MAS launches consultation on environmental risk management guidelines

MAS launches consultation on environmental risk management guidelines | Insurance Business

MAS launches consultation on environmental risk management guidelines

The Monetary Authority of Singapore (MAS) has released three consultation papers on its proposed guidelines on environmental risk management for insurers, banks, and asset managers.

The guidelines aim to enhance financial institutions’ resilience to environmental risk, and strengthen the financial sector’s role in supporting the transition to an environmentally sustainable economy, both inside and outside Singapore, a statement by the MAS said. This is part of the regulator’s Green Finance Action Plan, which aims to make Singapore a global green finance hub.

Financial institutions (FIs) and industry associations also took part in the creation of the guidelines, which cover the following aspects:

  • Governance – boards and senior management of FIs are expected to incorporate environmental considerations into their strategies, business plans, and product offerings, and maintain effective oversight of the management of environmental risk.
  • Risk management – FIs should put in place policies and processes to assess, monitor, and manage environmental risk.
  • Disclosure – FIs should make regular and meaningful disclosure of their environmental risks, so as to enhance market discipline by investors.

“Even as FIs, regulators and policymakers grapple with COVID-19 and its impact, it is crucial to keep our focus on environmental issues as they pose clear challenges for our economies and financial systems,” said Ong Chong Tee, deputy managing director of MAS.

“It is important for FIs in Singapore to have a good understanding of environmental risk and improve their resilience against environmental-related events, as part of their business and risk management strategies.  MAS is grateful to our industry partners for helping to co-create these guidelines.”

The consultation papers are available on MAS’s website, and interested parties can submit their comments on the proposed guidelines until August 07.