Singapore Adopts New Regulations at COP28 to Lessen the Possibility of Banks Engaging in Greenwashing


Singapore has established new standards for banks and financial institutions on the financing of green business activities and transitional activities that are not green at the moment but are moving towards net-zero emissions in order to increase climate mitigation across eight important sectors.

By doing this, banks and other financial institutions will be less likely to engage in “green” or “transition washing,” and transition activities will eventually be compliant with green standards.

The Monetary Authority of Singapore (MAS) introduced the Singapore-Asia Taxonomy on December 3 during the ongoing United Nations COP28 climate conference in Dubai.

“The world needs not just green finance for solar panels and wind farms,” MAS Managing Director Ravi Menon stated during the launch at the Singapore Pavilion. To give non-green businesses and sectors the financial support they need to adopt cleaner technologies, boost energy efficiency, and gradually become greener, transition finance is required.

At the launch, Senior Minister Teo Chee Hean announced that the Government will be ready to offer catalytic capital as part of a US$5 billion (S$6.7 billion) blended finance platform to direct desperately needed funds towards the region’s greening.

Grants and loans with reduced interest rates are two possible sources of catalyst capital. Then, this would support the attraction of business funding.

Following multiple rounds of consultation, the taxonomy was developed and now covers the following eight sectors: waste and circular economy, information and communications technology, energy, industrial, carbon capture and sequestration, agriculture and forestry, construction and real estate, and transportation.

According to MAS, “defining transition is particularly salient in Asia, where economic development, population growth, and rising energy demands are taking place alongside the progressive shift towards a net-zero economy.”

By enabling financial institutions to clearly identify and disclose how their financed activities and labelled products are in line with the taxonomy, defining sustainable and transitional financing will also help to lower the risk of green or transition washing.

Transitional actions that are either on a path towards net zero or have the potential to do so, like the phase-out of coal-fired power plants, do not currently meet the green thresholds.

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