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Sustainability is fundamental to the long-term health of the global economy. It is integral to GIC’s mandate, which is to preserve and enhance the international purchasing power of the reserves under our management.
We believe that companies with strong sustainability practices offer prospects of better risk-adjusted returns over the long term, and that this relationship will strengthen over time as market externalities get priced in and incorporated into the decisions of regulators, businesses, and consumers.
We take a holistic and long-term approach towards sustainability across our investment and corporate processes. Investments may entail trade-offs between different sustainability objectives, especially in the short term. GIC integrates sustainability in a way that recognises the diversity of industries and markets in which we operate, and the trade-offs and time needed for companies to make the transition.
GIC is committed to the global transition to a net-zero economy, through our investments and operations. We believe that it is critical to focus on making a positive impact in the real economy. To do this, it is more constructive to actively engage and support companies in their transition towards long-term sustainability, than to mechanically divest from certain industry sectors. For example, we actively engage with portfolio companies on their climate transition plans, and fund the adoption and scaling-up of green technologies. Such an approach would create more value and more beneficial outcomes in the real economy over the long term.
Sustainability is a top management priority at GIC. The GIC Board, along with its supporting committees – the Investment Strategies Committee, the Investment Board, and the Risk Committee – have oversight of GIC’s sustainability approach and management’s considerations on climate-related risks and opportunities.
GIC’s Sustainability Committee, comprising senior leaders from our investment, risk, and corporate functions, is tasked to implement the sustainability framework, and monitor and respond to environmental, social and governance (ESG) issues. The Committee regularly engages the Group Executive Committee and Board Committees on broad trends and emerging issues that may affect our portfolio, as well as the ongoing implementation of GIC’s framework for sustainability – focused on capturing opportunities, protecting our portfolio, and pursuing enterprise excellence and partnerships.
A dedicated Sustainability Office has been set up to support the Committee in deepening research into sustainability issues, and in driving their integration into the investment process and across the enterprise.
GIC recognises that new investment opportunities will emerge as regulators, consumers, and businesses increasingly act on sustainability issues. We aim to capture these opportunities by integrating sustainability into our investment processes, actively engaging our portfolio companies on sustainability issues, and investing in innovative low-carbon solutions and other sustainability trends.
We protect our investments by regularly screening our existing investments for material sustainability risks and by stress-testing our portfolio against a range of climate scenarios and carbon price projections. We conduct additional due diligence for companies and assets exposed to greater sustainability risks and adjust our long-term valuation and risk models accordingly..
How we operate sustainably as an organisation is as important as the way we invest. We do this by communicating clear expectations for sustainable behaviour to our business partners, managing our resource use to improve our energy efficiency, and maintaining carbon neutrality in our operations across all our offices.
As a long-term investor, we welcome progress in global sustainability initiatives that help investors and companies make better business decisions that improve long-term value. Sustainability is a field that continues to evolve, and all organisations, including GIC, can benefit from learning from one another as new standards are developed. GIC collaborates with fellow asset owners through the following industry platforms:
GIC worked with British Land, a partner which has successfully demonstrated the important role developers play in supporting global decarbonisation goals. Since 2014, when GIC acquired a stake in the Broadgate Estate, GIC has advised in a joint venture with British Land on the evaluation of new developments, major value-add opportunities and placemaking initiatives on the Estate.
In November 2020, the joint venture delivered its first net-zero carbon building, 100 Liverpool Street (100LPS), which was awarded with an ‘Outstanding’ BREEAM certification and ‘Platinum’ Wired Score. In addition, 100LPS won the City of London Building of the Year 2021, an award by the Worshipful Company of Chartered Architects.
100LPS was developed with sustainability in mind, and today provides a model for sustainable, low-carbon development. To keep embodied carbon low, 100LPS’ design retained or reused 50% of the building’s existing structure, such as the steel frame, foundations and concrete. To optimise the completed building’s operational efficiency, smart systems were installed to monitor real-time building performance, water recycling systems were built to use rainwater/greywater to meet 40% of water demand, and 100% of electricity and gas will be supplied by renewable sources. Residual emissions were offset through nature-based solutions including land restoration and afforestation projects in Tibet, Mexico, Cumbria, and Scotland.
ACEN is the listed energy platform of the Ayala Group, one of the largest conglomerates in the Philippines, and a long-time partner of GIC. ACEN has ~4,000 MW of attributable capacity in the Philippines, Vietnam, Indonesia, India, and Australia. The company has expanded its renewable pipeline beyond 2025 to 18 GW, developed organically or with partners. As of July 2022, the company’s renewable share of capacity is at 87%, among the highest in the region.
ACEN’s aspiration is to be the largest listed renewables platform in Southeast Asia, with a goal of reaching 20 GW in renewables capacity by 2030. In 2021, ACEN announced its commitment to achieve net-zero greenhouse gas emissions by 2050. This will involve the early retirement of its remaining coal plants by 2040 and transitioning the company’s generation portfolio to 100% renewable energy by 2025.
GIC’s investment in ACEN will be used to fund the platform’s renewable energy project development and potential acquisitions, enabling it to accelerate and expand its green impact. Our confidence in this investment is backed by its diverse portfolio of renewable energy assets and strong track record of profitable growth. We believe the company is well-positioned to capture the shift from thermal energy to clean, sustainable energy in the region.
Climeworks empowers companies and consumers to reverse climate change by permanently removing carbon dioxide from the air. Two things happen to the captured CO2: it is either returned to the earth and stored away safely for millions of years, or upcycled into climate-friendly products such as carbon-neutral fuels and materials. Since its founding in 2009, Climeworks has pioneered direct air capture (DAC) technology, and launched the world’s largest commercial DAC and storage plant in September 2021. Climeworks' Orca plant in Iceland has a capacity of capturing 4,000 tons of CO2 from the atmosphere per year. Climeworks exclusively uses renewable energy and removes the carbon that was emitted in the building process of its plants.
GIC's funding will support the scaling of Climeworks' plants to multi-million-ton capacity as the carbon removal market grows and matures. Climeworks will also use the capital to further build out the team with top-tier talent.
US-based Divert is an impact technology company on a mission to protect the value of food. Divert is transforming the food value chain by creating innovative solutions to eliminate food waste. The company creates sustainable infrastructure to prevent wasted food, recover edible food, and divert food waste from landfills. GIC’s investment will be used to support Divert’s expansion across the US. Our confidence in this investment is backed by its strong relationships with key national grocers, such as Albertsons and Target, as well as the regulatory and ESG tailwinds driving demand for waste solutions which are both environmentally friendly and cost-effective.
Duke Energy Indiana (DEI) – a subsidiary of Duke Energy, one of the largest utility holding companies in the US – owns electric generation, transmission and distribution assets in Indiana. It is the largest regulated electric utility in the state and serves more than 870,000 customers. When GIC announced it was investing in DEI in 2021, DEI was dependent on coal-fired power plants to generate most of its electricity.
DEI will diversify its power generation fleet by investing in more renewables and natural gas-fired generation and by retiring its coal-fired units over time to achieve its carbon reduction goals. In late 2021, DEI released an updated plan that would retire all coal-fired generation by 2035 (several years earlier than its prior plan) and triple the renewable energy investments as compared to its previous plan. At its Edwardsport plant, which runs on both gasified coal and natural gas, the company would either retire the coal gasifiers or add carbon capture technology by that goal date.
In addition to its medium-term carbon reduction goals, Duke Energy plans to achieve net-zero emissions in Scope 1, Scope 2 and certain Scope 3 emissions by 2050. Meanwhile, DEI is also investing in transmission and distribution for a smarter, more resilient, green-enabled grid.
InterContinental Energy (ICE) is a leading dedicated green fuels company. ICE has pioneered green fuel projects at massive scale, including three of the most advanced developments worldwide with the governments of Australia, Oman, and Saudi Arabia.
ICE projects are located in coastal deserts with abundant sun during the day and strong wind at night, and will use renewable energy to electrolyse water and generate green fuels at the largest volume and lowest cost. The portfolio will enable the production of more than 10 million tons per annum of green hydrogen. ICE works with leading local partners to ensure maximum domestic benefits, including the development of high technology ecosystems around each hub. The ICE portfolio is expected to offset over 200 million tons of carbon dioxide per annum and create over 100,000 direct and indirect high-quality jobs.
MioTech, a sustainability data and technology provider, harnesses artificial intelligence to solve carbon emission, energy, and ESG challenges. Its data terminal supplies global ESG datasets with a focus on Greater China and Southeast Asia for holistic portfolio and asset risk assessment. MioTech has also developed solutions for sustainability data reporting, energy and carbon data management, and carbon emissions reduction. Clients can thus track and improve sustainability metrics towards improved ESG performance and net zero transition.
GIC backed the company’s series B+ funding round in 2021, and has actively supported the company in its client expansion and product development roadmap. GIC has been working with MioTech to test and provide feedback on its platform, and has connected the company with our other portfolio companies to help the company expand its customer base. As an active, long-term investor, GIC regularly engages MioTech on issues such as its corporate structure and data security initiatives, among others, so as to create value for shareholders.
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