The Monetary Authority of Singapore (MAS), together with the financial industry, will establish the Singapore Sustainable Finance Association (SSFA) to build a vibrant ecosystem for green and transition finance.

The Association of Banks in Singapore is leading the coordination and setting up of the SSFA. It will initially focus on initiatives to scale voluntary carbon markets, transition finance, and blended finance.

The SSFA will include representatives from financial institutions, financial industry associations, relevant corporates and service providers such as ESG rating agencies.

MAS will also set supervisory expectations to steer financial institutions’ transition planning processes to facilitate credible decarbonisation efforts by their clients.

The guidance on transition planning will cover financial institutions’ governance frameworks and client engagement processes to manage climate-related financial risks and enable transition in the real economy towards net-zero.

The regulator said that financial institutions should not indiscriminately de-risk from particular sectors, but instead carefully assess clients’ transition plans and provide the needed financing for transition where the plans are credible.

In reviewing financial institutions’ implementation of transition plans, MAS added that it will recognise that a short-term increase in their financed emissions may arise due to actions supporting longer term climate positive outcomes. MAS will issue a consultation paper later this year.