Sustainability Governance

Our Board provides overall guidance and policy directions to management. 

As at 31 March 2024, our Board comprised 11 members from across the world, each with diverse skills, experiences, and knowledge. The majority (82%) are non-executive independent private sector business leaders.

Our Board operates on a commercial basis, with the added constitutional responsibility, together with our Chairman and CEO, of protecting the Company’s past reserves, given Temasek’s status as a Fifth Schedule entity under the Singapore Constitution. There are no nominees of the Government on our Board. 

The annual Board schedule includes quarterly two-day meetings, and additional meetings as needed, such as for significant large investments. Six Board meetings were held during the year.

The Board has reserved the following matters for its decision:

• overall long-term strategic objectives;
• annual budget;
  
• annual audited statutory accounts;
  
• major investment and divestment proposals;
• major funding proposals;
• CEO appointment and succession planning;
• Board changes;
• portfolio risk appetite and profile.

The Board has separate and independent access to information to assist it with its deliberations, including the opportunity to request supplementary or explanatory information from management. Management provides information to the Board on an ongoing basis, including minutes of key management committee meetings, to allow the Board to effectively discharge its responsibilities.

The following Board committees, each chaired by a non-executive Director who is independent of management, have been set up with specific delegated authorities:

• Executive Committee
• Audit Committee
• Leadership Development & Compensation Committee
• Risk & Sustainability Committee

Executive Committee (ExCo)

The ExCo has been delegated the authority to approve new investment and divestment decisions up to a defined threshold, beyond which, transactions will be considered by the Board. The minutes of ExCo meetings are circulated to the Board. ExCo takes into account sustainability-related risks and opportunities, where relevant, as they decide on investments and divestments and make other decisions to manage and shape our portfolio. The ExCo met seven times during the year.

Audit Committee (AC)

Comprising only independent directors, the AC supports the Board in its oversight responsibilities by reviewing, among other things, our system of internal controls, and processes used for financial reporting, audit, and monitoring compliance with laws and regulations. The AC also reviews the scope and results of the external audit, and the independence of the external auditors. The AC is supported by Internal Audit (IA). To ensure its independence, IA reports functionally to the AC and administratively to the office of the CEO of Temasek Holdings. The minutes of AC meetings are circulated to the Board. The AC met four times during the year. The AC also has separate sessions, without management, with the external auditors and with IA.

Leadership Development & Compensation Committee (LDCC) 

The LDCC is responsible for recommending Board and management leadership plans to the Temasek Board. These include Board and CEO succession, as well as guidelines and policies on performance measurement and compensation plans. The LDCC ensures the Board exhibits a broad skill set, including the competencies necessary to oversee the organisation’s response to sustainability-related risks and opportunities, including climate-related risks and opportunities. The LDCC met three times during the year. 

Risk & Sustainability Committee (RSC) 

The RSC was established to enhance focus on opportunities and risks arising from sustainability trends, including climate change, and other financial, reputational, operational, and cyber risks. The RSC supports the Board in its oversight responsibilities by reviewing, among other things, our portfolio risk appetite and profile, material Environmental, Social, and Governance (ESG) matters, risk management and sustainability frameworks and policies, as well as key public statements relating to risk, sustainability, and ESG.

The RSC coordinates with other standing Committees of the Board, such as the AC and the LDCC, in its oversight of risk and sustainability matters, where relevant. The RSC met three times during the year.

Senior management sets the tone and culture of our institution, leading the delivery of Temasek’s vision and mission.

Operating as OneTemasek, our senior management team implements the strategy and policy directions set by the Temasek Board to fulfil our mandate to deliver sustainable returns over the long term. Levels of authority for investment, divestment, and other operational matters are defined according to our Board’s delegation.

Our senior management oversees Temasek’s key business strategies and organisational initiatives with the support of the following committees, which are chaired by our CEO and comprising members of senior management:

Strategy, Portfolio and Risk Committee (SPRC)

The SPRC reviews macroeconomic, political, industry, technological, and social trends that provide the context in which new opportunities and risks may arise, in both existing and new markets. It reviews our overall portfolio construction efforts and investment strategies. The SPRC also oversees our ESG policy and the integration of ESG considerations, including climate change, in the firm’s strategy, investment, risk, and operational management processes.

Senior Divestment and Investment Committee (SDIC)

The SDIC manages and shapes our portfolio on an ongoing basis and decides on investments and divestments up to the authority limits as delegated by our Board. The SDIC also takes into account sustainability-related risks and opportunities, and make other decisions to manage and shape our portfolio. Investment proposals beyond these authorisation limits are escalated to the ExCo and/or the Board as warranted. Meeting minutes are circulated to the Board.

Senior Management Committee (SMC) 

The SMC reviews and sets overall management and organisational policies. These include internal controls, the implementation of our Derivatives Framework, and the Valuation Policy approved by the Board Audit Committee. The SMC has developed the Temasek Code of Ethics and Conduct (T-Code) and constituted the Ethics Committee to assist in its implementation. All employees are required to observe and comply with the T-Code. The SMC also oversees the operationalisation of corporate initiatives and processes, within the frameworks and overarching principles approved by the Board. Examples include our sustainability-related initiatives and institutional sustainability strategy.

Senior management works with a dedicated team of functional experts supporting the delivery and evolution of our sustainability strategies, frameworks, and programmes.

Reporting to the CEO, our Sustainability Group initiates, develops, and implements our overarching strategy and initiatives on sustainability. As part of its remit, the Sustainability Group partners internal and external stakeholders to catalyse and invest for long-term positive impact, to support the transition to a net zero, nature positive, and socially inclusive world, to build a sustainable organisation, and collaborate for global progress.

The integration of sustainability considerations across our investment lifecycle is supported by a dedicated ESG Investment Management (ESG IM) function that reports to the Chief Investment Officer. ESG IM oversees ESG integration efforts pre- and post-investment and climate transition readiness. It serves as a centre of knowledge and expertise on ESG issues, partners investment teams to analyse material ESG issues, and engages with portfolio companies with the goal of building portfolio resilience and uplifting ESG practices. This includes identifying and assessing the emission profiles of our portfolio companies. 

Our ownership ethos places the institution above the individual, emphasises long term over short term, and aligns employee and shareholder interests over economic cycles. Our compensation framework aims to foster a high-performing and responsible culture, where our employees think and act as owners with a strong sense of intergenerational duty, sharing gains and pains alongside our shareholder.

It balances rewards for short-term performance and long-term value creation. It also aligns our staff towards achieving both our financial performance and carbon emissions reduction targets.

To reinforce the commitment to our carbon emission goals, we apply a carbon charge against our portfolio performance. This carbon charge is taken from our Wealth Added incentive pool to be awarded as another type of co-investment grant tied to our carbon emission reduction targets. This drives us to collectively work towards our institutional commitment to halve the net carbon emissions of our portfolio over 2010 levels by 2030, and to achieve net zero carbon emissions by 2050.