Dr Thomas Lanyi, Chairman of the SVCA,
Friends and colleagues in the industry,
Ladies and gentleman,

Good afternoon. It is an honour to be invited to open this timely conference on ESG and impact investment.

Every day, we are faced with signs that we are reaching a tipping point – for our planet, and our collective society.

July this year was the hottest month ever recorded on Earth.

Indeed, the last five years have been the warmest in history. In the Arctic, ice is melting at unprecedented levels.

Elsewhere, tropical storms are becoming more frequent. And wildfires, like those across the Amazon and South East Asia, have devastated large land masses.

While society is dealing with other significant changes, including automation and AI, these pale in comparison to the impact of climate change.

The issues of our time have very wide-ranging repercussions. It is not an exaggeration to say they are the most critical in generations.

Against this backdrop, our industry has to transform.

In recent years, we’ve seen an unprecedented surge in investor concern, advocacy, and action on environmental and social issues. This is no coincidence.

We are entering a new era in investment. An era that no longer accepts the view of investing just for profit.

As a powerful catalyst for economic transformation, capital needs to have a purpose beyond returns. I repeat that: capital needs to have a purpose beyond returns. A purpose to contribute positively to the development of our communities – in economic, environmental and social terms.

Just two weeks ago, on the sidelines of the United Nations General Assembly, an international group of asset owners made a bold commitment to transition their portfolios of more than 2 trillion US dollars to carbon-neutral investments by 2050.

At the same time, a blueprint was launched to step up efforts to end modern slavery and human trafficking - a situation that still affects more than 40 million people today. This initiative makes it clear that doing business by exploiting workers cannot be tolerated.

These are powerful examples of how asset owners can deploy their capital with purpose and ultimately, for a better world.

Such commitments are also changing businesses. Any company that hopes to attract investment will only be successful if they can deliver attractive financial returns and positive environmental and social impact – in at least equal measure.

The market is responding: globally, sustainable investing assets stood at about 30 trillion US dollars at the start of 2018, increasing by a third in just two years¹.

Sustainable financing has also seen strong growth rates, with green bonds worth over a 100 billion US dollars issued in the first half of this year, up 50 percent year-on-year².

Ladies and gentlemen, against this backdrop of global challenges and industry transformation, the option of just standing by is not acceptable. We all have a role to play.

There is much angst in the world today. In fact, there is much anger. It is the result of the pursuit of maximum returns for shareholders, and failure to address the impact of underlying trends on people.

And this is why it’s critical for us investors to re-define or re-discover the true purpose of our industry: to positively contribute to the development of the communities in which we and the businesses we invest in operate.

Events such as the one today, where we can learn from other’s experiences, are important and I am happy to share with you on Temasek’s journey.

Our approach is to invest with tomorrow in mind – and sustainability is core to this. None of our investments can succeed if society fails, or ecosystems collapse.

Three years ago, we formed a dedicated team to act as a catalyst for change in our organisation, with a few goals in mind.

First, we want to protect and enhance value.

The global challenges I talked about earlier, like climate change, resource scarcity, automation and AI will impact the operating environment of our portfolio companies.

Companies that don’t adapt their business models will face increasing public, legal and regulatory pressure and are at risk of becoming obsolete.

To ensure that we consider how these challenges affect our companies, we implemented a framework to incorporate Environmental, Social and Governance considerations in every investment decision we make.

We also published our ESG Statement online, as a public marker of our commitment to sustainability.

This was not an easy journey. Progress was incremental, but pleasingly, quite fast. Yet it required much effort and commitment from everyone involved. It is heartwarming to see how willingly people made that commitment.

I don’t see we’re anywhere near the end of this journey; it’s really only beginning.

By next year, we intend to be carbon neutral as a company ourselves, and we are supporting our portfolio to reduce their carbon emissions by 50% by 2030.

It is a journey we are taking together, as a firm, with our wider community.

Second, we want to capture value.

Disruptive technology, changes to regulations and consumer expectations are all creating new opportunities to invest in transformation.

The Business for Sustainable Development Commission valued opportunities in areas such as sustainable agriculture, clean energy, water and waste management at 12 trillion US dollars by 2030.

Sustainable Living is one transformational trend that guides our investments. We have been actively investing in sustainability solutions. For example, we recently invested in Neoen, which provides renewable energy alternatives like solar and wind power.

With such investments, we’re capturing value in the renewable energy trend, while contributing to decarbonising the economy.

Over the past decade, more gigawatts of solar power capacity have been installed than any other energy-generation technology, with the support of investments in renewable energy across the world.

Without this ‘clean energy’, global carbon dioxide emissions last year would have been about two gigatonnes greater³.

You are also likely familiar with Impossible Foods and their plant-based protein. The transformational technology behind it is a step towards a more sustainable food system.

The newest version of the Impossible Burger has a carbon footprint 89% smaller than a burger made from beef. It uses less land, less water, and cuts water contamination by significant magnitudes⁴.

Such sustainable innovations are also financially attractive investments.

Now, third, we seek to create new value. The global sustainability challenges we face are unprecedented. Solutions may not yet exist, or they are at a very early, pre-commercial stage.

In such cases, we may have to take a leap of faith, but we do so by applying the right mindset and business acumen.

For instance, we partnered with Singapore Power to pilot a system at Gardens by the Bay to convert waste into thermal energy, which is then used to heat up water for the F&B outlets. After the two-year pilot, we will have data to show its effectiveness.

We need to have the courage to invest in our vision for a better world, and be patient to make it a reality.

We also have to acknowledge that as the world changes, the responsibilities we have to our shareholders or clients are also evolving.

If we want to be at the forefront of the ‘next generation’ of responsible investors, it is no longer enough to “consider” ESG issues that are financially material. We also have to “account” for the sustainability impact of those issues. So, we should hold ourselves accountable.

I believe this is where the future is headed. As companies and investors, we are no longer simply accountable in terms of profits. And I would argue that we were on the wrong path, if we felt that we ever were.

Already in 1969, Mr Lee Kuan Yew said, and I quote: “Developing the economy, increasing productivity, increasing returns, these make sense only when fair play and fair shares make it worth everyone’s while to put in his share of effort for group survival and group prosperity.”

We are, and must be, equally accountable to demonstrate positive impact on the environment and society. Doing right, doing good and doing well can – and must – go together.

With that, I wish all of you fruitful discussions and meaningful connections at this conference.

Thank you.

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¹ Source: Global Sustainable Investing Alliance

² Source: Climate Bonds

³ Source: UN Environment Programme

⁴ Source: Quantis