New MAS guidelines require actionable climate transition plans by Sept 2027. Matter provides the exact data and advisory solutions financial institutions need to seamlessly comply.
The Monetary Authority of Singapore (MAS) has released new Guidelines on Environmental Risk Management – Transition Planning (TPG) to strengthen how financial institutions (FIs) manage climate-related risks within their business models and investment portfolios.
The Guidelines build upon 2020 MAS Environmental Risk frameworks, shifting the focus from high-level sustainability commitments to requiring the development of practical, long-term transition plans. These plans proactively address climate-related risks across business strategy, portfolios, and governance.
The Guidelines will take effect in September 2027, following an 18-month transition period designed to allow firms sufficient time to enhance their governance frameworks, data capabilities, and risk management processes.
Pillar 1: Dual Focus on Physical and Transition Risks
FIs must assess both physical climate risks (e.g., extreme weather events) and transition risks (e.g., policy changes, technology shifts, and market adjustments linked to decarbonisation).
Pillar 2: Enhanced Client and Portfolio Engagement
MAS encourages institutions to actively collaborate with clients and investee companies. This deep engagement is intended to foster a better understanding of climate exposures and transition strategies, thereby avoiding abrupt or indiscriminate withdrawals of financing or insurance coverage.
Pillar 3: Sectoral Focus and Proportionality
Institutions are expected to prioritise measures for high-risk sectors (such as energy and transport) while ensuring that the scale of their actions is proportional to the institution’s size, risk profile, and the specific nature of its activities.
Pillar 4: Governance Integration
Climate change considerations must be formally embedded into long-term strategies and governance structures, ensuring top-down oversight of the transition strategy.
The TPG represents a significant advancement, moving from basic risk identification to strategic, long-term transition planning.
Matter Advisory helps asset managers meet the core expectations by September 2027:
Forward-Looking Portfolio Oversight:
• Assess the resilience of all managed funds against long-term climate transition scenarios.
• Integrate climate considerations throughout the entire investment lifecycle, from due diligence to exit.
Stewardship over Divestment:
• Prioritise "active engagement"to support investee companies in their decarbonisation efforts through the development of robust engagement policies.
• Identify portfolio companies with credible transition plans, helping you meet the MAS expectation to avoid "indiscriminate divestment."
Governance & Mandate Alignment:
• Ensure the local Board and Senior Management maintain clear oversight of the transition strategy through targeted training and governance development.
• Establish metrics to monitor goals, carefully balancing transition goals with fiduciary duties and specific client investment mandates.
Practical Stewardship and Engagement Strategies:
• Public Equity Managers (minority stakes): Implement active stewardship via proxy voting and collaborative engagement.
• Private Equity (Control Stakes): Directly embed transition plans into the portfolio company’s core business strategy.
FIs must implement structured disclosure practices for GHG emissions associated with their investment portfolios. Using Matter data, financial institutions can:
Meet Disclosure Needs:
• Accurately measure and disclose Scope 3 financed emissions.
Utilise Standardised Methodologies:
• Leverage Matter’s data approach, which is based on globally recognised frameworks such as the Partnership for Carbon Accounting Financials (PCAF) Standard, ensuring consistency and comparability in emissions data.
• Align reporting with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
Leveraging Forward-Looking Metrics:
• Report on metrics such as the percentage of the portfolio covered by science-based targets or the “implied temperature rise” of the fund.
• Include the qualitative and quantitative milestones required by the Guidelines to measure progress against decarbonisation commitments.
Portfolio Screening & Engagement:
• Support screening and engagement efforts by identifying companies based on critical transition metrics, including:
◦ GHG emissions driving portfolio emissions.
◦ Exposure to climate solutions (aligned with IICGG).
◦ Existence of Net Zero Targets or Science Based Targets.
◦ Impact on portfolio temperature alignment (Implied Temperature Rise).
◦ Net Zero Maturity within sectors most critical to the transition.
By Leonie Kelly
Questions? Reach out directly at leonie@thisismatter.com
The Monetary Authority of Singapore (MAS) has released new Guidelines on Environmental Risk Management – Transition Planning (TPG) to strengthen how financial institutions (FIs) manage climate-related risks within their business models and investment portfolios.
The Guidelines build upon 2020 MAS Environmental Risk frameworks, shifting the focus from high-level sustainability commitments to requiring the development of practical, long-term transition plans. These plans proactively address climate-related risks across business strategy, portfolios, and governance.
The Guidelines will take effect in September 2027, following an 18-month transition period designed to allow firms sufficient time to enhance their governance frameworks, data capabilities, and risk management processes.
Pillar 1: Dual Focus on Physical and Transition Risks
FIs must assess both physical climate risks (e.g., extreme weather events) and transition risks (e.g., policy changes, technology shifts, and market adjustments linked to decarbonisation).
Pillar 2: Enhanced Client and Portfolio Engagement
MAS encourages institutions to actively collaborate with clients and investee companies. This deep engagement is intended to foster a better understanding of climate exposures and transition strategies, thereby avoiding abrupt or indiscriminate withdrawals of financing or insurance coverage.
Pillar 3: Sectoral Focus and Proportionality
Institutions are expected to prioritise measures for high-risk sectors (such as energy and transport) while ensuring that the scale of their actions is proportional to the institution’s size, risk profile, and the specific nature of its activities.
Pillar 4: Governance Integration
Climate change considerations must be formally embedded into long-term strategies and governance structures, ensuring top-down oversight of the transition strategy.
The TPG represents a significant advancement, moving from basic risk identification to strategic, long-term transition planning.
Matter Advisory helps asset managers meet the core expectations by September 2027:
Forward-Looking Portfolio Oversight:
• Assess the resilience of all managed funds against long-term climate transition scenarios.
• Integrate climate considerations throughout the entire investment lifecycle, from due diligence to exit.
Stewardship over Divestment:
• Prioritise "active engagement"to support investee companies in their decarbonisation efforts through the development of robust engagement policies.
• Identify portfolio companies with credible transition plans, helping you meet the MAS expectation to avoid "indiscriminate divestment."
Governance & Mandate Alignment:
• Ensure the local Board and Senior Management maintain clear oversight of the transition strategy through targeted training and governance development.
• Establish metrics to monitor goals, carefully balancing transition goals with fiduciary duties and specific client investment mandates.
Practical Stewardship and Engagement Strategies:
• Public Equity Managers (minority stakes): Implement active stewardship via proxy voting and collaborative engagement.
• Private Equity (Control Stakes): Directly embed transition plans into the portfolio company’s core business strategy.
FIs must implement structured disclosure practices for GHG emissions associated with their investment portfolios. Using Matter data, financial institutions can:
Meet Disclosure Needs:
• Accurately measure and disclose Scope 3 financed emissions.
Utilise Standardised Methodologies:
• Leverage Matter’s data approach, which is based on globally recognised frameworks such as the Partnership for Carbon Accounting Financials (PCAF) Standard, ensuring consistency and comparability in emissions data.
• Align reporting with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
Leveraging Forward-Looking Metrics:
• Report on metrics such as the percentage of the portfolio covered by science-based targets or the “implied temperature rise” of the fund.
• Include the qualitative and quantitative milestones required by the Guidelines to measure progress against decarbonisation commitments.
Portfolio Screening & Engagement:
• Support screening and engagement efforts by identifying companies based on critical transition metrics, including:
◦ GHG emissions driving portfolio emissions.
◦ Exposure to climate solutions (aligned with IICGG).
◦ Existence of Net Zero Targets or Science Based Targets.
◦ Impact on portfolio temperature alignment (Implied Temperature Rise).
◦ Net Zero Maturity within sectors most critical to the transition.
By Leonie Kelly
Questions? Reach out directly at leonie@thisismatter.com
