Why Singapore's sovereign wealth fund takes a nuanced approach to sustainability

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Nov 29, 2024

De Rui Wong, Senior Vice President at GIC, Singapore's sovereign wealth fund, discusses the fund's unique approach to sustainability. He emphasizes a tailored strategy, recognizing that companies decarbonize at varying rates based on location and regulations. Wong highlights climate change as a new reality that demands adaptive investment strategies, especially in real estate. He also touches on the social implications of climate transitions, advocating for reskilling workers to support a just energy shift. A multifaceted view of climate finance emerges!

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INSIGHT

Sustainability and Returns

GIC believes companies with strong sustainability practices offer better long-term returns.
They emphasize a nuanced approach to sustainability, recognizing that different companies are at different stages.

INSIGHT

Categorizing Companies

GIC categorizes companies into three groups: green solution providers, transition companies, and carbon-intensive companies.
They tailor their investment approach based on each company's category.

ADVICE

Assessing Transition Plans

Assess a company's transition plan, emission reduction targets, and integration into business plans.
Evaluate the commercial viability of the transition and the governance process.

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Throughout 2024 we've been talking with financial institutions around the world about their approach to sustainability and climate finance. Finance was also a big focus of the UN’s COP29 climate conference that just wrapped up in Baku, Azerbaijan, and in this episode of the ESG Insider podcast, we talk with De Rui Wong, Senior Vice President in the Sustainability Office of GIC, Singapore's sovereign wealth fund.

"When it comes to sustainability, we believe that there is no one-size-fits-all approach," De Rui says. "Companies are often decarbonizing at different rates and along different trajectories, depending on the regulations, the availability of technology, as well as the market opportunities in the locations that they operate in."

GIC's approach includes a focus on the physical risks of climate change.

"Climate change has moved from threat to reality," De Rui says. "It is creating a new environmental norm, a new economic paradigm, that we need to understand how to navigate."

You can read a report published by GIC and S&P Global Sustainable1 on integrating climate adaptation into physical risk models here: https://www.spglobal.com/esg/insights/blog/integrating-climate-adaptation-into-physical-risk-models

Listen to our interview with Mastercard's Chief Sustainability Officer here: https://www.spglobal.com/esg/podcasts/mastercard-chief-sustainability-officer-talks-cop-climate-and-the-road-ahead

Listen to our interview with Norges Bank Investment Management, the world's largest asset owner, here: https://www.spglobal.com/esg/podcasts/why-the-world-s-largest-asset-owner-is-leaning-into-esg

This piece was published by S&P Global Sustainable1, a part of S&P Global.

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