DPM Heng Swee Keat at the 7th Global Research Alliance for Sustainable Finance and Investment (GRASFI) Conference

Professor Lily Kong, President, Singapore Management University,
Dr Heidi Raubenheimer, Executive Director, GRASFI
Ms Nikki Kemp, Dr Hao Liang, and the Singapore Green Finance Centre (SGFC) team,
Ladies and Gentlemen,

Good morning. I am glad to join you for the 7th Annual Global Research Alliance for Sustainable Finance and Investment conference, or GRASFI, at the Singapore Management University or SMU.

Fostering Credible Transition, Creating Sustainable Impact

Climate change is a clear and present danger for the world. This is the first time that GRASFI is gathering physically here in Asia. I hope this experience will be valuable to deepen your understanding of Asia. Asia is a big and complex region, with countries at different stages of development, and with a range of economic and social needs and resources.

On one hand, we emit about half of global emissions. These emissions are expected to grow, driven by economic and development needs, including extending electricity to rural populations.

On the other hand, Asia is rich in biodiversity, which is affected by climate change, but also offers a promising range of nature-based solutions. Asia is home to around a fifth of the world's rainforests. The waters in South-East Asia, near Singapore, harbour one of the world's most extensive seagrass beds, coral reefs, and mangroves.

The theme of the conference "Fostering Credible Transition, Creating Sustainable Impact" is most apt. With the right policies, strategies, and technologies, we can pursue sustainable growth for the benefit of people and planet.

While climate change affects all states around the world, for tropical island states like Singapore, it is an existential risk.

Small island states are the first to experience the impact of climate change.

Singapore's latest National Climate Change Study projects that mean sea levels in Singapore could rise by up to 2 metres by 2150.

But climate change will set off other complex changes in the world's ecology, that ultimately impacts all of us, wherever you live.

These include tipping points in our ice sheets, seawater and forests, which could amplify and accelerate climate change.

It is critical that we address this existential challenge and avoid the tragedy of the commons. Every one of us has a stake, and everyone must do his or her part. This complex problem with multiple dimensions must be dealt with at multiple levels, with a range of policy instruments, and by mobilising a wide range of stakeholders.

At the global level, we need to forge a consensus for a sustainable and equitable model of growth.

International frameworks and agreements are the foundation of this, with the UNFCCC process and the Paris Agreement at the heart of it.

Singapore is a strong supporter of this multilateral approach, including serving as ministerial facilitators in the negotiations leading up to the Paris Agreement, and more recently on mitigation and carbon credits.

Global institutions, such as the World Bank and IMF, play important roles in mobilising climate finance. I am glad that the World Bank Group has a presence in Singapore, including an Infrastructure and Urban Hub to serve the region.

At the country level, we must do our parts to decarbonise our economies, and adapt to the impacts of climate change.

We can all contribute in our own way, regardless of our size, or our level of development. For instance, even though Singapore emits less than 0.1% of global emissions, we have set ourselves a target to achieve net-zero emissions by 2050, and a little earlier for the public sector.

To achieve this, we launched the Singapore Green Plan 2030 - a roadmap to mobilise our industries and citizens towards sustainable growth.

When I was the Finance Minister, I introduced a carbon tax as a price signal for carbon emissions. The government has also issued green bonds We have since laid out a schedule of carbon tax levels until 2030.

The proceeds from our carbon tax will be used to help companies in Singapore decarbonise.

And under our S$28 billion Research, Innovation and Enterprise 2025 plan, we are supporting R&D into new climate technologies and solutions like sustainable building materials, carbon capture and storage, and alternative fuels like biofuels and hydrogen.

Do find out more about these projects from GRASFI participants from the National University of Singapore, Nanyang Technological University, and SMU, which have strong science and technology capabilities, and research programmes in several areas of sustainability.

We trust that these initiatives can enable us to boost resilience here in Singapore, and enable us to serve the region as a pathfinder and testbed for green solutions.

And at the industry level, companies will need to keep pace with greater consumer preferences for sustainable products, and emerging climate regulations like sustainability reporting and cross-border carbon taxes.

Companies can either pivot their business models and portfolios to contribute and benefit from new opportunities, or risk being disrupted by others or boycotted by consumers.

Last week, I presented an award for transformation to Sembcorp Industries, a local energy company which had pivoted from oil and gas to renewable energy. They had also achieved impressive total shareholder returns through this transformation.

As part of our wider efforts in Singapore to transform our economy - also known as Industry Transformation 2.0 - we have added two new pillars to the existing four pillars, by including sustainability and resilience.

Sustainable Finance as a Catalyst for a Greener and More Resilient Future

Among the many stakeholders, the financial sector plays a critical role. Significant financing is needed to accomplish these ambitions at the global, country, and industry levels. We must mobilise financial resources and allocate these effectively to meet the diverse needs.

McKinsey estimates that Asia alone needs more than US$3 trillion annually to achieve net-zero by 2050.

But public finances in many countries are stressed, especially after the COVID-19 pandemics.

To meet the needs for investment and capital, we will need to more effectively mobilise some of the estimated US$400 trillion of private capital.

Sustainable finance - the pursuit of financial returns alongside environmental and social objectives - will be a critical enabler.

As a global financial centre, Singapore hopes to play our role in advancing sustainable finance, for our region and the world.

Last year, we launched the Finance for Net Zero Action Plan, which seeks to achieve four strategic outcomes.

One, to promote consistent, comparable and reliable climate data and disclosures to guide decision making and safeguard against climate risks; Two, to build up a climate resilient financial sector with deep capabilities in risk management practices like climate scenario analysis and stress testing; Three, to support financial institutions in developing credible science-based transition plans; and Four, to promote innovative financing solutions such as blended finance and voluntary carbon markets.

Many of you here are experts and practitioners in sustainable finance. You have an impressive list of topics and speakers for the coming sessions. Let me take this opportunity to suggest three areas where academics, industry, and government can work together to advance sustainable finance.

The first area is to develop better definitions and outcome measures of sustainable finance. This reduces the risks of green washing, and helps guide companies and investors in decision-making.

Taxonomies which define sustainable activities, are the foundation of this.

I am glad that efforts are underway to align these taxonomies across jurisdictions, including between Singapore, China and the EU. This will facilitate cross-border transactions by financial institutions in these jurisdictions.

We can also work together to improve how we measure the impact of finance on sustainability.

For example, the conference paper by Ayako Yasuda and Keer Yang from UC Davis suggests that clearer labelling of sustainable finance products helps investors make better investment decisions.

Similarly, the Singapore Green Finance Institute (SGFIN) developed a corporate impact pricing model that leverages AI to analyse the impact of environmental performance on stock prices.

And the Singapore Green Finance Centre is developing an Impact Weighted Account Framework to help companies better assess the sustainability impact of their operations and investments.

These initiatives help us measure outcomes, and to channel capital into activities that are impactful.

Second, to shape regulations to facilitate sustainable finance flows, while keeping down regulatory costs to companies.

For example, we have seen an increase in sustainability disclosure regulations in many jurisdictions, with some countries looking to progressively implement the International Sustainability Standards Board (ISSB) disclosure standards including listed companies in Singapore from FY2025, and large non-listed companies from FY2027.

By working together, we could better develop reporting frameworks that are simple yet effective.

I am glad that the conference will examine the impact of regulation, and on ESG ratings and disclosures, over the next few days.

Good regulations can also catalyse the flow of financing to impactful causes such as energy infrastructure, and deep tech innovations to accelerate decarbonisation.

For example, in the Handbook on Scaling Up Blended Finance by the Network for Greening the Financial System, regulatory and practical barriers were often cited as obstacles to scaling up blended finance transactions in emerging markets.

Third, while definitions, outcome measures, and regulations are important, ultimately, any system is operated by people. We must therefore uplift our skills and broaden our talent base.

As part of Singapore's Sustainable Finance Jobs Transformation Map, we will invest $35 million over the next three years to upskill and reskill our finance professionals.

This includes expanding the range of sustainable finance training courses for working professionals, undergraduate and polytechnic students.

I encourage all of us here to develop new teaching modalities to make sustainable finance more accessible. For example, SGFC leveraged SMU's teaching infrastructure to deliver executive courses, and provide a Massive Open Online Course (MOOC) that is open to the public.

While we do our best with our current state of knowledge, we need to recognise that sustainability, and sustainable finance is a complex and fast-evolving field. So we must continue to push the boundaries of our knowledge, and deepen the capabilities of our industry.

This will require us to bring together multidisciplinary research and real-life application, and bridge the varied fields of science, technology, economics and finance.

Academic institutions, including Centres of Excellence like the SGFC and SGFIN, can play an important role by bringing academics and industry together to study important issues such as carbon markets, climate adaptation, transition finance, and nature. Our Centres of Excellence are also crucial in ensuring that the research uncovered can be applied by industry through practice notes and whitepapers, and through training courses across the career spectrum - from undergraduate to executive and C-suite levels.

Through research networks like GRASFI, we can bring together the best minds around the world, to explore, to learn and to share.

Conclusion

Let me conclude. Climate change is an existential challenge, and one of the most complex challenges facing humankind.

Every one of us must do his or her part, and make adjustments at the global, country, industry and personal levels.

Academic researchers and practitioners like yourselves can help guide global efforts for decarbonisation and sustainable growth in an objective and science-based manner.

We will need to push the frontiers of innovation across different fields -in science and technology to better understand climate science and to develop new solutions; as well as in economics and finance to optimise price signals and fiscal incentives; and in the social sciences to shape norms and nudge behaviours.

By bringing together experts from all over the world, GRASFI is an important platform to exchange perspectives and learn from each other's experiences.

I wish you a successful conference, and continued collaborations in this complex and critical work. Thank you.

Topics: Environment, Finance