Widen investment options for retail investors: Ho Ching

This is needed to help them invest for 'retirement with dignity', adds outgoing Temasek CEO

Oct 01, 2021

IN what marks her final speech as the head honcho of Temasek Holdings, Ho Ching has reminded businesses and investors of their "collective responsibility" with governments and the labour movement to prepare the work force for life beyond work and help them invest for "retirement with dignity".

"I urge them to open new opportunities for retail investors to invest for their own retirement or for the children... especially as governments and investors put money into green infrastructure as part of the transition to a net-zero world," said Ms Ho on her last day as Temasek's chief executive officer and executive director.

"The nexus between investors, businesses and society is people," she said in her closing address on Thursday that wrapped up the three-day Ecosperity Week 2021 organised by Temasek. The final day involved the inaugural Singapore Sustainable Investing and Financing Conference (SSIFC), which was organised by BlackRock, the International Finance Corporation (IFC) and Temasek.

One aspect of preparing for retirement is saving and investing, which should begin as soon as one enters the workforce, she remarked. "This means that we must create suitable products for young investors, first-time investors, as well as for retirees and small investors," she continued, citing efforts such as the development of real estate investment trusts in Singapore or S-Reits and Temasek's private equity bonds for retail investors.

"These diversify and reduce risks for the retail investors and socialise them to the world of PE (private equity) funds," said Ms Ho, adding that the state investment firm was also looking to "open" the equity component of PEs to retail investors.

On the issue of climate emergency and the warning that the planet will warm to 1.5 degrees Celsius in the next two decades, Ms Ho pointed to the world's top five carbon emitters that account for 60 per cent of the world's carbon dioxide emissions. China and the United States collectively account for 40 per cent of global emissions.

"Carbon abatement needs government actions now, especially by these top five emitters. Investors and businesses must act too...," she said, as she described Temasek's own journey to reach zero carbon, which in the beginning drew some pushback and surprise but was eventually received with "whole-hearted support".

"How did Temasek start our own journey towards zero carbon? Simple. We estimated our carbon emissions and dollarised it," she said.

"Then came the hard part. We estimated the future carbon emissions of our portfolio in 2030. Our portfolio management team had a fierce and passionate debate on what it means to halve the carbon emissions of our portfolio (by 2030).

"Again, we dollarised the value of carbon reduction that we need to deliver every year to 2030 and mapped that against a long-term incentive plan. For investment decisions, we now impute a carbon price of US$42 per tonne CO2 equivalent. We expect to raise this progressively over the decade.

"We debated and decided not to divest emitters just to tick the box. This does nothing to help the world decarbonise and it isn't the right thing to do. Instead, we are prepared to do the hard work, to work with or even invest in emitters who commit to a clear transition plan for carbon reduction," she added.

After her closing address, Dilhan Pillay, who succeeds Ms Ho and will hold a dual role as CEO of both Temasek and its commercial arm Temasek International, presented Ms Ho with a painting done by Singaporean botanical artist Lucinda Law called The Giant Sequoia.

Also on Thursday, Temasek Trust announced that Ms Ho will be appointed to its board of directors from Oct 1. She will also succeed S Dhanabalan as chairman of Temasek Trust from April 1, 2022.

In a statement, Temasek chairman Lim Boon Heng said Ms Ho drove Temasek to play a key role as a "champion of sustainability" long before the word became synonymous with the firm's investment approach.

He added: "Temasek is, in every sense, a changed organisation from the one Ho Ching joined in 2002, and also in every sense, for the better."