Let me highlight three areas we need to get right to catalyse green finance – clear taxonomies to define what is green, what is transition, and what is neither; innovative solutions to unlock and catalyse multiple sources of financing; supervision of how financial institutions are managing their climate-related risks. First, clear taxonomies. We are unlikely to have a single, global taxonomy. Instead, efforts should focus on ensuring that taxonomies across different markets are interoperable and comparable. This means taxonomies that use a common language, such as internationally referenced industry classification systems. Asia needs a taxonomy that supports transition activities while achieving compatibility with existing high-quality international taxonomies. The ten countries of the Association of Southeast Asian Nations are developing a taxonomy with a two-tier architecture, comprising a Foundation Framework and a Plus Standard. The Plus Standard will set out data-backed thresholds for each activity, starting with less ambitious thresholds to facilitate early adoption and leading up to more ambitious “gold standard” thresholds that reference science-based pathways. In Singapore, an MAS-led industry taskforce is developing a taxonomy that encompasses green and transition activities. It adopts a “traffic light” system that helps market participants identify activities that are “green”, “yellow” (or transition) and “red”, with the intent of reaching net 1/2  BIS central bankers' speeches  zero as soon as possible. The calibration of thresholds is important, considering the feasibility and availability of alternative technologies in Singapore and the region. The thresholds will need to be recalibrated at regular intervals to keep pace with technological innovations.

Second, innovative financing solutions. To meet Asia’s green financing needs, it is not enough to rely on just the public sector or the banking sector. We need innovative platforms to catalyse capital flows to marginally bankable but worthy green projects. In Singapore, one of our sovereign wealth funds, Temasek, has partnered HSBC to set up a debt financing platform to invest in marginally bankable sustainable infrastructure projects in Asia. We need new instruments such as blended finance to draw in different types of financers. Government agencies and multilateral development banks can potentially help to derisk sustainability projects by taking on first loss equity or providing a guarantee, to help crowd-in more private sector financing. This includes not just commercial banks but also capital providers such as foundations and family offices. We need to deploy technical assistance alongside financing. This is to support a range of activities such as project preparation, project implementation, and even training and capacity building to achieve maximum development impact. Third, financial supervision. Regulators are in a strong position to steward the financial system towards net zero through supervising financial institutions’ management of climate related risks. The Network for Greening the Financial System, or NGFS, plays a key role in helping to mainstream climate-related risk management. The NGFS has just issued a report highlighting the different paths that supervisors can take towards a set of internationally aligned supervisory practices. We strongly support the NGFS Declaration1 to green the financial system. The MAS is progressively embedding climate risk considerations in its supervisory framework.