The Monetary Authority of Singapore (MAS) has set targets on emissions reduction across its operations and investments in its second annual sustainability report, released July 28.
In its Sustainability Report 2021/22, MAS set FY2025 and FY2030 targets for its Scope 1, Scope 2 and Scope 3 emissions, with the latter focusing on business air travel and outsourced currency operations.
Using FY2018 ended March 2019 as the base year, MAS aims to cut Scope 1, Scope 2 and Scope 3 (business air travel) emissions by 17.5% by FY2025, and by 30% by FY2030.
For its Scope 3 (outsourced currency operations) emissions, MAS targets a 10% reduction by FY2025 and a 20% reduction by FY2030. “MAS is committed to reducing Scope 3 emissions as it forms the bulk of our carbon profile, despite the greater challenges in reducing such emissions,” it says.
MAS’s currency value chain comprises outsourced currency operations, in-house currency processing and waste incineration. Outsourced currency operations include currency production, processing and transportation.
According to MAS managing director Ravi Menon, the carbon footprint of the excess new notes issued to meet festive demand each year makes up about 8% of MAS's total emissions, comparable to the emissions from powering 430 four-room HDB flats annually. For example, MAS will discourage the use of brand new note, especially during Chinese New Year, and push for wider use of “e-gifting” instead.
In FY2021 ended March 2022, MAS’ Scope 1 and Scope 2 emissions were 10.2% and 0.9% lower than the base year respectively.
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Meanwhile, its Scope 3 emissions for business air travel and outsourced currency operations were 92.2% and 24.3% lower respectively, which MAS says is an “aberration”. This is because of Covid-19 border lockdowns and a lower demand for coins during the pandemic. “Overall, our FY2021 emissions declined 39% from FY2018 baseline, given substantial decline in business air travel due to the Covid-19 pandemic,” say MAS.
Scope 1 emissions are direct emissions that occur from sources that are controlled or owned by an organisation. Scope 2 emissions are indirect emissions associated with the purchase of electricity, steam, heat or cooling. Scope 3 includes all other indirect emissions that occur in a company’s value chain.
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MAS is perhaps setting a precedent for sustainability reports among companies here. The Singapore Exchange (SGX) has mandated that all SGX-listed entities provide climate reporting on a “comply-or-explain” basis from 2022.
Climate reporting will be required in phases, based on the Task Force on Climate Related Financial Disclosures (TCFD) recommendations. Disclosures will become mandatory from FY2023 for companies in the financial, agriculture, food and forest products and energy industries. TCFD has identified these sectors to be most affected by climate change.
By 2025, mandatory climate reporting will cover 60% of SGX-listed entities by number, and 78% by total market capitalisation.
Currently, MAS expects all financial institutions to make climate-related disclosures from June 2022, in accordance with international reporting frameworks, such as the TCFD recommendations.
For upcoming mandatory reporting, MAS has judged that a seamless move to the International Sustainability Standards Board (ISSB) standard would be more efficient, says Menon. “We will consult on the disclosure requirements for financial institutions as soon as the ISSB standard is finalised.”
ESG disclosures for retail funds
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MAS is also putting out disclosure and reporting guidelines for retail ESG funds, effective January 2023.
Funds that are sold to retail investors in Singapore under the ESG label will now have to provide relevant information. These will shed light on the ESG fund’s investment strategy; criteria and metrics used to select investments; and risks and limitations associated with the fund’s strategy.
MAS will require the disclosures to be made on an ongoing basis, and investors will receive annual updates on how well the fund has achieved its ESG focus, says Menon. “The new guidelines will help to reduce greenwashing risks and enable retail investors to better understand the ESG funds they invest in.”
Scope 2 and facility management
To reduce its Scope 2 emissions, MAS will introduce new metrics to report energy use, water efficiency and waste disposal, in accordance with GreenGov.SG targets.
Launched in July 2021, GreenGov.SG is the public sector’s sustainability movement. By 2030, MAS aims to improve energy use and water efficiency by 10% each from a 2018-2020 baseline, while improving waste disposal by 30% from a 2022 baseline.
These are measured against MAS’s Energy Utilisation Index (EUI), or annual energy consumption divided by the total gross floor area; the Water Efficiency Index (WEI), or annual water consumption per day divided by the total number of occupants including visitors; and the Waste Disposal Index (WDI), or the total amount of waste disposed per day divided by the total number of occupants including visitors.
At 118 kWh/sq m and 94 litres per person per day, only EUI and WEI are reported in the FY2021 report. The WDI uses 2022 as the base year, and MAS will only report its waste figures in 2023.
Sustainable finance
As of March 2022, MAS has fully funded a group of five externally-managed mandates amounting to US$1.8 billion under the Green Investment Programme (GIP).
First announced last June, the GIP will help to enhance the climate resilience of the official foreign reserves, attract sustainability-focused asset managers to Singapore and catalyse funding towards environmentally sustainable projects in Asia and beyond.
The asset management companies appointed under the GIP have established their Asia Pacific sustainability hubs in Singapore and launched new ESG thematic funds for the Asia Pacific region, which will provide a further uplift to regional efforts to transit to a low carbon economy.
MAS has not disclosed the names of the five asset managers, rumoured to be BlackRock, BNP Paribas, NN Investment Partners, Robeco and Schroders.
Infographics: Monetary Authority of Singapore
