This is the repurposed version of the interview titled “In Conversation with Liew Tzu Mi, Chief Investment Officer, Fixed Income, and Chair of the Sustainability Committee” which was published as part of the “Investing Sustainably” chapter of the GIC Report 2021/2022.
Access the audio recording of the interview here.
What are your views on the recent rise in net-zero commitments by companies?
Decarbonising the economy is an existential issue, which is increasingly recognised by companies around the world. For example, a report by Natural Capital Partners in 2021 estimated that 38% of the Fortune 500 companies have set a major climate-related milestone by 2030, up from 30% a year before. This is encouraging.
But these aspirations must be translated into actions to have an impact in the real economy. From GIC’s interactions with our portfolio companies, we learnt that companies are more likely to make meaningful progress in their transition to net zero when decarbonisation makes business sense. For example, technologies are available today to reduce the carbon content of cement, a basic material in construction, but producers will only adopt them if customers demand it.
Regulators could also shape market conditions, for example, by raising the costs of emitting carbon or encouraging the adoption of lower-carbon technologies. Once such conditions are in place, companies will still need significant investment to upgrade their production processes or transform their business models. These transition efforts are what long-term investors such as GIC can play a role in enabling.