This article is an extract from the “Investing Sustainably” chapter of the GIC Report FY2020/21, with visuals by Idea Ink.

Sustainability is a key priority for GIC given the impact of climate risks, and changing regulations and consumer preferences on the value of physical assets and companies over time. It is thus core to GIC’s mandate, which is to preserve and enhance the international purchasing power of the reserves under our management.

As a long-term investor, we seek to 1) invest in sustainability whilst protecting our portfolio assets from being negatively affected; 2) integrate sustainability into our portfolio, strategy and processes, in a way that recognises the diversity of the industries and markets that we operate in; 3) engage and support our investees and partners in their transition towards sustainability.

We take a holistic and considered approach towards sustainability across our investment and corporate processes, and do this through our Offence-Defence-Enterprise Excellence (ODE) framework.

Offence: Capturing opportunities

Offence focuses on capturing opportunities by integrating sustainability into our investment processes, actively engaging investee companies towards more sustainable outcomes, investing in ESG solutions and opportunities, actively greening our assets to be resilient to climate change risks, and incorporating sustainability signals into quantitative strategies.

Defence: Protecting our portfolio

Defence refers to protecting our portfolio, as sustainability issues across the domains of environmental, social and business governance all have the potential to pose investment risks. GIC protects our investments by developing climate scenarios to stress-test our portfolio, regularly screening our portfolio for sustainability issues, and conducting additional due diligence for companies exposed to greater sustainability risks.

Enterprise Excellence: Operating sustainably

GIC believes that operating sustainably as an organization is as important as the way we invest. We achieve enterprise excellence by communicating clearly our expectations for sustainable behaviour to our business partners and staff, managing our resources to improve energy efficiency and achieve carbon-neutrality across our global offices, and fostering a culture that embraces diversity and respect, and active contribution to society.

By collaborating with fellow asset owners through organizations and initiatives such as AIGCC, CDP, Climate Action 100+ and TCFD, we help to accelerate the overall pace of transition.

In summary, GIC’s approach and ODE framework are aligned with our purpose of creating long-term value for companies and society, and driving good returns for the GIC portfolio.

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