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Singapore’s Temasek now considering ESG factors in investment decisions

Asian giant commits to responsible investment

Singapore’s giant state fund Temasek has explained that it is now considering social, environmental and governance factors when it makes investment decisions.

“As a responsible investor, we are committed to delivering value over the long term in a sustainable manner,” the investor says in its new annual review released today (July 7) in which it revealed a 19% annual return.

“The generation of long term sustainable returns depends on stable, well-functioning and well-governed social, environmental and economic systems,” it continues.

In a marked change in language from previous reports, the now S$266bn (€178bn) fund says: “We consider social, environmental and governance factors when we make decisions as an investor, asset owner and shareholder. We work to understand the impact of our portfolio companies.”

A theme of the report is stewardship: “We are an investor, institution and steward, guided by the principles of good governance and sustainability.”

It goes on to say it believes that “dialogue and robust exchanges of information, best practices and ideas” between key stakeholders from the public and private sectors are critical enablers of sustainable growth.

Temasek advocates independent and diverse boards and the separation of chairman and CEO and explainsthat it protects its interests by exercising its shareholder rights, including voting at shareholders’ meetings.

Last year, Temasek hosted its inaugural Ecosperity conference, bringing together business leaders, public officials and thought leaders to debate sustainable growth in natural resources. The focus for 2015’s event, on September 18, is urbanisation trends.

“As a responsible investor, we are committed to delivering value over the long term”

The investor encourages the boards of portfolio companies to identify and consider potential directors with relevant backgrounds and experience, and conduct annual reviews of their succession plans.

There are five signatories to the Principles for Responsible Investment (PRI) in Singapore, though the list does not include Temasek or its fellow state fund GIC.

It comes as the Singapore Stock Exchange in May launched a consultation to support a review of its sustainability reporting listing rules and guidelines (the deadline for responses is July 13). “SGX is now reaching out to institutional investors and sustainability professionals in consideration of reviewing the Guide which was first introduced in 2011,” the exchange says.