Temasek Review 2023
Sustainability at the Core

Engaging our Portfolio Companies

The success of our portfolio companies underpins our own success. Through engagement, we strengthen long term resilience and advance sustainable value creation.

In 2020, we shared our target to reduce the net carbon emissions attributable to our portfolio to half the 2010 levels by 2030, and our ambition to achieve net zero by 2050. These bold targets demand determined and sustained action.

We have been measuring and disclosing the carbon emissions attributable to our investment portfolio as part of our annual reporting. Our reported Total Portfolio Emissions encompass 78% of the portfolio as at 31 March 2023.

Our Total Portfolio Emissions have increased slightly from 26 million tonnes of carbon dioxide equivalent (tCO2e) for the financial year ended 31 March 2022 to 27 million tCO2e for the financial year ended 31 March 2023. Our Portfolio Carbon Intensity has increased from 81 tCO2e/S$M portfolio value for the financial year ended 31 March 2022 to 93 tCO2e/S$M portfolio value for the financial year ended 31 March 2023.

These still compare favourably to our pre-COVID emissions levels reported in March 2020, which was 30 million tCO2e in Total Portfolio Emissions and 130 tCO2e/S$M portfolio value in Portfolio Carbon Intensity.

The increase in carbon emissions during the year was mainly attributable to our portfolio company Singapore Airlines, which saw its group passenger capacity recovering to 79% of pre-COVID levels, as global air travel resumed. Other factors contributing to the increase include business resumption for various portfolio companies, as well as continuous refinements to their emissions reporting and more accuracy in capturing a broader scope of underlying entities. At the same time, these increases were moderated by reductions due to decarbonisation efforts of portfolio companies as well as changes in portfolio composition.

We have been measuring and disclosing the carbon emissions attributable to our investment portfolio.

On the other hand, our Portfolio Weighted Average Carbon Intensity has decreased from 119 tCO2e/S$M revenue for the financial year ended 31 March 2022 to 116 tCO2e/S$M revenue for the financial year ended 31 March 2023.

As we continue stepping up efforts to encourage decarbonisation across our portfolio and continue to invest in less carbon-intensive businesses, we expect the emissions associated with our portfolio, in absolute and intensity terms, to decrease over time.

For a detailed breakdown, please click here to view the sustainability indicators of our portfolio

Regular Engagements with Portfolio Companies on ESG Matters

We regularly engage our portfolio companies to understand the challenges they face in climate transition, and to convey our expectations. We prioritise and target our engagement efforts with companies where we see the highest potential for impact.

Our Climate Transition Readiness Framework brings together a holistic set of levers for the net zero transition and sets out a systematic process for dialogue, including setting climate targets in line with science; establishing and advancing compelling transition plans; providing relevant disclosures in line with the recommendations of the Task Force on Climate-related Financial Disclosures; and preparing for relevant disclosures in line with the imminent International Sustainability Standards Board requirements.

We have developed an internal portfolio carbon analytics and reporting tool, which enables automated calculation, analysis and reporting of our portfolio emissions. This allows us to take the data into account in our investment decisions, as well as to track and manage progress towards our climate targets.

We also formulated a value creation playbook which guides our investment teams to identify and drive Environmental, Social, and Governance (ESG) value creation opportunities across our portfolio. It includes key ESG levers where a company's strategy and operations can be strengthened to increase resilience, improve competitiveness, enhance their access to capital, and position them for new growth opportunities. With our portfolio companies, we proactively promote good governance, ethical business practices, and compliance with all laws, as well as support them in building capacity for sustainability leadership and carbon management.

To address physical climate risk, our ongoing partnership with a leading re-insurance provider provides portfolio companies with a better understanding of their exposure to these risks. This also enables us to have a better grasp of these risks at the portfolio level. In addition, we provide training on carbon measurement and disclosures for relevant operational teams of our portfolio companies.

An example of a portfolio company that we have been working closely with on ESG matters is Rivulis, a global micro-irrigation company. They have implemented measures to reduce the environmental impact of their operations and also launched their first ESG report highlighting progress in areas such as savings for energy and water, as well as carbon emissions reduction, associated with the deployment of its micro-irrigation solutions.

We are encouraged to see the efforts of other portfolio companies in their transition journeys. One such example is Topsoe, which has traditionally been a catalyst and process technology supplier to the refinery and chemicals industries. They now focus on developing decarbonisation technologies in multiple areas including clean hydrogen and chemicals, sustainable aviation fuel, and battery materials.

Targeted Engagement with Selected Portfolio Companies to Accelerate Climate Transition

Beyond engaging our major portfolio companies on their climate transition plans, we also strive to be a convenor and catalyst within the broader ecosystem by collaborating with them on solutions that support decarbonisation.

For example, the next phase of a pilot between Singapore Airlines (SIA), Civil Aviation Authority of Singapore, Temasek, and GenZero saw SIA operating its first flights with blended sustainable aviation fuel. This reflected progress in SIA’s own decarbonisation journey, as well as successfully laid the foundation for the broader aviation community to operationalise uptake of sustainable aviation fuel in Singapore. We are also encouraged to see SIA making efforts on other fronts to achieve their net zero targets. This includes purchasing more fuel-efficient aircraft and operating one of the youngest fleets globally.


Blended Sustainable Aviation Fuel is being loaded onto a Singapore Airlines (SIA) aircraft (Photo: SIA)

Temasek has also been collaborating with Singapore’s national grid operator, SP Group, Tampines Group Representative Constituency, and the Ministry of Sustainability and the Environment on Singapore’s first brownfield district cooling system within Tampines, a residential neighbourhood in Singapore. When the solution is operational in 2025, Tampines town centre will be able to achieve energy savings of more than 2,800,000 kilowatt-hour annually, which can power more than 900 two-bedroom public housing flats for a year, and reduce 1,359 tonnes annually in carbon emissions, equivalent to removing 1,236 cars off our roads.

Dedicated Platforms for Programmatic Engagements

The Temasek Portfolio Companies Sustainability Council brings together the CEOs and Sustainability Leads of our major portfolio companies periodically to share successful sustainability strategies and forge potential collaborations on sustainability initiatives. Over the past year, the focus was on carbon markets and fostering understanding of dependencies and impact on nature against the backdrop of ecosystem degradation. We further reinforced knowledge in this area by convening a nature-focused workshop for our Temasek Portfolio Companies Sustainability Leaders Network in early 2023.