Mr Gan Kim Yong, Minister for Trade and Industry,
Distinguished guests,
Ladies and Gentlemen,

Good afternoon,

I thank Global Compact Network Singapore for inviting me to be here today. It is a good opportunity to connect with all of you after so long. It is also good to see a number of familiar old faces.

GCNS aims to drive action to forge a more sustainable future. Similarly, Temasek strives to build a better tomorrow for current and future generations. We place sustainability at the core of everything we do. This underscores that businesses can only thrive when societies thrive.

We have an exciting session ahead, so I’ll keep my remarks short. I want to touch on where we are today on our journey to net zero, and where we can go from here. I’ll also share strategies that Temasek has adopted, and I hope our story will help to spur discussions.

Global Call for Climate Action

By now, we are familiar with the call to decarbonise. Just last year, the IPCC¹ released a report stating that an aggressive reduction in emissions is required to limit global warming to 1.5 degrees Celsius. Exceeding this level will result in severe and irreversible impacts.

I was at Davos just a couple of weeks ago and the message that I got attending one of the sessions was that it’s not enough just to limit what we emit. It is necessary to strive for net negative rather than net zero if we are going to achieve the 1.5 degrees Celsius target. So, a sobering message for all of us.

And for our region, this is especially worrying. In April, Tsinghua University produced a report, with support from Temasek’s Ecosperity platform, which noted that Asia is disproportionately affected by climate change. The region’s GDP could shrink an astonishing 26.5% by 2048 if no action on climate change is taken². For contrast, during 2020, during the peak of COVID lockdowns and before vaccinations became available, the region’s GDP shrank about 1.5%³. So, there’s some perspective! 26.5% versus what we experienced – 1.5%.

It is therefore heartening that many countries and companies have stepped forward to make net zero pledges in recent years. While this is an important first step, some of these targets are more theoretical than concrete. Bridging the gap between intention and reality is not easy and, sometimes, we may not even know where to start.

The Path Ahead

So, I would like to share three strategies we can adopt to translate goals into action. The first is measuring corporate emissions; the second is investing in climate-aligned solutions; and the third is collaborating for progress.

Businesses should start by measuring their corporate emissions. This will provide a reference point for the next steps of their decarbonisation journey.

I think people who attend this three-day conference largely are better informed and probably know better what to do. But the many companies that we have here in Singapore out there don’t attend these conferences and don’t know where to start, and don’t know what measuring your carbon footprint really means.

It can be tricky – less than 10% of companies accurately estimate their emission levels⁴. Calculating Scope 1 and Scope 2 emissions already poses technical challenges. But for many of us, Scope 3 emissions form the bulk of our carbon footprint. Mr Nixon⁵ here can share with you, because he said earlier today, that he accounts for a lot of our Scope 3 emissions. Now this adds an additional layer of complexity since these emissions sit outside the direct control of our businesses.

Increasingly, the use of AI and machine learning can help businesses overcome some of these difficulties. Smart software will enable companies to analyse their emissions data accurately and connect them to partners with expertise in carbon reduction. Such platforms can help businesses like yours take the first step to decarbonise. And as Minister for Trade and Industry is here, many companies have first to embark on the digital journey before you can tell them about AI and how to use the data.

When Temasek embarked on our own decarbonisation journey, we started by measuring our carbon footprint. Of course, we got consultants so they helped us start. These measurements now serve as the basis of our targets.

Three years ago, we achieved carbon neutrality for our company – that means in the investment or asset management business that we do. Now, we’re looking to reduce our portfolio emissions to half the 2010 levels by 2030, on a path to net zero by 2050. And measuring the emissions of our portfolio companies is not an easy task.

So, we incorporate ESG considerations within our investment analysis. For example, we adopted an internal carbon price of US$42 per tonne of carbon dioxide equivalent, to account for climate transition risks, and this will go up as the years go by.

Secondly, businesses can invest in climate-aligned solutions. The transition to net zero is creating exciting opportunities in every industry. Business models are being transformed, and fields like alternative proteins and renewable energy are growing quickly. And you would have seen from the news these couple of days that we set up a platform called GenZero with $5 billion to look at investments in this space.

The intersection of digitisation and sustainability is another promising area. Embracing digitisation and data to analyse our operations can help improve resource efficiency. As businesses, we can provide catalytic capital to spur the development of such sustainable solutions, either through investments or the purchasing decisions we make.

Giving preference to buying a sustainable solution spurs suppliers to make their offerings more sustainable. As you change your practices by making those purchasing decisions, your suppliers change theirs because customers like you are demanding those changes. So, if one express doesn’t embark on it, but some other shipping line does, then pressure from stakeholders will make the customers go to other lines. So, it’s something we need to do to be competitive.

In hard-to-abate sectors, this is where investors can do their part by putting investment capital to work catalysing new solutions.

For example, Temasek, together with the Civil Aviation Authority of Singapore and Singapore Airlines, has unveiled a pilot programme on the use sustainable aviation fuel. This was announced this morning and some more information is coming out from the three organisations.

Starting next quarter, all Singapore Airlines and Scoot flights will use a blended fuel made with used cooking oil and waste animal fats. This one-year pilot is expected to reduce about 2,500 tonnes of carbon dioxide emissions – not a big amount, but at least it’s a start and in line with GCNS’ philosophy: just do something.

The third strategy businesses can adopt is collaborating for shared progress which I alluded to earlier.

Climate change is a multi-faceted issue that requires coordinated action from stakeholders. As we have seen, reducing carbon emissions – even our own – is not something we can do alone.

As an investor, most of Temasek’s emissions are attributable to our portfolio companies. To encourage decarbonisation within our portfolio, we set up the Temasek Portfolio Companies Sustainability Council in 2020. I was in Stewardship Asia Centre discussions yesterday afternoon and one of the questions was, “How do we spur more developments in the decarbonisation journey?” I think at this stage, sharing of information is probably one of the more effective ways of helping everybody out.

Now this council that we have brings together the leaders of our major portfolio companies to share experiences on sustainability strategies, and foster collaboration on common ESG goals. In the long term, this enables our portfolio companies to reduce their carbon footprint, while also bringing down our own Scope 3 emissions.

Likewise, how can your businesses share experiences and learnings with others to improve what we all do?

Conclusion

The sustainability space is developing rapidly. To help businesses stay ahead, events like this roundtable and Ecosperity Week seek to bring people together to generate and sustain action for people and planet.

However, events only last for a few days. After we leave, it is up to businesses – and all of us as leaders – to follow through and take action.

The climate crisis represents a bigger threat to our prosperity than anything else, so we must act with urgency to invest in the future we want. We must accelerate action, and work together to build a more sustainable world for business and society – so that every generation prospers. So, whatever we do is not for ourselves. We should do it for our grandchildren.

I wish you all a fruitful time of learning.

Thank you.

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Notes:

¹ The Intergovernmental Panel on Climate Change (IPCC) published their Sixth Assessment Report on 9 August 2021 on climate change and its impacts.

² Source: https://www.straitstimes.com/business/climate-change-affects-asia-disproportionately-spore-facing-high-risks-but-prepared-to-combat-it-report

³ Source: https://www.mckinsey.com/featured-insights/asia-pacific/five-windows-of-opportunity-for-postpandemic-asia

⁴ Source: https://www.bcg.com/publications/2021/measuring-emissions-accurately

⁵ Jeremy Nixon, CEO, Ocean Network Express, spoke at Ecosperity Week 2022.