Written by Subha Kannan
PM Haze welcomes the designation of 2018 as the Year of Climate Action to raise awareness on climate change and inspire individual and collective action. This comes at an opportune time when Singapore is beginning to feel the impact of climate change as seen during the floods and abnormal temperatures. This initiative brings the much-needed focus on climate change, which is currently accepted as the most pressing global environmental issue.
To help all sections of society take action, the MEWR has published a range of resources and suggested everyday action that can be taken. A portal has also been launched where individuals and organisations can publicly declare their commitment/willingness to take action on climate change.
Use of cleaner fuels, responsible production and consumption are some of the actions being encouraged. In this context, we would like to highlight the role of finance in climate action.
Financial institutions provide the capital required by businesses through loans and investment capital (shareholding). When our financial institutions lend or invest in companies without considering their environmental and social impact, they run the risk of supporting companies that engage in unsustainable practices such as deforestation and burning to clear land, which causes transboundary haze that affects the region and contributes to climate change.
By attaching sustainability criteria to their lending and investment decisions financial institutions can channelise capital to companies that have responsible business practices. They can also shrink the pool of funds available to companies that follow destructive, irresponsible practices.
Singapore’s financial institutions are major financiers of agri businesses (rubber, palm oil, sugar) and energy sector (coal, oil & gas) in the region. It is encouraging to see that all three of our local banks have made commitments on the climate action portal. DBS is the first bank in the region to adopt a climate policy.
Given the urgency with which we need to act on climate change, we hope all our financial institutions including asset managers and insurance companies will pledge their commitment to responsible financing and disclose the progress on implementation.
We also hope the Environment and Finance ministries will coordinate their efforts to make their collective action more timely and impactful.