GIC partners 3 organisations and initiatives on climate change management

GIC has become a signatory to three organisations and initiatives relating to climate change management, as part of its sustainability strategy to increase engagement and disclosures on climate risks and opportunities.

The organisations and initiatives are CDP, Climate Action 100+ and the Asia Investor Group on Climate Change (AIGCC), GIC said in a media statement on Monday.

GIC said sustainability is core to its mandate and investment strategy. "We believe that companies with stronger sustainability practices will deliver better risk-adjusted returns over the long term, and that this relationship will strengthen over time," it said.

The AIGCC is an initiative to create awareness and encourage action among asset owners and financial institutions in Asia about the risks and opportunities associated with climate change and low carbon investing. It has 49 members from 11 markets representing over US$11 trillion in assets under management (AUM).

Climate Action 100+ is an investor initiative to ensure the world's largest corporate greenhouse gas emitters take necessary action on climate change. It was launched in December 2017, and is coordinated by five investor networks, including AIGCC. More than 500 investors with US$47 trillion in AUM are involved in engaging companies on climate-related matters.

GIC said that signing up with the two initiatives signals more active engagement with portfolio companies on climate risks and opportunities.

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"As a long-term investor, we seek to ensure our portfolio companies are aligned with the transition to a more sustainable path," said Liew Tzu Mi, chief investment officer for fixed income and chair of GIC's sustainability committee.

"Where we identify companies exposed to greater physical or transition risks arising from climate change, we engage with those companies to discuss, and offer support for, their plans to mitigate or transition from those risks."

Rebecca Mikula-Wright, executive director of AIGCC and member of the global Climate Action 100+ steering committee, said: "We are witnessing a rapid increase in investor understanding and activity on climate risk across Asia, which is translating into enhanced and deeper cooperative engagement with companies to ensure they are preparing for the low carbon transition."

CDP is a global non-profit that drives companies, cities and governments to reduce their greenhouse gas emissions, safeguard water resources and protect forests. It runs a disclosure system and works with institutional investors with assets of US$106 trillion, and leverages investor and buyer power to motivate companies to disclose and manage their environmental impacts.

Ms Liew said CDP plays an important role in driving greater disclosures on the business risks and opportunities presented by climate change. She noted that its disclosure framework is based on the Financial Stability Board-Task Force for Climate-related Financial Disclosures (TCFD) recommendations, which provides companies with clear guidance on the material environmental metrics they should measure, monitor and disclose.

"We believe that investors can benefit from having access to high quality and consistent carbon emissions and climate-risk data on their portfolio," Ms Liew said.

Paul Simpson, CDP's chief executive officer, said: "Over the past 20 years, CDP has worked with financial institutions to meet the growing demand for consistent, comparable environmental data that is fully aligned with the TCFD framework."

He added: "As a globally influential long-term investor, we are proud to partner with GIC, and provide the information needed to assess climate-related risks, opportunities for value creation and collaborative engagement with companies on their environmental impact."