Policy Briefing — MAS Environmental Risk Management Guidelines
Singapore’s Monetary Authority finalised environmental risk management guidelines for banks, insurers, and asset managers on December 7, 2020, embedding board accountability for climate governance in the financial sector.
Executive briefing: The Monetary Authority of Singapore (MAS) issued final Guidelines on Environmental Risk Management for banks, insurers, and asset managers on 7 December 2020. The guidance requires financial institutions to integrate climate considerations into governance, strategy, and risk management, with boards accountable for establishing clear oversight structures and competencies.
Core governance expectations
- Board ownership. Boards must approve environmental risk appetite, assign management responsibilities, and ensure directors possess the expertise to evaluate climate and nature-related threats.
- Senior management accountability. Executives must implement policies covering customer due diligence, portfolio monitoring, and escalation protocols, reporting outcomes regularly to the board.
- Disclosure discipline. Institutions are encouraged to align public reporting with TCFD recommendations and provide stakeholders with meaningful updates on governance and risk integration.
Implications by segment
- Banks. Credit committees need sector-specific heat maps and portfolio steering metrics to manage transition and physical risk concentrations.
- Insurers. Boards should oversee underwriting and investment guidelines that factor in catastrophe risk, carbon intensity, and policyholder engagement.
- Asset managers. Fund boards and responsible officers must update stewardship policies, voting guidelines, and product disclosures to reflect environmental risk integration.
Action checklist
- Embed climate competence benchmarks into board skills matrices and training plans.
- Align risk appetite statements, scenario analysis, and stress testing schedules with MAS expectations.
- Prepare 2021 disclosures highlighting governance enhancements, product labelling adjustments, and client engagement outcomes.
Sources
- MAS Guidelines on Environmental Risk Management for Banks
- MAS Guidelines on Environmental Risk Management for Asset Managers
Zeph Tech partners with Singapore-based institutions to operationalise MAS environmental risk expectations across governance, stress testing, and disclosure programmes.
Follow-up: MAS completed supervisory reviews in 2022, issued an information paper on best practices in May 2022, and is integrating environmental-risk metrics into 2024 stress tests for insurers and asset managers.