WITH more global capital shifting towards sustainable efforts, central banks around the world, including the Monetary Authority of Singapore (MAS), have been nudged to jumpstart the green transition.

Last November, Singapore’s central bank announced a US$2 billion green investments programme (GIP) to drive growth in sustainable finance. Under the scheme, MAS will channel funds to asset managers who are committed to deepening green finance activities in Singapore.

These managers will in turn invest in public market firms with a strong green focus.

A first for Singapore, the GIP is “likely just the beginning” in bolstering the market for nascent green investments, said Jamus Lim, associate professor of economics at Essec Business School. In September last year, Danish pension funds pledged to invest more than US$50 billion in energy infrastructure, energy efficient construction, and green stocks and bonds.

Closer to home, Japan’s largest public investor – with over US$1.6 trillion of assets under management – is looking to solicit green-bond indices from private sector index firms.

Stephen Grundlingh, managing director and head of institutional (ex US) at Franklin Templeton, told The Business Times (BT): “If you were to speak to the big pension funds in the US, as an asset manager, you wouldn’t even get in the door if you do not deeply ingrain ESG (environmental, social and governance) factors in your investment process.”

The GIP comes amid an ongoing debate raised by the Central Banks and Supervisors Network for Greening the Financial System (NGFS) this year.

In a report released in April 2019, the governing board called on central banks to “lead by example in their own operations” – that is, to include sustainability factors in their portfolio management with a primary focus on climate-friendly investments. MAS is a founding member of NGFS, along with other international partners.

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