China-Singapore Green Finance Taskforce: Advancing Sustainable Financing for a Low-Carbon Future in Asia

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Financing activities that support environmental sustainability is crucial for shifting to a low-carbon economy. It provides funds for activities that enhance environmental sustainability, like using renewable energy sources, reducing energy consumption, constructing green buildings, adopting green transport modes, and coping with climate change. Transition finance is a subset of green finance that focuses on supporting high-emitting sectors and regions to shift to more sustainable practices and technologies.

Singapore and China are both committed to advancing green finance in Asia and globally. They have taken various initiatives to develop green finance markets, standards, and regulations, as well as to promote green finance innovation and cooperation. For example, Singapore launched its Green Finance Action Plan in 2019 and its Finance for Net Zero Action Plan in 2022, while China issued its Guidelines for Establishing the Green Financial System in 2016 and its Green Bond Endorsed Project Catalogue in 2021.

To further deepen their bilateral cooperation in green and transition finance, the Monetary Authority of Singapore (MAS) and the People’s Bank of China (PBC) announced the establishment of the China-Singapore Green Finance Taskforce (GFTF) on 21 April 2023. The GFTF will enable more cooperation between the public and private sectors to address Asia’s challenges as it moves to a low-carbon future.

The GFTF will focus on three key areas: what counts as green and transition finance, what kinds of products and instruments are available, and how technology can support them. These are some of the key challenges and opportunities for scaling up green and transition financing flows between Singapore, China and the region.

Taxonomies and definitions: A common understanding of what constitutes green and transition activities is essential for ensuring consistency, transparency, and credibility in green finance. MAS and PBC will work together under the International Platform on Sustainable Finance (IPSF) to achieve interoperability between the Singapore and China taxonomies, which are both aligned with international standards such as the Task Force on Climate-related Financial Disclosures (TCFD) and the Network for Greening the Financial System (NGFS). They will also collaborate to enhance the use of the IPSF’s Common Ground Taxonomy, which provides a comparison of different green taxonomies around the world, as well as deepen understanding of transition activities defined by China and Singapore.

Products and instruments: A diverse range of green and transition products and instruments can help mobilize capital from different sources and channels for sustainable development. Singapore Exchange (SGX) and China International Capital Corporation (CICC) will establish a workstream to strengthen sustainability bond market connectivity between China and Singapore, including the issuances of and mutual access to green and transition bond products in both markets. This will enable issuers and investors from both countries to tap into each other’s liquidity pools and access a wider range of sustainable financing options.

Technology: Technology can play a vital role in facilitating sustainable finance adoption, such as by enhancing data availability, quality, and analysis; improving disclosure and reporting; enabling verification and certification; and creating new platforms and solutions. Metaverse Green Exchange (MGX) and Beijing Green Exchange (BGX) will establish a workstream that leverages technology to facilitate sustainable finance adoption, including piloting of digital green bonds with carbon credits. This will allow issuers and investors to benefit from greater efficiency, transparency, traceability, and impact measurement in green finance transactions.

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