Accenture Banking Blog

This series of blogs looks at the opportunities and challenges associated with green finance in Southeast Asia, and draws on a recent position paper “Green Finance in Singapore and ASEAN: Opportunities and Challenges” by EuroCham Singapore and Accenture.

In recent years, Singapore has positioned itself as Asia’s home for green – or sustainable – finance. In my first blog, for example, I noted that the city-state is now ASEAN’s largest issuer of green debt, while my second noted the work that the Monetary Authority of Singapore (MAS) is doing to endorse ESG ratings providers as it seeks to boost transparency for ESG ratings.

But, as the headline on this blog makes clear, Singapore’s efforts don’t stop there. It is also taking steps to boost green finance skills by training talent to support the industry’s growth and by seeking to attract the best foreign talent to set up shop locally.

There are a number of ways in which Singapore is focusing on boosting these skills and the capabilities that will underpin the sector:

  • Universities are starting to offer specialised courses on green finance
  • A key pillar of MAS’s Green Finance Action Plan is focused on improving knowledge and capabilities in the field of sustainable finance, including building a centre of excellence, encouraging banks to grow their sustainable finance teams in Singapore, and encouraging collaboration between industry and academia
  • MAS is pushing ahead with a range of regulatory efforts to boost green finance
  • And the 2020 Singapore Fintech Festival emphasised green fintech

This links directly to Singapore’s ambition to be the global green finance hub – or, as I put it, to become to green finance what Silicon Valley is to software development. Having the right talent onboard is a fundamental requirement for success.

While that goal is one reason for Singapore’s aggressive moves to attract top talent in this space, it’s not the only one. Another is that green finance is an emerging field, and that means sourcing talent isn’t the same as it is for more established fields like coding or computer science. Green finance requires a new inter-disciplinary talent set such as a combination of financial and environmental skills, even as what’s needed is being refined and redefined as the industry evolves.

Singapore’s efforts are driven by a government whose ministries, policymakers and bureaucracy are singularly focused on ensuring the right climate (no pun intended) is in place for green finance to flourish. The internal drive and coherent nature of Singapore’s approach makes it different from many countries where interest is often driven by external pressure.

Singapore vs ASEAN?

Singapore’s approach, in other words, is exceptional in regard to ASEAN, but that’s understandable: the other ASEAN nations typically aren’t seeking to become players in global green finance (which, admittedly, is a goal that is far easier for Singapore to attain given its standing as a leading financial centre). Malaysia perhaps comes closest with its efforts to lead in Islamic green finance, which has specific rules around talent and managing the financial ecosystem.

Yet while other ASEAN countries aren’t looking to lead in green finance, they do need green finance solutions to develop their economies, particularly in areas like infrastructure – for example, building bridges, water-treatment plants and buildings that are green.

Vietnam, Thailand and Indonesia are among the nations placed to benefit the most from green finance solutions as they embark on massive investments in infrastructure. Sustainable development of the ASEAN economies requires access to green finance, which is why – although none has been as systematic as Singapore – some have taken steps to develop local regulations to enhance access to sustainable funding.

How green is Singapore’s future?

All of which raises several questions. The first is: Where is green finance headed in the region? My view is that Singapore has become and will remain the regional green finance leader – in terms of issuance, talent and as a centre of green finance. But will its efforts to build a local talent pool help it achieve its ambition of becoming a global leader?

That’s a tougher question, but I’d argue that it’s likely. For any country to become a meaningful player in any space, the single biggest resource it can deploy is its talent pool, and that’s even truer for Singapore given the size of its population relative to its ambition. After all, you have to punch above your weight if you want to turn a country of five million people into a financial heavyweight on a continent of three billion.

In other words, talent is the space in which Singapore can compete – and indeed this approach has arguably proven the single biggest driver of growth in its development. That makes talent-development the sine qua non of success.

But is it enough? That depends. If Singapore is to emerge as the Silicon Valley of sustainable finance, it will need to implement a range of structural innovations: create green credit bureaus and green finance marketplaces; build carbon-credit trading platforms; and deploy powerful underlying technologies like blockchain, big data and artificial intelligence to assist the market.

Once again, that comes back to talent – and not only nurturing specialised skills, but also building a diversity of related skill sets that will evolve with the industry. Singapore currently lacks this diversity, yet it is essential if it is to build connectivity between finance, the environment, science, technology and big data. Because it is only when all of these aspects come together that Singapore will reach the critical mass necessary to meet its global green finance goal.

Technology, then, is another element that is core to success. Leveraging it successfully constitutes the fourth proposal in the EuroCham Singapore report and is the focus of my final blog.