24th Investors' Choice Awards - Ms Grace Fu

SPEECH BY MS GRACE FU, MINISTER FOR SUSTAINABILITY AND THE ENVIRONMENT, AT THE 24TH INVESTORS’ CHOICE AWARDS ON 8 NOVEMBER 2023

Mr David Gerald, President and CEO of the Securities Investors Association Singapore

Dr. Tony Tan, former President of the Republic of Singapore and Patron of SIAS

Distinguished guests

Ladies and gentlemen

Introduction

1 Good evening.

2 Climate change is an existential threat to humanity on a global scale.

a. The past 15 years have seen the fastest rates of global warming, and 2023 is firmly set to be the warmest year on record.

b. Climate disasters, brought about by extreme weather events such as intense storms to wildfires, have inflicted colossal damage on property, infrastructure and supply chains, amounting to nearly S$200 billion a year.

3 Unless we act decisively in this decade, climate change will intensify, and affect lives and livelihoods worldwide.

a. Famine, biodiversity loss, air pollution and public health threats will become more likely.

b. There is now a much greater urgency to transit towards a green, inclusive and resilient economy.

4 We are mid-way between the signing of our Paris Agreement in 2015 and the first major milestone year of 2030.

a. In less than a month, the UNFCCC’s Climate Change Conference, or COP-28, will meet to conduct our first Global Stocktake on climate action.

b. The data and science are telling us that the world is not on track to attaining the Paris Agreement temperature goal.

5 While we have made progress under the Paris Agreement, we are not decarbonising at the required pace to keep global warming to 1.5 degrees Celsius.

6 To keep this target alive, we must transit faster.

a. The transition to a low-carbon world could cost the world over $8 trillion annually till 2030.

b. While the amount may seem staggering, it is only a fraction of the $300 trillion in financial assets circulating in our global economy.

7 So, the world is not short on financial resources. What we lack is a strong and collective will to channel capital towards sustainable and impactful solutions.

8 I would like to give you a few reasons why we must step up on climate action.

Impact of climate change on global finance

9 First, climate change is starting to tangibly impact profitability.

a. It has fundamentally shaped risk calculations and business decisions. Beyond its physical impacts, climate risk will increasingly encompass transition risks driven by governments and the society.

b. Examples:

i. Higher carbon prices and green procurement mandates are setting the pace for decarbonisation in many economies worldwide.

ii. Consumers and shareholders are holding companies to a higher standard on their corporate responsibility to the environment.

iii. This higher standard applies not only to pollutive industries, but also to equity holders that fund such activities.

10 Climate change is therefore no longer optional for companies nor investors.

a. Corporates and industries are expected to adhere to the principles of the Paris Agreement and transit to a new normal of net zero emissions by 2050.

i. Today, over one-third of the world’s largest listed companies have set net zero targets, up from just one-fifth in 2020.

ii. The aviation and maritime industries have made similar commitments.

b. Investors are increasingly conscious about the climate risks of their portfolios. They are backing businesses that prioritise ESG outcomes, and are demanding greater transparency in disclosures.

11 Second, the Government will lead with the policy impetus for economic transition.

a. We have committed to achieving net zero by 2050 for Singapore, and will work with our stakeholders, including industries and bankers, towards this target.

b. Carbon Tax, which will rise over the new few years, is one of the main policy levers for economic transition.

12 We have established sustainability reporting as a standard practice here.

a. Since January this year, retail ESG funds are required to comply with disclosure and reporting guidelines, including providing information to substantiate their ESG label.

b. From next year, climate reporting will become progressively mandatory for listed companies in the sectors most impacted by climate change.

c. Also from next year, all Statutory Boards will publish annual environmental sustainability disclosures, setting out their efforts, progress and plans.

13 The government has introduced initiatives to empower the economic sector to make informed decisions.

a. The Monetary Authority of Singapore developed NoVA!, an AI tool to help detect greenwashing and facilitate risk assessment for sustainability-linked loans.

i. In June, MAS proposed a code of conduct for providers of ESG ratings and data products, which sets out minimum industry standards on transparency, governance and management of conflicts of interest.

b. My ministry has also set green procurement requirements and carbon crediting standards.

i. Published last month, our eligibility criteria for international carbon credits take reference from reputable international standards that integrated ESG considerations.

Investing in a broader mission

14 Third, we expect the financial sector to internalise a broader ESG mission, a mission that will maximise long-term profits, while ensuring resource resilience and community well-being. Investors and financiers can and must help us pivot, by allocating capital towards sustainable and climate-resilient businesses.

15 Recognising the immense opportunities before us as we search for greener energy sources and technologies, the financial sector can catalyse the growth of new industries, by mobilising funding for needle-moving sustainability solutions, to shorten the runway for commercialisation.

a. In September, GIC and Temasek are part of a consortium that raised over $2 billion in equity to finance the world’s first large-scale green steel plant.

i. Once operational in end-2025, the plant will utilise green hydrogen to reduce emissions by up to 95% compared to conventional steel production processes.

b. In the same month, SGX and BlackRock rolled out the first Climate Action ETF investing in the Asia-Pacific region.

i. With S$580 million in assets under management, it is the largest equity ETF launched in Singapore.

c. As our banks decarbonise their loan portfolio, they are empowering their clients to go green.

i. Last month, DBS launched the first-of-its-kind Eco Renovate loan to help SMEs fund green renovation to install energy optimisation solutions.

16 As a country, we must look beyond our size constraints, and leverage our position – as an international financial hub, maritime and shipping hub, aviation hub and petrochemical hub – to unlock and redirect capital towards long-term sustainable value creation, even when the returns may only be realised after our lifetime.

17 The Government has embarked on long-term investments in infrastructure works and resource resilience.

a. We are building the capacity and capability to guard against food supply disruptions caused by extreme weather events, geopolitical tensions and disease outbreaks.

i. Meeting our “30 by 30” goal to produce 30% of our nutritional needs locally by 2030 will improve food resilience for future generations, just as we have done so in water.

b. We are investing heavily in drainage improvements and coastal protection measures. We are prepared to spend S$100 billion to protect our island from rising sea levels.

Conclusion

18 Let me conclude. Investing in a shared tomorrow has been a recurring theme during our Forward Singapore engagements.

a. And Forward Singapore is about establishing a social compact between the Government, businesses and people in the face of global challenges such as rising geo-political tensions, protectionism and nationalism, and climate change.

b. In our journey forward as a united people, businesses and investors must step up to fulfil the social responsibility of safeguarding our planet for our future generations.

i. Only so can we continue to progress and thrive despite our domestic constraints and challenges.

19 As we celebrate the achievements of our companies today, let us remember that we can all be stewards of change, and creators of greener possibilities.

20 Let me leave you with a quote by renowned anthropologist, Margaret Mead – “Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever has.”

21 And as Prime Minister Lee Hsien Loong said recently, “This is a nation of lions led by lions.”

a. Climate change is an existential challenge at a global scale, but by working together as Team Singapore, we can overcome this challenge and create global opportunities for our people and future generations.

22 I urge you all as business leaders to come forward and participate fully in our nation’s transition to a low-carbon future. Thank you.