Singapore’s $35b green bond sale lifts sustainable financing capabilities

The taxonomy initiative will reduce the cases of greenwashing.

Singapore’s plan to sell up to $35b green sovereign bonds through 2030 will help develop the country’s sustainable financing capabilities and support its climate agenda, according to Fitch Ratings.

The funds raised may be spent to promote fields such as adaptation to climate change, biodiversity conservation and sustainable resource usage, renewable energy, energy efficiency, clean transportation, sustainable water management, pollution control, and green buildings, Fitch added.

The bond issuance is also a testament to the Singapore government’s commitment to long-term social challenges, such as sustainable development and combating climate change. The government targets for carbon emissions to reach net-zero by or around 2050, with the establishment of a broader green finance ecosystem by then. 

This in turn could support the funding of sustainable finance initiatives both in Singapore and the broader region, and enhance the Lion City’s existing strengths as a financial center.

Singapore’s inaugural green sovereign bonds are likely to be issued in the second half of 2022. Even before the green sovereign bonds, Singapore has already dipped its toes in issuing green bonds. The local Housing & Development Board separately raised S$1b in March 2022 for the development of green buildings. 

Meanwhile, Singapore’s taxonomy initiative would support the development of this ecosystem by providing a classification scheme and enhancing disclosure, according to Fitch, and would reduce green washing risks.

The taxonomy’s second draft proposes a ‘traffic-light’ scheme for the three sectors most important for greenhouse gas emissions: energy, transport, and real estate.