Highlights

• Temasek is committing S$100m to Concessional Capital for Climate Action (CCCA) to boost climate initiatives.
• CCCA will fill financing gaps in developing countries and support sustainable projects in Asia.
• Temasek’s community and climate investments are key to its sustainability and social impact agenda.

Mr. Lim Boon Heng, Temasek Chairman, announced the S$100m CCCA allocation at Temasek’s 50th-anniversary celebrations recently.

Temasek’s Concessional Capital for Climate Action

While they have made progress on climate in the last year, it is not enough. The global climate financing gap for developing countries is expected to double by 2030 and we need more resources for climate initiatives.

Asia is key to net zero as it has over 50% of the world’s population and 50% of global emissions. However, the region has its own set of challenges that slow down progress towards sustainability.

In Southeast Asia, decarbonisation plans must happen alongside new industries. This requires innovative financing solutions. By using blended finance, Temasek can reduce market risks and lower the cost of capital so the transition is more economically viable.

CCCA will support climate initiatives by providing flexible, patient and concessionary financing to address existing market gaps. This funding will enable the green transition and create pathways to 1.5 degrees and attract more commercial and concessional capital to projects that may not have funding otherwise.

The S$100m for CCCA comes from Temasek’s community contributions, which focus on creating lasting impact aligned with community goals. Since 2003, Temasek has committed a portion of its net positive returns above its risk-adjusted cost of capital to initiatives that connect people, uplift communities, protect the planet and enhance capabilities. These philanthropic efforts are to catalyse further investment.

CCCA’s effectiveness will be measured by its outcomes in climate action. This includes strategies to avoid, mitigate and adapt to climate change impacts, conserve biodiversity and promote sustainable living practices that benefit people and the environment. Projects funded by CCCA may include marginally bankable clean infrastructure in Asia.

A New Kind of Philanthropy

CCCA is a new way for Temasek to deploy philanthropic capital, beyond traditional grant-making. This is the first time Temasek is committing concessional capital to the green transition. Through CCCA, Temasek will mobilise various forms of capital across the climate ecosystem to finance projects that may not be funded otherwise.

Mr. Lim Boon Heng said:

“Climate change is the crisis of our time. Temasek has invested in sustainability and deployed commercial capital to support innovations that drive the green transition. But we know that concessional capital is important to spur financing in emerging markets and developing economies. Initiatives like the Monetary Authority of Singapore’s Financing Asia’s Transition Partnership (FAST-P) are key to aligning long-term investors, philanthropic entities and commercial investors.”

Through CCCA, we want to treat concessional capital as an asset class to mobilise diverse capital to bridge the climate financing gap. We look forward to working with organisations that share our vision for prosperity for current and future generations.”

Temasek’s Climate Finance

Sustainability is core to Temasek’s business, guiding its long-term strategy, portfolio management and engagement with portfolio companies to drive sustainable practices. The move to a sustainable economy presents new investment opportunities that balance returns with impact.

As of 31 March 2024, Temasek’s portfolio value for sustainable living investments was S$44b, which includes S$38b for sustainability-focused investments and S$6b for climate transition initiatives. Temasek is actively investing in emerging sectors related to food, water, waste, energy, materials, clean transportation and infrastructure.

Temasek works with like-minded partners to drive systemic change on sustainability. Through partnerships and dedicated investment platforms, Temasek seeks to deploy financial capital across growth and maturity stages.

Mobilising Capital for Green Growth

Temasek is committed to mobilising capital to invest in projects that drive sustainable and inclusive growth across different stages of technological and commercial maturity:

• BEV Select Fund (Venture Stage): Invested in the Select Fund under Breakthrough Energy Ventures to support late-stage clean technology startups and new facilities in key Asian markets.
• Decarbonization Partners (Growth Stage): In partnership with BlackRock, Temasek established Decarbonization Partners to focus on late-stage venture capital and early-stage growth equity in clean energy and circular economy technologies.
• Partnerships with Brookfield (Late Growth and Established Stage): Invested in Brookfield Global Transition Funds to drive clean energy production and decarbonisation solutions for carbon-intensive industries.
• GenZero (Late-Venture and Late Growth Stage): The company has created GenZero, an investment platform to accelerate global decarbonisation through nature-based and technology-based solutions, including land restoration in Ghana and sustainable aviation fuel technologies.
• LeapFrog Investments: Committed to the LeapFrog Climate Fund, which focuses on green technologies, including electric vehicles and smart farming solutions in the energy and agriculture sectors.

Increasing Bankability of Sustainable Projects in Asia

Temasek is also working to increase the bankability of sustainable projects through strategic initiatives:

• Pentagreen Capital: A joint venture with HSBC to provide debt financing to accelerate sustainable infrastructure development in Asia.
• Green Investments Partnership: In partnership with Allied Climate Partners, IFC and MAS, the company established this partnership to increase the bankability of green projects, part of the MAS’s Financing Asia’s Transition Partnership (FAST-P).

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Source: Temasek