In line with the growing emphasis on Environmental, Social and Governance (ESG) and sustainable finance in Singapore, the Monetary Authority of Singapore (MAS) issued the Guidelines on environmental risk management (ENRM) for asset managers in December 2020. The Guidelines apply to all asset managers domiciled in Singapore who have discretionary authority over their funds/mandates and hold a capital markets service licence for fund management, including real estate investment trust management as well as registered fund management companies. The Guidelines became effective on 8 June 2022 after a transition period of 18 months.
In May 2022, prior to the effective date of the Guidelines, the MAS published an Information Paper on environmental risk management for asset managers based on a thematic review of thirty asset managers, to highlight the progress made in implementing the Guidelines. In the same month, we performed an Asset and Wealth Management environmental risk management readiness survey of our own, to assess the implementation journey of the asset managers, that is, what are the environmental risk management procedures that they are able to establish effectively at an early stage, and what are some key focus areas where they need further guidance to enhance their understanding.
Breakdown of respondents for the PwC Asset and Wealth Management ENRM Readiness Survey
We garnered 18 survey responses from a range of asset managers in Singapore for our survey performed in May 2022. All of the respondents are capital markets services licence holders. Below is a further breakdown of the respondents by firm size, location and investment strategies.
The publication illustrates key findings of the review detailed in the MAS Information Paper and is supplemented by PwC’s market insights garnered from our own Asset and Wealth Management environmental risk management readiness survey as well as from our experience in working with asset managers on the implementation of environmental risk management practices.
It summarises best practices that are either already being implemented by asset managers or could be implemented in the near future to align with each of the five focus areas of the Guidelines:
Governance and strategy
Research and portfolio construction
Portfolio risk management
Stewardship
Disclosure
Overall, the publication finds that asset managers are currently displaying varying levels of progress towards the Guidelines. While most asset managers do realise the significance of managing environmental risks and many have begun to adopt relevant policies and procedures, a fair amount of work still remains for them to incorporate environmental risk management practices within their day-to-day business activities in a manner that is consequential.
