As the International Panel on Climate Change warns that the world must act now to mitigate global warming, before it’s too late, nations across the globe are scrambling to reach net-zero targets. While the greater share of investment and initiatives have come out of Europe and the U.S., the Global South, while still nascent, also has a substantial share of opportunities to transition toward net zero.

The Singapore-headquartered investment company Temasek is one player helping to turn the tide on climate financing in the Asia-Pacific region and beyond. Keeping sustainability as a central focus, Temasek is accelerating its climate action to advance the transition to net zero and help reverse nature loss in an inclusive way.

Helping to steer the company’s course toward sustainability is Kyung-Ah Park, head of ESG investment management and managing director of sustainability. For Ms. Park, the idea that financial returns and positive environmental outcomes are mutually exclusive is an outdated one.

“Temasek has been doubling down on its efforts to achieve a net-zero world through both new investments and leaning in with our existing portfolio and businesses,” says Ms. Park. “We have a responsibility to not only do well in generating long-term returns, but also to do good and do right by our wider community and our planet.”

No time but the present

Along with the scientific community, industry has increasingly recognised that the luxury of time in which to take action has vanished. According to U.N. climate experts, in order to limit global warming to a 1.5°C temperature rise, global emissions need to be halved by 2030 and reach net zero by 2050. 

Temasek aims to halve the 2010 levels of net carbon emissions attributable to its portfolio by 2030, with the ambition of achieving net zero by 2050. “Time is our biggest challenge,” says Ms. Park, who stresses the IPCC report’s finding that without immediate and deep emissions reduction across all sectors, limiting global warming to just 1.5°C will be beyond reach. 

In these conditions, urgent and deep emissions reductions are critical, and market-based mechanisms can incentivise least-cost emissions reductions and technological innovations. To that end, Temasek is actively investing in sustainable solutions in food, water, waste, energy, materials, clean transportation and the built environment to spur the development of novel and disruptive decarbonisation technologies with promising potential for scalability. 

As an investment company centered on long-term, sustainable returns, Temasek also places patient capital behind sustainable solutions requiring longer gestation periods so as to deliver innovative solutions at scale. 

Says Ms. Park: “There is a need to speed up the deployment of proven sustainable solutions which are economic today, while also directing capital to next-generation decarbonisation solutions, which will take time to commercialise and become affordable. It will take all the tools in our toolbox to reach net zero, as it requires the transformation of our global economic systems, including hard-to-abate sectors.”

Evidence-based innovation

For the team at Temasek, innovation grounded in science as well as inclusive growth remains at the heart of sustainable development. “To ensure we achieve scale as soon as viable, the industry needs to rally around science and technology,” says Ms. Park. “However, this must be done in an inclusive manner. Nature-based solutions, which protect and restore natural ecosystems, have the potential to benefit not just the climate, but also biodiversity and the community.”

To date, Temasek has founded the investment platform GenZero to accelerate decarbonisation globally through investing in nature- and technology-based solutions as well as carbon ecosystem enablers, and established Decarbonization Partners together with BlackRock to invest in the scaling-up of proven next-generation decarbonisation solutions to reduce and eliminate carbon emissions. The company has also spurred the development of carbon-negative solutions, for example, by funding research led by the National University of Singapore’s (NUS) Centre for Nature-Based Climate Solutions to understand how marine carbon storage, or blue carbon, can mitigate climate change in Southeast Asia.

One of Temasek’s key investment focus areas is climate-aligned opportunities. From novel technology to extend the shelf life of fresh produce to carbon-sequestering cement and green hydrogen as fuel, the firm’s portfolio is expanding to include companies generating game-changing sustainable technologies and solutions. One example is its investment in an Indonesia-based agritech start-up that uses technology to sustainably increase farmers’ production capacity, contributing to food security and better livelihoods for communities.

Having focused over the past 15 years on financial solutions to address climate change, Ms. Park is more optimistic than ever about the technologies currently powering the climate transition. The market, she says, is pulsing with solutions: “Technology is leapfrogging, with our investments helping transform and transition the industries that our portfolio companies are operating in.”

Scale of the challenge

The task of achieving net-zero portfolio emissions by 2050 is a daunting one. It extends beyond Temasek’s commitment to investing in climate-aligned opportunities and enabling carbon-negative solutions.

It also requires the company to engage and encourage decarbonisation efforts in its existing portfolio. Temasek is not shying away from the challenge, even if it means working to decarbonise traditional hard-to-abate sectors like heavy industry and transportation.

One notable example is Temasek’s partnership with Singapore Airlines, one of its major portfolio companies, and the Civil Aviation Authority of Singapore to advance the use of sustainable aviation fuel (SAF) at Changi Airport, which has laid the foundation for the broader aviation community to put SAF into use in Singapore.

Temasek holds that industry can no longer take a linear approach. Rather, the key to effecting meaningful change is to bring together relevant stakeholders and facilitate capital to support pilots and scale decarbonisation innovations across the ecosystem.

“Governments, businesses, investors and individuals all need to work together to tackle the climate crisis,” Ms. Park says. “We can change the trajectory of our collective future if we take the right actions today and work together to bring systems change.”

At such a critical juncture, Temasek is committed to catalysing the transition to a cleaner, more sustainable and better world, as it forges ahead in the ever-more-urgent effort to decarbonise.