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Business Times
a day ago
- Business
- Business Times
Temasek pivots to ‘plain vanilla' renewable energy amid global climate pullback
[SINGAPORE] Amid the global pullback on climate action and uncertain business environment, Temasek is looking to allocate the bulk of its environmental, social and governance (ESG) investments in renewable energy technologies, including transmission infrastructure as well as battery storage. While investing in such projects may seem 'plain vanilla' and also increasingly competitive –given the falling prices of solar electricity – these technologies are deemed to be 'geopolitically resilient' as they are 'scaled opportunities' with a 'narrower range of outcomes', said Temasek's senior executives. Solar energy projects combined with energy storage can be deployed faster than conventional forms of energy. It is also becoming one of the cheapest forms of energy around the world, while being inflation-protected and cashflow-generating, said Park Kyung-Ah, chief sustainability officer of Temasek. 'The opportunity sets are very compelling. People probably over-index to a lot of the headlines that keep coming out, whether it's tariffs on certain clean energy supply chain or whether it's in the context of pulling out of certain (climate) commitments and so forth. But we have to remember, at the end of the day for the market, the economics are what really matters,' said Park, who was speaking to The Business Times at the recent launch of its 2025 sustainability report. Even though solar prices are falling across the board, thereby affecting the returns of such investments, Park said that there are ways to make returns by entering some markets earlier, and leveraging some of the development opportunity sets. 'It is becoming more sustainable infrastructure, which is again, more resilient, bigger growth opportunity set and cashflow visibility. And so it's actually a compelling part of our portfolio construction,' she added. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up The dislocation of some renewable energy companies in the public market – due to uncertainty around energy transition globally as the US dialled back on its climate commitments – has also provided the state investor with more attractive opportunities, said chief investment officer Rohit Sipahimalani. For example, Temasek, along with its partner Brookfield, acquired listed French renewable energy company Neoen for US$6.6 billion and took it private in December last year. The pivot towards renewable energy is part of Temasek's risk management strategy amid heightened volatility in sustainability investing. Spurred by United States President Donald Trump pulling the country out of the Paris Agreement and rolling back some policies incentivising clean energy development, there has been a broader reassessment among governments and corporates on their climate ambition and strategies. In addition to leaning more towards renewable energy, Park said the state investor would be 'more selective and intentional' when investing in early stage companies. 'So we are doing early stage deals, but where there's true differentiation and innovation, as well as where we see companies really cementing their competitive differentiation, scaling and go-to market,' she added. Climate commitments Despite the scaling back of climate ambition globally, Temasek said that it will stay on course for its net-zero targets. In 2020, the investor made a commitment to halve its portfolio emissions from its 2010 levels by 2030 – to 11 million tonnes of carbon dioxide equivalent, and is also targeting to be net zero by 2050. For one, while the US might be retreating, Franziska Zimmermann, managing director for sustainability at Temasek, said that the European Union as a collective is still advancing on sustainability, and would likely not be impacted by developments in the US. Secondly, Park said that delayed climate action will actually result in higher costs further down the road. In addition, she noted that while policy stability provides investors with confidence in the return profile, Temasek does not make investment decisions with policy dependencies in mind. 'When we do our investment thesis, we want the companies to stand on their legs... There will be bumpiness along the way. And it's the case with any industry in any market. It's never a glide path, but the opportunity sets are very compelling,' she added. The shifting landscape on climate has also meant that Temasek is currently in the process of revising some of its underlying assumptions behind its climate scenarios. The investor's current baseline scenario, which projects temperatures to rise by 1.8 degree Celsius by 2100, assumes significant acceleration in climate policy by 2025 with higher upfront transition costs. The recent policy actions from the US, as well as the latest results from climate science, would now be factored in as part of this review, said Zimmermann. 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, the investor'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. The sustainability 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, which generated higher emissions due to a strong demand for air travel and cargo uplift.
Business Times
5 days ago
- Business
- Business Times
Temasek's sustainability-aligned investments valued at S$46 billion in FY2025
[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. A NEWSLETTER FOR YOU Friday, 12.30 pm ESG Insights An exclusive weekly report on the latest environmental, social and governance issues. Sign Up Sign Up 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.
Straits Times
5 days ago
- Business
- Straits Times
Temasek pressing ahead with its green targets; sustainable investment portfolio grows
Sign up now: Get ST's newsletters delivered to your inbox Temasek has an aim of reaching net zero in its portfolio emissions by 2050. SINGAPORE - Temasek said it is pressing ahead with its sustainable living investments and green targets, despite the uncertain geopolitical situation and some pullback in other countries. Temasek's chief sustainability officer Park Kyung-Ah said at a media briefing on the firm's 2025 sustainability report out on July 9: 'We are staying the course in terms of addressing tomorrow's needs and, certainly, given the urgency of climate change that is already upon us, that is a key need that we have to address.' Temasek has an aim of reaching net zero in its portfolio emissions by 2050. 'We remain committed to our target… and we are not taking the foot off our pedal,' she added. This commitment comes as Temasek grew its portfolio value of sustainable living trend-aligned investments to $46 billion in the 2025 financial year ended March 31, up $2 billion compared with the previous year. Sustainable living trend-aligned investments include companies whose products and services seek to fulfil environmental and social objectives, as well as those that will benefit from the sustainability opportunities. Temasek's chief investment officer Rohit Sipahimalani said: 'We have stepped up our investments in the sustainable living trend in the past year, compared with the previous year.' Top stories Swipe. Select. Stay informed. Singapore Singapore to hire 1,000 new educators annually in the next few years, up from 700 Business Temasek reports $45 billion rise in net portfolio value to $434 billion Singapore Pritam's appeal against conviction, sentence over lying to Parliament set for Nov 4 Asia Why Japan and South Korea are on different paths in the latest US trade salvo Singapore Female primary school teacher allegedly committed sex acts with underage male student Opinion Hyper-competitive classrooms feed the corporate world's narcissist pipeline Singapore Man charged after he allegedly threw glass bottle at bus window, injuring passenger Singapore Police officer taken to hospital after motorcycle accident on PIE He added that the pullback in other parts of the world should not change Temasek's approach towards investing in this space. The US withdrew from the Paris Agreement earlier in 2025, when US President Donald Trump took office. Major banks and asset managers such as JP Morgan, Goldman Sachs and Morgan Stanley have pulled out of net-zero initiatives such as the Net-Zero Banking Alliance, which brings together banks that want to align their lending and investing activities with net-zero emission targets. Mr Sipahimalani said: 'Technically, with regard to what's happening on the regulatory front or policy front, you can see that even the large US multinationals… are still very committed towards their net-zero goals. 'So we've not seen a change (in the end goal of) moving towards a lower-carbon world, moving away from fossil fuels into renewables. And therefore, we see significant opportunities to participate in that transition in ways that can be financially attractive, regardless of government subsidies.' Ms Park also told The Straits Times in an interview that the news that dominates the headlines can be different from what is happening on the ground. This is because some companies engage in greenhushing, which refers to the practice of companies under-reporting or withholding information on their sustainability targets and achievements to avoid any backlash, from stakeholders, for instance. For some companies, this can be about pulling out of public commitments but still doing the hard work in sustainable investing and implementing environmental initiatives. Ms Park said that there is also the rising cost of inaction when it comes to the climate, as insurance and disaster recovery have cost the US US$1 trillion (S$1.27 trillion) over a year – or 3 per cent of its gross domestic product. Temasek's managing director for sustainability Franziska Zimmermann added that there is much uncertainty around the macro environment and global politics, but no uncertainty when it comes to climate change. 'The science is clear… we may not be absolutely clear on how it's going to play out, how quickly… but directionally that's super clear,' she said. Ms Park added that Temasek's sustainable targets have not changed, but how the company gets there might need fine-tuning according to evolving circumstances. Temasek aims to cut its total portfolio emissions by 2030 to 11 million tCO2e – which refers to tonnes of carbon dioxide equivalent, a standard unit of measurement used in greenhouse gas emissions accounting – and hit net zero by 2050. Its financial year 2025 portfolio emissions stood at 21 million tCO2e, the same as in financial year 2024. But nine million tCO2e of that figure was attributed to Singapore Airlines, with the increased demand for air travel. SIA is one of Temasek's 17 portfolio companies that contribute to the majority – 91 per cent – of its total portfolio emissions. Temasek is engaging SIA in its decarbonisation efforts. SIA also has the aim of achieving net-zero carbon emissions by 2050, which requires strategies such as investing in new-generation aircraft, attaining higher operational efficiency and adopting low-carbon technology like sustainable aviation fuel. Ms Park said: 'Our 2030 target is ambitious, but we are staying on course. The reason for that is, the more we delay action, the higher the costs are going to be and the more material the risks will be… We do see a fair number of opportunities to lean in and capture returns as well as sustainable outcomes.' But, while Temasek has stepped up its sustainable living trend-aligned investments, the proportion of its net portfolio value exposed to such investments fell to 11 per cent in financial year 2025, from 12 per cent the year before. In total, its net portfolio value reached a record $434 billion. Ms Park said Temasek does not have targets for what proportion of the portfolio sustainable investments should take up. 'We are looking for the best opportunities… so in line with that, sustainable living trends will not be a linear pathway, in terms of growing by XYZ year on year,' she said. 'But over the past year we have deployed $4 billion... so despite these questions around headwinds, we are actually seeing opportunities for more deployment.' She added that Temasek is not making concessional investments, but commercial ones that will deliver returns. Temasek also wants its portfolio companies to become sustainability champions and leaders, she said. 'New deployment matters, but existing engagement of portfolio companies and enabling Singapore champions to become sustainable and resilient in value creation is also something we are very focused on.'
