Over $8b allocated for climate transition: MAS

The figure represents about 2% of the central bank’s portfolio.

The Monetary Authority of Singapore (MAS) has allocated over $8b to its climate transition programme, Managing Director Ravi Menon revealed.

The allocated funds equate to about 2% of the central bank’s portfolio.

“We have done this by tilting part of the equities portfolio towards less carbon-intensive companies that are more aligned with the low-carbon transition, rather than by excluding any entire carbon-intensive sector,” Menon said.

“This approach strikes a balance between reducing the portfolio’s carbon intensity while continuing to support companies which are transitioning to lower carbon intensity,” he added.

Moving forward, Menon said MAS will scale up its climate transition programme as the central bank gains confidence in the effectiveness of the climate indices it has used to tilt its equities portfolio.

Menon added that MAS will also seek a better understanding of how the scoring methodologies of climate indices fare as indicators of actual company actions; how company actions in turn translate into climate risk reduction and financial market pricing; and how active managers calibrate their investment process when their performance is measured against a climate index instead of a conventional market capitalisation-weighted index.