SINGAPORE: Temasek will set aside S$100 million (US$77.5 million) as concessional capital to support climate action initiatives, announced chairman Lim Boon Heng on Monday (Sep 23).
“The aim is to crowd in capital to support marginally bankable projects,” said Mr Lim at the state investor’s 50th anniversary dinner held at the Shangri-La Hotel.
“We believe there can be a catalytic effect by mobilising funding from other sources such as public, private and philanthropic capital providers. Our philanthropic dollar will be amplified as more funding goes towards climate action.”
This is the first time Temasek is contributing concessional capital – defined as a type of capital that is willing to absorb more risks or take a lower return – to drive the green transition.
The firm has been investing in sustainability – with a “sustainable living” portfolio valued at S$44 billion – but said it is seeing “the criticality of concessional capital to catalyse financing into emerging markets and developing economies” where the net-zero transition has been hindered by structural constraints and challenges.
Southeast Asia is one example where plans to decarbonise and build new industries concurrently will require the scaling of catalytic financing, it said.
Temasek added that its concessional capital will provide “more flexible, patient and favourable financing” that can address challenges such as emerging market risks and a higher cost of capital.
Success of its latest initiative will be measured by the “ability to scale positive outcomes in the area of climate action”.
These include the ability to avoid, mitigate and adapt to the impact of climate change, promote biodiversity and encourage sustainable living choices, among others, it said–CNA
