Singapore MAS Guidelines on Environmental Risk Management

Singapore MAS define environmental risk as risks that arise from the potential adverse impact of changes in the environment on economic ... 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Ourlocations-contactus Beijing BritishVirginIslands CaymanIslands Guernsey HongKong Jersey London LuxembourgLegal LuxembourgCorporateServices Shanghai Singapore Tokyo Aboutus Wegetstraighttothepoint,managingcomplexitytogettotheessentials.Ourglobalnetworkofofficescoverseverytimezone.WearetheonlylawfirmtoadviseonBVI,CaymanIslands,Guernsey,JerseyandLuxembourglaw. AboutUs Ogierataglance Tothepoint:BringingtheOgierbrandtolife CorporateSocialResponsibility(CSR)  Search HomeSingaporeMASGuidelinesonEnvironmentalRiskManagement–areyouready? SingaporeMASGuidelinesonEnvironmentalRiskManagement–areyouready? Publication-28/01/2021 ViewthePDFhere. On8December2020,theMonetaryAuthorityofSingapore(MAS)releaseditsfinalGuidelinesonEnvironmentalRiskManagement(theGuidelines)forbanks,insurersandassetmanagers. Manybanks,insurersandassetmanagersarenowworkingtowardsalignmentwiththeGuidelines. WhyhasMASintroducedtheGuidelines? TheGuidelinesaimtoenhancetheresilienceoffinancialinstitutionstoenvironmentalriskandstrengthentheroleofSingapore'sfinancialsectorinsupportingthetransitiontoanenvironmentallysustainableeconomy. Whatarethekeyaspectsinfocusforassetmanagers? TheGuidelineswillapplytofundmanagementcompaniesregisteredinSingapore,aswellastheholdersofacapitalmarketslicenceforfundmanagementandrealestateinvestmenttrustmanagementinSingapore.Assetmanagersthatdonothavediscretionaryauthorityovertheinvestmentsofthefunds/mandatestheyaremanagingarenotcovered.CMSlicenceholdersforfundmanagement(LFMC)andREITmanagement,andregisteredfundmanagementcompanies(RFMC)areinscope. AssetmanagersmayimplementtheGuidelinesinphases,butareexpectedtoshowcasetheirimplementationprogressoverthe18monthtransitionperiodoutlinedbyMAS.MASplanstoengagelargeassetmanagersfromQ22021. Therearefourkeyaspectsassetmanagersshouldbeawareofaheadofthisincluding: Focusonenvironmentalrisks(goingbeyondclimate-relatedrisk) Threeriskchannelsincludephysical,transitionandreputationalrisks TheGuidelinesgenerallyalignedwithTaskforceonClimate-relatedFinancialDisclosures(TCFD)Recommendations TheGuidelinesaddressenvironmentalriskacrossfivepillars: GovernanceandStrategy ResearchandPortfolioConstruction PortfolioRiskManagement Stewardship Disclosure No1.FocusonEnvironmentalRisk SingaporeMASdefineenvironmentalriskasrisksthatarisefromthepotentialadverseimpactofchangesintheenvironmentoneconomicactivitiesandhumanwell-being.Environmentalissuesthatareofconcernincludeclimatechange,lossofbiodiversity,pollutionandchangesinlanduse.Theseenvironmentalchallengescallforurgentcollectiveactionstoaddressenvironmentalrisk.TheGuidelinesthereforeencompassrisksbeyondclimatechangealone. No2.Threeriskchannels TheGuidelinesdetailthreeriskchannelsincludingphysical,transitionand reputationalriskasdetailedhere. a)Physicalriskarisesfromtheimpactofweathereventsandlong-termorwidespreadenvironmentalchanges. b)Transitionriskarisesfromtheprocessofadjustmenttoanenvironmentallysustainableeconomy,includingchangesinpublicpolicies,disruptivetechnologicaldevelopments,andshiftsinconsumerandinvestorpreferences. c)Reputationalriskcanarisewhenassetmanagersinvestintocompaniesthatcarryoutbusinessactivitieswhichhaveanegativeimpactontheenvironment. No3.AlignedwithTCFD Themeasurementofclimate-relatedrisksforinvestorsisstillanemergingfield.Toassistwiththis,theTaskForceonClimate-relatedFinancialDisclosures(TCFD)wasestablishedin2015.TCFDprovidesrecommendationsforinvestorstoidentifyrisksandopportunitiesfromclimatechangeandfororganisationstoimprovethestandardofclimate-relatedfinancialdisclosures.TheGuidelinesisgenerallyalignedwithTCFD,whichfocusonclimate-relatedrisksonly.TheTCFDframeworkprincipallyrecognisesphysicalandtransitionrisks,withtheMASelectingtoalsoincludeastandalone"reputationalrisk"categorydescribedabove. No4.FiveGuidelinepillars Note:thisisasummaryonly,completeinformationcanbefoundintheMASGuidelines FindoutmoreaboutourSustainableInvestmentConsultinghere.   AboutOgier OgierprovidespracticaladviceonBVI,CaymanIslands,Guernsey,JerseyandLuxembourglawthroughitsglobalnetworkofoffices.Oursistheonlyfirmtoadviseonthesefivelaws.Weregularlywinawardsforthequalityofourclientservice,ourworkandourpeople. Disclaimer ThisclientbriefinghasbeenpreparedforclientsandprofessionalassociatesofOgier.Theinformationandexpressionsofopinionwhichitcontainsarenotintendedtobeacomprehensivestudyortoprovidelegaladviceandshouldnotbetreatedasasubstituteforspecificadviceconcerningindividualsituations. Regulatoryinformationcanbefoundatwww.ogier.com ogier.com EmailPrintSaveShare       KeyContacts LeonieKelly Director,HeadofSustainableInvestmentConsulting HongKong  T+85236566169 M+85291983718 Relatedservices OgierGlobal SustainableInvestmentConsulting