Speech by Ms Indranee Rajah, Minister in The Prime Minister's Office, Second Minister for Finance and National Development, at The Singapore Sustainable Investing and Financing Conference, at Marina Bay Sands Expo & Convention Centre, on 9 June 2022

Mr Lim Boon Heng, Chairman, Temasek Holdings

Distinguished Guests

Ladies and Gentlemen

Introduction

1. It is a great pleasure to join you this morning at the second edition of the Singapore Sustainable Investing and Financing Conference.

a. Thank you, Blackrock, International Finance Corporation and Temasek for organising this very important event.

Urgent Need for Sustainable Financing

2. Climate change is urgent and real. It will be the defining challenge of our generation. 

3. Given increasing severity of climate change [1], we will need immediate and deep emissions reduction across all sectors, to have a chance in limiting global warming to 1.5 degrees Celsius. Scientists have warned that a temperature rise beyond 1.5 degrees will result in irreversible impact on human lives and the worldwide ecosystem.

4. The effects of climate change are increasingly being felt in Asia, which is the topic of this morning’s session.  Extreme rainfall events – too much or too little – are becoming more frequent and more intense.  An estimated 600 million people, many of whom live in Asia, live in low-lying coastal regions and are vulnerable to flooding due to a rise in sea levels [2].

5. The task to accelerate sustainable finance to create and enable green solutions is critical. By some estimates, US$2 trillion in infrastructure investments will be needed over the next decade in Southeast Asia alone to enable the sustainable transition and put the region on the path to net zero [3].

6. The transition may seem daunting. But we are determined to secure a brighter and greener future for ourselves and the generations that are yet to come. The sustainability movement will bring about new areas of growth opportunities for each country, for Asia, and for the world at large – in green technologies, in sustainable finance, and in carbon services and trading.

Singapore’s Commitment to the Climate Agenda

7. Singapore is fully committed to the climate agenda. We are addressing the challenge on various fronts.

a. We launched the Singapore Green Plan 2030, a nationwide movement to advance sustainable development. One of the key pillars of the Plan is to build a Resilient Future.

i. As a low-lying island city-state with one-third of our land less than 5 metres above sea level, Singapore must adapt to rising sea-levels. We are hard at work in developing options to protect our coastline, combining engineering solutions with nature-based elements, such as the planting of mangroves and seagrasses.

b. We have raised our ambition to achieve net zero emissions by or around mid-century, in line with the Glasgow Climate Pact.

i. To achieve our net zero target, we will progressively raise our carbon tax from the current S$5 per tonne of emissions to S$50 to S$80 per tonne by 2030. This provides a strong price signal for businesses and individuals to internalise the cost of carbon and take meaningful actions to reduce their carbon footprint.

ii. The carbon tax revenue will primarily be used to support the transition to a greener economy through investments in low-carbon solutions. We will also help to cushion the impact on households and businesses.

c. The Monetary Authority of Singapore (MAS) has been actively working with the industry stakeholders to broaden and deepen our sustainable finance initiatives and capabilities. Today, Singapore is the largest sustainable finance market in Southeast Asia, accounting for about 50% of sustainable debt issuances cumulatively. To support the region’s low-carbon transition, there is an urgent need to mobilise private capital to sustainable projects. 

i. MAS is actively promoting the development of sustainable finance markets and solutions. For example, MAS supports companies’ access to sustainable financing instruments and their shift towards more sustainable business practices, through its sustainable loan and bond grant schemes. 

ii. There is also huge potential to unlock more financing into marginally bankable but worthy sustainable projects through blended finance platforms. We have made good strides in this space to-date, with HSBC-Temasek Partnership catalysing sustainable infrastructure projects in Asia.

8. Across our island, in our schools and educational institutions, in our neighbourhoods and communities, individuals and groups are coming together to do their part.

Singapore Green Bond Framework

9. We are now moving to develop the green finance market and make green finance a catalyst for sustainability. To accelerate and lead the growth of Singapore’s green finance market, the Government announced that it will issue up to S$35 billion worth of public sector green bonds by 2030.  The inaugural Singapore sovereign green bond will be issued in the coming months.

10. Today, I am pleased to announce the publication of the Singapore Green Bond Framework. The Framework lays the foundation for the issuance of green bonds by the Singapore Government. It outlines the Government’s ambition and commitment to high-quality green issuances. 

Strong green credentials and credit standing

11. The Framework is aligned with internationally recognised market principles, standards, and best practices. This ensures that the Framework will serve as a benchmark for the corporate green bond market. 

12. Sustainalytics, our Second-Party Opinion (SPO) provider, has assessed our Framework to be credible, impactful, and aligned with the ICMA Green Bond Principles and the ASEAN Green Bond Standards.

13. Our investments into the eligible green projects will facilitate Singapore’s transition to a low-carbon economy and advance the United Nation’s Sustainable Development Goals. 

a. These investments include the upcoming Jurong Region Line and the Cross Island Line. Our rail network expansion will enhance connectivity and encourage more commuters to take public transport, which together with walking and cycling, are the greenest ways to move.

i. This is a key enabler that will help us achieve the ambitious goal of reducing land transport emissions by 80% by or around mid-century, from its peak in 2016. 

b. We are exploring the use of green bonds also for climate change adaptation including coastal protection. Such infrastructure will provide environmental benefits to both the current and future generations.

14. While the Singapore Government has been accorded high credit ratings by international credit rating agencies, this is not something that we take for granted. We will continue to conduct our finances prudently to ensure fiscal sustainability and maintain our strong creditworthiness.

a. To qualify for financing via the Singapore sovereign green bonds, a project will first need to be classified nationally significant infrastructure under the Significant Infrastructure Government Loan Act (SINGA). It must then meet the eligibility criteria stated in the Singapore Green Bond Framework.

b. In addition, the issuance of such green bonds will be subject to the overall legislative gross borrowing and interest cost limits under SINGA.

Coherence of public sector green bonds with sustainability agenda

15. The Statutory Boards that have launched their respective green bond programmes, or are planning to do so, will also play a vital role in Singapore’s Whole-of-Government green financing efforts. Their respective green bond frameworks will, likewise, be aligned with market principles, standards, and best practices stated in our national Framework. 

16. These public sector green bond issuances are a key part of Singapore’s overall sustainability agenda and will build on MAS’ efforts to develop the green financing market. Through these high-quality issuances, we hope to deepen market liquidity for green bonds, attract green issuers, capital, and investors, and catalyse sustainable financing in the region.

Conclusion 

17. We are committed as one Government to taking bold and decisive actions to tackle climate change, finance sustainable infrastructure, and catalyse the green economy. The publication of our Singapore Green Bond Framework is yet another important step forward in this regard.

18. We look forward to working closely with existing and new partners in our investing and financing communities on this journey.  There is much to be done ahead of us. Finance will play an essential role in the green transition, to channel critical resources efficiently and effectively to address climate change.

19. I am confident that if we put our collective minds to tackling this defining challenge of our generation, we can make the goals of the Paris Agreement a reality, and build a greener and more sustainable world for ourselves and our future generations.

20. Thank you all very much, and I wish you a fruitful discussion ahead.

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[1] IPCC Sixth Assessment Report, Climate Change 2022: Impacts, Adaptation and Vulnerability | IPCC, February 2022

[2] The Projected Economic Impact of Extreme Sea-Level Rise in Seven Asian Cities in 2030 | Greenpeace, June 2021

[3] Southeast Asia’s Green Economy 2021: Opportunities on the Road to Net Zero | Bain, October 2021