MAS consultation highlights market’s green responsibilityJuly 1 2020 by Andrew Tjaardstra
Asia’s (re)insurers and governments still have a long way to go before walking the walk on climate change.
Whilst they grapple with the fallout from Covid-19 and recession, the Arctic Circle has just recorded its highest temperatures on record – reaching a staggering 38C (100F) in Verkhoyansk, Siberia.
When the Arctic is reaching temperatures at this level – everyone’s minds should be focused.
This week the Monetary Authority of Singapore (MAS) issued guidelines about how financial institutions can best handle environmental risk.
MAS has this week issued a set of three consultation papers on its proposed Guidelines on Environmental Risk Management for banks, insurers and asset managers.
The guidelines aim to enhance financial institutions’ resilience to environmental risk, and strengthen the financial sector’s role in supporting the transition to an environmentally sustainable economy, both in Singapore and the wider region.
“Even as financial institutions, regulators and policymakers grapple with Covid-19 and its impact, it’s crucial to keep our focus on environmental issues as they pose clear challenges for our economies and financial systems.” Ong Chong Tee, MAS
There are three parts of the Green Finance Action Plan are to build financial system resilience to environmental risk, develop green finance solutions and markets, and leverage innovation and technology.
Singapore has also announced US$2 billion investment programme to support growth of green finance in Singapore to help it become a leading global centre for green finance.
The General Insurance Association of Singapore, the Life Insurance Association Singapore and Singapore Reinsurers’ Association helped set out MAS’ supervisory expectations for (re)insurers in their governance, risk management, and disclosure of environmental risk.
The guidelines suggest for governance purposes that boards and senior management are expected to incorporate environmental considerations into their strategies, business plans, and product offerings, and maintain effective oversight of the management of environmental risk.
Financial institutions have also been told to place policies and processes to assess, monitor, and manage environmental risk for risk management. While for enhanced disclosure, (re)insurers should make regular and meaningful disclosure of their environmental risks, in order to aid market discipline by investors.
Ong Chong Tee, deputy managing director at the Monetary Authority of Singapore, comments: “Even as financial institutions, regulators and policymakers grapple with Covid-19 and its impact, it’s crucial to keep our focus on environmental issues as they pose clear challenges for our economies and financial systems.”
Chong Tee adds: “It’s important for financial institutions in Singapore to have a good understanding of environmental risk and improve their resilience against environmental-related events, as part of their business and risk management strategies.”
The public consultation papers are available on MAS’ website has this link for insurers. MAS is inviting interested parties to submit their comments on the proposed guidelines by August 7.
Hong Kong’s improved pollution
In addition to so called ‘green finance’ there are also more practical measures we can all take.
Hong Kong has seen a recent run of “good” pollution days that have been a joy and surprise for the city’s population and a reminder of just how blue the sky should be. Considering Hongkongers can’t even travel to neighbouring Macau it has been a welcome sight as they flock to the city’s beaches.
“We strive to contribute to the development of a vibrant society and to help secure a sound future for the planet.” Philip Kent, MSIG Hong Kong
However, today’s blue skies can’t hide multiple failures in the city to cater for adequate recycling, a failure to turn every taxi in the city electric and a chronic inability to manage the city’s traffic flows. Presumably a combination of fewer cruise ships, plane and reduced pollution from China has contributed.
There is also a renewed push for electric public transport with a HK$2 billion (US$257 million) pilot scheme to subsidise the installation of electric vehicle parking spaces in private housing estates to increase adoption of green cars.
Hong Kong has about 13,600 electric cars, making up 2.1% of all private vehicles in the city – a figure that could be greatly improved and quickly.
There has been a host of insurers resorting to digital claims in the region.
MSIG Hong Kong for example say they have reduced paper usage by adopting digital copies via ecommerce and a mobile app. Since 2014, over 800 trees have been saved as a result – they point out that is more than 50% of the trees in Kowloon Park.
Philip Kent, chief executive of MSIG Hong Kong, told InsuranceAsia News: “We strive to contribute to the development of a vibrant society and to help secure a sound future for the planet. The roll out of EASY Claims, an online platform that supports claim forms for all lines of insurance, is a prime example of that.”
Kent explains: “Customers can fill-in the digital claim form and upload supporting documents with ease. It’s an environmentally friendly option as physical paper documents are no longer required. We also encourage our customers to accept digital copies of their policy documents, which not only supports the environment, but is also a more secure and efficient way to keep and store documents.”
These kind of tangible actions and facts can help (re)insurers relate to their customers and remind them of the importance of simple measures to help preserve our biodiversity.
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