Singapore set to use AI to curb greenwashing in sustainable finance

November 30, 2023|Written by Ingrid Walker|Monetary Authority of Singapore

A Monetary Authority of Singapore (MAS)-led consortium has announced its artificial intelligence (AI) project will be given access to nationwide data on buildings to identify cases of greenwashing.

The utility, known as Project NovA!, leverages AI and data analytics to assess performance of sustainability linked loans (SLL) in real estate.

SLLs promote sustainable business activities by tying interest rates to achievement of agreed sustainability performance targets (SPTs). Since 2019 the popularity of this financial product has surged and, according to an MAS whitepaper, greenwashing concerns may currently affect about 50% of SLLs.

MAS has said the consortium will soon be given access to the Building and Construction Authority’s (BCA) green buildings database to assess progress against SPTs.

With this data, MAS says the project will be able to help banks identify prospective green building projects, monitor real-time performance targets and accelerate green real estate financing, in part through automated extraction of sustainability insights.

Ang Kian Seng, group director of environmental sustainability at BCA, has said this project marks a “critical step towards meeting Singapore’s net-zero and Singapore Green Building Masterplan targets”. According to the BCA, buildings account for over 20% of the nation’s carbon emissions.

The project is part of broader efforts by MAS to leverage fintech solutions in sustainable finance.

For instance, a separate MAS scheme will create a cross-border, integrated digital platform to automate aspects of ESG reporting and reduce reporting burdens for small and medium enterprises. Where source data is unavailable, they will use AI tools to allow users to upload documents and automatically extract key data.

Sopnendu Mohanty, chief fintech officer at MAS, said the AI project “marks a transformative phase in both green finance and sustainable building, accelerating our industry towards achieving their net-zero targets. NovA! creates a transparent and effective environment that combats greenwashing and directs finances towards truly sustainable projects.”

A similar AI tool is currently in development by WWF, the University of Zürich and the University of Oxford to help investors and regulators assess greenwashing in transition planning. The platform will assess whether a company’s transition plans are robust enough to reach net-zero targets.

The MAS project will later extend its AI capabilities “to support sustainable financing in other sectors such as power and manufacturing industries”, according to the central bank.

This page was last updated November 30, 2023

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