This article is featured in the 2024 FCLTGlobal Blue Book, a collection of real-world examples of how our members are putting long-term strategies into practice today. We hope that these practical illustrations will inspire others to embrace the mission of focusing capital on the long term. Learn more >>

As the climate crisis intensifies, governments, businesses, and societies face multifaceted challenges. At Temasek, we recognise the long-term effects of climate change on the resilience and commercial viability of our portfolio. Sustainability is, therefore, a resolute commitment and an ongoing journey for us. We embed it in all that we do – from our mandate to deliver sustainable value over the long term to our strategy for how we operate as an institution, shape our portfolio, and engage our investees to build sustainable businesses. We have been steadily intensifying efforts to deploy capital and catalyse solutions to tackle the climate crisis, to create a more resilient and inclusive world so that every generation can prosper.  

Our Commitment to Sustainability and Climate Action 

Environmental sustainability, climate change mitigation, adaptation, and transition are critical levers towards a greener economy. We have committed to halve our portfolio emissions (from 2010 levels) by 2030 and achieve a net zero portfolio by 2050. To guide our investment decisions and account for potential exposure to transition risk, we have set an internal carbon price of US$50 per tonne of carbon dioxide equivalent (tCO2e), informing us of the true cost of capital for the long-term value of our investments. This helps us better prepare for a world where current or future regulation could increase the environmental cost associated with business activities, in line with the Paris Agreement, resulting in financial impact on businesses. We expect to raise this internal carbon price progressively to US$100 per tCO2e by 2030. To drive progress towards our targets, we developed a climate strategy that is informed by science and the relevant policy and technology roadmaps, and have also accelerated efforts along these three pathways to decarbonisation. 

Investing in Climate-Aligned Opportunities 

To support the acceleration towards net zero, Temasek’s investments and efforts span several key areas reflecting the real economy: food, water, waste, energy, materials, clean transportation, and the built environment. 

Temasek invests in companies seeking to scale pivotal and commercially viable decarbonisation technologies, such as renewable energy and solutions, and bring them to market quickly. Through our investments in early-stage companies, we also back nascent but innovative and promising next generation technologies and solutions that may not be commercially viable yet, but have immense potential to decarbonise adjacent sectors and transform economies. Solutions include those in geothermal energy; nuclear energy including fusion; and hydrogen, which could all have a transformative impact as technology advances.  

Enabling Carbon-Negative Solutions 

Temasek has also deployed capital into ventures at the forefront of decarbonisation. We launched GenZero, an investment company that aims to accelerate decarbonisation globally and drive positive climate impact by investing in nature-based solutions, tech-based solutions, and carbon ecosystem enablers. We have also invested in carbon removal and carbon capture solutions to support the mitigation of climate change.  

As we lean into the transition of the real economy, we are also prepared to selectively invest in carbon-intensive businesses to help accelerate their transition to net zero. Reflecting Temasek’s focus on real-world decarbonisation, we acknowledge that emissions trajectories of such transition investments may therefore differ from our core portfolio. 

Encouraging Decarbonisation Efforts in Businesses 

The success of our portfolio companies underpins our own success. Close engagement strengthens everyones’ long-term resilience. To encourage ongoing alignment, we developed a Climate Transition Readiness framework that is shared with our portfolio companies and we work with them to transition their operations. For example, the merger of Sembcorp Marine and Keppel Offshore & Marine to form Seatrium is expected to accelerate the group’s transition towards providing renewable energy and cleaner offshore and marine solutions.  

Another key engagement opportunity is our annual Ecosperity conference, a platform for global leaders, policymakers, investors, and civil society to share developments, insights, and best practices on sustainable development. 

Radical Collaboration Towards a Common Goal  

The world is not yet on track to net zero. The urgency to find effective, sustainable solutions has never been greater, and our collective journey requires a systems approach. In addition to direct investments, we established Decarbonization Partners, a joint venture with BlackRock, to focus on late-stage venture capital and early-growth private equity investments with the sole purpose of advancing decarbonisation solutions.  

Asia is also where the action needs to happen – and at speed, even as it balances competing interests of social and economic development with the decarbonisation of its energy systems. Asia accounts for half of global carbon emissions, with about 85 percent of energy produced from fossil fuels. Given fiscal constraints and limited access to private capital, especially for marginally bankable projects, the substantial costs associated with a just transition make the adoption of greener solutions challenging. 

This is where opportunity lies for all players and sectors to lean in. With appropriate structuring and adaptation of frameworks by governments, alongside partnerships with multilateral development banks, concessionary and philanthropic capital can provide first-loss capital to fund critical developments. This, in turn, encourages private sector buy-in, which will help expand progress and hopefully foster a cascade of innovation.  

Our joint venture with HSBC, named Pentagreen Capital, is an example of how we are catalysing financing for marginally bankable clean infrastructure projects. Temasek also signed a Memorandum of Understanding with the Monetary Authority of Singapore, Allied Climate Partners, and the International Finance Corporation, at COP28 to establish a blended capital partnership, with the goal of addressing climate finance gaps and increase the bankability of green sustainable projects in Asia. 

The climate crisis does not discriminate based on borders, entities, and sectors. We recognise that partnerships are crucial for us to catalyse sustainable solutions, and pool resources with complementary capabilities. It is more critical now than ever for the international community to come together. When we work together, our efforts can be stronger and our impact, amplified. We look forward to continued collaboration and partnerships that will enable us to deploy meaningful solutions today to shape a sustainable future for generations to come. 

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