Singapore state investor Temasek will set aside S$100 million (around $77 million) as concessional capital for climate action (CCAA), according to an announcement on Monday.
Concessional capital refers to loans, grants, or equity investments that are provided on more favourable terms—lower interest, longer repayment periods, or grace periods—than those available in the market
The S$100 million is funded by Temasek’s community gifts, which aim to drive intergenerational impact aligned with its community objectives.
To fulfil its stated objectives of connecting people, uplifting communities, protecting the planet, and advancing capabilities, Temasek has, since 2003, been setting aside a portion of its net positive returns above its risk-adjusted cost of capital.
These gifts are philanthropic and have the potential to be catalytic in mobilising other forms of capital, the state investor said in the statement.
Its success would be measured by its ability to scale positive outcomes in climate action. This includes the ability to avoid, mitigate, and adapt to the impact of climate change; promote biodiversity and enable people to live in harmony with nature; and encourage sustainable living choices and behaviours that promote responsible resource use for better human and environmental health.
Examples of projects include marginally bankable clean infrastructure projects in Asia.
This announcement also marks Temasek’s inaugural contribution of concessional capital to support the green transition.
Speaking at Temasek’s 50th anniversary dinner speech Chairman Lim Boon Heng said: “Through the Concessional Capital for Climate Action, we hope our community gift can contribute to concessional capital emerging as an asset class, to mobilise the varied forms of capital necessary to bridge the climate financing gap.”
The chairman added that they view the criticality of concessional capital to catalyse financing into emerging markets and developing economies.
Blended finance initiatives like the Monetary Authority of Singapore’s Financing Asia’s Transition Partnership (FAST-P) are key in lining up long-term investors and philanthropic entities alongside commercial investors for this purpose.
Asia faces unique structural constraints and challenges that hinder the pace of progress. Particularly in Southeast Asia, ambitious plans to decarbonise while building the industries of tomorrow concurrently would require the scaling of catalytic financing.
Innovative financial mechanisms like blended finance can help mitigate emerging market risks, lower capital costs, and optimise the economics needed to accelerate the transition.
CCCA represents a novel way of advancing Temasek’s deployment of philanthropic capital, going beyond conventional grant-making, and a deepened commitment towards the climate agenda.
Temasek hopes to leverage other forms of capital in the climate ecosystem, which will contribute to the financing of marginally bankable projects, thereby enhancing the impact of its giving activities.
