Corporates in Asia rely more on bank loans compared to bonds. MAS will therefore introduce a grant to fund the costs of conducting external reviews and ratings, for green and sustainability-linked loans. The grant will also promote the development of sustainable lending frameworks that provide simplified processes and standardised criteria for borrowers. This will reduce the cost of green borrowing and encourage more small and medium enterprises to tap on such loans. Progress on the green bond and green loan fronts has been good. Singapore is now ASEAN’s largest green finance market, accounting for close to 50% of cumulative ASEAN green bond and loan issuances. [6] Notably, sustainable financing and investment flows have held up well through the first half of this year, despite the pandemic and broad-based economic weakness. Singapore is also steadily developing solutions such as Insurance Linked Securities to address climate risks. MAS’ Insurance Linked Securities Grant Scheme has seen strong take-up since its launch in 2018. Within two years, we have seen nine catastrophe bond issuances in Singapore. This includes the first Asian sovereign and catastrophe bond covering earthquake and typhoon risks in the Philippines. The strong expansion of wealth in Asia will provide a boost to sustainable investments. Personal wealth in Asia excluding Japan has seen an eight-fold increase over the past two decades. [7] Despite the economic disruption due to COVID-19, Asia is projected to have the strongest wealth growth in the world over the next 5 years. This wealth is increasingly being allocated to ESG causes and investments.

It is estimated that at a temperature rise of two degrees Celsius, $ trillion of global financial assets could be at risk of a write-down in value. [4] https://www.mas.gov.sg/news/speeches/2020/harnessing-the-power-of-finance-for-a-sustainable-future  5/13  14/10/2020  “Harnessing the Power of Finance for a Sustainable Future”- Keynote Speech by Mr Ravi Menon, Managing Director, MAS, at the Finan…  As for transition risks, it is estimated that up to $ trillion of assets across the energy, industry and building sectors globally could become stranded by 2050. [5] Financial institutions cannot aﬀord to ignore these risks. MAS has co-created with the financial industry a set of Guidelines on Environmental Risk Management. These Guidelines are distinct from those in other jurisdictions in two ways: First, they cover environmental risks beyond climate change – such as pollution, loss of biodiversity, and changes in land use. These risks can interact with climate eﬀects to compound environmental degradation and depress asset values. Second, the Guidelines extend beyond banks to include insurers and asset managers, and are calibrated to each sector’s business activities. The Guidelines set out expectations for financial institutions to assess, monitor, mitigate and disclose environmental risks. Financial institutions should adopt sound methodologies and tools to identify and assess the environmental risks relevant to them. They should monitor their exposures to geographies and sectors with higher environmental risks, and the carbon intensity of customers and investee companies.