Singapore Green Bond Framework Updated to Align with Singapore-Asia Taxonomy for Sustainable Finance

On 23 January 2025, the Ministry of Finance (“MOF“) issued the second edition of the Singapore Green Bond Framework (January 2025) (“2025 Framework“), updating the first edition issued in June 2022 (“2022 Framework“). For a summary of the 2022 Framework, please click here to read our earlier Legal Update.

Singapore is committed to sustainable development and combating climate change, and green and transition finance are key enablers in facilitating investments in green technologies, products, and services. In recognition of the role that Singapore can play in green and transition finance, in April 2023, the Monetary Authority of Singapore (“MAS“) launched the Finance for Net Zero (FiNZ) Action Plan, which set outs MAS’ strategies to mobilise financing to catalyse Asia’s net zero transition and decarbonisation activities in Singapore and the region. MAS also offers grant schemes that defray the cost of external reviews for such financing, such as the Sustainable Bond Grant Scheme and Sustainable Loan Grant Scheme. The 2025 Framework is a critical part of Singapore’s overarching sustainability strategy and governs the issuance of sovereign green bonds under the Significant Infrastructure Government Loan Act 2021 (“SINGA“). It also provides a reference point for Statutory Boards’ respective green bond frameworks. The proceeds from such issuances are used to finance green public sector projects. 

This Update provides a quick snapshot of the 2025 Framework. One of the significant updates in the 2025 Framework is its alignment with the latest sustainable finance standards, including the Singapore-Asia Taxonomy for Sustainable Finance (December 2023) (“Singapore-Asia Taxonomy“).  

Summary of 2025 Framework and Reference to Market Standards

Four Core Components

All green bonds issued by public sector agencies under the 2025 Framework must conform to four core components:

1. Use of Proceeds. The proceeds from the issuance of green bonds must be used for the eligible green expenditures that contribute to the environmental objectives set out in the International Capital Market Association (“ICMA“) Green Bond Principles 2021 and the Association of Southeast Asian Nations (“ASEAN“) Capital Markets Forum ASEAN Green Bond Standards 2018. We discuss this in greater detail below.
2. Project Evaluation and Selection. The issuer should clearly communicate to investors: (i) the environmental sustainability objectives of the eligible green expenditures; (ii) the process by which the issuer determines how the expenditures fit within the eligible expenditure categories; and (iii) complementary information on the processes by which the issuer identifies and manages social and environmental risks associated with the relevant expenditures. The Second Minister for Finance chairs the Green Bond Steering Committee, which assumes overall responsibility for proper governance of the 2025 Framework to provide transparency and accountability.
3. Management of Proceeds. The net proceeds of the green bond issuance, or an amount equal to these net proceeds, should be tracked by the issuer in an appropriate manner, and attested to by the issuer in a formal internal process linked to the issuer’s investment operations for eligible green expenditures. The Singapore Government will allocate the net proceeds to the eligible green expenditures in full within two years. The net proceeds will only be allocated to expenditures of the green categories incurred no earlier than two years prior to the date of issuance, and no later than two years from the date of issuance. At least 50% of the net proceeds will be allocated to current and future expenditures.
4. Updated information on the use of proceeds, including allocation and expected impact, should be provided to investors at least annually until full allocation and in case of material changes. Since 2023, MOF has been preparing progress reports and will continue to do so until the full allocation (and subsequently on a needs basis). The progress report will consist mainly of information on:

• • Allocation reporting: The Singapore Government will report on the allocation of the net proceeds raised from green bond issuances.
  • Impact reporting: The Singapore Government will report on the associated environmental benefits and social co-benefits, where possible, of the eligible green expenditures, as well as align, on a best effort basis, the impact reporting with the project-level or portfolio-level reporting approach.

External Review

DNV, an independent provider, has issued a pre-issuance second party opinion on the 2025 Framework, available at www.go.gov.sg/greenbonds. Post-issuance external verifications will be conducted by an independent provider annually to ascertain alignment of the allocation reporting with the 2025 Framework, until full allocation and in case of material changes. The post-issuance verification report will be available at www.go.gov.sg/greenbonds.

Use of Proceeds

To qualify, projects must meet two essential thresholds: (i) being approved under SINGA; and (ii) fall under the eligible green categories defined in the 2025 Framework. The eligibility criteria for the green categories have been developed with reference to existing market standards and principles, including the ICMA Green Bond Principles 2021, ASEAN Green Bond Standards 2018, Singapore-Asia Taxonomy, and Climate Bonds Initiative Taxonomy and Sector Criteria. The 2025 Framework has provided a non-exhaustive list of examples of eligible expenditures that fall within each green category for reference.

 The scope of potential eligible expenditures has been expanded to include certain associated ancillary activities, in addition to those already set out by the 2022 Framework. In all, potential eligible expenditures may include the following:

1. Infrastructure capital expenditures;
2. Operational and maintenance expenditures for public infrastructure;
3. Expenditures on associated ancillary activities necessary for the construction, operation or maintenance of the infrastructure;
4. Intangible assets (research and innovation, human capital and organisation);
5. Tax expenditures (subsidies and tax exemptions); and
6. Capital transfers to public or private entities.

Green Categories and Sub-categories

In the 2025 Framework, the contributions of the green categories are being mapped to three other frameworks key to Singapore’s commitment on sustainable development: (i) the environmental objective(s) of the Singapore-Asia Taxonomy; (ii) the key pillars of the Singapore Green Plan 2030; and (iii) the UN Sustainability Development Goals.

Sub-categories within each green category provide further details on eligible activities. The descriptions as well as the thresholds and criteria of the sub-categories have been updated from the June 2022 Framework, to align with the green activities of the Singapore-Asia Taxonomy, where applicable. These sub-categories are then mapped to analogous activities in the Singapore-Asia Taxonomy, where possible. A few sub-categories are not covered by the Singapore-Asia Taxonomy, particularly activities related to research and development (“R&D“) (i.e. for clean and renewable energy technologies, new energy efficiency technologies, and low- and zero-emission transportation technology), as well as sub-categories under climate change adaptation, NEWater treatment systems, food waste treatment into high quality bio-pulp, and activities related to the improvement in sustainability and liveability of the urban environment.

The following summarises the activities covered under the green categories, which are grouped according to the environmental objective(s) of the Singapore-Asia Taxonomy they have been mapped to:

Climate change mitigation

1. Renewable Energy includes electricity transmission from, storage of, and generation of renewable energy such as solar, wind, hydropower, geothermal, bioenergy, and ocean energy, subject to fulfilment of the respective specified criteria for each sub-category. It also includes, among other things, electricity generation from low-carbon hydrogen or its derivatives. It also includes R&D and test-bedding for clean and renewable energy technologies.
2. Energy Efficiency includes energy efficiency programmes for commercial, public, and industrial sectors. It also includes R&D for new energy efficiency technologies.
3. Green Buildings includes the construction, renovation or acquisition of buildings that meet the Building and Construction Authority’s Green Mark certification and data centres complying with specified criteria.

Climate change adaptation

4. Climate Change Adaptation is not covered in the Singapore-Asia Taxonomy, and includes for instance, information support systems, such as climate observation and early warning systems, as well as climate change and flood resilient infrastructure and nature-based solutions, among other things.

Climate change mitigation and pollution prevention and control

5. Clean Transportation expands coverage to include water and air transport, in addition to land transport previously already included in the 2022 Framework. The emphasis is on infrastructure and mobility solutions with zero direct tailpipe CO₂ emissions such as electrified railway infrastructure, electric bus infrastructure, electric vehicle charging infrastructure, and electric vessels. Water transport infrastructure that falls within scope includes hydrogen-based fuelling and vessels with biofuels that fulfil specific international standards. Air transport covers airports and air infrastructure that fall within the required scope.

Natural resource conservation and pollution prevention and control

6. Sustainable Water and Wastewater Management includes water collection, treatment, and supply systems, covering distribution networks, desalination systems, wastewater systems, and NEWater treatment systems.
7. Pollution Prevention, Control, and Circular Economy includes the collection, transportation, processing and recycling of non-hazardous waste, as well as biowaste treatment that complies with specified criteria for composting and anaerobic digestion, among other things. A new sub-category is R&D for low carbon technologies including carbon capture, transportation and storage such as direct air capture.

Biodiversity conservation and natural resource conservation

8. Biodiversity Conservation and Sustainable Management of Natural Resources and Land Use includes activities for conservation, restoration, and maintenance of natural or pristine forests which are within scope, as well as other activities related to the improvement in sustainability and liveability of the urban environment.

Exclusions

The 2025 Framework retains the same set of exclusions as the 2022 Framework. The list of activities excluded from the green categories are for those related to fossil fuels, nuclear energy, lethal defence goods, gambling, alcoholic beverages, tobacco products, conflict minerals, and activities associated with child labour or forced labour. Essentially, all eligible green expenditures financed under the 2025 Framework must not significantly undermine the environmental objectives stated in the green categories, and must adhere to internationally recognised principles and guidelines, as well as applicable national laws and regulations in Singapore.

Our Comments on the 2025 Framework

The 2025 Framework spotlights the Singapore Government’s commitment and support for sustainable finance, as well as its readiness and agility to keep up with the latest market standards and principles. This alignment update of the Singapore Green Bond Framework to the Singapore-Asia Taxonomy is set to harmonise the sustainable financing standards between sovereign and private sector green bond issuance.

We are excited as the market continues to develop, and we look forward to further bond issuances under the 2025 Framework. Private sector and financial institutions can take their cue from the improved visibility on potential infrastructure and public sector projects and ventures that are in line with Singapore’s overarching sustainable development direction, to develop and allocate their capabilities and capital to meet future demands.

For further details, please refer to the media release on the MOF website (available here). If you have any queries, please feel free to contact our team members.