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Singapore to invest $2.7b in green funds

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Republic aims to be leading centre for green finance in Asia and the world

Singapore will invest US$2 billion (S$2.7 billion) in funds that have a strong green focus, as part of its ambition to be a leading centre for green finance in Asia and the world.

"Finance fuels the economy and business. It determines investment decisions, and it drives action. We must make finance green to drive climate action - mitigate and adapt to climate change," said Education Minister Ong Ye Kung at the opening of the fourth annual Singapore FinTech Festival yesterday.

He unveiled several new initiatives as part of the green action plan of the Monetary Authority of Singapore (MAS), which aims to place Singapore at the forefront of creating a greener financial system.

One of the initiatives is to invest more in green funds.

MAS will launch the Green Investments Programme, in which the central bank will invest with asset managers who are committed to deepening finance activities and capabilities in Singapore.

"This programme also supports MAS' efforts to generate sustainable long-term returns on its investment portfolio," said Mr Ong.

"It complements our broader range of initiatives to accelerate the growth of Singapore's green finance ecosystem."

As part of the programme, MAS will allocate US$100 million to the Bank for International Settlements' green bond fund, to support its global green finance initiatives.

Green finance involves making sure financial services such as borrowing and lending, as well as investing, deliver both returns and environmentally positive outcomes.

Prime Minister Lee Hsien Loong said in August that Singapore would need to spend $100 billion over the next 100 years to fight climate change and rising sea levels.

Mr Ong said that while Singapore accounts for only 0.11 per cent of global carbon emissions, it is determined to do its part to catalyse change.

"We are... the only (country) in Asia to have introduced a broad-based carbon tax to put a price on emissions," he said.

He added that Singapore is one of the few countries in the world to limit its car population with a zero-growth policy.

Other than investments, Singapore is also committed to making green lending a mainstream activity, said Mr Ong, who is an MAS board member.

To do this, MAS will develop incentives to encourage growth in green and sustainability-linked loans.

It will roll out grant schemes to help firms defray the costs for developing sustainability frameworks and engaging external reviewers.