Today Singaporean Minister for National Development Lawrence Wong announced that the Monetary Authority of Singapore are launching a Green Bond Grant scheme which will cover the costs of external reviews for green bond issuance.
Speaking at the Investment Management Association of Singapore’s 20th Anniversary conference, the Straits Times reports that Minister Wong declared that sustainable investing had become mainstream, and that Singapore was taking steps to build a financial sector with a strong sustainability focus.
Starting with this green bond grant scheme, the Monetary Authority of Singapore will promote the development of a wide range of sustainability-oriented benchmarks, funds and products.
What excellent news! The cost of getting an external review is one of the key hurdles that hold potential first-time green bond issuers back from joining the party.
Once issuers have come to market they tend to find that the benefits outweigh any additional set-up costs, but it remains a bottleneck for new issuers.
Supporting Market Growth
With this simple move of a grant scheme absorbing the external review cost, Singapore’s central bank is facilitating rapid market growth – and crucially ensuring scale does not compromise sound environmental quality by incentivising every green bond issuer to get an external review. These are the two things we need to see: scale and impact.
We have yet to see all the details on what the central bank will set as criteria for ‘qualifying issuance’; but they have released some broad guidelines.
Qualifying bonds can be denominated in any currency but must:
- be issued and listed in Singapore
have a minimum size of S$200 million
have a tenure of at least three years
Others should follow
Let’s hope other central banks and public sector entities are paying attention to this great development from Singapore – it is a model ready to be replicated!
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