The Monetary Authority of Singapore (MAS) has estimated that 30% of financial assets in the island-state could face shifts in valuations or higher costs of doing business as the world transitions to a low-carbon economy.
The figure primarily refers to climate ‘transition risk’, one of the two channels through which climate change risk is transmitted to the financial system. The other channel, known as ‘physical risk’ or the physical impacts of climate change on the economy, was not considered by MAS due to “data limitations as well as the complexity and uncertainty associated with extreme weather events”.
The study, which was included in MAS’ annual financial stability review published today, did not provide a financial value for the assets it identified.
MAS assessed the financial sector’s exposure to climate risk by sizing the loans and investments provided by banks and insurers to six carbon-intensive sectors: Fossil fuels, Utilitie…