Decarbonising Government's Investment Holdings and Reducing Government's Exposure to Climate-related Financial Risks

Ms He Ting Ru asked the Deputy Prime Minister and Minister for Finance in the wake of the European Central Bank's latest announcements of measures to decarbonise its corporate bond holdings and to reduce exposure to climate-related financial risks, whether there will be similar moves to be made by MAS and Government's investment entities to do the same.

The European Central Bank intends to decarbonise its corporate bond holdings by tilting its exposure to companies whom they assess to be doing better in mitigating climate impact. This is part of its broader commitment to take into account climate-related financial risk in the Eurosystem's monetary policy framework.

The Monetary Authority of Singapore (MAS) and the investment entities have integrated sustainability considerations in their investment processes across a range of asset classes, not just limited to corporate bonds. They consider climate risks in their investment strategies and calibrate these strategies to mitigate climate-related risks based on their investment portfolios.

MAS will exclude from its portfolio the equities and corporate bonds of companies that derive more than 10% of their revenues from thermal coal mining and oil sands activities. It will also customise its equities benchmark to gradually tilt its portfolio towards exposures that are less carbon-intensive and more aligned with the low-carbon transition over time.

GIC contributes to the global decarbonisation by investing in companies which develop solutions that help to accelerate the low carbon transition in the real economy and supporting existing companies in their transition towards more sustainable business practices.

As part of Temasek's plans to achieve a decarbonised and carbon-efficient portfolio, some of the actions it has taken include investing in businesses and funds that support decarbonisation and engaging its major portfolio companies on their climate transition plans.

While the Government does not prescribe individual investment actions, MAS and the investment entities will continue to emphasise sustainability in their investment strategies and processes. More information can be found in MAS' Sustainability Report and the Sustainability chapters in GIC's Annual Report and the Temasek Review.