With a climate protection program, Singapore's monetary authority is directly involving itself in the transformation of the economy. For the Swiss National Bank, such a program is currently out of the question.

The Monetary Authority of Singapore (MAS), which comprises Singapore's central bank and financial market regulatory authority, has allocated about two percent of its equity portfolio, just over $8 billion, to a climate change program.

«Our approach to climate portfolio actions is to start small, learn fast, and scale up as new data provide greater clarity,» MAS Managing Director Ravi Menon told a media conference Wednesday. Strengthening the climate resilience of the agency's investment portfolio remains an ongoing process, «Bloomberg» (behind paywall) reports.

Mixed Interim Results

After it completes the pilot project, Singapore's central bank has allocated funds for two equity climate indexes and aims to increase its exposure to companies that are less carbon-intensive and more transformational, according to its annual sustainability report.

Investments so far have been on a small scale, since the track record of climate indices is not yet very good, according to Menon. Over time, however, exposure will need to increase to make the portfolio climate resilient.

Individual Utilities Excluded

The MAS allocated $2 billion as part of a green investment program and divested itself of companies deriving over 10 percent of its revenues from mining thermal coal and oil sands, the report says. 

However, the weighted average carbon intensity of corporate bonds in the MAS portfolio has increased over the past year due to investments in the utility sector, according to the report.

SNB Weighs In

In Switzerland, the central bank has so far been cagey when it comes to playing a stronger role in making more climate-friendly investments.

The Swiss National Bank (SNB) cites its clear mandate to maintain price stability while contributing to financial stability to create favorable conditions for balanced growth.

No Room for Social Policy

SNB President Thomas Jordan often stresses the central bank is aware of the importance of climate change and is examining how it affects the SNB's mandate.

Climate risks could weigh on investments, but these risks would not be fundamentally different from other financial risks, he explained at this year's Annual General Meeting.

ECB Less Strict

The SNB also doesn't want to include structural or social policy objectives because it would constrain it in implementing an independent and credible monetary policy.

By contrast, the European Central Bank in the euro area is looking at becoming more involved.