The government has published the Singapore Green Bond Framework, first announced at Budget 2022 in February. This sets the stage for Singapore’s first sovereign green bond to be issued in the coming months.
To qualify, projects must first be classified “nationally significant” under the Significant Infrastructure Government Loan Act, or Singa, says Indranee Rajah, minister in the prime minister’s office; and second minister for finance and national development.
Green bond issuances must then meet the criteria stated in the new framework.
"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," she adds.
Speaking at the keynote address of the Singapore Sustainable Investing and Financing Conference 2022 on June 9, Indranee says green projects will facilitate Singapore's transition to a low-carbon economy.
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“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,” says Indranee.
“This is a key enabler that will help us achieve the ambitious goal of reducing land transport emissions by 80% by around mid-century from its peak in 2016,” she adds.
Singapore is also exploring the use of green bonds for climate change adaptation, including coastal protection, says Indranee. “Such infrastructure will provide environmental benefits to both the current and future generations.”
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Singapore is the largest sustainable finance market in Southeast Asia, says Indranee, accounting for about 50% of sustainable debt issuances cumulatively. “There is an urgent need to mobilise private capital to sustainable projects.”
In a joint release on June 9, the Ministry of Finance (MOF) and Monetary Authority of Singapore (MAS) say proceeds from green bonds issued under the framework will be used to finance projects in support of the Singapore Green Plan 2030.
These include projects in renewable energy, energy efficiency, green buildings, clean transportation, sustainable water and wastewater management, pollution prevention, climate change adaptation, biodiversity conservation, and sustainable management of natural resources and land use.
The framework is developed and structured in line with the core components and key recommendations of the International Capital Market Association (ICMA) Green Bond Principles 2021 and the Asean Capital Markets Forum Asean Green Bond Standards 2018.
The second minister for finance will chair the framework’s Green Bond Steering Committee, which is responsible for “proper governance and implementation of the framework”, reads the release.
The MOF intends to report on the allocation and impact of proceeds on its website on an annual basis until full allocation. Allocation reporting may include a breakdown of proceeds according to project category and the balance of unallocated proceeds.
DBS Bank was an adviser on the development of the framework, which was reviewed by Morningstar Sustainalytics, an independent environmental, social, and governance (ESG) research firm.
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Clifford Lee, DBS Bank’s global head of fixed income, says: “As a leading financial hub with an AAA rating, Singapore is well-placed to lead the development of the Green Bond Framework, which will serve as a good reference point to help further develop, grow and deepen ESG financing in Asia.”
Lee adds: “We are heartened to support the Singapore government in the structuring and development of the framework which will provide a robust foundation for Singapore to further cement its position as a global green finance hub, and drive more high-quality public and private green bond issuances to fuel the nation’s climate ambitions.”
The government announced in February that $35 billion in green bonds will be issued by 2030 to fund public sector green infrastructure projects. This will come from both the government and statutory boards.
Then-finance minister Lawrence Wong said in his Budget 2022 statement that the government will publish a Singapore Green Bond framework and issue its inaugural green bond this year.
Photos: Bloomberg, Temasek
