SINGAPORE: Singapore’s GIC has established a dedicated office focusing on sustainability, as the sovereign wealth fund ramps up its focus on this front amid a global shift towards a low-carbon economy.
Set up last month, the new office will deepen GIC’s research into key sustainability issues and integrate sustainability further into all its investment and corporate processes, it announced on Wednesday (Jul 27) as part of the release of its annual report.
It will be headed by Ms Rachel Teo, who is GIC’s head of sustainability and a member of the firm's sustainability committee.
Speaking at a media briefing, chief executive officer Lim Chow Kiat said GIC has been rolling out sustainability initiatives and building up related capabilities over the years. But it saw the need for a dedicated team to focus on specific issues.
“For example, reporting standards have become a very complicated area because there are so many reporting standards, so how does GIC gain capability to determine what is a good set of standards?
“How can we contribute to the industry (through) consultation? How do we do our own implementation internally? All these things (will) need a dedicated team of sustainability experts,” he told reporters.
GIC, which has more than 1,900 employees globally, declined to comment on the headcount for the new office. It told CNA, however, that it “will be bringing together existing resources who are working on sustainability and also recruit more dedicated sustainability professionals”.
“This unit will work with other sustainability capabilities across our investment and corporate teams to deepen and accelerate GIC’s overall sustainability efforts,” the spokesperson said.
GIC said in its annual report that time is running out to take decisive action on climate change. To drive the low-carbon transition, it actively invests in new technologies, such as green hydrogen, carbon removal, and nuclear fusion.
It had in July 2020 launched an internal investment fund to invest in sustainability-related opportunities that would generate good returns over time.
Beyond the fund, GIC views “sustainability as a part of the regular investment process” across all of its teams.
Said Mr Lim: “Every deal that we do, we ask the question – ‘What is the sustainability angle for this deal?’”
Some of its recent investments include China-focused sustainability data and analytics platform Miotech and Swiss start-up Climeworks whose green technology removes carbon dioxide from the air.
More crucially as part of “making a positive impact in the real economy”, GIC engages its portfolio companies to nudge them along on their transition efforts, with divestment as a “last resort”.
On whether GIC gives its investees specific transition timelines, Mr Lim said it depends as businesses in different jurisdictions face varying challenges.
“The good news is that, especially in recent years, most companies understand the importance of this because it’s not just a shareholder telling them. Their customers are telling them as well, and regulators.”
As to why divestment is a last resort, Mr Lim, who took on the top job at GIC in 2017, said: “As an investor, you could, as some people advocate, change the composition of your portfolio to reduce the carbon intensity. We don’t find that particularly helpful.
“Because you’re just passing the high carbon intensive assets to other investors. Maybe over time, at the margin that will help but that’s not really the best solution.”