The Monetary Authority of Singapore (MAS) has released the first use case of its NovA!, which aims to combat greenwashing.
This use case will help financial institutions assess the sustainability performance of Singapore’s real estate sector.
NovA!, which is part of the National Artificial Intelligence (AI) Programme in Finance, aims to help financial institutions leverage AI to generate insights on financial risk. In the first phase, the programme will focus on enhancing the ability of financial institutions to assess companies’ environmental impact and identify emerging environmental risks.
The tool supports firms’ ESG risk assessments for originating, underwriting and servicing sustainability linked loans.
At loan origination, firms can use NovA! To identify real estate corporate borrowers whose sustainability metrics can be improved, by comparing their historical environmental performance to that of their peers.
As for the underwriting stage, NovA! Can help set appropriate sustainability performance targets (SPTs) for borrowers, by comparing borrowers’ SPTs with the SPT Industry Benchmark generated by NovA!.
Finally, in the servicing of loans, NovA! Can compare the actual sustainability performance indicators (through direct use of metres or sensors) against the borrower’s self-declaration to detect greenwashing.
MAS hopes the ESG use case will also reduce the time taken by financial institutions to collect, process and analyse data through natural language processing to automatically extract relevant information from documents. It hopes this will also reduce overall costs.
This use case will be integrated with MAS’ Project Greenprint, which is a collection of digital data utilities and initiatives aimed at leveraging technology and data to aggregate high quality, consistent and granular sustainability data. With this it hopes to build a transparent, trusted and efficient ESG ecosystem.
MAS chief FinTech officer Sopnendu Mohanty said, “NovA! will provide a valuable tool to help FIs generate prompt and actionable insights using structured and unstructured datasets and advanced computing. This will better enable financial institutions to direct financing towards sustainable projects and companies that meet sustainability performance targets.”
MAS’s sustainability taskforce, Green Finance Industry Taskforce, recently issued its second version of its green taxonomy for consultation.
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