It was a bold move, Rohit Sipahimalani admits, a joint venture with an explicit mandate to scale transformative climate technologies. But it was one that would drive critical climate action, with an impact beyond what either partner could achieve alone, while generating long-term returns for both.

“We each brought something different to the table,” says Temasek’s Chief Investment Officer. “BlackRock has fundraising expertise and extensive data insights, while Temasek has deep experience in growth investing and has invested in climate tech.”

Decarbonization Partners, designed as an early-growth private equity platform, would harness the partners’ complementary strengths to make strides in climate-focused tech, and accelerate the transition to a sustainable economy.

Strategic partnerships like Decarbonization Partners are a key element of Temasek’s growth strategy, says Rohit, who plays an instrumental role in advancing these partnerships. “It allows us to focus on our strengths while leveraging the specialised expertise of our partners.”

Temasek and BlackRock collectively committed US$600 million in seed capital across two funds, and to raising additional funds from third-party investors, with a US$1 billion target for the first funding round. By the time the funding round wrapped up in April 2024, they had surpassed this target, securing US$1.4 billion – funds that would back high-impact growth stage investments, from clean energy to green transport.

Charting a collective course

Rohit first encountered Temasek as an investment banker with Morgan Stanley, where he worked closely with its investment teams on several deals. A strong working relationship led him to make the move to Temasek in 2008 to lead its global Telecommunications, Media, and Technology (TMT) portfolio. “Temasek was entrepreneurial and dynamic, and I knew that it would be an exciting place to work,” he says. “I also knew the people; I had worked with a lot of them, and I liked them.”

Just over a year after joining, he found himself part of a team helping to shape T2020, the company’s strategic vision for the following decade. “Then, it was about doing more in technology and life sciences,” he says. It ultimately drove Temasek’s global expansion, particularly in the US, where there was strong potential for growth in these sectors.

The following decade would see him take on leadership roles across multiple sectors, including energy and resources, and in key regions, including India and Southeast Asia.

Fast forward to 2016, and Rohit once again found himself in a position to shape Temasek’s long-term strategy, this time in his role as co-head of the newly-established Portfolio Strategy and Risk Group (PSRG). Established that year, PSRG was tasked with looking at Temasek’s portfolio from a top-down perspective, and allocating capital to areas that would help the portfolio achieve long-term, sustainable returns.

“One of the trends we identified was sustainable living, a critical necessity in a resource-constrained world – we needed to deploy more capital toward it,” he says.

“Various investment teams were already engaging with sustainability from diverse angles – country-level, sector-specific, and innovation- or technology-focused. However, we realised that we needed to focus on specific areas we could effectively scale up.”

Soon after, Temasek embarked on a journey to redefine its purpose in a changing world, landing on So Every Generation Prospers. “Climate action was an area we rallied behind,” says Rohit. “The question was, what were we going to do about it? We felt that it was essential for us as an organisation to walk the talk.”

Recognising the limits of what could be achieved independently, Temasek looked to form partnerships with companies that shared its commitment but brought complementary strengths to the table.

BlackRock, which was pushing the boundaries of sustainability, was a natural fit. “We had made a significant investment in BlackRock back in 2020, and were in ongoing discussions on how we could collaborate,” says Rohit. “The idea to join forces emerged, focusing on companies that had proven technologies but needed capital to scale.”

It was an interesting process, he recalls, not least figuring out how to set up Decarbonization Partners in a way that would allow it to leverage the respective strengths of each company, yet operate without direct influence from either. “We learned, and it guided how we worked moving forward,” says Rohit.

Temasek’s collaboration with BlackRock not only marked a significant step in sustainable investment, it set a benchmark for how partnerships can drive impactful action, he says. “It shaped the way we think about partnerships and the value they can bring.”

Beyond accelerating decarbonisation, it creates a pipeline of opportunities that align with Temasek’s broader sustainability goals. “As the companies grow, there’s potential for larger investments down the line.”

Profit, with purpose

Over the last few years, Temasek has entered into more partnerships, including with HSBC to finance marginally bankable energy transition projects, and DBS to provide growth debt that bridges the gap between venture debt and equity funding.

“Effective partnerships come down to three things,” says Rohit. “First, they bring in skills we don’t have internally. Second, they create a focused effort that aligns with our strategic priorities. And third, there’s a shared commitment – both sides are fully invested in achieving the best outcome.”

This goes beyond generating returns to positively impacting communities. “We use our capital to catalyse change – whether by advocating for climate action or filling a gap in the market that can accelerate growth for businesses.”

Good business and positive impact go hand in hand, he says, adding that Temasek’s focus on delivering more than financial returns resonates not just with communities, but also potential employers and partners.

“I have always believed what may sometimes appear as conflicting is often not so, depending on your time horizon. In the short term, you might be able to prioritise profits over purpose, but in the long term, it is positive impact that creates resilience and generates sustainable returns.”