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Singapore central bank targets real estate sector with AI ESG tool

SGX has separately set up an advisory committee to scrutinise sustainability reporting frameworks for listed companies.

The real estate sector will be the first use case for an artificial intelligence ESG tool being developed by the Singaporean government, the Monetary Authority of Singapore (MAS) said on Tuesday.

Responsible Investor reported in November on the national launch of the NovA! tool, which is billed as “an industry-wide AI platform for financial risk insights generation”. At the time, deputy prime minister Heng Swee Keat said the tool would enable financial institutions to assess their exposure to environmental risks and “check against greenwashing”, in addition to measuring the environmental impact of companies.

MAS has outlined three applications for NovA!. At loan origination, the tool can benchmark the ESG performance of real estate corporate borrowers against their peers; it can help set appropriate ESG KPIs for borrowers during underwriting; and it can compare ESG disclosures against agreed ESG KPIs to “detect greenwashing”.

In addition, MAS claimed that it will provide cost efficiency by reducing “the amount of time it takes for FIs to collect, process and analyse data through the use of natural language processing technique”.

Singapore has allocated S$180 million ($130 million; €123 million) to develop its overall AI programme, in addition to S$500 million already committed. The finance-focused programme is one of five to have been unveiled.

NovA! was developed with Singapore-based financial institutions including Bank of China, Citi, DBS, Deutsche Bank, HSBC, Shanghai Pudong Development Bank, Standard Chartered and state fund Temasek.

The tool is set to be released in beta form for testing in early 2023.

Separately, the regulatory arm of Singapore Exchange and the country’s reporting watchdog, the Accounting and Corporate Regulatory Authority, have set up an advisory board to scrutinise global sustainability disclosure frameworks for local implementation.

More broadly, the panel will develop a roadmap for sustainability reporting across the city-state, not just for SGX-listed companies. The panel is chaired by the chief sustainability officer of local real estate investor City Developments, Esther An. The panel also includes representatives from BlackRock, Temasek, KPMG, PWC and EY – its full composition can be found here.