Green Finance Industry Taskforce (GFIT) Taxonomy Public Consultation

There is increasing attention from consumers on financial products and services that are labelled as “green”. However, despite this increasing interest in green and sustainable finance, there have been concerns over greenwashing. These concerns may be inhibiting the development of green finance. There has therefore been a move in some markets to create a system of classification or standards that would help financial market participants and their stakeholders communicate through a shared understanding. One such approach is the creation of a taxonomy.

Singapore, as a leading financial centre, can play an active role in advancing the green finance agenda and serve green financing needs in the region. Convened by the Monetary Authority of Singapore, the Green Finance Industry Taskforce (GFIT) is an industry-led initiative to accelerate the development of green finance through four key initiatives: (i) develop a taxonomy (ii) enhance environmental risk management practices of financial institutions (iii) improve disclosures, and (iv) foster green finance solutions.

Under the first focus area, the GFIT is exploring the development of a taxonomy for Singapore-based financial institutions, with particular relevance to those active across ASEAN. The first and second consultation papers were released in January 2021 and May 2022 respectively. Further details of the consultation papers are set out below.

Building on the two earlier rounds of consultation papers, a third and final consultation paper is released on 15 February 2023 which seeks views on the detailed thresholds and criteria for classification of green and transition activities in five sectors: (i) agriculture and forestry / land use; (ii) industrial; (ii) waste and water; (iv) information and communications technology; and (v) carbon capture and sequestration. The consultation also seeks views on the “Do No Significant Harm (DNSH)” criteria which specifies that activities which are making a substantial contribution to climate change mitigation should not be carried out in a manner that would cause significant adverse impact to the other four environmental objectives under the taxonomy.

The GFIT welcomes all feedback on this document by 15 March 2023.