Portfolio Metrics and Targets

We target to reduce the net carbon emissions attributable to our portfolio to half the 2010 levels by 2030, as we aim for net zero portfolio emissions by 2050¹. 

This target was set in 2020 with reference to the Intergovernmental Panel on Climate Change Special Report (IPCC SR1.5), which detailed the science-based pathways to limit global warming to 1.5°C, in alignment with the Paris Agreement.

Tasked with supporting the Board in overseeing our sustainability goals and targets, the Board Risk & Sustainability Committee (RSC) is responsible for reviewing the appropriateness of our emissions target and providing guidance where needed.

Whilst our target has not been independently verified, we keep abreast of and regularly evaluate methodologies and best practices in target setting to ensure that the target underpinning our net zero commitment remains ambitious and current.

As an asset owner, the achievement of our net zero target depends on the decarbonisation outcomes of our portfolio companies. It is therefore essential that our portfolio companies have their own targets in place alongside credible net zero transition plans. 

In recent years, we have made significant progress on decarbonising our portfolio, driven by the efforts of our portfolio companies, as well as our internal carbon price which embeds the cost of carbon in our investment decisions. Nonetheless, we recognise that achieving our target remains challenging given the concentration of portfolio emissions from companies in the hard-to-abate sectors. The solutions to drive the significant emissions reductions required in these sectors have yet to be commercialised and scaled. Ultimately, systems-level changes are required to enable us to reach net zero. 

¹  The target is based on Total Carbon Emissions (tCO₂e) as defined within the Task Force on Climate-related Financial Disclosures (TCFD) Supplemental Guidance for the Financial Sector. It reflects the absolute GHG emissions (Scope 1 and Scope 2) associated with our investment portfolio, expressed in tonnes of carbon dioxide equivalent (tCO₂e.). Our investment positions in private equity funds, credit, and other assets are excluded. Due to the nature of our business as an asset owner and the diversified makeup of our portfolio, our emissions target does not disaggregate between the different GHGs. Instead, we quantify all emissions using tCO₂e.

Our portfolio climate target was set to track our progress towards net zero. Metrics reflecting the absolute emissions of portfolio companies allow us to track the carbon reduction efforts attributable to our investment portfolio, which is crucial for understanding our overall impact on climate change. However, we recognise that relying solely on metrics reflecting absolute emissions may not always reflect the full picture of the decarbonisation efforts and achievements of our portfolio. 

Thus, we also monitor intensity-based metrics, which measure carbon emissions relative to a unit of output or economic value, enabling us to:

• account for changes in portfolio size and composition;
• measure efficiency improvements across assets from different sectors and industries;
• provide a complementary lens to metrics reflecting absolute emissions in understanding decarbonisation progress;
• facilitate meaningful comparisons between companies of different sizes or in various growth stages.

By leveraging both types of metrics, we aim to present a more accurate and comprehensive assessment of our climate performance and ensure that we drive meaningful action across our portfolio.

As part of our annual reporting and tracking of progress towards our climate target, we measure and disclose both absolute and intensity-based metrics with reference to the GHG Protocol, as well as recommendations of the TCFD for Asset Owners.

Total Portfolio Emissions encompass Temasek’s direct investments in public and private equities, which account for 77% of our investment portfolio as at 31 March 2025. Our investment positions in private equity funds, credit, and other assets are excluded, given current limitations in the availability of data. The portfolio emissions reported include Scope 1 and Scope 2 emissions of the underlying companies based on the latest available data sets.

We use a combination of company-reported emissions data and modelling approaches to establish Total Portfolio Emissions based on our proportionate shares (i.e., ownership interests) in the assets. 

We adopt the following hierarchy in data sources, taking into account the availability and timeliness of reported data:

• Company-Reported Data: GHG emissions data reported by the company, either directly to Temasek or made available through S&P Global Sustainable1.
• Company-Specific Estimates: GHG emissions for each company estimated by Temasek or S&P Global Sustainable1 using relevant industry-level carbon intensity or carbon efficiency averages as proxies (GHG emissions normalised by revenue/market capitalisation/other relevant operational unit of measurement). In cases where industry averages do not provide a meaningful proxy for the company, carbon intensity or efficiency data of comparable peers may be used instead.

This measurement approach has remained unchanged since the last reporting period.

¹ This metric is also known as Total Carbon Emissions (tCO₂e) within the TCFD Supplemental Guidance for the Financial Sector.

² This metric is also known as Carbon Footprint (tCO₂e/$M invested) within the TCFD Supplemental Guidance for the Financial Sector.

³ This metric is also known as Weighted Average Carbon Intensity (tCO₂e/$M revenue) within the TCFD Supplemental Guidance for the Financial Sector.

The reported Total Portfolio Emissions account for 77% of our investment portfolio as at 31 March 2025. Total Portfolio Emissions and Portfolio Weighted Average Carbon Intensity remained at 21 million tCO₂e and 92 tCO₂e/S$M revenue respectively for the year ended 31 March 2025. Meanwhile, Portfolio Carbon Intensity decreased to 63 tCO₂e/S$M portfolio value, from 73 tCO₂e/S$M portfolio value a year ago. 

The movements in Total Portfolio Emissions during the year were mainly attributable to increase in emissions from Singapore Airlines (SIA), driven by strong demand for air travel and cargo uplift, as well as the refinement and expansion of emissions reporting boundaries of some portfolio companies. This was balanced out by decrease in emissions from Sembcorp Industries, who completed the transfer of its Phu My 3 Power Plant to the Vietnam Electricity, decarbonisation efforts of some portfolio companies, as well as changes in portfolio composition.

Towards Net Zero

(for year ending 31 March)

In reporting the progress towards our portfolio climate target, we recognise that our portfolio companies are advancing on their respective climate journeys at different paces, with unique decarbonisation challenges for their industries or businesses. This year, we provided an additional lens on climate emissions metrics, excluding SIA, in recognition that the hard-to-abate aviation sector is committed to the Carbon Offsetting and Reduction Scheme for International Aviation’s baseline requirements and hence follows a different decarbonisation trajectory from the rest of the portfolio. Aviation decarbonisation remains challenging given the high costs associated with scaling up sustainable aviation fuels.

To date, we have not used carbon credits to offset Total Portfolio Emissions. We focus our efforts on engaging portfolio companies on their decarbonisation pathways and supporting the development and introduction of decarbonisation solutions, where relevant and feasible.

The pace of decarbonisation outcomes across our portfolio will differ and will be slower in the hard-to-abate sectors, where relevant decarbonisation solutions may not be available in the near-term. We therefore expect the trajectory of Total Portfolio Emissions to remain non-linear. This is especially true in the event of climate transition investments that may result in a temporary increase in the Total Portfolio Emissions.

Carbon reporting remains a complex and evolving challenge for many organisations. Absence of uniform market practices, inconsistencies in methodologies, and lack of credible, complete, and comparable data will impact the quality of emissions information reported.

Our reported Total Portfolio Emissions currently cover Scope 1 and Scope 2 emissions of our public and private equity investments. We are beginning to track the material Scope 3 emissions of our in-scope investments. Measuring the 15 categories of Scope 3 emissions across the value chains remains challenging due to data limitations. To address the data gaps, we continue to engage with our portfolio companies, advocating for more comprehensive disclosures of material Scope 3 emissions.

With respect to reporting emissions associated with our investments in private equity funds, data challenges remain, notably: 

• data availability and quality of disclosures across funds and their underlying companies;
• inconsistent reporting standards among companies within each fund;
• difficulties in attributing emissions to underlying companies within the funds;
• delays in emissions reporting;
• potential for double-counting due to complex ownership structures and value chains.

Notwithstanding these ongoing reporting challenges, we remain committed to increasing transparency in our disclosures. We regularly review and refine our methodology and approach to align with prevailing market practices and international reporting standards and frameworks.