Investment firm Temasek commits S$100 million in concessional capital to support climate change initiatives
In a significant move towards addressing climate change, Temasek, Singapore's state investment company, has pledged S$100 million towards climate action as part of its 50th-anniversary celebrations. The new initiative, called the Concessional Capital for Climate Action (CCCA), was revealed during a speech at the anniversary dinner last week by Temasek's chair, Lim Boon Heng.
The CCCA aims to provide favorable financing for climate initiatives, particularly in emerging markets like Southeast Asia. This region, home to more than half the world's population and responsible for over 50% of global carbon emissions, faces structural challenges in decarbonizing while growing its industries.
The exact details and projects that the CCCA will fund have not been specified. However, the initiative reports that climate change is the defining crisis of our time, according to Mr Lim. By offering concessional capital, Temasek hopes to bridge the gap in climate financing, addressing risks and high costs that hinder private investment in green projects.
Temasek's S$100 million commitment towards climate action is funded by its community gifts, which have been set aside since 2003. These gifts, derived from Temasek's net positive returns, focus on connecting people, uplifting communities, protecting the planet, and advancing capabilities.
Temasek has partnered with BlackRock and Brookfield in its efforts towards climate finance and energy transition investments. The company has already committed a total of S$44 billion to climate finance and energy transition investments through strategic partnerships.
The CCCA is a form of financing that provides loans at favorable terms, such as lower interest rates or longer repayment periods. Concessional capital is relatively less common for institutional investors to lend on such terms. By mobilizing varied forms of capital necessary to bridge the climate financing gap, the CCCA aims to contribute to concessional capital emerging as an asset class.
The CCCA hopes that its community gift can contribute to concessional capital emerging as an asset class. This could potentially attract more institutional investors to support climate initiatives, especially in emerging markets like Southeast Asia.
Temasek's commitment to climate action is reflected in its portfolio level carbon emissions, which have reportedly dropped. The company's efforts towards climate finance and energy transition investments are a testament to its commitment to a sustainable future.
The exact details and projects that the CCCA will fund have not been specified. However, the initiative's focus on emerging markets and favorable financing terms suggests a commitment to supporting climate initiatives that may otherwise struggle to secure funding. As more details emerge, it will be interesting to see how the CCCA shapes the landscape of climate finance in Southeast Asia and beyond.
