Sustainability is at the core of Singapore investment company Temasek Holdings’ portfolio, amid a record $49 billion invested in FY2021 ended March 31, 2021.
That said, Temasek is stopping short of setting hard carbon targets for its investee companies, or even floating the threat of divestment.
Instead, Temasek seeks to work with companies on their decarbonisation journey, says Nagi Hamiyeh, Temasek International’s investment group joint head and head of portfolio development. “We would rather do that, because being serious about sustainability is not pushing the problem to somebody else; I would rather [we] deal with it ourselves,” he explains.
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In 2020, Norway’s US$1.3 trillion ($1.76 trillion) wealth fund blacklisted 15 companies and sold its entire portfolio of stocks focused on oil exploration and production. As a result, the Government Pension Fund Global, built on Norway’s legacy oil earnings, saw emissions from companies in the fund’s equity portfolio fall 14% from 2019.
Temasek is not adopting such a hardline stance, says Mukul Chawla, Temasek International’s joint head of North America and telecommunications, media and technology. “I think we’re even open to investing — if appropriate — in emitters, as long as we have a clear line of sight to the decarbonisation journey,” he adds.
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The investment company has sunk roughly $5 billion into the agri-food sector over the past decade, says Hamiyeh. Last May, Temasek joined celebrity investors Oprah Winfrey and Katy Perry in backing Apeel, a US agritech innovator that produces edible plant-based coatings, which extend the shelf life of fruits and vegetables. The US$250 million round brought the company’s valuation to more than US$1 billion, elevating it to unicorn status.
On the sustainability front, other areas of investment include renewable energy, carbon capture technology and smart buildings, although Temasek did not provide specific figures. Notable investments include Rivulis, an Israel-headquartered company providing water-saving technology solutions to farmers worldwide; and Solugen, a US-based specialty chemicals manufacturing platform that aims to decarbonise the chemicals industry.
“Going forward, I can tell you with certainty that we are going to double down on these investments,” says Hamiyeh at a virtual media conference. “When we look forward in terms of our journey, we see that sustainability is going to be at the very core of everything we do. I cannot give you a number, but I can assure you that it’s going to be trending towards a much heavier investment in this area.”
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The company aims to reduce the net carbon emissions of its portfolio to half of 2010 levels by 2030. “This signals our ambition for net zero carbon emissions by 2050,” says Temasek. To that end, the company adopts a three-pronged approach: investing in climate-aligned opportunities, enabling carbon negative solutions and encouraging decarbonisation efforts in businesses.
According to Temasek, carbon pricing may need to surpass US$100 per tonne of carbon dioxide equivalent (tCO2e) by 2030 to drive effective decarbonisation and deliver on the Paris Agreement. Presently, Temasek has set an initial internal carbon price of US$42 per tCO2e, with plans to increase this figure.
“We will refine our carbon pricing strategies during this coming decade, likely with increasing internal carbon pricing, as we get further clarity on the economic and policy levers of change,” notes Temasek.
Photo: Bloomberg
