Temasek launches decarbonisation investment platform

GenZero, a wholly-owned unit of the government-controlled investment fund, has a broad remit. It can back early-stage companies as well as mature, scale-oriented businesses, and it can make commitments to third-party funds as well as participate in direct investments. The goal is to deliver positive climate impact alongside long-term sustainable financial returns.

There are three key focus areas: technology-based solutions that deliver deep decarbonisation impact through climate-driven technologies; nature-based solutions that protect and restore natural ecosystems to generate climate impact while benefiting local communities and biodiversity; and companies that support the development of an effective, efficient, and credible carbon ecosystem.

Investments have already been made in each area. GenZero has backed Newlight, a US-based producer of biomaterials derived from methane to displace plastics, and a Southeast Asia clean cookstoves program launched by social impact player C-Quest Capital. The latter deal, a USD 14m investment with Pavilion Energy, is intended to reduce carbon emissions from rural households.

On the fund side, the platform is working with Decarbonization Partners, a Temasek-BlackRock initiative aimed at launching late-stage venture and early-stage growth funds, and with Brookfield Global Transition Fund, which focuses on investments that reduce emissions and energy consumption and increase low-carbon energy capacity.

Under nature-based solutions, GenZero is supporting reforestation and tree planting programs in Kenya’s farming communities, and it has invested in a Southeast Asia-focused tropical forests fund launched by Australia-headquartered real assets investment manager New Forests.

Carbon ecosystem investments include South Pole, which develops emission reduction projects and strategies for corporate and government clients, and Climate Impact X, a global carbon marketplace and exchange. GenZero has also backed Perennial, a US-based start-up using artificial intelligence and remote sensing to accurately quantify soil organic carbon sequestration on agricultural lands.

“GenZero is driven by the common purpose to decarbonise for future generations. Recognising the importance of immediate action, we will focus on investment opportunities that can deliver positive climate impact by 2030 while ensuring sustainable financial returns,” said Frederick Teo, CEO-designate of GenZero.

Teo is currently a managing director for sustainable solutions at Temasek International. He will take up his new role in July.

The Intergovernmental Panel on Climate Change estimates the carbon emissions gap – the reduction in emissions required to limit global temperature rise to 1.5 degrees Celsius above pre-industrial levels by 2030 – is 19-26 gigatonnes of carbon. Achieving net-zero emissions by this date will require the deployment of around USD 5trn per year, according to the International Energy Agency (IEA).

“GenZero will not only support Temasek’s efforts as we strive towards halving our portfolio’s net emissions by 2030 and working towards a net-zero portfolio by 2050, but also those of the wider ecosystem,” said Steve Howard, chief sustainability officer at Temasek International, in a statement.

This is not the first investment platform established by Temasek to pursue a sustainability-linked agenda. Three years ago, ABC World Asia was announced by Temasek Trust, the group’s philanthropic arm, to make impact investments in support of Singapore’s plan to meet the UN sustainable development goals.

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• Topics
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