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Singapore's green taxonomy should lead, not lag

(Eco Business, 12 Apr 2021) By taking the initiative to create a common language for all financial institutions in ASEAN, Singapore is asserting its ambition to become the green finance hub of Asia.

The Green Finance Industry Taskforce (GFIT) is an industry-led initiative brought together by the Monetary Authority of Singapore (MAS). Aiming to accelerate the development of green finance, its current task is to develop a taxonomy defining what projects and companies should qualify for green finance.

The taskforce is currently asking for feedback through a consultation process. While the initiative could create a common language for the different financial institutions in ASEAN, the taxonomy should take care in certain areas to avoid turning the exercise into a missed opportunity. 

A strong case for an ambitious green taxonomy for Singapore and ASEAN  

The Singapore taxonomy will be more detailed than its Asian counterparts. The “Climate Change and Principle-based Taxonomy Discussion Paper” issued by Bank Negara Malaysia in 2019 and the Chinese Green Industry Guiding Catalogue both remain high-level but do not include any systematic quantitative thresholds.  

The challenge will be to come up with threshold metrics that align with the Paris Agreement targets for each activity comparable to the ones proposed in the draft European Union (EU) green and sustainable taxonomy. While some thresholds might vary from European standards, these should be minimal and should only be near- to medium-term; probably no longer than 2030.  

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Eco Business, 12 Apr 2021: Singapore's green taxonomy should lead, not lag