Singapore central bank launches global ESG registration system for SMEs

The Monetary Association of Singapore (MAS) is to begin work on a digital system for micro, small and medium-sized enterprises (MSMEs) to store their ESG credentials, in partnership with the UN’s Development Programme (UNDP) and Global Legal Entity Identifier Foundation (GLEIF).

The initiative – named Project Savannah – aims to simplify and reduce the costs associated with ESG reporting for smaller companies, and allows the sharing of verified entity information and key ESG data with clients and suppliers.

The information will be associated with a company’s Legal Entity Identifier (LEI), a code designed to identify any legally distinct entity that engages in financial transactions, and will be accessible anywhere in the world via the global LEI directory overseen by GLEIF.

A key project remit is to establish a common reporting framework of ESG metrics in response to difficulties faced by MSMEs associated with navigating between different ESG disclosure standards. MAS also noted that smaller firms make up key components of major supply chains, which are themselves subject to increasing reporting requirements.

The project will leverage other green digital projects by MAS such as the ESGenome disclosure platform, which uses data capture solutions to automatically fill out ESG reports using verified data where possible. The platform is currently being piloted by companies listed on the Singapore Exchange.

Stephan Wolf, CEO of GLEIF, said: “We strongly advocate the availability and usage of the LEI to support transparency in global sustainability initiatives such as Project Savannah.

“We look forward to exploring how this open system can also be leveraged to support global ESG reporting by, for example, enabling access to varying ESG metrics and establishing a trust framework so that MSME ESG credentials can be relied upon.”

Sopnendu Mohanty, chief fintech officer of MAS, said that such projects could also play “a crucial role in supplying verified private market” climate data in the future.

The three project partners will consult regulators, financial institutions and companies to refine the project’s scope and execution, ahead of a proof-of-concept presentation scheduled for COP28 in December.

Singapore has emerged as a key regional hub for ESG and climate financing under the supervision of MAS.

The central bank is in the final stages of preparing a green taxonomy and a code of conduct for ESG ratings, and has launched a slew of other initiatives including ESG disclosure requirements for companies and the financial sector, sustainable bond and loan grant schemes, and an ESG data and reporting platform.

MAS is also part of a number of global ESG groups. Its outgoing managing director, Ravi Menon, is chair of green central banking group the NGFS and the APAC office of GFANZ.