Jeff Johnson, managing director at Temasek, discusses the charter of the Sustainable Investing Team, their investment criteria, and their alignment with climate tech and energy transition. They explore Tomásik's origin story and its various lines of business, highlight the importance of prioritizing impact over profitability, and discuss their strategy for scaling investments in sustainable living. They also delve into the balance between thesis-driven and opportunistic investing, the challenges of measuring performance and progress, and the risks of being too risk averse in decision-making.
Temosik invests in emerging technologies and decarbonization to support sustainable living.
Temosik collaborates with external partners to identify market-disrupting investment opportunities.
The sustainable living investment team at Temosik focuses on industries that offer solutions with strong unit economics and potential for wide-scale adoption.
Deep dives
Temosik: A Long-term Investment Management Company
Temosik is an investment management company headquartered in Singapore, with a focus on long-term investments. It was established in 1974 and initially managed Singapore-based businesses. Over time, Temosik expanded its portfolio to a value of nearly $300 billion. The company operates multiple engines, including investment, development, and partnership engines. Temosik aims to support sustainable living by investing in emerging technologies, decarbonization, and other areas aligned with climate solutions.
Temosik's Approach to Investment and Partnerships
Temosik emphasizes collaborative partnerships and seeks to work with great partners to amplify impact. The company sets up various investment platforms, teams, and partnerships to facilitate its investment strategies. These include an early stage emerging technologies team, a decarbonization partnership with BlackRock, and dedicated platforms such as Gen Zero, which focuses on managing carbon risk. Temosik also collaborates with external parties like Breakthrough Energy Ventures and HSBC to further its investment goals. By leveraging a broad ecosystem and specialized teams, Temosik aims to identify and invest in market-disrupting opportunities.
Temosik's Focus on Sustainable Living and Long-Term Impact
The sustainable living investment team at Temosik, led by Jeff Johnson, focuses on identifying businesses and industries that can deliver solutions with strong unit economics and potential for wide-scale adoption. The team strives to understand market maturity, technology readiness, and inflection points for growth in order to make impact-oriented investments. By prioritizing long-term sustainability and appropriate financial returns, Temosik seeks to contribute to the transition to a low-carbon economy. The company values problem-solving, collaboration, and storytelling for effective climate solutions and commercial success.
Focus on Impact: Investing in Sustainable Solutions
The podcast episode delves into the philosophy behind investing in sustainable solutions and the importance of prioritizing impact. One key point discussed is the need to find areas with high leverage for immediate GHG impact, such as methane reduction. While the search for investable opportunities in these areas is ongoing, the focus remains on achieving risk-adjusted returns. The episode also highlights the significance of energy storage and grid resilience as crucial factors in accelerating the transition to renewables. In the short term, the goal is to effectively scale investments in the sustainable living space, while the long-term vision involves creating a sustainable future through innovation and collaboration. The challenges of risk allocation and capital deployment are acknowledged, underscoring the need for careful evaluation and robust business models. Despite the complexities and slow progress, the episode expresses optimism for the future, citing the increasing involvement of experienced entrepreneurs and the recognition from legacy companies that business as usual is no longer viable.
Navigating the Climate Tech Investment Landscape
The podcast episode explores the nuances and considerations involved in climate tech investment. The speaker emphasizes the importance of being both thesis-driven and opportunistic, balancing fundamental evaluation with openness to emerging market dynamics. Energy storage, grid resilience, mobility, and sustainable materials are identified as key areas of interest. The discussion highlights the challenges in scaling up companies in the climate tech space, attributing them mainly to business model development rather than technological progress. The need for early-stage support and guidance to refine business models and acquire critical stakeholders is stressed. Additionally, the episode acknowledges the risks and uncertainties associated with investing in the climate tech sector and suggests seeking insights from experienced investors who understand the complexities and nuances of the industry. The speaker encourages a long-term view, recognizing the immense potential for innovation and the ability to build successful, impactful businesses within the climate tech landscape.
This episode is part of our new Capital Series hosted by Jason Jacobs. This series explores a diverse range of capital sources and the individuals who drive them. From family offices and institutional LPs to private equity, government funding, and more, we take a deep dive into the world of capital and its critical role in driving innovation and progress.
Jeff Johnson is managing director at Temasek, where he leads the US-based Sustainable Investing team. Temasek was incorporated in 1974 and is an investment company headquartered in Singapore.
Supported by 13 offices across nine countries, Temasek owns about $382 billion or US$287 billion portfolio as of March 31st, 2023, mainly in Singapore and the rest of Asia. We have a great discussion in this episode about what the charter of the Sustainable Investing Team is, how Jeff found himself doing the work that he's doing today, what criteria they look for when they make investments, and, of course, how their investments fit into the broader climate tech landscape and the energy transition overall.
Enjoy the show!
In this episode, we cover:
[2:10] An overview of Temasek
[4:13] Different lines of business at the firm and where sustainable living sits
[8:44] Jeff's background and career history
[18:58] The CEO's mindset for Temasek's approach
[21:44] Jeff's role at the firm
[24:22] Lessons he learned about the space and future projections for Temasek's impact
[26:26] The balance between thesis-driven investments vs opportunistic ones
[33:55] Temasek's direct and fund investments
[38:39] The firm's performance measurements and market entry points
[46:51] Temasek's role in debt financing
[51:07] The types of companies and projects best suited for Temasek's capital
[56:48] Jeff's response to folks who are worried about the risk of investing in climate tech
[58:51] The need for a balance between experience and beginner's mindset in picking winners
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Episode recorded on Oct 13, 2023 (Published on Nov 8, 2023)
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