Singapore’s MAS to divert more funds to decarbonisation

Market: Emissions
05/07/23

The Monetary Authority of Singapore (MAS) has announced it will allocate 2pc of its portfolio, or just over S$8bn ($5.92bn), to sustainability efforts including financing the decarbonisation of carbon-intensive sectors.

MAS has shifted part of its equities portfolio "towards less carbon-intensive companies that are more aligned with the low-carbon transition," said its managing director Ravi Menon, instead of excluding whole carbon-intensive sectors. "This approach strikes a balance between reducing the portfolio's carbon intensity while continuing to support companies which are transitioning to lower carbon intensity."

"Finance is a critical lever in accelerating Asia's transition to a greener future, but the world is simply not investing enough in transition," said MAS' chief sustainability officer Gillian Tan. MAS' Sustainability Report 2023 cites McKinsey estimates that achieving net zero by 2050 will require investments of approximately $9.2 trillion/yr, and that the world is currently more than 35pc short of this.

In line with this, MAS has expanded its Finance for Net Zero (FiNZ) action plan, which was launched in April. Under the FiNZ plan, MAS intends to support the decarbonisation of carbon-intensive sectors, such as by financing the managed phase-out of coal-fired plants. The plan also includes the development of markets and platforms to mobilise financing for carbon services and carbon credit markets, for example.

MAS has also completed divestment from companies with more than 10pc of their revenues derived from thermal coal mining and oil sands activities, according to its report.

Other Singapore financial institutions such as OCBC bank and United Overseas Bank have also announced plans to cut or wholly cease financing upstream oil and gas projects as part of their sustainability plans.

By Prethika Nair

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