Compliance Briefing — December 8, 2020
Singapore’s Monetary Authority issued environmental risk management guidelines for banks on 8 December 2020, formalising board accountability, scenario analysis, and disclosure controls.
Executive briefing: On 8 December 2020 the Monetary Authority of Singapore (MAS) released the Guidelines on Environmental Risk Management (Banks). Banks must demonstrate climate governance at board and senior management level, embed environmental considerations into risk management, and disclose progress in line with international standards.
Key compliance checkpoints
- Governance and accountability. Assign board oversight and senior management responsibility for environmental risk, with documented mandates and reporting lines.
- Risk management integration. Incorporate environmental risk drivers into credit, market, liquidity, and operational risk frameworks, including sectoral exposure limits.
- Scenario analysis and stress testing. Develop climate scenario analysis covering physical and transition risks, informing capital planning and portfolio decisions.
Operational priorities
- Data and metrics. Collect emissions, energy, and transition data from counterparties, augmenting with external datasets to quantify risk concentrations.
- Disclosure alignment. Prepare TCFD-aligned disclosures detailing governance, strategy, risk management, and metrics/targets for environmental risk.
- Product governance. Review green and sustainability-linked products to ensure risk-adjusted pricing and transparent client commitments.
Enablement moves
- Build cross-functional climate risk committees spanning credit, treasury, and sustainability teams.
- Adopt climate analytics platforms to model physical risk scores, transition pathways, and stranded asset exposures.
- Integrate environmental risk requirements into third-party due diligence for asset managers and outsourced portfolio services.
Sources
- MAS Guidelines on Environmental Risk Management for Banks
- MAS media release on environmental risk management guidelines
Zeph Tech equips Singapore-regulated banks with climate governance frameworks, scenario modelling, and disclosure tooling aligned to MAS guidelines.
Follow-up: Bank-specific inspections concluded in 2022, and MAS’ 2024 speech on climate scenario analysis confirmed that baseline expectations—including board accountability and portfolio alignment metrics—will be tested in the next supervisory cycle.