of the Monetary Authority of
Singapore, at Asian Venture Philanthropy Network (AVPN) Virtual Conference 2020, 8 June 2020.
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Ms Naina Batra, Chairperson and CEO, AVPN
Distinguished guests, ladies and gentlemen
1. Good morning. Thank you for inviting me to the eighth AVPN Conference. I am very glad that
AVPN has pressed on with this flagship event virtually in these unprecedented times.
2. The COVID-19 pandemic has resulted in significant health, economic and social
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challenges globally. The IMF has projected that global GDP will contract by 3% this year ,
marking a significantly deeper downturn than the 0.1% contraction in 2009 during the Global
Financial Crisis.
3. "The Power of Networks", which is the theme of this year's AVPN conference, is
highly apt as we strive towards the United Nations Sustainable Development Goals (UN
SDGs). Addressing complex and multi-dimensional challenges like climate action, inequality, and
quality healthcare and education requires policymakers, financial institutions, corporates,
nongovernmental organisations, and multilateral development banks (MDBs), to come together on a
common global challenge.
4.
The financial sector and MDBs have stepped up and shored capital towards
building capacity in healthcare and pharmaceuticals, while supporting the recovery.
Social and sustainability bond issuances totalled US$24 billion in the first quarter of
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this year , nearly double that of the same period last year. The bond proceeds are
channelled to support healthcare and pharmaceutical development, for the benefit of
lower income households and small businesses.
The World Bank's pandemic bond facility has been triggered, and will provide US$195
million in emergency financing to 64 of the world's poorest countries to support their
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recovery.
5. Today, I will focus on opportunities in green and sustainable finance, and impact investing.
Pushing forward with green finance for a sustainable world
6. The pandemic provides a prime opportunity for countries to "build back better". It is
important now, more than ever, that countries not only rebuild their economies and preserve
jobs, but also in the process, intentionally build a more sustainable new economy. There have
been growing calls for governments to prioritise or accelerate green infrastructure development
as part of recovery plans.
Infrastructure development is critical to driving economic growth and improving social
outcomes, while climate change remains a significant threat to mankind. It is important
that a right balance between growth and sustainability be achieved.
Public-private partnerships will be key to achieving this. Last week, Infrastructure Asia
in Singapore partnered the World Bank Group and Singapore Management University
to build capabilities of regional government officials, and raise awarenss of solutions to
support sustainable and resilient infrastructure development, such as clean energy
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projects.
7. Singapore is committed to support the pivot towards a clean and sustainable future.
MAS announced our green finance action plan last year, which comprises three key thrusts:
firstly, building resilience to environmental risks;
secondly, developing green finance solutions and markets; and
thirdly, leveraging innovation and technology.
8. We have made good progress across all three thrusts.
We will issue a consultation paper on MAS' Environmental Risk Management
Guidelines for the banking, insurance, and asset management sectors later this year.
These guidelines will set standards on governance, risk management, and disclosure,
to enhance the financial system's resilience to environmental risk.
Last year, we expanded the sustainable bond grant scheme to support not just green
but also social and sustainability bonds. This year, to accelerate green and
sustainability linked lending, we are developing a green and sustainability loan grant
scheme, which aims to defray the costs of external review and bank frameworks for
such loans. This seeks to increase the ease of loan origination and reduce expenses
for small and medium sized enterprises (SMEs), and encourage SMEs, corporates,
as well as banks to integrate green and sustainability issues in their financing
discussions and decisions.
We will also be anchoring centres of excellence in Singapore, to undertake quality
green finance research and talent development, with strong customisation and
applications for Asia's transition needs.
9. The theme for the Global FinTech Hackcelerator, in this year's Singapore FinTech
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Festival, is "Building Resilience, Seizing Opportunities, Emerging Stronger".
Hackcelerator will identify solutions that enable financial institutions to respond to the pandemic
and climate change. MAS has received a record 100 problem statements, on pertinent areas
including:
improving supply chain resilience amidst disruptions to manufacturing and the flow of
goods and services during the pandemic;
driving social impact by improving credit access for lower-income individuals and
SMEs; and
accelerating green finance flows to support low-carbon economic activities.
I welcome your support in rallying start-ups in your networks to submit their proposed solutions.
10.
We encourage the financial sector and corporates to work in tandem with MAS'
green finance efforts. On this front, we have seen encouraging developments even in recent
months.
Global banks like Deutsche Bank and JPMorgan have pledged to increase sustainable
financing flows.
The National University of Singapore (NUS) became the first university in Asia to issue
a green bond, working with OCBC and DBS Bank. NUS issued S$300 million to
finance projects targeted at green buildings, renewable energy, and sustainable
management of water and land.
CapitaLand raised S$1.5 billion through sustainable finance this year, including a
S$500 million sustainability linked loan from UOB, the Singapore real estate sector's
largest issuance, two weeks ago.
Investing in sustainability and impact
11. Moving beyond bonds and loans, asset managers should seize this opportunity to
launch robust green and sustainability focused fund strategies, in anticipation of rising
demand from investors in a post-COVID-19 world.
Global investments that factor in environmental, social and governance (ESG)
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considerations have increased by 70% between 2014 and 2018 .
The momentum will likely persist, with early indications that corporates with good ESG
ratings are exposed to less systemic risks and are more resilient to shocks.
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Since the onset of COVID-19, 24 of 26 Morningstar sustainable index funds
outperformed their closest conventional counterparts, while global sustainable
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openended funds registered net inflows of US$40 billion in 1Q 2020 , over 40% more
yearon-year, despite a weakening in global market conditions.
12. Foundations, trusts, and family offices are also well placed to drive positive change
through your investments and your business operations. Impact investing serves to bridge
the gap between philanthropy and asset management. Allocation to impact funds managed by
private equity and venture capital managers will allow investors to make a positive impact, while
generating market competitive financial returns.
13. I am glad to see that AVPN has dedicated a full day during this conference to impact
covering topics such as impact management and maximising social impact within
investing,
family offices. While impact investing is still a nascent development, there has been good
progress.
Close to 100 asset managers and institutional investors have signed the Operating
Principles for Impact Management, which provides a set of market standards on how
to achieve measurable positive environmental and social outcomes, alongside
financial returns.
In May 2020, the Global Impact Investing Network (GIIN) formed a Response,
Recovery, and Resilience Investment Coalition with AVPN and other networks and
foundations, to coordinate efforts and direct capital to high impact solutions in
response to the pandemic.
14. The fund raising outlook for impact investing strategies remains strong despite
Managers in Asia can play a meaningful role in creating impact
recent challenging months.
and capitalise on this opportunity. For example:
Impact Investment Exchange, a Singapore-based enterprise whose platforms connect
impact investors with underserved communities, issued its second Women's
Livelihood Bond in January this year. The US$12 million social bond is listed on the
Singapore Exchange and a third bond is being planned as part of the US$150 million
series.
BlackRock recently launched an actively managed impact fund to invest in firms
addressing global challenges like COVID-19 and advancing the UN SDGs.
Conclusion
15. In conclusion, the pandemic has raised the importance of the climate and sustainability
agenda, and I encourage the financial sector to not lose sight of these issues even as countries
and corporates rebuild. This virtual conference, bringing together over 5,000 participants from 80
markets, is timely for us to continue sharing insights and experiences as we work together to
address global challenges. I hope that you will form new partnerships and deepen existing ones
through this virtual conference. I wish you a very fruitful week ahead. Thank you.
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International Monetary Fund (IMF), 6 April 2020, World Economic Outlook, April 2020: The Great Lockdown
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Euromoney, 7 April 2020, Coronavirus crisis offers green and social bonds chance to prove their worth
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World Bank Press Release No: 2020/180/HNP, 27 April 2020
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Infrastructure Asia and World Bank Press Releases, 1 June 2020
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Global Sustainable Investment Alliance, April 2019, 2018 Global Sustainable Investment Review
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Morningstar, 3 April 2020, Sustainable funds weather the first quarter better than conventional funds;
Morningstar, 28 May 2020, What the pandemic means for sustainable investing
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BlackRock compilation at 18 May 2020, Sustainable investing: resilience amid uncertainty