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Speech by Ms Indranee Rajah, Minister in the Prime Minister's Office, Second Minister for Finance and National Development, at ICMA 9th Annual Conference of the Principles on 28 June 2023

28 Jun 2023
Distinguished Guests, 

Ladies and Gentlemen,

A very good morning. 


1.    It is a great pleasure to join everyone at the International Capital Markets Association’s (ICMA) 9th Annual Conference of the Principles today and to all of those who have come from abroad - welcome to Singapore.  

Growth of Green and Sustainable Finance

2.    The urgency of the climate crisis is getting more evident each day. We often hear numbers being cited, such as how global temperatures have already risen by 1.1 degrees celsius since pre-industrial times, or that there is only 500 Gigatonnes left of the global carbon budget. But nothing hits home harder than when it becomes part of our lived reality.

a. Since April, crippling heatwaves have swept across much of Asia, resulting in severe impacts including power cuts, business disruption, crop failures and lives lost in countries like India, Bangladesh, China, Laos and Thailand. 

b. In the West, Canada just saw an unusual wildfire season while Europe is bracing for droughts as it heads into summer. 

c. Singapore was also not spared. Many here can attest to warmer days as the mercury hit record highs. 

3.    These events underscore the need to accelerate our journey to net zero. Finance is a powerful tool that we leverage to enable the transformation we need in economies, infrastructure and societies to shape a greener world.

4.    Much progress has been made in green finance. Global green debt issuance alone is estimated to have doubled in just half a decade to more than US$480 billion last year . This is part of a larger wave of sustainable finance, with capital providers eager to channel financing towards climate and other environmental goals.

5.    But left on its own, money does not flow easily. Markets need standardised frameworks and common principles that allow investors to make comparisons and give confidence that their investments will achieve the intended environmental outcomes. ICMA has played a crucial role in this regard. The ICMA Principles and Guidelines have supported the development of the sustainable debt market by setting out clear expectations of what green or sustainability-linked debt instruments should entail.

6.    This helped to establish credibility and scale the green and sustainability-link debt market and today, the ICMA frameworks remain the internationally accepted standards of best practice. 

7.    In Singapore too, the sustainable debt market has grown healthily by about 10 times over the last 5 years, from about US$2 billion in 2018 to more than US$20 billion last year . To support Singapore’s decarbonisation efforts and further deepen Singapore’s green finance market, the Singapore government has committed to issue up to S$35 billion of green bonds by 2030. The Singapore Green Bond Framework was launched in 2022, based on ICMA principles. 

a. This forms the basis for the Government’s issuance of green bonds, including our first sovereign green bond issuance of S$2.4 billion last year, which will be used to expand our electric rail network and green our transportation system. 

b. We have kept our standards high, and in keeping with the spirit of ensuring our green bonds are credible in their climate impact, we will be sharing the allocation and expected impact of financing these electric rail projects through a post-issuance green bond report in the coming months. 

Need for Transition Finance

8.    We have made great strides in green finance, but this is not enough. Channelling funding to green activities such as the building of solar farms or improving energy efficiency is important, but pure green activities make up only about 8% of the global economy. 

9.    We need to do more, and we need to speed up. We need to progressively decarbonise all sectors of our economy, whether it is to upgrade our grids to support hydrogen-generated electricity, adapt our ships to run on cleaner fuels, or retrofit steel plants with emissions mitigating technologies like carbon capture and storage. To get there, we will need transition finance. 

10.    This is both a necessary step for climate action and a growth opportunity. McKinsey estimates that the transition to net zero needs more than US$9 trillion of investments per year globally. But only about US$5.7 trillion per year is being invested globally today. There remains a gap of more than 35% of the annual investment required – or in other words, there are financing opportunities of some US$3 trillion per annum to be seized.

11.    Private capital is keen to play a part in the decarbonisation journey. Just as in green finance, we will need critical enablers to catalyse transition finance in a credible way – standardised principles and definitions to provide a common frame of reference, and reliable and comparable data to guide decisions. 

Credible Standards and Definitions to Grow the Transition Finance Market

12.    Unlike green finance, capital raised from transition finance is intended to help brown industries become greener. There is an inherent risk of being seen as transition-washing if there isn’t an accepted understanding of what constitutes a credible transition. 

13.    Globally, efforts to establish common principles and guidelines on transition finance are starting to emerge. 

a. In late 2020, ICMA published the Climate Finance Transition Handbook, outlining the expectations of what transition-labelled instruments entail. And I am glad to hear that ICMA has updated this just last week  to integrate the progress made globally on climate transition guidance and disclosures. 

b. Japan built on ICMA’s initial guidance and was one of the first governments to provide basic guidelines on transition finance two years ago. 

c. China has indicated its intent to explore transition finance instruments, including establishing standards. 

d. The EU has just published measures to enhance its sustainable finance framework. This include clarifications around what transition finance is and recommendations on how to facilitate its growth. 

14.    At an activity level, taxonomies can guide investors and financiers on what constitutes “green” and further boost the credibility of green finance instruments. But many existing taxonomies currently focus on “green”. We need standardised definitions of what can be credibly considered “transition” to further lower the barriers to entry for private capital.

Singapore-Asia Taxonomy to Catalyse Transition Finance 

15.    Singapore has played a part in this effort by developing a Singapore-Asia Taxonomy together with industry partners. By providing clear definitions on what is green, what is transition and what is neither, the Singapore-Asia Taxonomy aims to catalyse green and transition finance flows to enable the decarbonisation of brown sectors. The taxonomy will be among the first globally to adopt a “traffic light” system that classifies activities as either green or transitioning based on science-based criteria and thresholds. 

16.    Defining ‘transition’ is especially important in Asia, where many economies are still rapidly developing and there is still a growing demand for energy. By covering the transition category, the Singapore-Asia taxonomy is able to cater for the need for significant transition in this part of the world. 

17.    Today, it has become increasingly clear that we cannot address Asia’s energy transition without tackling the issue of the significant number of coal fired power plants in the region. However, coal presents a catch-22 situation for us.

a. Coal helps to power Asia’s growth, with coal accounting for nearly 60% of power and electricity generation in APAC. But it also contributes to 30% of Asia’s emissions. 

b. While financing coal activities is less and less defensible in a decarbonising world, the indiscriminate withdrawal of financing can result in undesirable outcomes, such as the loss of energy security or of livelihoods for communities that depend on coal. 

18.    We cannot adopt a binary approach to coal, nor force people into having to choose between sustainability and livelihoods. Leveraging transition finance to accelerate the early phaseout of coal-fired power plants in a managed, credible way allows us to move forward with practical ambition.  We will enable this by including guidelines on the managed phaseout of coal in the Singapore-Asia taxonomy. I am happy to announce the launch of the public consultation by the MAS on these guidelines today. 

a. The guidelines set out the conditions in which funding for the early phaseout of coal-fired power plants contributes to emissions abatement, energy resilience and just transition objectives. 

b. This will build on the good work done by the Glasgow Financial Alliance for Net Zero and the ASEAN Taxonomy Board. 

19.    We welcome your feedback. MAS, together with industry representatives, will incorporate feedback from the public consultation in the Singapore-Asia taxonomy that will be launched later in the year. 

Alignment of Singapore Green Bond Framework with Singapore-Asia Taxonomy

20.    The alignment of Singapore Green Bond Framework with Singapore-Asia Taxonomy is another important part of our work. As part of the Singapore Government’s continued commitment to high-quality public sector green bond issuances, we will be updating the Singapore Green Bond Framework to align with the Singapore-Asia Taxonomy for green activities. 

21.    As we grow the transition finance market, the Singapore Government will also explore the issuance of public sector transition bonds for suitable projects that are in line with the transition activities under the taxonomy.

Industry Code of Conduct for ESG Rating and Data Product Providers: Launch of Concept Paper for Public Consultation

22.    As the integration of sustainability-related risks and opportunities into capital allocation decisions become increasingly mainstream, the use of ESG ratings and data products for investing and capital allocation has grown. Financial market participants are integrating ESG data into their investment strategies and risk management. 

23.    But this is a nascent industry where regulatory clarity and direction is still evolving. In line with the guidance promulgated by the International Organisation of Securities Commissions (IOSCO), MAS is seeking to establish baseline industry standards on governance, transparency and management of conflicts of interest to bolster market confidence in the use of ESG ratings and data products while safeguarding against greenwashing risks.  

24.    MAS will take a phased and risk-proportionate regulatory approach for ESG rating and data product providers, starting with a voluntary Code of Conduct for the industry. It will continue to monitor global regulatory developments before consulting on a more formalised framework in the future.

a. The industry Code of Conduct aims to elevate the quality, reliability, and transparency of ESG ratings and data products in Singapore. 

b. ESG rating and data product providers will be required to disclose how forward-looking elements are factored into their products. This will enable financial market participants to better understand the use case of ESG products and provide more accurate market pricing signals relating to transition risks and opportunities. 

c. I am pleased to announce the launch of a public consultation on the Code of Conduct for ESG rating and data product providers today, and we invite you to provide your feedback. 


25.    In conclusion, let me say, with the right guardrails in place, finance can be a force for good that can be harnessed to support the next bound of accelerating the net zero transition, for Asia and the world.

26.    Our collective efforts to define and refine the standards and practices that guide finance today can create the right architecture to facilitate capital flows to shape a more sustainable future. I wish you a fruitful conference and thank you very much.