On 5 March 2026, the Monetary Authority of Singapore (“MAS“) issued three Guidelines on Environmental Risk Management – Transition Planning (“Guidelines“) on its supervisory expectations for banks, insurers and asset managers (collectively, “financial institutions” or “FIs“) to manage the transition and physical risks arising from climate change that affect both the FIs and their portfolios. MAS has earlier conducted a public consultation on these Guidelines in October 2023, which you can read more about in our October 2023 Legal Update titled “MAS Consults on Proposed Transition Planning Guidelines for Banks, Insurers, Asset Managers“. MAS has also issued its Responses to the consultation. The Guidelines are issued as an addendum to the Guidelines on Environmental Risk Management introduced in 2020, and build on MAS’ existing supervisory guidance to FIs, namely the Environmental Risk Management Guidelines (ENRM Guidelines) as well as MAS’ Information Papers on Environmental Risk Management published in May 2022. The Guidelines will take effect from September 2027, following an 18-month transition period.
Purpose of the Guidelines
These Guidelines help FIs strengthen risk assessment and management for climate-related risks. FIs should develop transition plans based on their own risk profiles and local business conditions.
Scope of Coverage
Banks |
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Insurers |
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Asset Managers |
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Key Supervisory Expectations
Generally, MAS expects FIs to:
- Assess and manage the risks associated with both physical and transition risks arising from climate change. FIs can manage by adapting their business models and implementing sound internal process to establish governance and risk management practices in a forward-looking manner;
- Have a structured process to engage their customers and investee companies to better understand their climate-related vulnerabilities, so as to avoid the indiscriminate withdrawal of credit, insurance coverage, or investments, and support broader financial stability. In doing so, FIs should consider the risk materiality of their customers and investee companies when collecting data and to consider improvements in data quality over time. Impacts by jurisdictional-level sectoral decarbonisation and adaptation roadmaps, where available, should be considered in proactive management of customers and investee companies’ risk; and
- Keep pace with the development of knowledge and capabilities relating to the measurement and management of climate-related risks, as data and methodologies around the understanding of such risks continue to improve. In assessing climate-related risks, FIs are expected to substantiate data gaps, model weaknesses, and the assumptions underlying the data proxies used. Such substantiation should also inform future iterations and enhancement in climate-related risks assessments.
FIs should look into aligning their governance processes, contractual agreements and regulatory reporting with transition expectations. Singapore FIs can tap on our environmental, social, and governmental (ESG) legal fee subsidy for legal advisory on environmental governance and reporting under the Sustainability Legal Catalyst Programme with Enterprise Singapore. Terms and conditions apply. You can reach out to us at [email protected].
Click on the following links for more information (available on the MAS website at www.mas.gov.sg):
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