Temasek's sustainability-aligned investments valued at S$46 billion in FY2025

Business Times

3 days ago

[SINGAPORE] The portfolio value of Temasek's sustainability-aligned investments stood at S$46 billion for FY2025, an increase of S$2 billion from S$44 billion in the previous financial year.
However, Temasek's share of sustainability investments out of its entire portfolio dipped slightly, accounting for 11 per cent of its net portfolio value of S$434 billion after including institutional assets and liabilities, compared to 12 per cent in the previous year.
Singapore's state investor provided these updates in its 2025 sustainability report, which was released on Wednesday (Jul 9) alongside its annual financial performance for the financial year ended Mar 31.
In addition to portfolio value, the report also reviewed Temasek's total portfolio emissions for FY2025, which remained unchanged at 21 million tonnes of carbon dioxide equivalent.
A majority of emissions (42.9 per cent) were attributable to Singapore Airlines (SIA), which generated higher emissions due to a strong demand for air travel and cargo uplift. The refinement and expansion of emissions-reporting boundaries of some portfolio companies also contributed.
This was offset by lower emissions from Sembcorp – which recently completed its handover of a gas-fired power plant to the Vietnamese government – as well as the decarbonisation efforts of other companies, and changes in portfolio composition.
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In 2020, the investor made a commitment to halve its emissions from its 2010 levels by 2030 to 11 million tonnes of carbon dioxide equivalent. The state investor is also targeting to be net zero by 2050.
Sustainability-aligned investments
Out of the S$46 billion of sustainability-aligned investments, S$39 billion are businesses that Temasek deems to have the potential to address the climate crisis, are nature-positive and contribute to inclusive growth.
The other S$7 billion is in another bucket known as climate transition investments, which refer to high-emitting sectors that are finding ways to transition its business model to be more low-carbon.
Temasek invested S$4 billion in sustainability through FY2025, higher than the S$3 billion deployed into similar opportunities in the previous financial year. These investments included established businesses, early and growth-stage companies, as well as funds, and were made across several key focus areas such as food, water, waste, energy, materials, clean transportation and the built environment.
The overall increase in the value of sustainability investments was a smaller amount of S$2 billion due to changes in market value of some portfolio companies, as well as divestments, said Park Kyung-Ah, chief sustainability officer at Temasek.
One of these exits was Indian renewable energy platform O2 Power, which was sold to a subsidiary of Indian power company JSW Energy for US$1.5 billion at the end of last year.
When asked whether Temasek is concerned about its ability to grow its pie of sustainability investments given the pullback in climate action primarily by the US, Park replied that there are still compelling investment opportunities in the landscape – though there might be bumps over the short term.
The US government has reversed some of its clean energy policies under the Inflation Reduction Act. Recently, US President Donald Trump signed into law a Bill that cuts tax credits for clean energy.
Temasek's chief investment officer Rohit Sipahimalani said it does not invest in companies or projects where their business case would require subsidies. He added that corporates in the US, including the large hyperscalers interested in accessing green data centres, are also still focused on meeting their net-zero targets.
Portfolio emissions
Similar to its total portfolio emissions, Temasek's weighted average carbon intensity remained the same in FY2025 at 92 million tonnes of carbon dioxide equivalent per S$1 million in revenue.
However, the carbon intensity of its portfolio decreased to 63 tonnes of carbon dioxide equivalent per S$1 million in portfolio value, compared with 73 tonnes the year before.
Temasek expects the trajectory of total portfolio emissions to remain non-linear, given that they may increase temporarily when it makes investments aimed at decarbonising a carbon-intensive company.
While Temasek has committed to staying the course on the low-carbon transition despite the ongoing uncertainties around climate, it recognises that meeting its targets is a challenge, given the concentration of hard-to-abate companies in its portfolio.
The investor engaged with 17 of its major portfolio companies that account for 91 per cent of its emissions during the course of the year. Out of these companies, 14 have set net-zero targets, which is an increase from 11 last year.
Just five companies – SIA, Sembcorp, Olam, PSA International and ST Telemedia – account for 82 per cent of its portfolio emissions.
When asked if Sembcorp's decarbonisation would be affected given that some of its projects in Vietnam are caught in the country's retroactive review of feed-in tariff eligibility for renewable energy projects, Sipahimalani said that the energy company has invested in other renewable projects in Vietnam, and has a footprint that is beyond just one country.
'So we feel pretty comfortable in terms of the trajectory that Sembcorp is on, and think there are significant opportunities still available,' he added.
The decarbonisation of the aviation sector remains challenging, however, given the high costs associated with sustainable aviation fuels as the commercial viability of the solution has not been established and has no scale.