Singapore's Temasek Working with Portfolio Firms in Green Transition

Singapore state investor Temasek is working with its portfolio companies to help them become more green as advancing sustainability goals becomes the new normal, the firm's chief sustainability officer said on Thursday.

Temasek, with a portfolio valued at S$381 billion ($278.81 billion) as of March, has committed more than S$2 billion this year to the decarbonization sector alone, Steve Howard told the Reuters Next conference.

"We want to work with those companies and help make sure that they are supported in having transition plans," Howard added. "We don't eliminate carbon or transform to full sustainability overnight, and so it's a journey."

Large investors have come under increased pressure to factor in environmental, social and governance strategies when deciding where to put their money, with the COP26 climate summit that ended last month providing an additional impetus.

U.N. climate talks ended with a deal that for the first time targeted fossil fuels as the key driver of global warming, while the agreement also kept alive hope of capping global warming at 1.5 degrees Celsius.

Howard said Temasek was also having to make weekly decisions about not investing in certain sectors, namely those it does not consider "part of the future or they're carbon-intensive without a plan or they have really negative externalities."

Temasek has investments in carbon-emitting sectors, such as rig builders and Singapore Airlines. Conglomerate Keppel Corp and Sembcorp Marine are considering combining their loss-making offshore and marine (O&M) businesses, with Temasek set to become the largest shareholder in the combined company.

Still, the state investor has already set itself targets to lower carbon emissions attributable to its portfolio to half the 2010 levels by 2030, eventually reaching net-zero by 2050.

"If you'd asked me a year ago, I'd say capital markets are still largely asleep. Now they're awake, they've had coffee and they're starting to make investment decisions," Howard said.

($1 = 1.3665 Singapore dollars) 

(Reporting by Anshuman Daga in Singapore; Writing by Aradhana Aravindan and Nikhil Kurian Nainan; Editing by Ana Nicolaci da Costa)