The Singapore government has launched a national Artificial Intelligence (AI) platform to identify instances of greenwashing and assess the impacts of companies on the environment.
According to a speech given earlier today by Deputy Prime Minister Heng Swee Keat, the new finance sector-focused platform will enable financial institutions assess their exposure to environmental risks and “check against greenwashing”, in addition to measuring the environmental impact of companies.
The tool – which is described as “an industry-wide AI platform for financial risk insights generation” – is called NovA! and is the result of collaboration between Singapore-based banks and local fintech firms. Details on the platform’s developers, timeline, scope and its regulatory implications were not provided.
The republic will allocate S$180m ($133m) to develop its overall AI programme, in addition to S$500m ($371m) which has already been committed. The finance-focused programme is one of five to have been unveiled by Singapore.
Heng also said that Singapore will be reviewing its carbon tax rate for 2024 onwards, with an update expected early next year. He said: “Raising carbon taxes is necessary to spur bold moves that will create a much more sustainable future for everyone in the long term.
“In the short-term, there will be upward cost pressure for households and companies. This will affect cost of living and our competitiveness, but we will mitigate the short-term consequences. If we price the externalities correctly, this will also shape future investment decisions and spur decarbonisation efforts.”
The move is in line with a push by governments around the world to impose a cost on corporate carbon emissions – either through a tax or a regulatory market – to incentivise decarbonisation, with Austria implementing such a policy last month.
But current carbon prices, both through taxes and markets, are considered inadequate to influence the business decisions of big emitters.
Singapore became the first South East Asian country to introduce a carbon tax back in 2019, but at S$5 per tonne it is one of the world’s lowest. The Monetary Authority of Singapore announced plans to increase the tax “to between $10 and $15 per tonne of emissions by 2030” in May but has subsequently acknowledged that hike may come more quickly than that.
Singapore is also due to launch an exchange for voluntary carbon credits in early 2022. The exchange, named Climate Impact X, is a joint venture from Asia’s largest lender, DBS Group, Standard Chartered, state fund Temasek and the Singapore Exchange.
It comes as global investors start to look into offsetting portfolio emissions through the purchase of carbon credits, as well as using credits as a way to generate investment returns. Canadian pension fund CPPIB recently announced a $20m investment into one such project.
Finally, Heng called for the development of “innovative financing structures to crowd in private capital for sustainable infrastructure”.
“Currently, around 60% of infrastructure projects in the region are not bankable. Through blended finance … these projects can be sufficiently de-risked to be acceptable to sponsors and lenders,” he added.