New office set up to accelerate Singapore's green bond efforts: Lawrence Wong

SINGAPORE – A new office has been set up to speed up the Government’s efforts in the area of green bonds, said Finance Minister Lawrence Wong on Thursday (Sept 30).

The Green Bonds Programme Office – which comes under the Ministry of Finance (MOF) – will work with statutory boards and develop a framework for green bond programmes. It will also engage the industry and manage investor relations.

The National Environment Agency in August became the first statutory board to establish a $3 billion multicurrency medium-term note and green bond framework.

Proceeds from the notes issued will be used to finance sustainable infrastructure development projects such as Tuas Nexus – Singapore’s first integrated water and solid waste treatment facility.

Mr Wong added that MOF is reviewing the level and trajectory of Singapore’s carbon tax, and will give an update on it in next year’s Budget.

“The right carbon price is critical in ensuring that the costs of carbon are properly internalised, and helps bring about a reduction in emissions,” he said.

He was speaking at the inaugural Singapore Sustainable Investing and Financing Conference, which was held in a hybrid format. The event wraps up the three-day Ecosperity Week sustainability conference organised by state investor Temasek.

Mr Wong added that Singapore is looking at several initiatives to expand its green finance ecosystem.

First, it plans to scale up the carbon credits market.

Organisations which find it hard to eliminate or reduce emissions can use such credits to offset them.

“The market for such voluntary carbon credits is huge. It’s also important because carbon credits can help direct private financing to climate action projects that would otherwise not get off the ground,” said Mr Wong.

He added: “Carbon markets today tend to be fragmented and complex. Asia will need a voluntary carbon market that is large, transparent, verifiable and environmentally robust. We will do our utmost to support the development of such a market in Singapore.”

Singapore will also catalyse sustainable financing and investing to grow the supply and demand for green investments, said Mr Wong.

“The Government will lead the way by laying out the framework and rules, test run them with our own issuance, and find ways to convene and connect the different stakeholders.”

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He added that public efforts alone may not be enough to mitigate climate change in the region, “o we are also heartened to see efforts from the private sector to help close funding gaps for sustainable infrastructure”.

He cited a partnership by Temasek and HSBC to set up a debt financing platform – announced on Thursday – to help fund sustainable infrastructure projects, with an initial focus on South-east Asia.

The Asian Development Bank and Clifford Capital Holdings, a specialist provider of debt financing solutions, will be strategic partners in the platform.

Mr Wong encouraged more private sector players to identify opportunities and tap partnerships in blended finance – a mix of public and private investments – to address climate change financing collectively.

The third area of focus for Singapore is building strong capabilities and expertise in the finance sector to support green finance.

For example, new capabilities are needed to quantify the environmental benefits and costs of projects, and estimate how environmental costs can translate into future default risks.

Mr Wong also highlighted the banking, finance and investment community’s crucial role in facilitating investments in renewable energy solutions and carbon neutral technologies.

More investors are recognising that environmental, social and governance (ESG) factors are aligned with their duties to maximise their clients’ portfolio returns.

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But the industry as a whole needs to do much more to enable the transition to a low-carbon future, said Mr Wong.

Investors need more clarity about definitions of green projects to ensure these activities truly help with decarbonisation.

“This will facilitate investments in such activities and help close the sizeable financing gap,” said Mr Wong, noting that Asean needs an estimated US$200 billion (S$272 billion) in green investments annually through 2030.

Better data management will also help companies, financial institutions and investors measure their progress towards sustainability goals, as well as the impact of their operations and investments, said Mr Wong.

“Besides good data, we need to implement a consistent set of global standards for disclosures and reporting,” he said, adding that this will mitigate greenwashing – instances where companies and organisations give the impression they are environmentally sustainable when they are not.

Mr Wong likened tackling the climate emergency to fighting the Covid-19 pandemic: “Throughout this pandemic, individuals, businesses and governments have come together to flatten the infection curve. Climate change doesn’t happen as quickly as the spread of the virus but the earth is warming faster than previously thought and the window to avoid catastrophic outcomes is closing.

“We must now come together to flatten the curve of greenhouse gas emissions to avert the climate pandemic.”

He added in a fireside chat that everyone needs to take climate change seriously but the response cannot stop at the individual level.

 “We need systems-level solutions and those require governments to act by setting policies, including carbon taxes and regulations,” said Mr Wong in the chat moderated by Temasek’s deputy chief financial officer, Ms Png Chin Yee.

“Finally, businesses have an important part to play because it is in their own interest… If they do not start making the shift early enough, they may be caught in investments and assets that are of higher risk and become stranded. Even from a narrow investment point of view, investing in ESG is good investment.”

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