MAS sets climate transition planning expectations for financial institutions

New guidance takes effect in 2027.

The Monetary Authority of Singapore has issued three transition planning guidelines setting supervisory expectations for banks, insurers, and asset managers to manage climate-related transition and physical risks.

MAS said the guidance is an addendum to its Environmental Risk Management Guidelines issued in 2020 and is intended to help financial institutions build stronger risk assessment and risk management capabilities.

MAS said institutions should implement transition planning in a risk-proportionate manner and assess and manage climate risks by adapting business models, governance, and risk management practices in a forward-looking way.

It also expects institutions to engage customers and investee companies to avoid indiscriminate withdrawal of credit, insurance coverage, or investments, and to keep pace with evolving data and methodologies.

The guidelines were developed with reference to feedback from an earlier public consultation and industry engagement, and will take effect from September 2027 after an 18-month transition period.