By Ashmita Chhabra – With the United Nation’s COP26 summit approaching, the need to do more to address climate change is once again in focus. As a key financial services hub in Asia, Singapore has an important role in the development and integration of sustainable finance practices into the real economy. The capital market’s ability to drive meaningful change by encouraging disclosure, stakeholder engagement and innovative green financing initiatives are all part of Singapore’s commitment.
By Ashmita Chhabra – With the United Nation’s COP26 summit approaching, the need to do more to address climate change is once again in focus. As a key financial services hub in Asia, Singapore has an important role in the development and integration of sustainable finance practices into the real economy. The capital market’s ability to drive meaningful change by encouraging disclosure, stakeholder engagement and innovative green financing initiatives are all part of Singapore’s commitment.
Developing a sustainable ecosystem
The Monetary Authority of Singapore (MAS) intends to make sustainable finance a defining feature in Singapore’s role as a global financial centre. Its inaugural sustainability report, the first of its kind by a central bank in Asia, outlines plans to strengthen and develop a green finance ecosystem, build a climate-resilient reserves portfolio, while reducing its own carbon footprint. Those efforts include testing the climate resilience of its official reserve investments and deploying USD1.8 billion to five asset managers under its Green Investment Programme (GIP) to manage new mandates focused on climate change and the environment.
The investment management industry has also been rapidly developing policies and framework to meet demand and major state-led institutional investors have followed global trends in ESG adoption, with themes such as carbon transition now core to investment decision managing. While much of the disclosure requirements remains voluntary, MAS expects financial institutions operating in the city-state to make climate-related disclosures from June 2022, in line with international frameworks, including the TCFD recommendations.
The EU introduced the first part of its Sustainable Finance Disclosure Regulation in March and plans to have in place more stringent measures next year requiring asset managers investing in the region to produce comprehensive reports, with quantitative ESG metrics around their investments, including carbon emission data points. Regulators in the US and the UK are set to push through similar rules.
Preparing to deliver
Having the right tools to provide accurate and meaningful qualitative and quantitative data, like through the use of Apex Group’s new Carbon Footprint Assessment solution, will be key to financial sector firms delivering on those regulatory and fiduciary demands. Only by obtaining a clear picture of their ESG performance – both as a business and across their portfolio companies – can they create an action plan that helps ensure they play their part in building a more sustainable future.
Recent research by Apex Group shows that many asset managers in Singapore recognise this responsibility; however, the commitment to act leaves room for improvement. 94 per cent of private equity firms in Singapore agreed that climate change is an urgent issue, with 84 per cent agreeing they and their investments should take greater responsibility. Yet less than half of respondents (40 per cent) measure their own carbon footprint and only 32 per cent that of their investments.
Encouragingly, however, all the private equity firms from Singapore that took part in the study said they have plans to be carbon neutral, with 44 per cent already having a well-defined process underway, and 56 per cent planning to do so in the future. Part of that commitment is down to the fact that pressure is mounting on the financial sector, not least from regulators.
Ashmita Chhabra
Managing Director
Business Development – Asia Pacific, Apex Group
Executive Committee Member and Co-Chair of the Promotion and Advocacy Working Group, Singapore Funds Industry Group (SFIG). Ashmita is based in Singapore and oversees business development and strategy. She has over 17 years’ experience working with asset allocators and fund managers in the alternatives funds sector. Prior to Apex, Ashmita spent a decade building the global alternatives research business at Eurekahedge, a subsidiary of Mizuho Bank with her teams in Singapore and New York. She was also responsible for key client relationships with global allocators, advisory firms, fund of funds and investment banks. She is Chair of the Singapore Fund Administrators Association (SFAA).
