GIC said in its annual report that time is definitely running out to take decisive action upon climate change. To push the low-carbon transition, it actively spends in new systems, such as green hydrogen, carbon removal, and nuclear fusion.
It acquired in July 2020 launched an internal investment fund to invest in sustainability-related possibilities that would generate great returns over time.
Beyond the finance, GIC views “sustainability as a part of the regular expenditure process” across all of its teams.
Said Mr Lim: “Every deal that we do, we ask the question – ‘What is the sustainability position for this deal? ’”
Some of the recent investments consist of China-focused sustainability information and analytics system Miotech and Switzerland start-up Climeworks in whose green technology gets rid of carbon dioxide from the air.
More crucially as part of “making a positive impact in the true economy”, GIC activates its portfolio companies to nudge them along on their transition efforts, with divestment as a “last resort”.
On whether GIC gives the investees specific transition timelines, Mr Lim said it depends as businesses in different jurisdictions face varying difficulties.
“The great news is that, especially in recent years, most companies understand the importance of this because it’s not just a shareholder informing them. Their customers are telling them as well, and regulators. ”
Why divestment is a last resort, Mr Lim, who took at the top job at GIC in 2017, mentioned: “As an buyer, you could, as some people advocate, change the structure of your portfolio to reduce the carbon strength. We don’t find that particularly helpful.
“Because you are just passing the high carbon intensive possessions to other investors. Probably over time, at the margin that will help but that’s not really the best alternative. ”