Sustainability at the core of everything we do, including investments: Temasek

Singapore

SINGAPORE'S state investor Temasek Holdings has set its eye on delivering a net zero carbon emissions portfolio by 2050, with sustainability now at the core of everything it does, including its investment approach.

To achieve that "ambitious" target as well as a mid-term goal of slashing net emissions to a quarter of the present levels by 2030, Temasek said on Tuesday when it shared its portfolio value that it has "mainstreamed sustainability considerations in our investment and portfolio management processes".

It joins the growing ranks of international investment companies that have elevated sustainability from being the periphery to the mainstay of their investment decisions.

Dilhan Pillay Sandrasegara, the chief executive officer of Temasek International, told The Business Times in a virtual media conference: "We are no different from every other investor in terms of looking at these trends of the future and trying to make sure that we ourselves are able to not just embrace the trends but invest in these companies, sometimes at a very early stage so that we can be part of the journey.

"And, we can actually learn from it as we think about the impact those companies will have on the existing sectors in which they're focused on, and the companies in those sectors which we may be invested in."

Instead of seeing the universe of investments will be limited by the sustainability mandate, Mr Sandrasegara thinks there will be more options because new sustainable solutions are coming to the market.

"Some of them will become part and parcel of existing businesses and companies are going to embrace them, some may well be disruptive to the future. So when you look at food, water, waste, energy, materials, clean transportation, urban development - that's huge. There's gonna be a huge number of opportunities that will come your way," he added.

Temasek, which has attained carbon neutrality on a company level, will engage its portfolio companies on their carbon-reduction plans, as well as explore new investments which have track records of better carbon intensity and efficiency.

Companies around the world are racing to cut carbon emissions in a bid to limit global warming to 1.5 degrees Celsius, as otherwise there could be significant and irreversible changes in the climate system.

Further, Temasek will seek out companies with business models that deliver carbon avoidance, such as renewable energy and plant-based proteins; or carbon-negative businesses and solutions that combat climate change, such as nature-based solutions.

Deputy head of Singapore projects at Temasek International Yeoh Keat Chuan pointed out that the state investor has found an interesting and exciting investment space in plant-based proteins to address the issue of greater demand for proteins due to growing affluence and population.

According to him, Temasek has increased investments in the likes of plant-based protein makers Perfect Day and Impossible Foods, as well as lab-grown meat producers such as Memphis Meats. "So these are really spaces which we see fit the sustainability goals, and also our good investment objectives."

Temasek has rejected investments that do not satisfy its criteria for ESG (environmental, social, and governance).

Investment returns would not necessarily be at the expense of pursuing a sustainability mandate, Temasek International deputy chief financial officer Png Chin Yee said.

She pointed out that researches have shown that ESG-focused companies produce better outcomes for shareholders.

Conversely, a company could land on the wrong side of regulations or lose favour with customers if it does not pay attention to ESG.

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