Environmental, Social and Governance (ESG) Policy

GenZero is an investment platform company aimed at accelerating decarbonisation globally to facilitate the transition to a net-zero world. We seek to deliver positive climate impact alongside long-term sustainable financial returns through investments across three focus areas:

1. Nature-based solutions (NBS) that help protect and restore natural ecosystems to generate climate impact while benefiting local communities and biodiversity;
2. Technology-based solutions (TBS) that deliver deep decarbonisation impact through climate-driven technologies; and
3. Carbon ecosystem enablers (CEE) that support the development of an effective, efficient, and credible carbon ecosystem.

GenZero recognises that the appropriate management of environmental, social, and governance (ESG) factors is fundamental to long-term value creation and risk mitigation. This ESG Policy is an articulation of GenZero’s holistic approach towards integrating sustainability considerations into our investment process and organisational philosophy, drawing on industry best practices.

GenZero is committed to complying with applicable local and international laws, regulations, and international conventions governing GenZero’s business, operations, and investments.

This policy applies to GenZero’s own operations and investment activities. It excludes other Temasek Group entities or other affiliates.

GenZero aspires to align our ESG practices with leading international standards and to participate in relevant industry alliances and coalitions. We are committed to continuously strengthening our processes and enhancing our transparency in our sustainability reporting.

3.1 Roles and Responsibilities

GenZero’s Board of Directors (Board) approves our ESG policy and provides ultimate oversight, while the CEO oversees its implementation across the organisation.

The Sustainability and Impact team is responsible for formulating and updating policies related to overall ESG risk management (e.g. ESG Policy, ESG risk assessment framework, etc.) and corporate environmental matters (e.g. GenZero’s carbon accounting), whereas the Human Resources and Legal teams are responsible for the formulation and implementation of policies related to corporate social and governance matters.

The Investment team is jointly responsible for implementing the ESG Policy and the ESG risk assessment framework throughout the investment process and engaging appropriate stakeholders should any significant ESG issues arise.

The Investment Committee (IC) is responsible for taking ESG considerations into account for all investment decisions.

When required, GenZero will seek support and guidance from industry experts, standard bodies, coalitions, and third-party advisors.

3.2 Anti-Discrimination Statement

GenZero is committed to establishing a fair, inclusive, and safe environment for our employees. We recruit and select employees based on merit, regardless of characteristics such as age, race, gender, religion, marital status, sexual orientation, family responsibilities, or disability. We treat employees with dignity and respect, and do not tolerate any acts of harassment or bullying. We provide employees with an equal opportunity to be considered for training and career development, based on their strengths and needs, to help them achieve their full potential. We reward employees fairly based on their ability, performance, and contributions.

Our SpeakUp Policy outlines the process for employees to raise concerns anonymously about illegal, unethical, or questionable practices. We have also established various channels to raise concerns confidentially, including an independent whistleblowing service platform, which is also accessible to third parties through GenZero’s website.

3.3 Approach to Decarbonisation

GenZero measures both operational and financed greenhouse gas (GHG) emissions. To manage our operational footprint, we focus on emission sources most relevant to our business model and activities, applying recognised standards and methodologies to guide our approach (i.e. the Greenhouse Gas Protocol (GHGP) and the Partnership for Carbon Accounting Financials (PCAF)). GenZero recognises that the decarbonisation landscape is continuously evolving and remains committed to staying informed and aligned with industry best practices.

GenZero aligns with the mitigation hierarchy by prioritising direct emission reductions in our operations, where we have the greatest control and impact, while supporting our investees in their decarbonisation journeys.

We address our operational emissions using Renewable Energy Certificates (RECs) for Scope 2 emissions and Sustainable Aviation Fuel Certificates (SAFc) for a portion of our air travel emissions (Scope 3 Category 6). For all other remaining operational emissions, we use high-quality, high-integrity carbon credits, with a mix of reduction and removal credit types.

The following principles guide our approach to building a balanced, high-quality, and high-integrity portfolio of carbon credits to address our emissions:

• a. Align with meta-standards: Source high-quality credits that are aligned with internationally recognised standards, such as credits with ICVCM’s Core Carbon Principles label or that use CORSIA-eligible methodologies (without corresponding adjustments).
• b. Assess quality at project level: Conduct internal and external due diligence to assess project quality. Internal due diligence is undertaken by the Investment, the Policy and Analytics, and the Sustainability and Impact teams, complemented by external due diligence such as independent carbon ratings where relevant. Whenever possible, we strive to find projects with a rating of BBB as a minimum bar for external due diligence. There may be exceptions to projects with lower ratings if there are mitigating factors (e.g. if the project has plans to transition to a newer methodology).
• c. Include both reductions and removals: Include a mix of reduction and removal credits, recognising that both are critical to achieve global climate goals.
• d. Support both nature and technology: Invest in a diversified portfolio of NBS and TBS credits across different geographies.

3.4 Additional Note on Carbon Markets

Carbon markets can play a critical role in catalysing global emissions reduction and driving climate ambition, but only when used with integrity. GenZero’s integrity standards require carbon credits to be issued by credible programmes and to represent real, additional, verifiable, and permanent emissions reductions or removals. The due diligence on carbon credit purchases, sales, and relevant investments that GenZero conducts includes the abovementioned criteria. 

For collaborations and partnerships, the decision on whether to proceed will be subject to joint approval by the CEO, Head of Investments, and General Counsel. For co-investments, the assessment and mitigations will be presented to the IC for decision-making.

We seek to promote sustainable and responsible business standards across our investments. ESG considerations are integrated throughout the investment process across due diligence, decision-making, portfolio management, and exit. Our IC is apprised of material ESG findings. We recognise that not every investee may be fully aligned with our ESG objectives and policies at the date of investment. As appropriate, our teams will seek to work with our investees to develop mitigation plans for the ESG risks identified.

4.1 Due Diligence

4.1.1 ESG Policy Screening

GenZero outlines a list of restricted practices and industries with recognised, significant adverse environmental and social impact for which we have limited or no tolerance for.

During due diligence, the Investment team conducts a screening against the restricted activities to establish whether there is any potential direct or indirect involvement. Where a potential involvement is identified, the Investment and the Sustainability and Impact teams conduct further due diligence and consider mitigants, where available, before proceeding.

4.1.2 ESG Risk Assessment

Our ESG risk assessment methodology is developed with reference to international standards and frameworks to support the identification of ESG risks relevant to GenZero and its investments.

GenZero’s ESG risk universe includes (but is not limited to):

• a. Environmental: GHG emissions, climate risks, biodiversity and ecological impacts, energy management, air quality, water, and waste management.
• b. Social: Respecting the rights of indigenous and local communities (e.g. land rights), labour practices, employee engagement, diversity and inclusion, product quality and safety, supply chain management.
• c. Governance: Corporate governance, business ethics, business model resilience, critical incident risk management, management of legal and regulatory environment.

From this risk universe, GenZero’s uses an ESG due diligence questionnaire (“ESG DDQ”) to identify and quantify the material risks for each investee.

The identification of risks associated with each investment opportunity is based on a double-materiality approach. This approach seeks to identify ESG risks that may have a negative financial impact on investees, as well as any potential adverse impact the investee may have on the environment and/or society. The materiality of each ESG risk depends on the sectors, activities, and geographies of the investee’s operations.

We assess each investee’s performance against the identified material risks, taking into consideration its stage of growth to inform the investee’s ESG risk score.

4.2 Decision-Making

The results of the ESG risk assessment conducted at the due diligence stage and any proposed mitigation measures for material risks are included in the investment memorandum presented to GenZero’s IC. The IC makes the final investment decision based on a holistic assessment of the investment opportunity.

4.3 Portfolio Management

The Investment and the Sustainability and Impact teams seek to work with investees that are exposed to medium-high and high ESG risks to develop an appropriate plan for engagement, monitoring, and mitigation. This may include recommendations to strengthen the investee’s internal approach to sustainability practices or to take measures to safeguard itself against potential risks.

However, we recognise that the ability to influence and exercise control over ESG matters varies depending on the asset class, investment structure, and contractual rights. Where appropriate, GenZero seeks to support investees in implementing best practices, policies, and controls, and to measure its implementation progress.

As part of our portfolio monitoring and management, GenZero generally requires investees to provide updates on the management of their ESG risks and performance indicators through an annual refresh of the ESG DDQ. The KPIs include, but are not limited to:

• a. GHG emissions across Scope 1, 2, and 3
• b. Climate Impact (climate mitigation through GHG emissions reduced and/or removed, or climate adaptation and resilience outcomes)
• c. Environmental and Social impact
• d. Additional relevant metrics on material ESG topics as agreed upon based on the due diligence and risk assessment

The KPIs may be revised from time to time to align with GenZero’s sustainability reporting requirements.

4.4 Exit

GenZero endeavours to develop and implement considerations for responsible exits in due course.

GenZero aims to continue evolving the ESG Policy to cater to our development and align with industry best practices. In the spirit of continuous improvement, this policy will be reviewed on an annual basis and will be updated as appropriate.