Temasek Holdings will set aside $100 million from its community gifts as concessional capital to support climate action initiatives, announced Temasek chairman Lim Boon Heng on Sept 23 at the investment firm’s 50th anniversary dinner.
The commitment, named Concessional Capital for Climate Action (CCCA), marks the first time Temasek is contributing concessional capital towards the green transition.
“Through CCCA, Temasek hopes to mobilise other forms of capital across the broader climate ecosystem which can help finance marginally bankable projects, and hence amplify the impact of its giving activities in support of its community objective of protecting the planet,” reads a Sept 23 announcement.
Since 2003, Temasek has been setting aside a portion of its net positive returns above its risk-adjusted cost of capital for gifts that meet the firm’s objectives of “connecting people, uplifting communities, protecting the planet and advancing capabilities”.
However, the pace and scale of climate action is still “insufficient”, says Temasek. “With the annual global climate financing gap for developing countries expected to increase double fold by 2030, there is a clear and urgent need for more resources to be channelled towards climate action.”
In addition, the plans to decarbonise, particularly in regions such as Southeast Asia, would require the scale of “catalytic financing” of which “innovative financial mechanisms” such as blended finance could accelerate the transition, according to Temasek.
See also: Singapore announces Asia-focused blended finance initiative Fast-P with US$5 bil target fund size
With this in mind, CCCA aims to support climate action initiatives by providing financing to address these market barriers. CCCA will also help to drive the green transition and open pathways towards keeping to the 1.5°C threshold.
According to Temasek, CCCA’s success would be measured by its ability to “scale positive outcomes in climate action”, which includes the ability to encourage sustainable living choices, promote biodiversity and avoid, mitigate and adapt to the impact of climate change.
While Temasek did not specify the beneficiaries of the sum, the firm says examples of potential projects “include marginally bankable clean infrastructure projects in Asia”.
See also: A US$12 bil climate fund is readying a rare bond issuance
“Climate change is the defining crisis of our time,” says Lim. “At Temasek, we have been investing in sustainability across the years, and have deployed commercial capital to scale innovation for the green transition.”
He adds: “At the same time, we see the criticality of concessional capital to catalyse financing into emerging markets and developing economies. Blended finance initiatives like the Monetary Authority of Singapore’s Financing Asia’s Transition Partnership (Fast-P) are key in lining up long term investors and philanthropic entities alongside commercial investors for this purpose.”
Singapore announced the Asia-focused blended finance initiative Fast-P in December 2023 with a US$5 billion ($6.46 billion) target fund size for green and transition projects.
Speaking at COP28 in Abu Dhabi, Senior Minister Teo Chee Hean said the government is prepared to contribute “catalytic capital” in support of the partnership, which aims to attract commercial capital from a “range of partners”, including multilateral development banks and philanthropists.
In June, Temasek contributed a $150 million community gift — named “T-Spring” — which will be deployed via initiatives in workforce skills development, scholarships and fellowships to upskill at-risk workers and cultivate a strong talent pipeline.
Book launch
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Temasek launched a commemorative book charting its 50 years. Photo: Temasek
Prime Minister and Minister for Finance Lawrence Wong was the guest of honour at the Sept 23 dinner, which was attended by more than 600 guests.
These included representatives from the board and C-suite executives from its local and global portfolio companies, as well as Singapore cabinet ministers and government and business leaders from Singapore and around the world. Past and present Temasek Board members and senior management also joined the dinner held at the Shangri-La Singapore.
Temasek also launched a commemorative book charting its half a century of history. Titled “By Generations, For Generations: Fifty Years of Temasek As Told By The People Who Shaped It’’, it is Temasek’s first and only official book chronicling the events and milestones of the company.
Written by former Straits Times journalist Ong Soh Chin, the book is not for sale. PDF copies can be downloaded for free by visiting www.StoryOf.Temasek.
