Mainstreaming Sustainability

Mainstreaming Sustainability

We incorporate Environmental, Social and Governance considerations into our investment decision-making and management. 

 As part of a holistic investment analysis we carry out ESG analysis alongside the traditional financial analysis.

Our Principles: Do well. Do right. Do good.

At Temasek, we seek to make a difference and to actively shape a better, smarter and more connected world, for today’s and future generations.

Temasek’s DNA is rooted in Singapore’s founding experiences. It shaped our ethos to be financially disciplined; to invest in our people and operate with integrity; to seek growth alongside a clean environment; to foster good governance; and to do the right things today with tomorrow in mind.

We comply with all obligations under Singapore laws and regulations, including those arising from international treaties and UN sanctions. We comply with the laws and regulations of jurisdictions where we have investments or operations. 

As a responsible investor, we are committed to delivering sustainable value over the long term.  Generating sustainable returns over the long term depends on stable, well-functioning and well-governed social, environmental and economic systems. 

The decisions we take today, as an asset owner, will impact future generations. Being a responsible investor, we incorporate environmental, social and governance considerations into our investment decision-making and management. 

Businesses have a stake in the well-being of our wider community. They will find it hard to thrive if society fails. Hence, businesses must play their part as stewards of our communities, for our common good, alongside governments and society more generally.

We believe companies that manage Environmental, Social and Governance (ESG) factors effectively, and recognise their importance, are more likely to create sustainable value over the long term.  

While Temasek does not play a day-to-day management role in the companies in which we invest, we expect them to adopt a mindset of continuous improvement; to apply industry best practices in managing relevant ESG factors for their businesses; and to deal openly and honestly with controversial issues, incidents and lapses, if they occur. 

Our Investment Approach: Creating Sustainable Value over the Long Term

As we carry out our investment analysis, we work to understand how sustainability-related factors impact a company’s long term ability to generate sustainable returns and its standing in the community.

Our teams employ a broad-based research approach to assess company-level ESG information, as well as relevant industry, thematic and macro sustainability considerations. 

How we carry out our ESG due diligence will be determined by factors such as sector, activity, location of company operations, and company track record. No two companies are the same, and our consideration process will take account of differences.

We make use of relevant data sources and tools to enable robust ESG analysis and decision-making. 

Findings from the ESG assessment are a key consideration in investment decision-making, alongside commercial considerations. 

We continuously evolve ESG integration efforts across our investment process, especially by applying learnings from our own experiences, as well as those elsewhere. 

We recognise that perfection will be near impossible to achieve, so we look at how a company has been demonstrating its commitment, over time, to improvement, accountability and change. We also look at how our investment can serve as a catalyst for change.

We believe that economic prosperity must go hand-in-hand with ecological sustainability and societal progress. We call this concept Ecosperity

Achieving a balance sometimes surfaces tension between different laudable sustainability objectives.  In the right circumstances, we may need to understand where the right balance is, rather than choosing one over the other.  We expect companies in which we invest to consider these questions carefully and thoroughly, just as we consider them when making investment decisions. 

Our Stewardship Practices: Inspiring Best Practices and Continuous Improvements across our Portfolio

We work to understand the impact of our investee companies. 

While we don’t manage the day-to-day business decisions of our investee companies, as an owner, we engage and encourage them to adopt policies and practices that safeguard and enhance long term performance, including ESG-related areas critical to their businesses. 

As part of our portfolio stewardship activities, we monitor relevant ESG factors in our investee companies throughout the life cycle of the investment, to understand changes in a company’s ESG position.  

We engage our investee companies through their boards and management teams, when we have perspectives to share. Temasek values these engagements and conducts them thoughtfully on the basis of factual evidence.

Ultimately, a company’s board is accountable to its shareholders for its total performance: business growth and other economic factors, as well as environmental, social and governance issues.  

As an active investor and shareholder, we exercise our shareholder rights fully. 

Temasek seeks to identify sustainability-related issues that are of relevance across our portfolio, regardless of industry or geography. On such portfolio level issues, we may take steps to share insights on trends, best practices and opportunities, or articulate our expectations through engagement with our investee companies.

In our efforts to seek sustainable solutions, we keep abreast of the latest developments and regularly discuss sustainability issues with our stakeholders and partners. We do this through a range of engagement sessions with companies in our portfolio, including our annual Ecosperity conference as well as regular portfolio roundtables. 

Our External Engagement: Collaborating for Progress

We believe that dialogue and robust exchanges of information, best practices and ideas between stakeholders from the public and private sectors are critical enablers of sustainable growth.

We support the United Nations Sustainable Development Goals. We foster dialogues and spur innovative solutions to build an abc World of active economies, beautiful societies and a clean Earth, for our common good.

We actively participated, in support of the International Monetary Fund, in the development of best practices for responsible investing under the Santiago Principles for sovereign investments. Temasek exceeds the applicable standards of disclosure and other guidelines under the Santiago Principles. 

We continue to advocate good governance. We share perspectives on governance and ethics with our investee companies, and expect them to stay abreast of changing regulations affecting the way they do business in markets all over the world. 

In the area of ESG and sustainable finance, we take part in domestic and international discussions about definitions, priorities, standards and best practices. We work with other investors and companies to encourage a longer term focus in business and investment decision-making. We participate in the development of practical tools and approaches to support long term behaviours across the investment value chain.

We also monitor sustainability-related trends that may impact our portfolio and our investment activities, such as climate change.  

Our ESG System: Evolving our Thinking

To support the work of our investment teams, Temasek has established a dedicated ESG function. This function serves as a centre of knowledge for ESG research, data and expertise on specific ESG issues, supported by external advisers as required. This function also supports ESG analysis along the life cycle of our investments.

We provide regular ESG training to our investment teams, to raise awareness of critical sustainability themes and help them proactively identify ESG issues during the normal course of their investment origination and relationship building activities with investee or potential investee companies. 

The link between business, environment and society, as well as related stakeholder expectations, is continuously evolving. Therefore, we continue to monitor relevant trends and developments in order to keep our ESG thinking current. As our thinking evolves, we will review this statement from time to time.


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