The Monetary Authority of Singapore (MAS) has announced the development of a Minimum Viable Product (MVP) to assist banks in utilizing Artificial Intelligence (AI) for issuing Sustainability-Linked Loans (SLLs) in the real estate sector. This announcement marks a significant milestone in the efforts to support sustainable finance.
Developed by Project NovA! consortium, the MVP addresses key challenges banks face in extending SLLs, such as setting accurate Sustainability Performance Targets (SPTs), combating greenwashing, and reducing manual errors in processing. The consortium has also published a whitepaper documenting the MVP’s methodology.
One of the MVP’s core features is its ability to set performance targets for SLLs through peer and industry benchmarking, using data from government sources for property-specific comparisons. This assists banks in setting realistic KPIs and SPTs, thereby enhancing the accuracy of sustainability assessments.
Additionally, the MVP incorporates a monitoring system using at-source data, such as building energy consumption, to compare borrowers’ sustainability performance with agreed SPTs. This real-time monitoring helps in identifying discrepancies and maintaining the intended impact of SLLs.
Another notable feature is the Autonomous Documentation Insights Engine (ADIE), which utilizes Natural Language Processing to extract sustainability insights from diverse sources, shifting away from manual document processing. This innovation allows for more informed decision-making based on comprehensive data.
The next phase of the project will see MAS collaborating with the Building and Construction Authority (BCA) to integrate BCA’s Super Low Energy Building (SLEB) database, enabling NovA! to access country-wide data on green buildings. This integration aims to enhance real-time monitoring of SPTs and accelerate green financing within the real estate sector. Furthermore, NovA!’s AI capabilities will be extended to support sustainable financing in other sectors like power and manufacturing industries.
Sopnendu Mohanty, Chief FinTech Officer at MAS, said, “The collaboration between MAS and BCA marks a transformative phase in both green finance and sustainable building, accelerating our industry towards achieving their net-zero targets. NovA! creates a transparent and effective environment that combats greenwashing and directs finances towards truly sustainable projects.”
Ang Kian Seng, Group Director of Environmental Sustainability at BCA, added that the partnership leverages MAS’s AI capabilities to drive a data-centric approach to sustainability, crucial for meeting Singapore’s net-zero and Green Building Masterplan targets.