SINGAPORE: Fuelling the nation’s ambitions to transition into a low-carbon economy and to be a leading green finance hub in Asia and beyond, the Governmentit will issue green bonds for S$19 billion worth of infrastructure projects at the Singapore Budget 2021.
To promote the integrity of the green bond market, issuers should comply with established frameworks and guidance or Climate Bond Initiative) which emphasise on use of proceeds, process for project evaluation and selection, management of proceeds and reporting.For Singapore, the Budget 2021 initiative can lead to attracting investors looking for green investments, and green bond issuers, and will deepen market liquidity for green bonds.
Whilst it is a generally a good mechanism to finance green projects, the devil is in the details. There are challenges that need to be addressed in order to successfully issue green bonds including ensuring that it can stand up to scrutiny of it being indeed green and the reasonableness of the targets.
Countries should focus on prioritising climate-focused projects while identifying current urban infrastructure assets that need investment to become cleaner – for example, transportation networks, aged buildings and climate-resilient infrastructure. READ: Commentary: Singapore's oil and gas sector should embrace transition to a green future with confidence
The creation of green bond indices and Exchange Traded Funds is also crucial in facilitating capital flows into the green bond space. Excellence in capacity and capabilities within the market to drive the projects is critical in order for projects to be successful.Singapore has developed a reputation as a leading financial services hub with effective governance, regulation, access to financial expertise, including sustainable finance expertise, verifiers and professionals.