Singapore looks to carve out green finance niche

Written by Kapronasia || April 20 2021

Singapore is steadily carving out a niche for itself in the emerging green finance segment. Much as it has done with fintech, the Monetary Authority of Singapore (MAS) is taking steps to make the city-state a hub for this up-and-coming area of financial services. MAS reckons that Asean will need annual green investment of US$200 billion annually. Given its role as the region’s leading financial center, Singapore is a natural choice to lead green financing efforts.

On January 1, Singapore launched the Green and Sustainability-Linked Loan Grant Scheme (GSLS), the first program of its kind globally, which aims to boost borrowers' ability to obtain green and sustainability-linked loans and encourages banks to develop frameworks for such loans. Previously, the MAS launched the Sustainable Bond Grant Scheme (SBGS), which intends to facilitate the issuance of eco-friendly bonds in Singapore. 

Green loans and bonds are a type of debt instrument made available exclusively to finance or re-finance, in whole or in part, new or existing eligible green projects. Singapore is the largest ASEAN green finance market, accounting for about 50% all green bond and loan issuance. Issuance volumes grew nearly 400% year-on-year in 2019 to US$4.4 billion, according to Lexology. 

Given Singapore’s strength as both a fintech hub and an emerging center of green finance, it makes sense to explore synergies between the two. Under the Green Finance Action Plan, MAS is encouraging the financial sector to to develop green fintech solutions. Grace Fu, Singapore’s Minister for Sustainability and the Environment, spoke about that opportunity at the Singapore Fintech Awards Night in February. “Our vision is for Singapore to be a leading center for green finance in Asia and globally, she said. “Technology can play an instrumental role in greening finance, and supporting the development of trusted, efficient green finance markets.

On April 1, Singapore-based fintechs Bluecell and STACS announced that they would jointly commercialize an industry-wide blockchain-powered infrastructure to support eco-friendly loans. Bluecell will connect its live end-to-end loans matching engine integrated with MyInfo, to STACS’ sustainability-enabling technology infrastructure, GreenSTACS, powered by distributed ledger technology (DLT). 

In addition to the benefits for business, carving out a niche as a green finance hub can also help Singapore in the broader fight against climate change. Data compiled by the city-state’s weather service show it has been warming twice as fast as the global average since 1960. The past decade was its hottest on record. Unless global carbon emissions are curtailed, Singapore’s daily temperatures could reach highs of 35C to 37C (95-99 Fahrenheit) by 2100, according to Bloomberg.