DPM Heng Swee Keat at the Sustainable And Green Finance Institute (SGFIN) Sustainability Summit 2024

Professor Tan Eng Chye, President, National University of Singapore
Professor Sumit Agarwal,
Professor Michael Greenstone,
Ladies and gentlemen,

Good morning to all of you. I am happy to join you at the NUS Sustainable and Green Finance Institute’s Sustainability Summit this year. Climate change is a global challenge that affects everyone. So I commend the NUS Sustainable and Green Finance Institute for convening such an international group for this conference, and I warmly welcome all our overseas guests to Singapore.

Climate change is a clear and present challenge. Around the world, climate extremes – such as intense heatwaves and droughts, and increased rainfall and flooding – are disrupting supply chains and disrupting lives and livelihoods more frequently than before. Some studies have pegged the damage from climate-driven extreme events to be around US$143 billion annually, and this is distributed unevenly across the world. In Singapore, our third National Climate Change Study, released in January, showed that Singapore has been warming at a rate of 0.24 degrees Celsius per decade over the last 40 years. In other words, our coolest month today is hotter than the warmest month in the 1960s. Rising sea levels due to climate change pose existential risks to Singapore and other small island states. The same study projected that our mean sea levels could rise by up to around 2 metres by 2150.

To tackle the climate challenge, we need to mobilise collective action, bring the best expertise together, and explore policy and technological innovations. While there are costs, there are also opportunities to create new industries and jobs, both in the real economy and the financial sector. So the theme of this year’s Summit, “The Costs and Opportunities of Commitment to Net-Zero”, is timely and relevant.

Singapore has announced a net-zero target by 2050. The Singapore Green Plan 2030, our national sustainable development roadmap, lays out specific targets towards this goal. These include increasing our solar energy deployment, greening our buildings and infrastructure, reducing water and energy consumption, and reducing waste. In our national research agenda, we are investing in sustainability research across domains. From urban solutions to manufacturing and trade to the digital economy, we aim to catalyse green innovations. Concurrently, we are working with industry and businesses on our whole-of-nation sustainability journey. For example, the Singapore Exchange is progressively introducing mandatory requirements for climate-related disclosures as part of sustainability reporting by Singapore-listed companies. In transforming our economy for the future, we have our 23 Industry Transformation Maps. We are embedding sustainability as a horizontal priority across these maps. Singapore is also an international financial centre, and we are looking at policy innovations, including in the area of finance, that can help play a role domestically, in the region, and perhaps globally. One example is carbon pricing. When I was Finance Minister, I first announced the implementation of the carbon tax. DPM and Minister for Finance Lawrence Wong has announced the details of our carbon pricing trajectory. Much of the revenue from this, particularly in the initial years, will be used to support industries in decarbonising. This is one way that we are using price mechanisms to deal with the green transition. Another way is through Climate Impact X that we have set up to look at the exchange of carbon credits. We are also working with international bodies like the World Bank and the International Finance Corporation to look at how we can promote better understanding of climate change, and the policy parameters and incentive structures that can guide our work in this area. As part of our work on infrastructure in the region, we also set up Infrastructure Asia which looks at how infrastructure can be made greener and more sustainable. 

Now, as Professor Agarwal just mentioned, the global transition is complex and needs to be carefully managed. Countries are starting from different levels of development and many will face hurdles along the way. So while the global momentum towards net-zero has risen in the past decade, much more needs to be done. A UN report last year found that we still need to cut global greenhouse gas emissions by 42% by 2030 to keep to the 1.5-degree Celsius goal of the Paris Agreement. And the need to step up the green transition is especially pressing in the Asia-Pacific, which accounts for close to half of the greenhouse gas emissions. Many projections show that the emerging economies of the Asia-Pacific will continue to grow, and this region is probably the fastest-growing in the world. If we do not manage the green transition early, we will have to deal with an increasing carbon footprint. 

Now, finance is a critical enabler for countries in the region to step up climate action and achieve our net-zero goals. The financing needed for the regional green transition is significant. McKinsey estimates that more than US$3 trillion is needed for Asia as a region to achieve net-zero by 2050. Many of you here are part of the sustainable finance community – in Singapore, in the region, and around the world.Your efforts in working together, across sectors and borders, will help facilitate our net-zero goals, and the broader success of the green transition. So let me share 3 suggestions on how we can better mobilise finance to support the region’s pathway to net-zero.

First, we must deepen our talent pool in sustainable finance. Investing in the skills and capabilities of people and organisations is an important enabler of the Monetary Authority of Singapore’s Finance for Net Zero (FiNZ) Action Plan. MAS, the Institute of Banking and Finance, and Workforce Singapore are jointly working on a Jobs Transformation Map on Sustainable Finance which will be launched next month. The Jobs Transformation Map will outline the impact of key global and regional sustainability trends on Singapore’s financial sector workforce. It will lay out initiatives to support the upskilling of our financial sector to seize new opportunities from sustainable finance. As a Centre of Excellence, the Sustainable and Green Finance Institute plays an important role in supporting upskilling efforts. The Institute has been contributing to these efforts. For example, the Institute’s inaugural cohort of Masters in Sustainable and Green Finance graduated last year. And many have joined the financial services sector, in roles such as Environmental and Social Governance or ESG investment analysts, portfolio managers and stewardship managers. Others have taken on corporate sustainability roles or are advancing climate research. I am glad that the Institute is building on this well-received Masters programme to launch a new, part-time edition later this year. This will provide additional flexibility to working professionals.

Second, to effectively channel financial flows across the world for the green transition, we need robust regulatory standards, good analytical tools, and trusted financial platforms. Last year, MAS launched the FiNZ Action Plan. Areas such as transition planning, nature and biodiversity, taxonomies and carbon markets are fast-evolving. The sustainable finance community must therefore develop cross-sectoral expertise and collaborate with counterparts in the real economy. Doing so will help catalyse Asia’s net-zero transition more effectively. At COP-28, under the FiNZ Action Plan, MAS also launched the Singapore-Asia Taxonomy for Sustainable Finance.The Singapore-Asia Taxonomy sets out detailed thresholds and criteria for defining green and transition activities that contribute to climate change mitigation across 8 focus areas. This provides greater clarity to investors who wish to credibly channel capital to support the climate transition and reduces the risks of greenwashing. At COP-28, MAS also launched Financing Asia’s Transition Partnership, or FAST-P. This is a blended finance platform that brings together different sources of capital with varying risk and return profiles, such as grant funding and concessional capital, and commercial capital. The platform will mobilise financing for key areas of green and transition financing that are most pertinent to the Asian region. I am glad that the Sustainable and Green Finance Institute is applying technologies such as AI to gain better analytical insights. In fact at COP-28 last December, the Institute introduced an AI-driven impact pricing project that uses machine learning to analyse the impact of environmental performance on stock prices. Using a framework that covers more than 250 financial variables from over 5,000 global firms, this research aims to identify the environmental variables that have material effects on firms’ values, and how these effects evolve across time, regions, and industries. So I encourage the Institute, and others, to make better use of such analytical tools to gain better insights, to promote greater flows of capital to support the climate transition. And we must continue to bring the global community to explore effective financing solutions. Later this year in September, we will be hosting the Global Research Alliance for Sustainable Finance and Investment, or GRASFI.

Third, we need to catalyse the flow of venture and private equity capital to support deep-tech innovations that can have a major impact. By combining our strengths in financial services with our growing capabilities as a Global-Asia node of technology, innovation and enterprise, Singapore can play a relevant role here. The application of robust science-based research, expertise and innovation is critical to solving the climate challenge. The Government has to fund basic research, and the infrastructure for innovation, as a form of public good. Under our Research, Innovation and Enterprise or RIE2025 masterplan, sustainability is a cross-cutting priority. Through our Campus for Research Excellence and Technological Enterprise, or CREATE, we are bringing the best minds from around the world to tackle complex climate challenges. The first CREATE Grand Challenge, currently underway, is themed around decarbonisation. Beyond basic research, we are also investing in the translation of research insights into real-world solutions, and the incubation of start-ups that can convert these solutions into fresh business ideas. In fact, Eng Chye and I were just at the NUS Deep Tech Showcase earlier this week, where we met innovative start-ups working on projects like green concrete and cultivated meats. But much more needs to be done. The Centre for Nature-based Climate Solutions at NUS, for example, looks at how we can harness nature as part of our fight against climate change. Many of the plants and trees in the tropics actually absorb much more carbon than normal trees. These, together with mangrove swamps, seagrass and so on are all very promising solutions. Much more needs to be done, to promote more investment by venture capital, private equity and by corporate venture funds, and to bring the expertise of venture funding to the increasingly urgent and important areas of climate transition and sustainability.

Let me conclude. The financial sector plays a critical role in mobilising finance to invest in addressing the challenges of climate change. To do so, the sector must continue to invest in deepening sustainability-related skills and capabilities, forge closer collaborations with academia and industry, and position itself to pursue innovation with impact and at scale. This includes facilitating critical energy transitions and supporting national and regional pathways to net-zero. So on that note, I look forward to this morning’s keynote by Professor Michael Greenstone. 

Let us find common cause in tackling the climate challenge. I am very happy to learn that last evening, the Sustainable and Green Finance Institute and the Energy Policy Institute that Professor Greenstone heads have signed a Memorandum of Understanding to deepen collaboration. Another seed for greening the planet has been planted, and we look forward to a forest of impactful ideas and initiatives from this collaboration in the coming years.

So thank you all, and I hope you have a great discussion.

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