Progress in Sustainable Finance: Second Edition of Singapore Green Bond Framework and MOF’s Progress Report on Green Budgeting Practices

1. The Singapore Government has refreshed the Singapore Green Bond Framework¹ (Framework) to align it with the Singapore-Asia Taxonomy for Sustainable Finance (Singapore-Asia Taxonomy), launched by the Monetary Authority of Singapore in 2023. Accompanying this release is the Ministry of Finance (MOF)’s Occasional Paper titled “Green Budgeting in Singapore: A Progress Update”. This paper outlines the Government’s green budgeting approach. Green budgeting takes into account sustainability considerations in the management of our public finances and supports our commitment to climate action. 

2. Ms Indranee Rajah, Minister in the Prime Minister’s Office, Second Minister for Finance and National Development, and Chair of the Green Bond Steering Committee said: “The Government has been adopting green budgeting practices to systematically incorporate environmental sustainability considerations in our financial policies while making sure that we are prudent and effective in our spending. We are putting resources behind our ambitious plans and ensuring that our decisions continue to drive our efforts towards net zero. The updated Singapore Green Bond Framework is a step in the same direction. This is a responsibility that Singapore takes seriously.”

Singapore Green Bond Framework (Second Edition)

3. The Framework governs the issuance of sovereign green bonds under the Significant Infrastructure Government Loan Act 2021 (SINGA), and also serves as a reference for Statutory Boards’ respective green bond frameworks. The proceeds from such issuances are used to finance green public sector projects. The Framework ensures that the public sector upholds a high level of green standards in line with best practices in the industry and is an important component of Singapore’s overarching sustainability strategy.

4. This second edition of the Framework is aligned with the Singapore-Asia Taxonomy for green activities and provides transparency on the screening criteria for projects to qualify for green bond financing. The addition of these science-based and robust thresholds ensures that the projects financed by public sector green bonds under the Framework will contribute substantially to Singapore’s climate ambition. 

5. The Framework continues to be aligned with the core components and key recommendations² of the International Capital Market Association (ICMA) Green Bond Principles³ and the ASEAN Capital Markets Forum ASEAN Green Bond Standards⁴. The Framework details the Government’s (i) intended use of green bond proceeds, (ii) governance structure to evaluate and select eligible projects, (iii) operational approach to manage green bond proceeds, and (iv) commitment to post-issuance allocation and impact reporting.

6. DNV, an independent external reviewer, has provided a Second-Party Opinion (SPO) on the green credentials of the Framework. Based on the information provided to DNV, DNV is of the opinion that the Framework is aligned with the ICMA Green Bond Principles, the ASEAN Green Bond Standards and the Singapore-Asia Taxonomy. 

7. The second edition of the Framework can be found here and the SPO can be found here.   

Green Budgeting Occasional Paper 

8. The Government’s budgeting framework has been enhanced over the years in tandem with our latest national strategies and targets on climate and sustainability. Our green budgeting approach seeks to align with international frameworks and practices, to support our development and implementation of environmentally friendly policies. At the same time, we have designed our green budgeting approach to be efficient and fit-for-purpose, as well as to keep the administrative cost and burden manageable. The Occasional Paper outlines the Government’s approach to green budgeting. This principled yet pragmatic approach represents a reasonable way forward, and we make continuous improvements in light of experience.

9. Green considerations are embedded within our budgetary processes, across various stages of the budget cycle: (1) Strategic Planning, (2) Budget Preparation, (3) Execution and Accounting, and (4) Governance and Control. Singapore has put in place a supportive ecosystem to encourage sustainability across the whole-of-society, which includes creating right incentives, setting high standards for sustainable finance and supporting sustainability disclosure. 

10. The Government proactively manages climate-related risks in our development plans, and accounts for various climate risks on our revenue and expenditure. We have made long-term plans, and deployed fiscal measures to ensure that we have the resources to turn these medium- to long-term plans into reality. The Government expects to commit over S$10 billion in fiscal spending in the decade up to FY2030 (i.e. FY2021 to FY2030), under the Singapore Green Plan. Beyond the Green Plan, there will also be significant additional areas of spending in carbon mitigation and adaptation, for which the plans are still being developed. We have introduced various fiscal tools to fund such sustainability measures beyond 2030, including the use of green bonds, and the establishment of the Coastal and Flood Protection Fund and Future Energy Fund.

11. Singapore reports our environmental performance in a transparent manner to provide public accountability, through various publications and platforms, like the GreenGov.SG report and this Occasional Paper. We will continue to enhance our approach and practices in green budgeting.

12. The Occasional Paper can be found here.  

[1] The inaugural Framework was published on 9 June 2022.
[2] The ICMA Green Bond Principles are a set of voluntary guidelines that recommend transparency and disclosure and promote integrity in the development of the green bond market. The ASEAN Green Bond Standards are aligned with the ICMA Green Bond Principles and aim to provide more specific guidance on how the ICMA Green Bond Principles are to be applied across ASEAN in order for green bonds to be labelled as ASEAN Green Bonds.
[3] Green Bond Principles June 2021 (with June 2022 Appendix I), ICMA, 2022
[4] ASEAN Green Bond Standards, ASEAN Capital Market Forum, 2018