Singapore’s sovereign wealth fund, fund GIC, announced today that it has become a signatory to three major sustainable investing initiatives and organizations, including CDP, Climate Action 100+, and the Asia Investor Group on Climate Change (AIGCC). According to GIC, the announcement is part of the fund’s sustainability strategy to increase engagement and disclosures on climate risks and opportunities, based on the belief that companies with stronger sustainability practices will deliver better risk-adjusted returns over the long term.
Ms Liew Tzu Mi, Chief Investment Officer for Fixed Income and Chair of GIC’s Sustainability Committee, said:
“Climate change is one of the defining issues of our era. As a long-term investor, we seek to ensure our portfolio companies are aligned with the transition to a more sustainable path. Where we identify companies exposed to greater physical or transition risks arising from climate change, we engage with those companies to discuss, and offer support for, their plans to mitigate or transition from those risks.”
GIC was established in 1981, to manage Singapore’s foreign reserves. The fund has grown to over $100 billion in AUM, with assets invested over 40 countries, and across a broad range of asset classes in private and public markets.
Climate Action 100+ is an investor initiative, with over 500 investors representing more than $47 trillion in assets, that targets the world’s largest corporate greenhouse gas emitters to promote taking necessary action on climate change, including delivering Paris Agreement-aligned emissions cuts, implementing strong climate governance frameworks and improving climate-related disclosures.
The Asia Investor Group on Climate Change (AIGCC) is an initiative aimed at creating awareness among Asia’s asset owners and financial institutions about the risks and opportunities associated with climate change and low carbon investing. The AIGCC was launched in 2016 as part of the Global Investor Coalition, a group of regional climate change investor groups providing a global platform for dialogue between investors and governments on climate policy, facilitating corporate engagement on climate risk, and supporting increased low carbon investment.
Rebecca Mikula-Wright, Executive Director of AIGCC and member of the global Climate Action 100+ steering committee, said:
“AIGCC is proud to welcome GIC as a member and as a signatory to Climate Action 100+, and is looking forward to working with the team on its active climate risk engagement.
“We are witnessing a rapid increase in investor understanding and activity on climate risk across Asia, which is translating into enhanced and deeper cooperative engagement with companies to ensure they are preparing for the low carbon transition. The continued growth and impact of Climate Action 100+ in Asia is testament to this.”
CDP aims to focus investors, companies and cities on taking action to build a truly sustainable economy by measuring and understanding their environmental impact. The organization runs a global disclosure system based on TCFD recommendations which provides companies with clear guidance on the material environmental metrics they should measure, monitor, and disclose.
Paul Simpson, CDP’s Chief Executive Officer, said:
“Investors are uniquely equipped to integrate climate and environmental data into financial decisions and accelerate the transition to a low-carbon economy. Over the past 20 years, CDP has worked with financial institutions to meet the growing demand for consistent, comparable environmental data that is fully aligned with the TCFD framework. In 2020, over 560 investors with US$106 trillion in assets signed our disclosure request across climate change, water and forests.
“As a globally influential long-term investor, we are proud to partner with GIC, and provide the information needed to assess climate-related risks, opportunities for value creation and collaborative engagement with companies on their environmental impact.”
According to GIC, by signing up to Climate Action 100+ and AIGCC it is signaling a more active engagement approach with portfolio companies on climate risks and opportunities. Additionally, GIC noted that GIC’s disclosure framework and database will help to enhance the focus and quality of dialogue with companies on their climate risk mitigation measures.
Tzu Mi said:
“We believe that investors can benefit from having access to high quality and consistent carbon emissions and climate-risk data on their portfolio. GIC is already a supporter of TCFD. We support CDP’s efforts to further encourage TCFD-aligned climate risk disclosures by companies on its global reporting platform.”