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Singapore is gearing up to issue its first sovereign green bond and has released the framework of the programme, as the city-state taps into opportunities of green finance to fund infrastructure projects. Earlier this year, during its annual budget announcement, the Singapore government said that $35 bn worth of green bonds will be issued by 2030.
As per the framework stipulated by the Singapore Government, green bonds issued by public sector agencies will need to be aligned with the recommendation of the International Capital Market Association (ICMA) Green Bond Principles 2021 and the ASEAN Capital Markets Forum ASEAN Green Bond Standards 2018. A Green Bond Committee, chaired by the Second Minister of Finance, will oversee the governance and implementation of the framework.
“We hope to deepen market liquidity for green bonds, attract green issuers, capital, and investors, and catalyze sustainable financing in the region,” Indranee Rajah, second minister for finance and national development said on Thursday.
Issuers will also be required to report the allocation and the impact for environmental benefit from the expenditure of the money raised from the green bonds, to ensure transparency and accountability for investors. Additionally, the sovereign green bond projects will be evaluated under the standards set out by the ICMA Green Bond Principles and the Climate Bond Initiative (CBI) Taxonomy and Sector Criteria.
What qualifies for sovereign green bond?
The framework published by the Monetary Authority of Singapore (MAS) stipulates that the money raised from the green bond issuance will be used to fund the Singapore Green Plan 2030. The government has set out specific categories which will be eligible for green finance under this plan and including — renewable energy, energy efficiency, green building, clean transportation, sustainable water and wastewater management, pollution prevention, control and circular economy, climate change adaptation and biodiversity conservation.
ESG research firm Morningstar Sustainalytics reviewed the green credentials of the Framework and said the Framework is credible, impactful and aligns with internationally recognised market principles and standards.
The MAS will undertake the issuance and management of Green SGS (Infrastructure) bonds on behalf of the government, and the projects are expected to provide long-term environmental benefits.
