Investment firm Temasek commits S$100 million in grant funds to support climate action efforts.

Singapore's state investment company, Temasek, has announced a new initiative called the Concessional Capital for Climate Action (CCCA). The initiative, revealed during a speech at the anniversary dinner last week by Temasek's chair, Lim Boon Heng, aims to mobilize the varied forms of capital necessary to bridge the climate financing gap, particularly in emerging markets like Southeast Asia.

The CCCA is a unique form of financing that is typically used to accelerate climate finance. It provides financing at favorable terms, such as lower interest rates and longer repayment periods, to support climate initiatives, especially in regions that face significant challenges in decarbonizing while growing their industries.

Temasek has committed S$100m for the CCCA, which is funded by Temasek's community gifts, an initiative that has been in place since 2003 to drive intergenerational impact. The community gifts focus on connecting people, uplifting communities, protecting the planet, and advancing capabilities.

By offering concessional capital, Temasek hopes to bridge the gap in climate financing, addressing risks and high costs that hinder private investment in green projects. This move follows Temasek's strategic partnerships with institutions such as the International Finance Corporation (IFC) and the Asian Development Bank (ADB) to finance climate action and energy transition. These partnerships have resulted in investments totaling several billion dollars aimed at sustainable infrastructure and clean energy projects.

Temasek has also entered strategic partnerships with prominent financial institutions like BlackRock and Brookfield, committing some S$44bn to climate finance and energy transition investments. The CCCA is intended to connect with these and other climate financing initiatives to accelerate climate finance.

The CCCA's goal is to make concessional capital more common for institutional investors to lend on favorable terms. This could potentially open up new opportunities for climate initiatives in emerging markets like Southeast Asia, where concessional capital, while often deployed by development banks for climate finance, is relatively less common for institutional investors to lend on such terms.

The CCCA is not just about providing financing, but also about connecting with other climate financing initiatives to create a more robust ecosystem for climate action. This new initiative is a significant step towards Temasek's commitment to sustainable and responsible investing, as it seeks to contribute to concessional capital emerging as an asset class.

Investment firm Temasek commits S$100 million in grant funds to support climate action efforts.