Climate-resilient Financial Sector

The resilience of the financial sector to climate and other environmental risks is critical to ensure the stability and soundness of Singapore’s financial system. The Monetary Authority of Singapore (MAS) will continue to engage financial institutions (FIs) to foster sound environmental risk management practices and deepen capabilities in climate scenario analysis and stress testing. MAS will incorporate international best practices in the supervision of FIs’ transition planning.

Setting Expectations on Credible Transition Planning

In October 2023, MAS issued a set of consultation papers proposing Guidelines on Transition Planning by banks, insurers and asset managers. The proposed Guidelines focus on FIs’ internal strategic planning and risk management processes to prepare for both risks and potential changes in business models associated with the global transition to a net zero economy and the expected physical effects of climate change.

FIs should not indiscriminately de-risk from particular sectors, but instead support the financing of climate-related risk mitigation and adaptation strategies by clients for an orderly transition. The proposed Guidelines are expected to be finalised in 2024.