Singapore sets out expectations for FIs' environmental risk management

FIs are expected to include environmental considerations in their business plans.

The Monetary Authority of Singapore (MAS) has issued a set of three consultation papers on its proposed guidelines on environmental risk management for banks, insurers and asset managers, the regulator announced in a press release.

It sets out MAS’ supervisory expectations for banks, insurers and asset managers in their governance, risk management, and disclosure of environmental risk.

Boards and senior management of financial institutions (FIs) are expected to incorporate environmental considerations into their strategies, business plans, and product offerings, as well as maintain oversight of the management of environmental risk.

FIs are also required to put in policies and processes that assess, monitor, and manage environmental risk. They are also required to make regular disclosure of their environmental risks as a way to enhance market discipline by investors, according to MAS.

The guidelines were co-created with the Association of Banks in Singapore, General Insurance Association of Singapore, Life Insurance Association Singapore, Singapore Reinsurers’ Association and Investment Management Association of Singapore.

The public consultation papers are available on MAS’ website.

The guidelines are part of MAS’ Green Finance Action Plan.

“Even as FIs, regulators and policymakers grapple with COVID-19 and its impact, it is crucial to keep our focus on environmental issues as they pose clear challenges for our economies and financial systems,” says Ong Cong Tee, deputy managing director, MAS.

“It is important for FIs in Singapore to have a good understanding of environmental risk and improve their resilience against environmental-related events, as part of their business and risk management strategies,” he added.