Focusing on Climate Change

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.

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


Climate-related considerations are embedded in Temasek’s governance structures.

Our Board has oversight of financial and systemic risks arising from climate change which can impact the value of our portfolio over the long term and the well-being of our institution, and approves our Environmental, Social and Governance (ESG) policy.

Our Strategy, Portfolio and Risk Committee (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.

Our Senior Divestment and Investment Committee (SDIC) takes into account climate-related risks and opportunities as they make decisions to manage and shape our portfolio.

Management periodically updates SPRC and the Board on the climate-related risk exposure of our portfolio and seek their endorsement for our climate-related strategies.


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 are in the process of better understanding 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 is 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 response 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.

We use a Medium Ambition climate scenario in our baseline, which assumes all countries follow through with the key commitments adopted in the Paris Agreement. More specifically, we apply the Shared Socioeconomic Pathway 2 (SSP2) with RCP (Representative Concentration Pathway) 4.5.

Given the inherent uncertainty of the global trajectory and returns, in T-GEM, we simulate our 20-year expected returns under different alternate scenarios. We model two alternate scenarios: 1) one of Low Ambition, with zero transition impact but high physical costs expected in the longer term; and 2) one of High Ambition, with much higher nearer term transition costs to avert or reduce the longer term physical costs.

The table below summarises the scenarios:




Temperature increase
(by 2100)

Low Ambition


Business as usual (BAU) scenario reflecting only existing climate policies and predicted technology cost trends, with no further policy changes.


Medium Ambition


Assumes immediate policy action with gradual adaptation and relatively less disruption; full availability of carbon dioxide removal technologies is also assumed.

2.0 - 2.2°C

High Ambition

SSP2-26, FPS

Incorporates likely effects of more ambitious climate policies to limit global warming below 2°C, which involves much greater near-term transition costs and a reliance on negative emissions technologies.


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, through regular engagement with leading experts in this field.

Risk Management

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. Over the long term, an understanding of climate-related risks will be embedded in our systems and processes.

The consideration of ESG-related risks, including climate risks, both transition and physical, is part of our overall investment analysis and is taken into account by the SDIC when it makes investment decisions. For example, we include a current internal carbon price of US$42 per tonne of carbon dioxide equivalent (tCO2e ), to assess the possible climate transition impact and to further guide our investment decisions.

Depending on the size or risk significance, these proposals may be escalated to our Executive Committee or Board for a final decision. Functional teams, including the Sustainability team 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, including at the individual asset level. We periodically update our overall ESG / climate-related risk exposure of our portfolio to Senior Management and our Board.

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, 2 and part of Scope 3); and ii) emissions attributable to our portfolio (Part of Scope 3).


i) Emissions Attributable to Our Operations

We had set and achieved our target of carbon neutrality for our company two years ago and have maintained this status through the purchase and retirement of carbon credits from the voluntary carbon markets.

Annual Environmental Footprint

1 tCO2e refers to tonnes of carbon dioxide equivalent, a standard unit used in greenhouse gas emissions accounting and reporting.
Prior to 2021, recorded Scope 3 indirect emissions only included data from business travel, corporate events and other sources. The emissions from waste generated only includes data from 1 January 2021.

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. In the longer term, we are exploring opportunities to source electricity from renewable energy sources. Unavoidable emissions are offset through purchase and retirement of carbon credits from voluntary carbon markets

For a detailed breakdown, please click here to view our emissions table.


ii) Emissions Attributable to Our Portfolio

With respect to our portfolio, we have committed to reducing the net carbon emissions to half the 2010 levels by 2030. We also signalled our ambitions for net zero carbon emissions by 2050.

Towards Net Zero

1 tCO2e refers to tonnes of carbon dioxide equivalent, a standard unit used in greenhouse gas emissions accounting and reporting.
2 The 2010 baseline (as reflected in FY2011) has been revised to 22 million tCO2e as more refined company-level data sets and sub industry-level proxies have become available. Our 2030 target (to be reported on in FY2031) is 11 million tCO2e, reflecting half of our 2010 baseline.
3 Our total portfolio emissions refer to the absolute greenhouse gas emissions (Scope 1 and Scope 2) associated with our equities portfolio, excluding private equity funds.
4 Negative emissions can comprise compensation (i.e. carbon avoidance) and neutralisation (i.e. carbon removals) acquired through investments and carbon credits.

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


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

Portfolio Carbon Intensity


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


Our portfolio emissions encompass Temasek’s direct investments in listed and unlisted 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 Trucost Limited
  2. Company-specific estimates: GHG emissions for each company modelled or estimated by Temasek or S&P Global Trucost Limited 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 years ended 31 March 2021, 31 March 2020 and 31 March 2011. Their assurance report can be found here.

Engagement of Our Portfolio & Stakeholders

Climate change, including the identification and proactive management of associated risks and opportunities is one of the focus areas of our external engagement.

We engaged the leadership as well as the operational teams of our Singapore-based portfolio companies on issues relating to climate change, shared knowledge around carbon measurement and expressed our expectation to understand their exposure to climate-related risks and opportunities.

Through our Ecosperity platform, we invite globally leading climate scientists, experts on natural resource management as well as climate-related financial disclosures to provide insights on relevant topics, such as physical climate risks, carbon emissions associated with the food value chain, carbon pricing as well as approaches to carbon offsetting to the broader business community.  

Temasek is also an active participant in local and global dialogues that relate to environmental disclosures and is a member of the Green Finance Industry Task force under the Monetary Authority of Singapore's Financial Centre Advisory Panel, the World Economic Forum (WEF), the Focusing Capital on the Long Term Initiative and the Sustainability Accounting Standards Board (SASB). 


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