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AUM in Action

Temasek Raises Internal Carbon Price by 30%

Singapore sovereign wealth fund Temasek has increased its internal carbon price (ICP) to US$65 per tonne, in an effort to prepare its portfolio for a decarbonising world. The latest figure is up from US$42 in 2021, and US$50 per tonne in 2023, the S$389 billion (US$288 billion) fund said in its first sustainability report. The group first applied an ICP in 2021 and aims to raise it to US$100 per tonne by 2030. ICPs have become an increasingly common tool used by companies and investors to price carbon emissions even where no official carbon price is in place. Temasek said it used the ICP both to inform transition risk analysis and to help “build a forward-looking portfolio in alignment with the global ambitions for net zero”. The group revealed it now has S$44 billion in what it calls “sustainable living” investments, which cover broad-based sustainability and environmental themes. Of those, S$6 billion are in “climate transition investments”. In addition, Temasek has lowered its portfolio emissions by 6 million tonnes – a 22% reduction from the previous year. Its emissions stood at 21 million tonnes on 31 March 2024. “Sustainability and ESG are central to Temasek’s investment philosophy,” said Dilhan Pillay Sandrasegara, CEO of Temasek. “In an era of unprecedented global challenges, and against the backdrop of a volatile, uncertain, complex, and ambiguous – or VUCA – world, sustainability, alongside good governance, have emerged as drivers of long-term portfolio resilience, value creation, and growth.” VUCA is an acronym invented by American scholars Warren Bennis and Burt Nanus in the 1980s.

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