Singapore creates roadmap for sovereign green bonds

The lion city plans to issue up to S$35bn ($25.4bn) in green financing by 2030

Singapore has released a green bond framework detailing the intended use of issuance proceeds and the governance structure to evaluate and select eligible projects.

The region has also outlined the operational approach to manage the green bond proceeds, and the commitment to post-issuance allocation and impact reporting.

“We are committed as one government to taking bold and decisive actions to tackle climate change, finance sustainable infrastructure, and catalyse the green economy,” said Indranee Rajah, second minister for finance.

“The publication of our Singapore green bond framework is yet another important step forward in this regard.”

The guidelines stipulate the bonds must align with internationally recognised market principles and standards – the International Capital Market Association (ICMA) Green Bond Principles 2021, and the ASEAN Capital Markets Forum ASEAN Green Bond Standards 2018.

Proceeds from issuance will be used to finance expenditures in support of the Singapore Green Plan 2030, which will play a key role in the domestic transition to a low-carbon economy.

The projects funded by green bonds will include renewable energy, energy efficiency, green building, clean transportation, sustainable water and wastewater management, and pollution prevention.

The green bond steering committee, chaired by Rajah, will be responsible for the governance and implementation of the framework, according to the announcement.

The green credentials of the framework have been reviewed externally by Morningstar Sustainalytics, an independent ESG research firm, which came to the conclusion it is “credible, impactful and aligns with internationally recognised market principles and standards”.

Inaugural issuance

In the same announcement, the Singapore government said it will issue its inaugural sovereign green bond under the framework in the coming months.

The first batch will be used to finance infrastructure costing over S$4bn, which meets the green criteria under the framework and has a life of at least 50 years.

The Monetary Authority of Singapore will issue and manage the issuance on behalf of the government. It will provide more details about the bond closer to its issuance date.

The government announced in its budget in February that the public sector, including the government as well as its statutory boards, will issue up to S$35bn of green bonds by 2030.