Understanding the Key Provisions of Si Circular 2024

Introduction

Si Circular 2024, issued by the Monetary Authority of Singapore (MAS), introduces a comprehensive framework for financial institutions to manage sustainability risks and promote sustainable finance.

Sustainable Business Practices

The circular mandates financial institutions to develop and implement policies and procedures for integrating environmental, social, and governance (ESG) factors into their business strategies and operations.

Institutions must assess and manage ESG risks, such as climate change, resource depletion, and social inequality, across their entire operations, including lending, investments, and asset management.

Sustainability Reporting

Si Circular 2024 requires financial institutions to disclose material ESG information in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

Institutions must provide transparent and comparable data on their sustainability performance, including emissions, water usage, and labor practices.

Sustainability Targets

The circular encourages financial institutions to set sustainability targets and align their operations with global sustainable development goals.

Institutions are expected to contribute to the transition to a low-carbon economy, promote social inclusion, and support sustainable infrastructure development.

Collaboration and Capacity Building

MAS emphasizes collaboration and capacity building within the financial industry to enhance sustainability practices.

Institutions are encouraged to share best practices, develop joint initiatives, and invest in training programs to enhance their sustainability expertise.

Governance and Accountability

Si Circular 2024 requires financial institutions to establish a governance framework for sustainability risk management.

Boards and senior management are held accountable for overseeing the implementation and effectiveness of sustainability strategies and policies.

Implementation and Timeline

Financial institutions are expected to comply with the requirements of Si Circular 2024 by December 31, 2024.

MAS will monitor compliance and provide guidance to institutions to support the transition to sustainable finance practices.

Conclusion

Si Circular 2024 represents a significant step towards embedding sustainability in the financial sector of Singapore.

By mandating comprehensive ESG risk management, transparent reporting, and sustainable business practices, MAS aims to create a sustainable financial ecosystem that supports economic growth while addressing environmental and social challenges.