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The Singapore-Asia Taxonomy for Sustainable Finance, launched at the 2023 COP28 climate conference in Dubai, marks a significant step towards a greener future for Singapore and the region. This initiative is the world’s first multi-sector transition taxonomy, defining sustainable and transition activities across eight key industries. It provides a common framework for financial institutions, businesses, and policymakers to align their efforts toward net-zero goals.
Insights from RSM Singapore
Dennis Lee, Partner and ESG Practice Deputy Industry Lead at RSM Singapore, highlights the increasing momentum in green financing in Singapore. He notes that Singapore’s largest banks reported over 30% growth in their green financing loan portfolios in 2023, with Asia projected to attract USD 150 billion in green investments by 2030—a significant leap from USD 40 billion over the past two decades.
Bennett Wong, Associate Director and ESG Practice Leader at RSM Singapore, underscores the importance of contextualising sustainable frameworks to Southeast Asia’s unique economic conditions. He stresses the need for a just transition that considers the economic and social implications for communities reliant on coal-fired power plants. Wong also warns of the potential risks posed by divergent taxonomies but remains optimistic about global convergence towards common standards by 2030 or 2050.
Key Features of the Taxonomy
- Traffic Light Classification: Activities are categorised as green, amber, or red based on their alignment with science-based sustainability goals. Amber measures encourage investment in decarbonisation initiatives to transition towards green criteria.
- Sector-Specific Guidelines: The taxonomy includes detailed thresholds for industries such as energy, transportation, and real estate.
- Support for Green Financing: The taxonomy enables businesses to align their projects with sustainable finance products, including green bonds and transition loans, broadening access to capital.
For more insights into Singapore’s green transition and Asia’s pathway to net zero, read the full article here.
