In this briefing note, we unpack some of the key considerations for asset managers to prepare in advance to abide by the guidelines on environmental risk management for asset managers.
On 8 December 2020, the Monetary Authority of Singapore (MAS) issued Guidelines on Environmental Risk Management aimed at asset managers.
The guidelines are intended to drive the transition to a green economy through integrating environmental risk considerations in investment decisions. A transition period of 18 months ending June 2022 is allowed, by which all asset managers are expected to comply.
It is important to note that the guidelines apply to managers that have discretionary authority over the investments and mandates they are managing. Additionally, even if a manager delegates the investment management to a sub-manager or advisor, it ultimately retains the overall responsibility for environmental risk management, and must have policies and procedures in place for the monitoring of delegates.
The MAS defines environmental risk as a risk that can financially impact funds/mandates by asset managers through two risks:
The MAS list five key areas for asset managers to look into for their compliance with the guidelines:
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