Singapore state investor Temasek raised its sustainability-linked investments to S$49 billion (US$38 billion) in the year ended March, expanding its bets on renewable energy, grid technology and other climate-linked businesses as it positions for a more electrified, lower-carbon economy.
The sustainable living portfolio, which accounts for about 9.5 per cent of Temasek’s net portfolio value, grew by S$3 billion from a year earlier despite divestments including renewable energy platform O2 Power, Temasek said in its Sustainability Report 2026 released on Wednesday.
The increase comes as Temasek’s overall net portfolio value rose to a record S$518 billion as of March 31, up S$49 billion from a year earlier, with one-year total shareholder return of 10.5 per cent, according to its annual review published alongside the sustainability report.
Temasek deployed S$5 billion in new and follow-on sustainable living investments over the year, with a focus on renewable energy, climate technology and grid-related assets.
These included India-based renewable energy company CleanMax, United States-based Luminace, which provides decarbonisation-as-a-service solutions to commercial, industrial and public-sector customers, US- and Singapore-headquartered based grid technology company Amperesand, and Commonwealth Fusion Systems, a US fusion energy company.
Of the S$49 billion sustainability-linked portfolio, S$42 billion was invested in companies whose products and services support Temasek’s long-term goals of net zero, nature-positive outcomes and inclusive growth. The remaining S$7 billion was invested in companies in high-emitting sectors that are shifting towards greener products and services, reflecting Temasek’s view that financing transition businesses will also be needed to decarbonise the real economy.
Temasek said its total portfolio emissions held steady at 21 million tonnes of carbon dioxide equivalent for the third consecutive year since 2024, and remain about 30 per cent below 2020 levels.
Still, the Singapore investor said it was now unlikely to meet its interim target of halving net portfolio emissions from 2010 levels to 11 million tonnes by 2030 under current conditions, a sign of the more unpredictable path facing investors with exposure to carbon-intensive sectors.
Temasek, which first set its net zero portfolio ambition in 2019, said in the study that market volatility, higher financing costs, rising global energy demand and its exposure to hard-to-abate sectors such as steel, cement, power, aviation and shipping had made the transition “more uneven, contested, and non-linear than previously anticipated”.
It added the shortfall against its 2030 target did not represent a retreat from its long-term ambition of reaching net zero portfolio emissions by 2050, and that it had started reviewing its targets to ensure the assumptions behind them remain “current, credible, and actionable”.
The report offers a more nuanced picture of Temasek’s climate transition challenge: portfolio emissions have stabilised and climate-linked investments continue to rise, but some of its largest holdings are expected to see emissions increase in the near term before declining.
Singapore-based portfolio companies accounted for 89 per cent of Temasek’s total portfolio emissions, with utility Sembcorp Industries and national carrier Singapore Airlines contributing the bulk.
Temasek said Sembcorp’s emissions are expected to rise in the near term following its acquisition of Australia’s Alinta Energy in June, before declining over time. Sembcorp has said it now expects to miss its 2028 emissions-intensity target and 2030 absolute emissions target, but is aiming instead to achieve emissions intensity of 0.26 tonnes of carbon dioxide equivalent per megawatt-hour by 2035. The company remains committed to reaching net zero by 2050.
Singapore Airlines’ emissions, meanwhile, rose 3.8 per cent year-on-year, driven by resilient air travel demand, expanded operations and longer routings caused by airspace restrictions.
Temasek said it has been stepping up engagement with major portfolio companies through its Climate Transition Readiness Framework, which it used during the year to engage 19 companies accounting for 88 per cent of total portfolio emissions. Of these, 15 have set targets to achieve net zero by 2050 or earlier.
It also launched a Temasek Portfolio Companies Ecosystem Workforce AI Fluency Programme in 2026 to help strengthen artificial intelligence skills across its Singapore-based portfolio companies, part of a broader push to use AI both as an investment theme and as a workforce transition tool.
At its annual review this week, Temasek said it plans to increase exposure to AI from about 6 per cent of its portfolio to 10 per cent to 15 per cent by 2031, while also raising core-plus infrastructure investments from around 1 per cent to 5 per cent.
It added it is focusing on infrastructure-led energy and data centre companies that support rising AI compute demand, leading semiconductor firms that enable advanced AI processing, and cloud providers that supply large-scale computing capacity for training and deploying AI models.
