ABS unveils questionnaire to help banks, clients engage on environmental risk

The Association of Banks in Singapore (ABS) has introduced a questionnaire for Singaporean banks to talk with their corporate clients on issues surrounding environmental risk.

According to The Business Times, the ABS Environmental Risk Questionnaire will be the industry-standard template designed to gather data points and identify opportunities to finance Singapore’s transition to a low carbon economy.

The questionnaire is applicable to high-risk sectors such as agriculture and forestry/land use, construction and real estate, energy, industrial and transportation and fuel.

In its first version, the ERQ will lay out basic questions to enable the easy adaptation by the banking industry and corporates. Furthermore, there is also an accompanying guide to provide clarity on and facilitate implementation of the ERQ.

The ABS noted that banks are recommended to apply the questionnaire to customers with which they have a credit exposure of $10m and above. The firms may adjust this threshold according to their own environmental risk materiality assessment as well as exercising discretion in identifying questions as either mandatory or optional for their corporate customers.

In addition, members of ABS are also encouraged to adopt the ERQ or incorporate the questions in their existing internal frameworks as soon as they can. The ABS mentioned that the ERQ was developed over several months by a workgroup that included Citibank, DBS, HSBC, UOB, OCBC and Standard Chartered.

Future versions of the ERQ, EBS claims, are expected to include more detailed questions such as sector-specific addendums for sectors such as energy.

The ABS said it believes its ERQ will help to establish a best practice for banks in Singapore to engage their clients in assessment and mitigation of their environmental risks. The association envisages this format will enable environmental risk information to be obtained and held centrally, shared digitally to the lending banks, as well as benchmarked across the industry in the future.

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