Good evening, everyone, and hello to those joining us online.

I want to first thank our partners, BlackRock and the International Finance Corporation, for helping to curate and co-host this first Singapore Sustainable Investing & Financing Conference (SSIFC). My thanks to PricewaterhouseCoopers for their support too for this conference.   

I take this opportunity to also thank PSA and the SP Group – they are the main sponsors for the hybrid Ecosperity Week this season. 

Most of all, I would like to thank all of you – your active participation augurs well for an inclusive and net zero carbon economy by 2050. 

This evening, I would like to touch on three takeaways:

1.      The genesis & philosophy of Ecosperity;

2.      The nexus between investors, businesses, and society; and

3.      The Climate Emergency

The Genesis & Philosophy of Ecosperity

First, why Ecosperity?

Well, Temasek is an intergenerational investor. 

We want a resilient portfolio, one which can deliver returns, not just for the present generation, but for the future generations to come. This is also why good governance and sustainability have been our twin guideposts.

Ten years ago, we saw exhilarating growth in Asia. But, we knew growth at all cost would be self-limiting, and ultimately destructive.  

What should we do?

We found inspiration in the Singapore Story. 

Singapore was a fledgling nation struggling to make a living in the 1960s. Yet, our founding fathers insisted on planting trees for a green Singapore, keeping our air fresh and our waters clean. We have enjoyed clean, green and inclusive growth till today.

Over in the US, Europe and Japan in the 1970s, heavily polluted cities, like LA, London or Tokyo, cleaned up their air, and washed soot off their grimy buildings.

Result? 

They ushered in good quality non-pollutive growth, and got a new lease of life. 

Plant trees along streets? Homes on the side with trees would command higher values, because trees make for a cooler, greener, happier space.  

Uncover a city stream? We would re-energise street life for people, because the running stream will cool and refresh the common space. 

Conclusion?

A clean and green environment does bring inclusive prosperity for people. Conversely, you have heard throughout these last three days, human prosperity at the expense of nature and our planet cannot last. 

One of our enthusiastic young staff took “Eco” from “Ecology”, and joined it with the second half of “prosperity”. And so, Ecosperity was born.

We held an inaugural conference in 2014, to advocate the symbiotic twinning of Ecology and Prosperity – in other words, Planet and People. 

Last year, COVID-19 became a showstopper for bringing the Ecosperity Asia to China.

So, I’m pleased we could restart the 7^th edition of Ecosperity Week in a hybrid mode this year. Over the past three days, there have been rich discussions, deep content, we have covered:

• Decarbonisation & Climate Action
• Reimagining Nature & Resources
• Sustainable Investing & Financing: what you have heard today.

The challenges they present are also opportunities for investors, businesses, and society.

The Nexus between Investors, Businesses, and Society

This brings me to the second takeaway – the nexus between investors, businesses, and societies.

Investors are driving change, from individuals and family offices, to large institutions. 

Businesses, too, are coming on board. And society is pushing for change, from the young who will inherit the planet, to the silver generation who are planting trees to shade future generations.

Their common cause is an inclusive prosperity that can sustain planet and people.

How?

New knowledge drives new ways of doing things. Innovation enables new business models to meet the changing needs of society. 

So the future of rapidly advancing technology demands that we learn, unlearn, and relearn, constantly, throughout our lives.

Learning must therefore go beyond basic schooling or training for a job. 

I have two suggestions. The first is to foster a learning culture as part of work life, and the second is to help our workforce prepare for retirement or life after work and beyond work.

A learning culture helps keep the brain young, the mind open, and the body active and healthy. Both employer and employee must take joint ownership for learning.

For instance, at Temasek, our staff can choose to learn a programming language, a foreign language, a musical instrument, or even to learn to dance. 

These options were offered specifically to help keep the brain supple; to open our hearts to different cultures; and to expand our horizons. 

But there is another important benefit: they break down barriers of age, rank or department, as people learn together. 

This shapes a culture of trust, fosters discipline with creativity, and encourages agile problem solving with an open mind.

Individually, our employees now have skills or knowledge which they can take with them anywhere with them, outside work, into their family life, into another job, or even into retirement. 

Another aspect of preparing for retirement is saving and investing for retirement.

This needs to start as soon as someone enters the workforce.

This also means we must create suitable products for young investors, for first time investors, as well as retirees and small investors.

In Singapore, CapitaLand pioneered the development of the Real Estate Investment Trust almost 20 years ago. Their first REIT was a portfolio of high performing shopping malls. Retail investors can easily visit these malls to see for themselves if the malls are doing well.

The S-REIT market in Singapore has since grown to over S$100 billion¹. Retail investors can now choose from over 40 different REITs and property trusts. They range from hospitality to commercial assets. 

S-REITs have also democratised these big ticket assets for the small investors. 

At the same time, companies were able to tap on a new class of investors to lighten their balance sheets.

Similarly, Temasek has pioneered a series of bonds backed by baskets of Private Equity funds. These diversify and reduce risks for the retail investors, and socialise them to the world of PE funds. We are working to open the equity piece for the retail investors too.

Looking ahead, you have heard over the course of today especially, as governments or investors put money into green infrastructure as part of the transition to a net zero world, I urge them to open new opportunities for the retail investors to invest for their own retirement, or to invest for their children.

In short, the nexus between investors, businesses and society, is people. We have a collective and shared responsibility between us, between investors and businesses, governments and the workers themselves, to foster lifelong learning and to prepare ahead for retirement.

The Climate Emergency

Finally, on climate emergency.

Based on the current policies of governments, and practices of businesses and people, we are heading for an increase of 1.5°C by 2040. This is less than 20 years away.

At this rate, we will fail to cap the average global surface temperature rise to less than 1.5°C by 2050. We’re getting there faster than we should.

The glacier melts are accelerating. The beautiful ice cap of Kilimanjaro is almost gone for good. 

Global warming isn’t just a sea level threat to coastal cities. It was shocking to see massive fires and floods take hundreds of lives far inland in Europe, in Germany for instance, China, and the US in recent times. 

Yet, as a global community, we continue to pump out increasing amounts of carbon dioxide and methane into our atmosphere, without regard for tomorrow.

Do you know, the top five emitters account for 60% of our global CO₂ emissions? 

Just China and US together account for 40% of global emissions – China leads at ~27%, over a quarter of the global emissions. This is followed by the US at ~13%. The next three are the EU at ~8%, India at ~7%, and Russia at ~5%². 

Since 2005, the EU has cut its emissions by a creditable 30% - a big credit to them – followed by the US at 12%³. But, China’s emissions over the same period grew by over 60%, while India’s more than doubled. Total global emissions grew.

Carbon abatement needs government actions now, especially by these top five emitters.

Investors and businesses must act too. But how?

You have heard many times during this conference, a decade ago, most companies were puzzled when asked to take climate action.

These days, companies will ask how they can make a start, how they can do their part.

Some are driven by their investors and shareholders. We heard from Larry Fink two days ago how his investors at BlackRock pushed for this. 

Others are being driven by their younger staff and their prospective employees.

How did Temasek start our own journey toward zero carbon? 

Simple – we estimated our carbon emissions and dollarised it. 

The immediate reaction was surprise, followed by wholehearted support. Oh? That looks doable, from having pushback, guys looked at the number and said that looks doable. And yes, we can aim for zero carbon with some offset. 

And so we delivered net zero as a firm soon after.  

Then, came the hard part. 

We estimated the future carbon emissions of our portfolio in 2030, not of the company – of the portfolio. Our management team had a fierce and passionate debate on what it means to halve the carbon emissions of our portfolio by 2030. It was not to halve the emissions projected for 2030, but to be no more than half the 2010 emissions by 2030. 

Again, we dollarised the value of carbon reduction that we need to deliver every year till 2030, and map that against a long term incentive plan.

For our investment decisions, we now impute a carbon price of US$42 per tonne of carbon dioxide equivalent. We expect to raise this progressively over the decade.

We debated and decided not to divest emitters, just to tick the box. This does nothing to help the world decarbonise, and it isn’t the right thing to do.

Instead, we are prepared to do the hard work – to work with, or even invest in, emitters who commit to a clear transition pathway for carbon reduction. This includes developing solutions like sustainable aviation fuel, and nature-based offsets for hard to abate sectors.

Our Decarbonization Partners initiative with BlackRock is one of the many steps that Temasek has taken over the years to invest in solutions for a zero carbon economy by 2050.

Earlier today, Temasek and HSBC jointly announced their new debt financing platform to fund sustainable infrastructure, to crowd in capital to work for a cooler future.

Climate action, if you’re not convinced by now, is not simply a cost – it is also an investment opportunity that will uplift returns beyond 2030. If you look at a 20-year timeframe, it uplifts returns.

One estimate puts the opportunity size at US$12 trillion a year by 2030⁴. There is potential to create millions of new jobs, as the world pivots to clean energy and other sustainable solutions.

I know many of you here and over the internet have ideas that you are taking forward. I hope this conference and the Ecosperity Week have inspired you to re-affirm and accelerate your plans to reduce your climate risks, and prepare a clear transition to a net zero world.

Conclusion

Friends, ladies and gentlemen,

We have a common interest to deliver inclusive growth: an Ecosperity that delivers a livable planet for people. 

There are no returns from a dead planet, or a divided society.

As investors and businesses, we share a collective responsibility, with governments and the labour movement, to ensure that there is a future for our workers and our people. 

We must help people to prepare for life beyond work, and help them invest for a retirement with dignity.

Finally, we are facing a climate emergency. 

Investors, businesses, and societies, must work urgently together to avert a 1.5°C increase in 2040. This is a critical milestone to deliver a net zero global economy by 2050. 

A sustainable tomorrow starts today.

Thank you, and have a good evening.

_________________________________________________

Notes:

¹ https://assets.kpmg/content/dam/kpmg/sg/pdf/2019/07/singapore-a-global-hub-for-reit-listings.pdf

² According to the World Resources Institute, based on 2018 emissions data

³ Statista.com total emissions by market annually 1990 – 2019, based off 2019 versus 2005

⁴ Business and Sustainable Development Commission Report, 2017