MAS Guidelines on Environmental Risk Management – Transition Planning for Asset Managers

Introduction

The Monetary Authority of Singapore (MAS) has released its Guidelines on Environmental Risk Management (Asset Managers) – Transition Planning (“TPG”), setting out supervisory expectations for asset managers to strengthen their climate risk management frameworks. These guidelines emphasize the need to address both transition risks (arising from the shift to a low‑carbon economy) and physical risks (stemming from climate change impacts).

Transition planning refers to the internal risk management process that prepares institutions for climate‑related risks, ensuring resilience in investment strategies and governance structures.

The new guidelines build on MAS’ 2020 Environmental Risk Management framework, expanding expectations for asset managers to integrate climate considerations into business strategy, portfolio management, and governance processes. The requirements apply to asset managers with discretionary authority over managed funds or mandates.

Asset managers are provided with an 18‑month transition period (deadline: September 2027) to assess and implement the guidelines in a manner proportionate to their scale, nature, and risk profile.

Objectives of Transition Planning Guidelines (TPG)

The TPG sets out MAS’ expectations for asset managers to:

• Assess and manage climate‑related risks across varying time horizons.

• Integrate environmental risk considerations into business strategies and portfolio decisions.

• Strengthen governance and accountability for climate risk management.

• Ensure investment strategies remain resilient under evolving climate conditions.

  
  

Implication

For asset managers who have discretionary authority over their investments, the TPG will be applicable to you. Below are the requirements to implement a sound internal process to manage the transition and physical risks due to climate change: 

No.	What is required	How to implement
1.	Adoption of climate-related factors into business strategy and governance process	Establish a robust governance process with a clear “tone from the top” as well as alignment of business strategy with internal behaviour to address climate-related risks
2.	Understand the implications of climate change on investment mandates and portfolio companies	Implement a structured, risk proportionate process to assess how investee companies manage the climate-related risks they faced.
3.	Enforcement of risk mitigating actions and adaptation measures to investee companies	Strategic implementation and monitoring planbased on the investee companies’ risk profile
4.	Long term assessment of the impact of climate-related risks over varying time horizons as part of planning and risk management processes	Leverage on existing climate scenarios developed by leading industry practices;  Perform internal scenario analysis that are tailored to investment strategies; and/or complement both external reference scenarios with internally developed scenarios

How We Can Help

At Kai Global, we understand the challenges of aligning with MAS’ evolving supervisory expectations. We provide:

• Gap analysis of current practices against MAS’ TPG requirements.

• Tailored compliance solutions to strengthen environmental risk management frameworks.

• Advisory support for integrating climate risk methodologies into portfolio‑level decision making.

  
  

For advanced technical implementation, we collaborate with specialized partners to help asset managers fully operationalize climate risk management within their governance and investment structures.

Reach out to us for a non‑obligatory discussion on how we can support your transition planning journey.

Contact Us for Advisory