Temasek and BlackRock form US$600m decarbonisation investment partnership

TEMASEK Holdings and BlackRock on Tuesday announced a new partnership to jointly commit a total of US$600 million to decarbonisation investments.

Named Decarbonization Partners, the initiative will launch a series of late-stage venture capital (VC) and early-growth private equity (PE) investment funds that will focus on advancing decarbonisation solutions that will "accelerate global efforts to achieve a net zero economy by 2050".

It intends to deploy private capital with a focus on early-stage growth companies which target next-generational renewable and mobility technologies - as well as companies in building and manufacturing sectors to drive decarbonisation, resource efficiencies, and material and process innovation.

Further, Decarbonization Partners will seek third-party capital from investors who are "committed to achieving a net zero world while also seeking to obtain long-term sustainable financial returns", said the firms in their joint press statement on Tuesday.

For its first fund, the partnership targets to raise US$1 billion, including capital from Temasek and BlackRock. AFP had earlier reported that the firms' US$600 million commitment to the effort included US$300 million of seed capital for this first fund, with the rest to be raised from outside investors. 

In their joint statement, Temasek and BlackRock said the partnership will leverage their respective expertise in sourcing and underwriting private investments, portfolio and risk management, and sustainable technology and analytics. 

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The funds will be staffed by employees from both firms. A dedicated team has also been recruited to source and undertake investments and manage its portfolio.

Dilhan Pillay, chief executive of Temasek International, believes the partnership represents one of several steps taken by Temasek to follow through on its commitment to halve emissions from its portfolio by 2030 – and ultimate move to net zero emissions by 2050.

"Through collective efforts with like-minded partners, we will be able to create sustainable value for all of our stakeholders over the long term, and investors will have the opportunity to help deliver innovative solutions at scale to address climate challenges," he said.

"This partnership will help define climate solutions as a standalone asset class that is both essential to our collective mission and a historic investment opportunity created by the net zero transition," said Larry Fink, chairman and chief executive of BlackRock.

Last month, Temasek announced a US$500 million allocation to Asia and Africa-focused Leapfrog Investments – then the single biggest commitment to date in a specialist impact manager, according to Global Impact Investing Network. 

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