Capturing opportunities

GIC recognises that new investment opportunities will emerge as regulators, consumers, and businesses increasingly act on sustainability issues. We aim to capture these opportunities by:

• Investing thematically in opportunities arising from climate change and other sustainability trends; 
• Integrating sustainability into our investment processes, including in due diligence, risk assessment, and monitoring; and
• Actively engaging our portfolio companies on sustainability issues that are material to their long-term business prospects.

Investing Thematically

To align existing energy systems to a pathway aligned to net zero by 2050, the world will need to incur over US$126 trillion of additional capital expenditures from 2021-2050. At the same time, investments are needed to shore up aging infrastructure and physical assets, to ensure that businesses remain resilient to increasing physical stresses resulting from global warming.  

The secular trends of climate change mitigation and adaptation are playing out simultaneously and require long-term investment capital to enable the scaling up of solutions. GIC is taking more steps to capture sustainability-related investment opportunities across the portfolio. We began the experimental, cross-asset Sustainable Investment Fund (SIF) a few years ago, which has since evolved into focused teams within asset classes, including: 

• The Climate Change Opportunities Portfolio (CCOP), a global public equities portfolio deploying long-term, dedicated capital towards climate mitigation and adaptation; 
• The Transition and Sustainable Finance Group (TSFG), a portfolio investing in sustainability-related opportunities across fixed income and multi asset; and
• The Sustainability Solutions Group (SSG), a private equity portfolio deepening GIC’s exposure to early-stage energy transition opportunities.

Integration

Our investment groups across public and private markets integrate sustainability considerations into their decision-making process, focusing on the issues material to each company’s long-term economic prospects. For example, our investment groups examine the carbon intensity of companies in the energy sector relative to their peer group. For significant positions, they may also conduct carbon price stress-testing against GIC’s set of climate scenarios.

Teams regularly engage with portfolio companies on sustainability risks and opportunities, and vote responsibly. We also engage with external fund managers and general partners on their sustainability policies and practices, and ensure our investments with them are managed in a manner consistent with GIC’s sustainability approach.

Protecting our portfolio

Sustainability issues across the domains of the environment, social issues, and business governance pose investment risks. We protect our investments by:

• Regularly screening our existing portfolios for material sustainability risks;
• Conducting additional due diligence for companies and assets exposed to greater sustainability risks and adjusting our long-term valuation and risk models accordingly; and
• Stress-testing our portfolio and significant holdings against a range of climate scenarios and carbon price projections.

Pursuing enterprise excellence

How we operate sustainably as an organisation is as important as the way we invest. We do this by:

• Managing our operational resource use and emissions through environmentally conscious office design and smart technologies, in line with leading green building certification programmes;
• Switching to renewable energy sources where available;
• Communicating clear expectations for sustainable behaviour to our business partners; and
• Encouraging employees to adopt more sustainable behaviours at the workplace and beyond.

We are making serious efforts to reduce our carbon emissions. We currently offset our residual emissions with credits that have been certified by globally-recognised carbon credit programmes. We will adapt our offset strategy as we monitor the developments in the global and local standards on how corporates can best manage their residual emissions.