Singapore Sets Climate Risk Management Expectations for Financial Institutions

Singapore’s central bank, the Monetary Authority of Singapore (MAS), has issued new guidelines outlining how banks, insurers and asset managers should manage climate-related risks. The framework sets supervisory expectations for financial institutions to strengthen their risk management practices and improve resilience to climate impacts. The guidelines require financial institutions to assess both physical risks from climate change and transition risks linked to the shift toward low-carbon economies. Firms are expected to integrate climate considerations into governance structures, business strategies and risk-management systems to better identify and manage potential financial exposures. MAS also encourages institutions to engage with clients and portfolio companies to help them manage climate risks instead of immediately withdrawing financing from high-emission sectors. Regulators say such engagement can help support an orderly transition while maintaining financial stability. The new guidance expands Singapore’s Environmental Risk Management framework introduced in 2020 and will take effect in September 2027, following an 18-month transition period for financial institutions to strengthen governance, data capabilities and climate risk analysis.