Introduction
The Monetary Authority of Singapore (MAS) published its Guidelines on Environmental Risk Management (Asset Managers) – Transition Planning (the “TP Guidelines”) on 5 March 2026. They sit as an addendum to the 2020 Environmental Risk Management (ENRM) Guidelines. For the Singapore Fund Management industry, including managers of Variable Capital Companies (“VCCs”), the TP Guidelines set out MAS’ supervisory expectations. Asset Managers should manage the transition and physical risks that climate change creates (“climate-related risks”) as part of a sound transition planning process.
The TP Guidelines provide an 18-month transition period. The requirements take effect in September 2027. As a result, Singapore-based Asset Managers have time to assess their existing practices, identify gaps, and strengthen their transition planning frameworks.
This article examines the key expectations under the TP Guidelines. It explains what they mean in practice and the steps Asset Managers can take to prepare.
Where the MAS Transition Planning Guidelines Sit
The MAS transition planning guidelines should be read alongside MAS’ 2020 ENRM Guidelines (ENRM Guidelines), which have been in effect since June 2022, and provide a baseline of the regulator’s expectations of climate-related risk management. Rather than replacing the existing framework, the TP Guidelines provide further guidance on how Asset Managers can approach climate-related risks from a forward-looking perspective.
The ENRM Guidelines established expectations around the identification, assessment, and management of environmental risks. MAS describes transition planning as the internal risk management and strategic planning process undertaken by an entity to prepare for climate-related risks and potential changes in business models. A transition plan is the documented output of this process and may be maintained internally or disclosed externally.
Importantly, the TP Guidelines are focused on risk management rather than prescribing a particular climate strategy. Its implementation should also consider an Asset Manager’s size, nature and risk profile. Moreover, MAS recognises that data availability, methodologies and other practical constraints may limit what firms can achieve in the near term. Accordingly, MAS expects implementation to develop progressively.
The TP Guidelines apply to Asset Managers with discretionary authority over the portfolios they manage. Where an Asset Manager delegates investment management to sub-managers or advisers, it retains overall responsibility. It should therefore communicate its expectations and monitor alignment, including through appropriate contractual arrangements where relevant.
Key Expectations for Asset Managers
The TP Guidelines set out expectations for Asset Managers to incorporate climate-related risks into their existing governance, investment and risk management processes. The key areas include:
1. Governance and Strategy:
Boards and senior management should consider how current and future changes in the operating environment will affect risk profiles. This covers both the Asset Manager and its investment portfolios. In addition, they should actively ensure that the climate-related business strategy becomes part of daily operations. Firms should also keep refining this approach and its implementation.
2. Investment and Portfolio Risk Management:
Asset Managers should consider the potential impact of climate-related risks when they develop product offerings and investment strategies. They should also account for sectoral specifics, particularly where a sector carries higher climate-related risks. Furthermore, they should factor in the different characteristics of investee companies, such as different levels and sources of risk and different stages of readiness. This can happen as part of either active or passive investment management.
This should include the use of forward-looking risk assessment tools (e.g. “Scenario Analysis” which considers the impact of climate-related risks on investment portfolios under a range of plausible scenarios) to trigger adjustments to sectoral strategies and product offerings, amongst other levers.
Asset Managers should also develop climate scenario analysis and risk modelling for short- to longer-term scenarios relevant to transition planning. They should reference leading industry practices, such as those from the Network for Greening the Financial System (NGFS), the United Nations Environment Programme Finance Initiative (UNEP FI), and central banks and regulators. The analysis should consider:
(i) Different asset classes with the appropriate levels of granularity (e.g. sectoral and/or security level) to account for the heterogeneity of climate-related risks across various investee companies, asset classes, economic activities and investment strategies; and
(ii) Varying time horizons.
3. Data:
Firms often use proxy data to bridge data gaps. However, proxy data has inherent limitations, and Asset Managers should recognise them. They should also address material data gaps in their climate-related risk assessments at investee company and portfolio levels. Doing so lets them capture and differentiate the level of climate-related risk that each investee company or portfolio faces.
4. Metrics:
Asset Managers should use specific metrics to track the risk exposures of their investment portfolios. These metrics should reflect investment horizon, instrument type, products in or out of scope, and sectoral and geographical breakdowns. Firms should then determine whether their investments and portfolios align with:
(i) Manager’s business strategy, and
(ii) The portfolios’ investment strategies and associated targets.
Finally, firms should review the metrics periodically. This keeps them relevant and current to the Manager’s risk profile.
5. Target Setting:
When Asset Managers set targets, it should consider the impact and risk profiles for the business strategy and investment portfolios it manages. This may include multi-year benchmarking, industry/geographical diversification, and maintaining relevance to current and evolving developments.
6. Implementation, People and Process:
None of the above would matter without effective implementation. This should include upskilling staff to look out for and monitor climate-related risks on a timely basis. Asset Managers should also ensure alignment of their existing products, services and business activities with their strategy, and embed strategic climate considerations in their decision-making. In line with potential data gaps as highlighted earlier as well, this implementation should also include a data strategy to build, maintain and analyse relevant climate-related data to support effective decision-making.
7. Engagement and Stewardship:
Asset Managers should be actively engaged with their portfolio companies and investments, stewarding them to mitigate exposure to climate-related risks. This should be adequately planned in line with the Asset Manager’s climate-related risk management strategy and supplemented by adequate training on sectoral and jurisdictional developments to ensure a robust and consistent engagement methodology.
Investee companies that are particularly vulnerable to transition risks should be encouraged to manage these risks (e.g. the risk of stranded assets and the long-term viability of an investee company’s business model). The plan should include risk-proportionate engagement and allow Asset Managers to obtain more information and climate-related risk data to make more informed investment and risk-management decisions as part of their portfolio management strategy.
A Practical Roadmap to September 2027
For most Asset Managers, preparation for the TP Guidelines can build on existing environmental risk management and investment processes rather than requiring a completely new framework. A phased approach can help firms identify gaps, strengthen relevant capabilities and test their approach before the guidelines take effect.
The following provides a suggested roadmap for firms to consider as they work towards implementation:
| Period | Suggested focus |
| Q4 2026 | Assess: a) Compare existing environmental risk management policies and practices against the TP Guidelines and identify gaps. b) Consider which funds, sub-funds or investment strategies are “in-scope” and have the greatest exposure to climate-related risks. c) Review how the aforementioned considerations are currently reflected in investment papers, Board reporting, data and engagement records. |
| Q1 2027 | Build: a) Develop or update the transition planning framework. b) Consider how climate-related considerations can be incorporated into due diligence and investment review processes. c) Establish a data gap register and a detailed plan for tracking engagement with investee companies. |
| Q2 2027 | Embed: a) Incorporate the updated framework into the firm’s governance process and maintain records of relevant discussions and decisions. b) Ensure investment, operations, and compliance teams understand their respective roles. Where relevant, consider how transition planning information should be communicated to VCC directors at the umbrella and sub-fund levels. |
| Q3 2027 | Test: a) Apply the framework to live portfolios. b) Prepare sample reporting to assess whether the process produces meaningful information for decision-making. c) Address any gaps or practical challenges identified through the exercise. |
| September 2027 | Implement: The TP Guidelines take effect, marking the end of the 18-month transition period. |
Conclusion: MAS Transition Planning Guidelines
The MAS Transition Planning Guidelines represent a further development in the regulator’s approach to climate risk management, focusing on how financial institutions can incorporate transition considerations into their existing governance and risk management processes.
For Asset Managers, implementation is unlikely to require a completely new framework. Instead, the emphasis is on building progressively on existing practices, with greater attention to forward-looking analysis, data, engagement, governance and the management of portfolio-level climate-related risks.
MAS has also recognised that firms will face differences in data availability, methodologies, investment strategies and resources. The expectation is therefore not a single approach, but a proportionate and credible process that can develop over time.
Asset Managers that begin assessing their existing practices now will be better placed to identify gaps, strengthen their processes and demonstrate how transition planning is being incorporated into investment and risk management activities ahead of the September 2027 effective date.
How Curia Regis can support?
Curia Regis supports regulated financial institutions in reviewing regulatory requirements, identifying gaps, and developing practical compliance frameworks that reflect their business activities, size, and complexity.
Our support may include:
- Gap Analysis and Regulatory Advisory: Reviewing existing environmental risk management policies and practices against the MAS transition planning guidelines, identifying areas for enhancement and helping firms prioritise their next steps.
- Policies and Procedures: Assisting with the development or enhancement of transition planning frameworks, governance arrangements, and supporting documentation to reflect applicable regulatory expectations.
- Risk Management and Corporate Governance: Reviewing how climate-related risks are incorporated into governance, investment decision-making, risk assessment, and management oversight.
- Ongoing Compliance Support: Helping firms monitor regulatory developments, review their compliance arrangements, and maintain appropriate documentation as their transition planning practices evolve.
By building on existing frameworks and addressing gaps progressively, Asset Managers can implement the TP Guidelines in a manner proportionate to their business and risk profile.
To discuss how Curia Regis can support your preparations for the MAS transition planning, you can reach us here or email admin@curiaregis.com to get in touch.
