MAS Seeks Input from Financial Institutions on Net Zero Transition Planningby Fintech News Singapore October 19, 2023
The guidelines are expected to help financial institutions manage climate-related risks and support their customers and investee companies in their own transition efforts.
The guidelines emphasize the importance of engagement over divestment. Financial institutions should work closely with their customers and investee companies to help them reduce their carbon footprint and build resilience to climate change.
It also encourages financial institutions to take a multi-year approach to assess climate-related risks and adopt an integrated approach to climate mitigation and adaptation measures.
In addition to climate-related risks, financial institutions should also consider environmental risks such as the loss of nature capital and biodiversity in their transition planning.
The guidelines build on MAS’ existing supervisory guidance to FIs and focuses on FIs’ internal strategic planning and risk management processes to prepare for both risks and potential changes in business models associated with the transition.
While the underlying risk principles are similar, the guidelines were developed recognising the different business models and needs of FIs in banking, insurance, and asset management.
MAS invited interested parties to submit their comments on the proposals by 18 December 2023.
Ravi Menon, Managing Director, MAS, said,
“We may have to accept short-term increases in financed, facilitated, or insurance-associated emissions arising from these plans support climate positive outcomes consistent with a net-zero pathway.
Regulators must support financial institutions in such efforts. This is why MAS is taking the lead in setting clear supervisory expectations on transition planning for our financial institutions.”