Unlocking Capital for Climate Solutions: Temasek’s $44 Billion Sustainable Living Portfolio

“The climate and nature emergency is real. And it is the race of our lives to tackle it. Fortunately, it is a solvable problem. But it’s on our watch. It’s our generation. It’s our best efforts. And with radical collaboration we can do it.”
These urgent words from Steve Howard, Vice Chairman of Sustainability at Temasek, frame the context for one of the most significant moves in sustainable finance this year. Temasek, a global investment company headquartered in Singapore and Council for Inclusive Capitalism Steering Committee member, has unveiled a ‘sustainable living’ trend-aligned investment portfolio valued at S$44 billion (US$32.6 billion), which focuses on key areas such as food, water, waste, energy, materials, clean transportation, and the built environment.¹
This significant amount, announced as part of Temasek’s annual review and inaugural sustainability report in July, demonstrates how large institutional investors can effectively incorporate inclusive capitalism principles while addressing global climate challenges. While wholly owned by the Singapore Government, Temasek operates independently on commercial principles, managing its assets with full discretion and flexibility. This structure allows Temasek to make strategic, long-term investment decisions that create value for generations, particularly in areas like sustainability where patient capital and a forward-looking approach are crucial.
By leveraging its unique position and substantial resources, Temasek is setting a new benchmark for climate-focused investing, ushering a wave of capital that could help accelerate the global response to climate change.
The Scale of the Challenge
As Lynn Forester de Rothschild, CEO and founder of the Council for Inclusive Capitalism, pointed out at B20 India, “We need to define the problem. It’s not just about greenhouse gases. It’s not just about 1.5 or 2 degrees Celsius. It’s also about how the transition affects people, how it affects the price of energy, how it affects our national security, how it affects workers.”² This view underscores the complex, interconnected nature of the climate crisis.
The enormity of the challenge requires innovative approaches to unlock capital at a magnitude of up to US$7 trillion annually from 2022-2050 for the global economy to transition to net-zero emissions (Figure 1).³ Temasek’s S$44 billion sustainable living trend-aligned portfolio, which included the deployment of S$3 billion in new investments in the past year, represents a significant step towards meeting this global financing need. While substantial, Temasek’s commitment also highlights the gap between current investments and the global need.
Figure 1: The scale of investment needed to achieve net-zero emissions by 2050 compared to a scenario with no new climate policies.

Temasek’s Sustainable Living Trend-Aligned Portfolio
Temasek’s investments span a wide range of innovative companies driving climate solutions. For example, its investment in Mahindra Electric Automobile in India seeks to support the expansion of the company’s electric vehicle portfolio and accelerate the availability and adoption of electric vehicles in India and globally. At the same time, such investments also stimulate job creation in the sustainable transport sector, showcasing how the deployment of capital can drive innovation and economic growth.
Similarly, Temasek’s partnership with Ascend Elements and Electric Hydrogen in the US illustrates how capital can help scale up clean energy technologies. By providing crucial funding to these innovative companies, Temasek is helping to bridge the gap between promising technologies and commercial viability – a key challenge in the clean energy transition.
In the renewable energy sector, Temasek’s investment in Neoen, a French company, demonstrates how cross-border collaborations can accelerate the global transition to clean power. This partnership combines Temasek’s long-term investment horizon with Neoen’s operational expertise in renewable energy projects.
Perhaps most notably, Temasek’s investments in Sembcorp Industries and Topsoe highlight its commitment to supporting the transition of hard-to-abate sectors. These investments demonstrate how engaged shareholders like Temasek can help companies in traditionally high-emitting sectors pivot towards more sustainable practices and business models.
Beyond financial returns, these efforts also enable job creation, foster resilience in local communities, and contribute to global climate goals while supporting the energy transition. They reflect Temasek’s broader commitment to measurable progress and transparency in tackling climate challenges.
Ambitious Goals, Measurable Progress, and a Benchmark for Transparency
Temasek has set ambitious goals to reduce the carbon emissions of its portfolio. By 2030, portfolio’s emissions in half from 2010 levels, and by 2050, its ambition is to achieve net zero emissions (Figure 2). While Temasek is making progress towards these goals, it also expects a non-linear pathway. In the past year, the total greenhouse gas emissions from Temasek’s portfolio dropped by 22%, from 27 million tons to 21 million tons of carbon dioxide equivalent.⁴
Figure 2: Temasek’s Net Zero Pathway

To put this in perspective, a 6-million-ton reduction is roughly equal to the annual emissions of 1.43 million passenger vehicles or the energy use of 782,000 homes for one year.⁵
Temasek also measures how carbon-intensive its investments are relative to the revenue it generates. This metric, called the Portfolio Weighted Average Carbon Intensity, decreased by 21% in the past year.⁴ This means that for every million dollars of revenue its portfolio companies generate, they are now producing 24 tons of carbon emissions less, as compared to last year.
To factor climate-related risks into its investment and operating decisions, Temasek applies an internal carbon price to embed the cost of carbon in its decisions. It recently increased this internal carbon price by 30%, from $50 to $65 for each ton of carbon dioxide equivalent,⁴ with a view that it may be raised to $100 per ton by 2030.⁴ This internal carbon pricing mechanism helps Temasek achieve a greater focus on the long-term climate resilience of its portfolio. With its ambitious climate goals, along with disclosures of its S$44 billion portfolio value of sustainable living trend-aligned investments, Temasek is setting a precedent for new standards for transparency and accountability in the investment sector. This level of detail in sustainability reporting is still rare among large institutional investors.
A Future Vision and a Model for Institutional Investors
Temasek sees sustainability-focused investments as crucial for long-term value creation and plans to continue stepping up in this space.
Rohit Sipahimalani, Chief Investment Officer, emphasizes this shift: “Our exposure to the Sustainable Living trend is steadily growing as we see more innovation and significant opportunities in this space. There is no doubt that if we don’t invest in businesses that are aligned with sustainability principles, it is going to be very difficult to sustain returns because there are no long-term trade-offs between the two.”
Looking ahead, Temasek’s efforts in the sustainability space and its commitment to transparency serve as a model for others and exemplifies how effective collaboration can drive systemic change.
Conclusion
Temasek’s sustainable living trend-aligned portfolio is a powerful demonstration of operationalizing inclusive capitalism. The approach showcases several key tenets of inclusive capitalism:
- Balancing financial returns with positive environmental and social impact
- Transparency in reporting and goal setting
- Intentionally allocating capital to address global challenges
This approach not only amplifies the impact of effective capital deployment but also de-risks sustainable investments for other private sector players, potentially unlocking even more capital for climate solutions.
Temasek’s model illustrates how unlocking capital at scale, in collaboration with global partners, can accelerate innovation, scale solutions, and drive the systemic changes needed to tackle the climate crisis. As we confront urgent global sustainability challenges, Temasek’s approach offers a model for institutional investors worldwide. The Council for Inclusive Capitalism commends Temasek’s bold initiatives and encourages all investors to consider how they can align their portfolios with inclusive capitalism principles.
Footnotes:
¹ As reported in Temasek’s 2024 Sustainability Report: https://www.temasek.com.sg/content/dam/temasek-corporate/sustainability/temasek-sustainability-report-2024.pdf
² The quote from Lynn Forester de Rothschild is taken from her remarks at the 2023 B20 India event, during a panel discussion on ‘Financing the Climate Transition’. The recording can be viewed here: https://www.youtube.com/live/zRvt_fgbQR0
³ This estimate is from BloombergNEF: https://about.bnef.com/blog/the-7-trillion-a-year-needed-to-hit-net-zero-goal/
⁴ As reported in Temasek’s July 9 2024 Media Release: https://www.temasek.com.sg/en/news-and-resources/news-room/news/2024/temasek-review-2024-389-billion-net-portfolio-value
⁵ The comparisons provided are estimated using the US Environmental Protection Agency’s Greenhouse Gas Equivalencies Calculator Calculations & References. These figures are based on US averages and are intended to provide relatable context for the emissions reduction. They are not part of Temasek’s official reporting.