Core to our mandate as a long-term investor managing the reserves for Singapore
Sustainability is core to GIC’s mandate as a long-term investor managing the reserves for Singapore. It is an important investment issue and a key management priority. Our Sustainability Committee, which was formalised in 2016, is tasked to implement GIC’s sustainability framework, support and promote sound stewardship, and monitor and respond to emerging ESG issues, including climate change. The committee comprises senior leaders from across our investment, risk and corporate functions, and is chaired by our Chief Investment Officer of Fixed Income, who is also a member of the Group Executive Committee (GEC).
Our Sustainability Policy is applied across GIC’s investment and corporate processes. The investment committees across GIC are responsible for assessing and managing the relevant ESG and climate-related risks and opportunities for their asset classes and portfolios, and play a major role in ensuring compliance with the policy at every stage of the investment process.
The GIC Board and its supporting committees (Investment Board and Risk Committee), have oversight over the framework and management’s considerations related to climate-related risks and opportunities. Board and board committee members regularly advise GIC executives on emerging ESG and climate-related risks to monitor, and risk management methodologies to review.
The Sustainability Committee routinely engages the GEC, the Investment Board and the Risk Committee on broad trends and emerging risks that may affect our portfolio, as well as potential investment opportunities.
Sustainability trends and ESG risks have a profound and growing impact on both the physical and financial world. These factors shape the long-term prospects of companies and their long-term value.
We believe in taking a long-term and holistic approach towards sustainability across our investment and corporate processes. Our Sustainability approach is aligned to GIC’s O-D-E framework:
We believe that companies with good sustainability practices will offer prospects of better risk-adjusted returns over the long term. As regulators and consumers act on ESG and climate-related issues, and businesses rethink their operating models, new investment opportunities will open up.
We aim to capture these opportunities by:
- Integrating sustainability and climate-related factors into our investment processes across all asset classes;
- Investing in thematic opportunities arising from the global transition towards a lower-carbon economy and more sustainable business models;
- Greening our portfolio of real assets, and ensuring that all the buildings we invest in are environmentally sustainable, or have the potential to be retrofitted to improve their environmental footprint; and
- Incorporating sustainability signals into quantitative strategies to enhance risk-adjusted returns.
As a long-term investor, we position our portfolio to weather a range of market and economic conditions by taking ESG risks into account at every stage of the investment process. As a responsible steward, we take a holistic and progressive approach to drive long-term positive outcomes for society. We believe it is more constructive to actively support our portfolio companies in their transition towards long-term sustainability, than to adopt a blunt divestment approach.
We aim to protect our investments by:
- Regularly screening our existing portfolio, and new investment opportunities, for a range of environment, social and governance risk factors;
- Conducting additional due diligence for companies exposed to greater sustainability risks, and adjusting our long-term valuation and risk models accordingly;
- Actively engaging our portfolio companies to improve corporate governance, ensure resilience against climate risks, and advocate for other positive environment and social outcomes;
- Voting responsibly across all active and significant holdings;
- Stress testing our portfolio against potential near-term climate-related disruptions and long-term climate scenarios, and implementing appropriate hedging strategies to mitigate anticipated risks; and
- Supporting efforts to improve climate risk reporting by portfolio companies.
The manner in which we operate sustainably as an organization is as important as the way we invest. Sustainability considerations are integrated into our corporate practices relating to governance, people, community and the environment.
We are committed to:
- Procuring sustainably, and communicating clear expectations for responsible and sustainable business practices to our business partners;
- Encouraging responsible consumption, by cutting down on the use of non-recyclable materials, introducing resource-efficient infrastructure in all our offices, and advocating environmentally responsible behavior amongst our employees;
- Reducing our carbon footprint, by measuring and monitoring the Scope 1, 2, and 3 emissions of our global offices, and taking meaningful action to mitigate emissions;
- Fostering collaboration and inclusion, and creating an inclusive culture which embraces diversity of skills and views, and promotes respect and active contribution;
- Giving back to the community, by developing and supporting sustainable social programs that build more confident, inclusive communities and create long-term value and financial security;
- Ensuring sound governance and requiring the highest standards of responsible and ethical conduct from our employees in all our business dealings.