PwC’s Transition Plan Taskforce Disclosure Framework - at a glance
Download this publication to see our summary of the UK's TPT’s sector-neutral Disclosure Framework.
As with any industry where advancement and innovation are outpacing regulation, the complex landscape can be difficult for businesses to navigate their operations. From adapting to new realities in emerging industries such as Web3, evolving regulations, to compliance and commitment to environmental, social and governance (ESG), it is of great importance for businesses to keep updated on key trends and developments in order to remain internationally competitive.
Here are several key highlights:
- ESG - The Monetary Authority of Singapore has issued for consultation its proposed guidelines on transition planning for banks, insurers and asset managers to enable effective climate change mitigation and adaptation measures.
- Metaverse - Mauritius publishes a consultation paper on the Metaverse for the financial services sector with the aim to ensure that regulatory and business environments are readily adaptable to accommodate metaverse adoption.
- Digital assets - Tokenisation of US Treasuries has increased by six-fold since the beginning of 2023.
- Emerging regulatory trends - Financial crimes like fraud and money laundering have evolved rapidly in complexity and sophistication. AI and perhaps Gen AI can be a tool in the fights against money laundering.
Feel free to explore the topics below and we welcome any opportunity to discuss more with our respective PwC representatives.
Main drivers
Environmental, Social and Governance (ESG)
The market has seen several recent developments in relation to sustainability and climate change. On the regulatory front, the MAS recently issued for consultation its proposed guidelines on transition planning. In response to this, a framework has been launched to combat climate change and to help companies and financial institutions create consistent, comparable company reports on climate transition plans. Additionally, PwC also launched a publication on Transition Plan Taskforce Disclosure Framework - At a Glance.
Regulations and standards
Monetary Authority of Singapore (MAS) has issued for consultation, its proposed guidelines on transition planning for banks, insurers and asset managers
The guidelines set out MAS supervisory expectations for financial institutions to have a sound transition planning process to enable effective climate change mitigation and adaptation measures by their customers and investee companies in the global transition to a net zero economy.
Singapore sets out eligibility criteria for International Carbon Credits (ICC) under the carbon tax regime
The ICC framework was introduced in November 2022, alongside the progressive increase in carbon tax rate under the Carbon Pricing (Amendment) Bill from the current SGD 5 per tonne of emissions to SGD 25 per tonne in 2024 and 2025, and SGD 45 per tonne in 2026 and beyond. This ICC framework will allow carbon tax-liable companies to use eligible ICCs to offset up to five per cent of their taxable emissions from 1 Jan 2024.
Transition Plan Taskforce launches framework to address climate change
Aimed to help companies and financial institutions create consistent, comparable company reports on climate transition plans, and reduce the level of disclosure complexity faced by firms, the launch comes after a short consultation period in which financial firms and real economy companies were asked for inputs on the feature.
Carbon Disclosure Project (CDP) to align with ISSB climate disclosure standard in 2024
Climate research provider and environmental disclosure platform CDP announced that it will align its sustainability reporting questionnaire with the ISSB’s new climate disclosure standard in the beginning of 2024, with the consideration of other emerging sustainability disclosure systems going forward in order to ease the reporting burden on companies, and encourage broader reporting on key environmental issues.
Industry update
Asset management
64% of institutional investors say financial returns is the top driver for sustainable investing: Schroders
Nearly two-thirds of institutional investors cite long-term financial returns as a key driver of investing in sustainability and impact strategies, ahead of any other driver, according to a new study released by global investment manager Schroders.
Robeco to disclose sustainability information for all investment products
International asset manager Robeco announced that it will begin providing sustainability information for all of its investment products, with information covering themes such as climate, net zero, biodiversity and the Sustainable Development Goals (SDGs) being added to product factsheets and webpages.
Banking and capital markets
EU bank regulator recommends accelerating integration of ESG risks into capital requirement framework
According to the European Banking Authority, the new report comes as environmental and social risks are expected to become more prominent over time, changing the risk profile for the banking sector, across financial categories such as credit and market risk.
UOB sets up a sustainability advisory panel with trio of members
They will also advise the bank’s board and management on a range of matters such as sustainability trends, the management of environmental, social and governance-related risks and opportunities, as well as UOB’s overall sustainability strategy, targets and initiatives.
Insurance
Bracing for climate realities: How ESG is influencing insurers’ strategies in Malaysia
Insurers in Malaysia are adjusting their underwriting and investment strategies, working with partners and key stakeholders to transition their insurance and reinsurance underwriting portfolios to meet greenhouse gas emission targets consistent with the Paris Climate Agreement.
Claims for nat cat perils to increase 40% by 2050 due to climate change: Caisse Centrale de Réassurance (CCR)
The CCR, the entity in charge of the re-insurance cover of natural catastrophes in France, has carried out a modelling exercise, in association with Météo France, of the evolution until 2050 of the main climatic risks already covered by the French Cat Nat system. CCR estimates that claims for perils covered by the natural disaster compensation scheme are likely to increase by around +40% by 2050 as a result of climate change, and by +60% if changes in insured stakes such as population growth and urban density are taken into account.
In a changing climate, the role of insurance will have to be much bigger: Allianz Re
Nicola Ranger, Leader, of the Resilience and International Development Program at the Environmental Change Institute and Executive Director for Oxford Martin Systemic Resilience Program, and Sibylle Steimen, Managing Director Advisory & Services at Allianz Re, has made a case for putting more focus on climate resilience. In their view, the public discussion needs to centre more on investing in adaptation measures to reduce the physical risk of climate change.
ESG platforms, solutions and tools
S&P Global adds physical risk assessment to Climate Credit Analytics solution
With the new enhancement, Climate Credit Analytics will now include S&P Global Sustainable1 data providing information on the physical risk exposure and related financial impact for over 20,000 companies, mapped against a range of seven climate change-related hazards across a series of four CMIP6 climate change scenarios.
Bloomberg launches indicators to measure exposure to physical climate risk
Business and financial markets information service provider Bloomberg and climate financial risk data analytics provider Riskthinking.AI announced the launch of new science-based physical risk indicators, aimed at enabling companies and investors to assess and understand exposure to climate-related risks such as floods, droughts and wildfires.
Interesting reads
Net-Zero Asset Owner Alliance (NZAOA) released its 3rd annual progress report
The report shows membership grew to 86 institutional investors with US$ 9.6 trillion in assets under management (AUM); members combined AUM covered by intermediate climate targets increased to $8.4 trillion, with its total financed greenhouse gas emissions dropped by 3.5% between 2021 and 2022. The Alliance also discussed on persisting barriers to mobilising private capital at scale and called on policymakers to strengthen their commitments ahead of COP28.
How Singapore sets the global standard for carbon offsets: Grace Fu
With the new enhancement, Climate Credit Analytics will now include S&P Global Sustainable1 data providing information on the physical risk exposure and related financial impact for over 20,000 companies, mapped against a range of seven climate change-related hazards across a series of four CMIP6 climate change scenarios.
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Metaverse
The metaverse concept has lost a bit of traction among enterprise businesses, with setbacks arising from economic slowdowns and the industry's shift towards AI. Several challenges include a lack of a unified platform, high entry costs and a dearth of compelling content. To fully realize the metaverse's potential will take time, as the necessary hardware and computing required are still in their infancy. Nevertheless, the market continues experimenting with the metaverse, as several companies from different industries such as manufacturing and supply chain have recently implemented metaverse applications, based on use cases specific to their industry.
Market developments
China wants metaverse firms with 'global influence' and plans for up to 5 industrial clusters by 2025
In a policy document published by the Ministry of Industry and Information Technology, the country has outlined a 3-year blueprint, with an emphasis on metaverse application across key industries such as aerospace, automotive, and manufacturing. It has also set targets to build three to five industrial clusters around emerging technologies by 2025, accelerating efforts to lead the next generation of internet development and hardware innovations.
United Kingdom don metaverse avatars as they share Web3 roadmap
The country's global leaders have come together to address the opportunities and challenges posed by the growth of Web3 technology, with Web3 industry growth and workforce planning serving as key national priorities. It is also investing in efforts to position itself as an attractive hub for Web3 developers and firms to set foot in the country. Additionally, the country also plans to take forward the National Blockchain Roadmap to build a blockchain-based “digital nation in climate mitigation efforts and digital identity programmes.
Industry update
Financial services
Housing Bank becomes first bank in the Kingdom to enter the Metaverse
Through this pioneering initiative, the bank aims to reach a new generation of customers and provide them with a unique opportunity to enter the world through its launch on two popular Metaverse platforms, Decentraland and Spatial. The bank aims to offer customers an opportunity to experience innovative technology that enables seamless communication and interaction. Further plans are in the pipeline to roll out virtual and augmented reality experiences in the Metaverse.
Mauritius sets stage for metaverse in the financial sector
The Mauritius’ Financial Services Commission (FSC) is considering an integration of the metaverse into its payments ecosystem to position the country to reap the positive rewards of digitisation. Over the month of November, the FSC will gather public comments on the anticipated impact of the metaverse on the financial services industry, and strategic developments for enhancing collaboration between financial institutions and other sectors and perceived obstacles to widespread metaverse financial services adoption. In addition to rolling out a public consultation, the FSC says it will benchmark its attempts with the models adopted by foreign jurisdictions.
Investments
SBI Holdings launches $600M fund for Web3, artificial intelligence (AI) and the metaverse
The fund is expected to invest several hundred million to several billion yen per company, with a total of 150 to 200 companies projected to receive investments. The initiative has secured funding from major financial institutions, including Sumitomo Mitsui Banking Corporation, Mizuho Bank, Nippon Life Insurance Company, and Daiwa Securities Group, in line with the country's recent efforts to promote startup development. The government has set targets to create 100 unicorns and 100,000 startups, as well as nurturing its homegrown startups and establishing itself as a global leader in the Web3 sector.
Saudi Arabia’s future city Neom will invest $50 million in Metaverse Giant Animoca
The leading blockchain gaming and metaverse investment company has signed a memorandum of understanding with Neom, a large-scale Saudi Arabian urban development project, to advance adoption of crypto technology in the Gulf region through collaboration on digital infrastructure projects and establishing a hub to grow the local blockchain ecosystem.
Artificial Intelligence (AI)
Wearable 'Ai Pin' launched by Humane, backed by ex-Apple execs and Microsoft
The interaction with the device happens via voice commands, gestures, a potent AI assistant and a laser projection system, which projects its interface on the user’s hands, with the use of a mini projector. Powered by technologies from the creator of ChatGPT, OpenAI, and cloud computing from Microsoft, the device aims to reduce the clutter of technology, with the goal of incorporating AI into everyday life.
Samsung unveils own generative artificial intelligence model “Gauss”
The South Korean tech giant introduced Gauss with its three sub-models, Gauss Language, Gauss Code and Gauss Image, with the aim of improving the consumer experience and enhancing the work efficiency of its workers. Gauss Language is a generative language model that allows users to compose and translate content and enables smarter device control when integrated into products. The second feature allows in-house software developers to write code quickly, while the third, Samsung Gauss Image, can generate or edit images. These devices seek to maximise user-device interaction and provide a more intuitive and natural user experience.
Regional alliances
Animoca Brands and NEOM secures US$50 million funding to drive regional Web3 development
The Hong Kong-based video gaming firm has entered into a Memorandum of Understanding with a Saudi Arabia-owned public investment fund, NEOM Company, to support and help the local Web3 ecosystem through building Web3 enterprise service capabilities with global commercial applicability, deployed to support technology advancements in Riyadh and the NEOM region. The funds will also be channelled towards a range of Web3 initiatives to nurture the local Web3 ecosystem and bring in extensive capabilities across the Amimoca Brand and its partners.
USDC stablecoin issuer Circle and technology startup Grab pilots Web3 experiences in Singapore
The partnership will roll out new Web3 services through the "Grab Web3 Wallet" with the integration of Circle's Web3 Service platform designed to help traditional firms adopt stablecoins, digital assets and smart contracts. As part of the current pilot phase, users are able to set up a blockchain-enabled wallet, earn rewards and collectibles, and use non-fungible token vouchers.
Key regulatory developments
EU countries against proposed approach for foundation models during AI Act negotiations
The approach of having a tiered approach to introduce tighter rules for leading providers from non-European companies has faced a mounting opposition by the EU countries, which are pushing against any type of regulation for foundation models. Despite efforts from the Spanish presidency to broker an agreement with the European Parliament, a general rethinking is needed to propose alternatives to the tiered approach to regulating the foundation models, which should more or less be in sight by the end of November 2023.
Digital assets
The tokenisation space has caught fire, providing new tools (and profits) for investors and traders alike. This is especially true of tokenised U.S. Treasuries. According to 21.co, the market value of tokenised Treasuries increased nearly six-fold since the beginning of January, jumping from $104 million to $675 million.
Industry update
General market
U.S. Treasuries spearhead tokenisation boom
The market for tokenised US Treasuries has grown six-fold in 2023. They are considered a gateway for tokenisation efforts, as many players seek these products for high yield and low risk status.
Central Bank Digital Currency (CBDC)
Swiss National Bank drive CBDC pilot for digital securities
Switzerland's pioneering CBDC pilot with SIX and Swiss National Bank, leveraging SDX, sets the stage for digital finance innovation.
Trading services
Coinbase debuts BTC and ETH futures for US retail traders
Coinbase unveils futures trading for US retail traders, emphasizing risks and settling in USD, amid SEC regulatory challenges.
Financial sector
JPMorgan is exploring blockchain-based deposit token for payments settlements
JPMorgan is exploring a digital deposit token for speeding up cross-border payments and settlement. The deposit token could be used to easily send money to clients of another bank.
Non-fungible tokens (NFTs)
SwissGold Crypto AG launches gold-backed NFTs for wealth preservation
SwissGold Crypto AG offers a secure and flexible means of gold ownership and trading by placing gold bars of all sizes on the blockchain as non-fungible tokens.
Key regulatory developments
EBA drafts liquidity and capital rules for stablecoin issuers under MiCA
Stablecoin regulation: To make stablecoin and crypto trade easy and risk-free, EU watchdog proposed regulations for capital and liquidity.
Interesting reads
China outlaws NFT theft, recognises digital collections as property
China takes a stance on NFTs and digital collections, declaring theft a criminal offense and recognising them as network virtual property.
Emerging regulatory trends
The recent billion-dollar money laundering crackdown highlighted the need to strengthen the anti-money laundering regime.
Money launderers operate across different FIs, AI is one of the tools to join the dots across them.
To use AI and generative AI to deliver near-term outcomes, transformative innovation and increased trust is not an easy task, which PwC has shared three guidelines to help businesses.
Industry developments
Veritas Initiative - part of Singapore National AI Strategy
Phase 3 has been concluded, and will focus on training in the area of responsible AI and facilitate more FIs' adoption of the Veritas Methodologies and Toolkit in the coming years.
Singapore and the US to deepen cooperation in AI
Singapore and the United States have made AI Governance frameworks interoperable. This will enhance clarity to meet the requirements within both frameworks, reduce compliance costs.
Inaugural AI Safety Summit
Prime Minister Lee Hsien Loong shares that AI systems must be imbued with human context and human values.
Anti-money laundering developments
MAS is “most keen” to explore using AI in fight against money laundering
Mr. Ravi Menon shared that AI, and perhaps even generative AI, can be layered on to COSMIC for additional insights to form a more holistic picture of the risks.
Singapore banks sharpen scrutiny after $2.8 billion money laundering scandal; Sources
MAS said financial firms must verify customers’ identities, establish the sources of wealth and funds of higher-risk clients, and keep track of transactions.
Key regulatory developments - Singapore
MAS issues revised MAS Notice 637 on risk based capital adequacy requirements
Effective from 1 July 2024. Banks are advised to engage MAS on their intended applications to seek regulatory approval for certain rules as soon as possible to facilitate MAS' review process.
MAS to increase maximum DI coverage to S$100k, effective from 1 April 2024
MAS published the 1st part of its response to feedback received on its proposed enhancements to the deposit insurance (DI) scheme, which has also included operational clarifications.
Consultation paper on repeal of regulatory regime for fund managers
MAS seeks feedback on its proposal to streamline the regulatory framework for fund managers, specifically on the transitional arrangement following the repeal of the existing Registered Fund Management Companies regime.
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