Focusing on Climate Change

As a generational investor, Temasek understands the importance of climate-related financial information in ascertaining the risks associated with climate change to our portfolio. This information guides our efforts to support the transition to a low carbon economy.

We believe that climate-related risks and opportunities can be material for many companies, and we encourage them to make use of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) when assessing climate-related risks and to include relevant information in their annual disclosures.

As an asset owner, active investor and shareholder committed to delivering sustainable value over the long term, we have publicly expressed our support for the recommendations issued by the TCFD and continuously work to enhance our practices and disclosures as well as those of our portfolio companies. We also engage our major portfolio companies regularly on their climate transition plans as part of our effort to achieve a decarbonised and carbon efficient portfolio.

These are Temasek’s climate-related disclosures in the areas of: Governance; Strategy; Risk Management; Metrics & Targets; and Engagement with Our Portfolio & Stakeholders.  


Board Oversight

We operate in a complex global environment influenced by multiple geopolitical and socio-economic forces. Our Board Risk & Sustainability Committee (RSC) was established in January 2022 to enhance focus on opportunities and risks arising from sustainability trends, including climate change, and other financial, reputational, operational and cyber risks.

The RSC supports the Board in its oversight of our sustainability strategy, governance, policies, goals and targets, disclosures, and stakeholder management. The RSC also provides guidance on topical sustainability-related matters. The RSC coordinates with other standing Committees of the Board, such as the Audit Committee (AC) and the Leadership Development & Compensation Committee (LDCC), in its oversight of risk and sustainability matters, where relevant. For the financial year ended 31 March 2023, the RSC met six times during the year.

Senior Management Oversight 

The senior management sets the tone and culture of our institution, leading the delivery of Temasek’s vision and mission. They oversee our team and portfolio with the support of the Senior Management Committee (SMC), Senior Divestment and Investment Committee (SDIC) and Strategy, Portfolio and Risk Committee (SPRC).

a. The SMC reviews and sets overall management and organisational policies. They also developed the Temasek Code of Ethics and Conduct (T-Code) and constituted the Ethics Committee to assist in its implementation. All employees are required to observe and comply with the T-Code.

b. The SDIC takes into account climate-related risks and opportunities as they decide on investments and divestments and make other decisions to manage and shape our portfolio. 

c. The SPRC oversees our ESG policy and the integration of ESG considerations, including climate change, in the firm’s strategy, investment, risk and operational management processes. 

Functional Oversight & Partnership

Our Sustainability Group partners different parts of Temasek and our ecosystem to embed sustainability into everything that we do, as an active investor and shareholder, a forward-looking institution, and a trusted steward.  The group initiatives, develops and implements strategies to address climate change, and deliver a climate resilient net zero portfolio.  It also works with both internal and external stakeholders to catalyse and invest for long-term climate positive impact, collaborate for global progress, and build a sustainable organisation for the future. 

A dedicated ESG Investment Management function supports the integration of sustainability considerations in our investment activities. This function serves as a centre of knowledge for ESG research, data and expertise on specific ESG issues, and supports ESG analysis along the life cycle of our investments.


As a generational investor, we recognise that there is an urgent need for solutions that support sustainable, longer and more fulfilling lives, while protecting the natural environment. We have been investing in structural trends driven by transformational technologies, sustainable living, longer lifespans, and changing consumption patterns as incomes grow, and lives are uplifted. Going forward, we will increasingly reshape our portfolio in line with these trends.

In line with our longer-term portfolio strategy, we assess the impact of climate change on the economy and individual businesses. In this context, we consider two dimensions: 1) physical risk, both chronic (longer-term effects e.g. on productivity) and acute (extreme weather events); and 2) transition risk, which includes the risk of an abrupt devaluation of assets due to regulations that facilitate the shift to a greener economy.

Given the nascent nature of this field and the uncertain path ahead, we adopt a scenario-based approach to ascertain the potential impact of different temperature pathways. In our analysis, we cater for varying responses from corporates, governments and households to mitigate climate-related risk. By doing so, this enhances the dynamism of our approach.

We incorporate the climate scenario analysis, alongside other macroeconomic or geopolitical events, within our Temasek Geometric Expected Return Model (T-GEM), which uses a scenario-based approach to simulate our 20-year long term expected returns.

Our baseline features a climate scenario of Medium Ambition, which assumes an acceleration in global commitment towards mitigation efforts by 2025 that limits warming to around 1.8°c from pre-industrial levels. More specifically, this scenario references the Inevitable Policy Response’s Forecast Policy Scenario (IPR FPS), a high conviction policy-based forecast that takes into consideration various key factors such as political readiness and societal momentum of countries.  

Given the inherent uncertainty around the trajectory of the global geopolitical, macroeconomic backdrop and returns, in T-GEM we simulate our 20-year expected returns under different alternate scenarios. We model two alternate climate scenarios:

  1. Low Ambition, with zero transition impact upfront but high physical costs expected in the longer-term as a result, referencing the Network for Greening the Financial System (NGFS) Hot House World scenario with 90th percentile physical damages;
  2. High Ambition, with much higher near-term transition costs but as a result sees lower longer-term physical costs relative to the baseline, referencing the NGFS Net Zero scenario.

We expect this to be an iterative process as we gain further insights into climate science, regulatory developments and actions from various key stakeholders. Therefore, we seek to evolve and enhance our analysis moving forward, refreshing our scenarios and gaining insights through regular engagement with leading experts in this field. 

The table below summarises the scenarios:

Name Scenario Description Temperature increase (by 2100)
Low Ambition NGFS Hot House World

Low transition costs, high physical costs

  • Assumes no further climate mitigation efforts from 2022 onwards
  • At the same time, greater climate sensitivities than initially assumed in climate models result in a worse temperature outcome
Medium Ambition IPR FPS

Medium transition costs and physical costs

  • Significant acceleration in policy by 2025
  • Lower physical costs but with higher transition costs upfront as a result
  • Based on a high conviction forecast of likely policy developments taking into consideration institutional, political and technological readiness and societal momentum across economies
High Ambition NGFS Net Zero High transition costs, low physical costs
  • Much greater levels of global effort in climate change mitigation (long-term positive impact)
  • Global warming limited to 1.5°C with net zero emissions achieved around 2050 through immediate enactment of stringent climate policies & green innovation 

For more information on the simulated impact of the Climate Change Scenarios on our portfolio, please see 20-year Returns Outlook.

Risk Management

There are inherent risks whenever we invest, divest, or hold our assets, and wherever we operate. Therefore, identification, assessment and management of climate-related risks form an integral part of overall risk assessment for new investments that we make, and across our portfolio. 

As part of our ESG integration framework, climate analysis is mandatory for all new investments that are evaluated by our Investment Committee. It examines climate impact from several perspectives: 

  • Potential investee company’s contribution to climate change through its carbon footprint; 
  • Effects of climate change, including physical and transition risks; and
  • Any potential new opportunities arising from technology innovations as well as evolving customer needs. 

We also apply an internal carbon price, currently US$50 per tonne of carbon dioxide equivalent (tCO2e) in our investment evaluations to account for the potential exposure of an investment to transition risk. An initial carbon price of US$42 per tCO2e was set in 2021, and subsequently raised to US$50 per tCO2e in 2022, with the aim to increase it to US$100 per tCO2e by 2030.

Depending on the size or risk significance, investment proposals may be escalated to our Executive Committee or Board for a final decision. Functional teams, including the Sustainability Group, ESG Investment Management and Risk Management Unit, provide additional specialist perspectives to SDIC and to the Executive Committee or Board.

For the success of our portfolio over the long term, we continuously track and manage climate-related risks to our portfolio. We conduct top-down and bottom-up assessment of the portfolio using models that incorporate transition and physical climate risks. We extend deeper analysis for portfolio companies that obtain higher climate risk scores, ensuring that the company has plans to mitigate or transfer these risks. We also monitor the underlying emissions footprint of our portfolio companies towards our 2030 target. We periodically update our Senior Management and our Board on the portfolio emissions footprint and the exposure to climate-related risks and opportunities.

To read more on our Risk Management approach, please see Managing Risk.


Metrics & Targets

The climate-related risks and opportunities associated with our business as an investment company can be divided into i) emissions attributable to our operations (Scope 1, Scope 2 and Scope 3, excluding our investment portfolio); and ii) emissions attributable to our portfolio.


i) Emissions Attributable to Our Operations

We set and achieved our target of carbon neutrality as a company in 2020, and have maintained this status.

Five-Year Environmental Footprint

1 tCO2e refers to tonnes of carbon dioxide equivalent, a standard unit of measurement used in greenhouse gas emissions accounting and reporting.
(for year ended 31 March)

We measure total emissions as well as carbon intensity (carbon emissions / employees) from our operations, and we aim to reduce emissions both in absolute and relative terms. With respect to the risks and opportunities in the context of our operations, electricity consumption across our offices and business travel activities constitute a significant part of our emissions. Over the longer term, we will continue to explore opportunities to source electricity from renewable energy sources, review the need for business travel closely, as well as leverage technology such as teleconferencing as we seek to reduce our emissions footprint. Our residual emissions are offset through purchase and retirement of carbon credits from voluntary carbon markets. 

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


ii) Emissions Attributable to Our Portfolio

With respect to our portfolio, we target to reduce the net carbon emissions to half the 2010 levels by 2030, with the ambition to achieve net zero carbon emissions by 2050.

Towards Net Zero

1  tCO2e refers to tonnes of carbon dioxide equivalent, a standard unit of measurement used in greenhouse gas emissions accounting and reporting.
2 Total Portfolio Emissions reflect the absolute emissions (Scope 1 and Scope 2) associated with our portfolio, expressed in tCO2e. Our investment positions in private equity funds, credit, and other assets are excluded.
3 Negative emissions acquired through investments and high quality carbon offsets.
(for year ending 31 March)

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

We use the following portfolio emission metrics in line with international standards, such as the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) for Asset Owners as well as the Greenhouse Gas (GHG) Protocols:

Metric Description

Total Portfolio Emissions

(in tCO2e)

The absolute GHG emissions (Scope 1 and Scope 2) associated with our portfolio, expressed in tCO2e

Portfolio Carbon Intensity

(in tCO2e/S$M portfolio value)

The GHG emissions associated with our portfolio normalised by the market value of the portfolio, expressed in tCO2e/S$M portfolio value

Portfolio Weighted Average Carbon Intensity

(in tCO2e/S$M revenue)

The sum of each asset’s carbon intensity (tCO2e/S$M revenue) multiplied by the weight of that asset in the portfolio (the market value of that asset relative to the market value of the portfolio), expressed in tCO2e/S$M revenue


Our portfolio emissions encompass Temasek’s direct investments in public and private equities. Our investment positions in private equity funds, credit and other assets are excluded.

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 our portfolio emissions based on our proportionate shares (i.e. ownership interests) in the assets.

We adopt the following hierarchy in data sources as we establish our portfolio emissions. The hierarchy takes into account data availability and timeliness of reported data, using company reported data where available:

1. Company reported data: GHG emissions data that is reported by the company, either directly to Temasek or made available through S&P Global Sustainable1.

2. Company-specific estimates: GHG emissions for each company modelled or 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 case industry averages do not provide a meaningful proxy for the company, carbon intensity or efficiency data of the company or its comparable peers may be used instead.

PricewaterhouseCoopers LLP, an independent third party, has undertaken a limited assurance engagement on the selected portfolio emission metrics for financial year ended 31 March 2023. Their assurance report can be found here.

Engagement with Our Portfolio & Stakeholders

As an asset owner, the success of our companies underpins our own success. Investment stewardship builds resilience and value, with sustainability as a value creation lever.

Our long-term investment horizon, which can span decades, puts us in a unique position to support companies to become more sustainable and adopt carbon abatement strategies. 

Our portfolio engagement framework helps us prioritise and target our engagement efforts with companies where we see the highest potential for impact. Please click here for more details on our portfolio engagement efforts. 

Governments, corporations, multilateral agencies, financiers, and investors must work together to define transition roadmaps and drive adoption of new solutions, due to the urgency, scale, and cross-disciplinary nature of the necessary transitions.

We have a role to play and we continue to catalyse solutions and advocate change by adding our voice to international platforms and networks that share our vision of achieving an abc World of active and productive economies, beautiful and inclusive societies, and a clean, cool Earth. For details on our collaborations and partnerships, please click here


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