Recent Developments in Sustainable Finance in Singapore – Green Bonds

Green bonds are any types of bond instruments where the proceeds or an equivalent amount will be exclusively applied to finance or re-finance, in part or in full, new and/or existing eligible “green” projects, being projects that have a positive environmental impact. There are a number of frameworks that set out the requirements for projects to typically be accepted as meeting this threshold, such as the ICMA Green Bond Principles 2021. The Singapore Government recently announced the Singapore Green Bond Framework, in line with its aim of developing a robust green finance market, to accelerate the development of green technologies and bring the nation closer to the net-zero emissions goal under the Singapore Green Plan 2030, a whole-of-nation movement announced in 2021 to advance Singapore’s national agenda on sustainable development. It was also announced in Budget 2022 that the Singapore Government aims to issue up to S$35 billion of green bonds by 2030 to fund public sector green infrastructure projects.

At the same time, to further directly encourage the private sector to issue green, social, sustainability and sustainability-linked bonds, the Monetary Authority of Singapore (“MAS”) also provides a Sustainability Bond Grant Scheme to defray the cost of external reviews to demonstrate the alignment of sustainability bonds with international standards.

Singapore Green Bond Framework

On 9 June 2022, the Singapore Government published the Singapore Green Bond Framework (the “Framework”) – a framework for sovereign green bond issuances under the Significant Infrastructure Loan Act 2021 (“SINGA”), intended to align the public sector with the market best practices on issuing green bonds under the SINGA and to serve as a benchmark for corporate green bonds. The Framework adheres to market best practices as it is designed to align with the core components in the International Capital Market Association (“ICMA”) Green Bond Principles 2021 and the ASEAN Capital Markets Forum ASEAN Green Bonds Standards 2018.

The core components of the Framework are:

a) Use of Proceeds
The proceeds from the issuance of green bonds must be utilised for eligible green expenditures (as defined below).

b) Project Evaluation and Selection
The green bond issuer should communicate with the investors

(i) the environmental sustainability objectives of the eligible green expenditures,

(ii) the process by which the issuer determines how the expenditures fit within the eligible expenditure categories, and

(iii) complementary information on processes by which the issuer identifies and manages social and environmental risks associated with the relevant expenditures.

c) Management of Proceeds
The net proceeds from the issuance should be appropriately tracked by the issuer and attested to by the issuer in a formal internal process.

d) Reporting
Updated information on the use of proceeds, including allocation of the proceeds and expected environmental and social impact, should be provided to investors at least annually until full allocation and in case of material changes.

Eligible expenditures using proceeds from the issuance of green bonds

Under the Framework, proceeds from the issuance of green bonds should be used to finance eligible expenditures under the eight categories as set out below (“Eligible Green Expenditures”):

  1. Renewable Energy
  2. Energy Efficiency
  3. Green Buildings
  4. Clean Transportation
  5. Sustainable Water and Wastewater Management
  6. Pollution Prevention, Control and Circular Economy
  7. Climate Change Adaptation
  8. Biodiversity Conservation and Sustainable Management of Natural Resources and Land Use

The Framework excludes expenditures that, amongst others, undermine the environmental objectives of the eight categories, such as fossil fuel, nuclear energy and conflict minerals.

Building on earlier green bond frameworks

The Framework supplements and builds on the earlier green bond frameworks introduced by individual statutory boards, including:

(a) the National Environmental Agency, which published its green bond framework in August 2021, pursuant to which proceeds will be used to finance sustainable infrastructure development projects (in particular in the sustainable waste management category); and

(b) the Housing and Development Board’s green finance framework introduced in January 2022 to facilitate HDB to enter into green financing transactions (which include green bonds and green loans).

Green SGS (Infrastructure) Bonds

To encourage more green bond issuances in the public and private sector, on 9 June 2022, the Singapore Government announced the inaugural sovereign green bond issuance under the SINGA, which will be used to finance “nationally significant infrastructure projects” which meet the criteria under the Framework. Nationally significant infrastructure projects are projects controlled and legally owned by the Singapore Government, cost at least S$4 billion, have a useful life of at least 50 years, and would support or materially improve national productivity or Singapore’s economic, environmental, and social sustainability. Examples of eligible projects are the Cross Island Line and Jurong Region Line of the Mass Rapid Transit system.

MAS Sustainable Bond Grant Scheme

Announced in 2017 and extended in 2020 to be valid until 31 May 2023, the Sustainable Bond Grant Scheme (“Grant Scheme”) intends to encourage the issuance of green, social, sustainability and sustainability-linked bonds by defraying the expenses of having independent external review or rating done in accordance with any internationally recognised green/social/sustainability bond principles or framework, up to a cap of S$100,000.

The Grant Scheme is available for both first-time and repeat issuers of green, social, sustainability and sustainability-linked bonds.

The types of bonds to qualify under the scheme (“Qualifying Issuance”) are:

(a) Bonds of any currency with a pre-issuance external review or rating done to demonstrate alignment with any internationally recognised green, social, sustainability and sustainability-linked principles or standards.

(b) Green, social, sustainability or sustainability-linked bonds issued and listed in Singapore. For sustainability-linked bonds, there must be post-issuance external review or reporting done annually for the first three years or up till the tenure of the bond, whichever is earlier.

(c) Minimum size of S$200 million or a bond programme size of at least S$200 million with an initial issuance of at least S$20 million.

(d) Minimum tenure of one year.

(e) Pre-issuance external review or rating and post-issuance external review or reporting work performed by external reviewers in Singapore.

(f) (for financial institutions) part of the sustainability advisory and assessment work performed by financial institutions in Singapore.

Between 2017 and 2020, more than S$8 billion in green, social and sustainability bonds were issued in Singapore, most of which were in the real estate and renewable energy sectors. After the Grant Scheme was introduced, the first green bond was issued by City Developments Limited in April 2017. Shortly after, DBS Bank Limited issued a US$500 million green bond in July 2017. More recently, in 2021, Surbana Jurong Group, an urban, infrastructure and managed services consulting firm, issued a S$250 million sustainability-linked bond, believed to be the first Singapore dollar-denominated sustainability-linked bond and the first public sustainability-linked bond issuance from a Southeast Asian-based company.


To conclude, the various government initiatives and incentives discussed above are clear indications by the Singapore government to encourage the private sector in Singapore and the region to pursue green initiatives and sustainable finance. This is a trend being observed in the financial industry across the globe. The field for sustainable finance through the issue of green bonds in Singapore is now fertile – it is up to the companies to sow the seeds and reap the benefits.

This article is jointly produced by our Singapore office, Bird & Bird ATMD LLP, and our Dubai office. Special thanks to our Singapore trainee, Janice Jiang, who contributed to the article. Please note that this article does not constitute as legal advice and it is intended to provide general information only. Information in this article is accurate as of 21 June 2022. Please contact our lawyers if you have any specific queries.

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