GenZero is an investment platform company aimed at accelerating decarbonisation globally. GenZero seeks to deliver positive climate impact alongside long-term sustainable financial returns through investments across three focus areas:
- Nature-based solutions that help protect and restore natural ecosystems to generate climate impact while benefiting local communities and biodiversity;
- Technology-based solutions that deliver deep decarbonisation impact through climate-driven technologies; and
- Carbon ecosystem enablers that support the development of an effective, efficient, and credible carbon ecosystem.
Driving strong environmental outcomes to facilitate the transition into a net zero world is built into GenZero’s mission and vision, while robust governance is foundational to driving towards this outcome. GenZero believes that appropriate management of environmental, social and governance factors together is fundamental to long-term value creation and risk mitigation.
This ESG Policy is an articulation of part of GenZero’s broader approach towards integrating sustainability into the investment process and organisational philosophy by 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, including applicable environmental protection laws and regulations.
This policy applies to GenZero’s own operations and investment activities, and excludes other Temasek group entities or other affiliates.
Defining ESG for Investment Activities
GenZero focuses on the assessment and management of ESG factors that are material from a risk point of view for our investments, recognising that the materiality of each of these risks varies depending on the industries and geographies that investees operate in, as well as the investees’ business practices and behaviours. This is in addition to the assessment and management of positive climate impact, which is core to GenZero’s mission, as well as other potential positive impact areas relevant to GenZero’s investments.
The ESG factors relevant to the investees that may be considered in GenZero’s investment process, as pertaining to GenZero’s investment focus areas include, but are not limited to:
- Environmental: GHG emissions; climate risk; biodiversity and ecological impacts; energy management;
- Social: Engagement and rights of indigenous and local communities (e.g. land rights); labour practices; employee engagement, diversity & inclusion; customer welfare; product quality & safety;
- Governance: Overall corporate governance; business ethics; business model resilience; critical incident risk management; management of legal & regulatory environment.
Additionally, GenZero screens potential investments against a list of restricted activities with recognised and significant negative environmental and social impacts or deemed illegal under host country laws or regulations or international conventions and agreements, and does not invest in companies or the instruments of companies or entities that are involved in such restricted activities.
ESG Integration in the Investment Process
ESG considerations are integrated throughout the investment process: due diligence, decision-making, post-investment engagement and monitoring, and exit.
Due Diligence: During the due diligence process, the Investment team collects and analyses data on an investee’s overall ESG approach, as well as approaches relating to material ESG factors that are relevant to the sector, activity, or geography the investee operates in. These factors are identified by drawing on guidance and insights provided by bodies such as the Sustainability Accounting Standards Board (SASB), the Task Force on Climate-Related Financial Disclosures (TCFD), and the Global Reporting Initiative (GRI).
Based on due diligence, the Investment team provides an overall ESG risk assessment, outlines priority ESG issues relevant to the proposed investment as well as proposes mitigation measures.
Decision-Making: The results of the analysis conducted at the due diligence stage are included in the investment memorandum presented to GenZero’s Investment Committee (or Board if necessary), who will make the final investment decision based on a holistic assessment. Investment approval will take into consideration appropriate mitigation measures for key ESG risk factors.
Post-Investment Engagement and Monitoring: Post investment approval, the Investment team will work with the investee to form an appropriate plan for engagement, monitoring, and mitigation (if necessary). As part of the plan, GenZero will request investees to report on Key Performance Indicators (KPIs) annually or as requested post investment. These KPIs include, but are not limited to:
- Overall ESG governance, monitoring and reporting
- GHG emissions across Scope 1 and 2, and Scope 3
- Diversity, equity, and inclusion
- Occupational health and safety
- Engagement with local communities (if applicable)
- Environmental compliance
- Climate change management
- Additional relevant metrics on material ESG topics as agreed upon based on the due diligence and risk assessment
Exit: While still at an early stage of capital deployment, GenZero endeavours to develop and implement considerations for responsible exits in due course.
GenZero will endeavour to influence ESG practices for different types of investments commensurate with GenZero’s level of ownership, the relevant asset class, and the geography in which the investees operate.
ESG at GenZero
GenZero is committed to achieving carbon neutrality at the company level on an annual basis from our launch in June 2022, by measuring, reducing avoidable emissions and offsetting unavoidable emissions.
GenZero is committed to establishing a fair, inclusive and safe environment for our employees. We recruit and select employees on the basis of 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 equal opportunity to be considered for training and 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. We also have a “Speak Up” procedure to encourage employees to raise any concerns they may have in the workplace.
GenZero also aspires to align our ESG practices with leading international standards, participate in relevant industry alliances and coalitions, and continue to strengthen our processes and enhance our transparency in reporting in relevant areas.
Additional Note on Carbon Markets
Carbon markets can play a critical part in catalysing global emissions reduction and driving climate ambition, but only when it is done right. GenZero believes that carbon credits should be issued by credible programmes and that these credits represent emissions reduction, avoidance or removal outcomes that are real, additional, verifiable and addresses permanence. The due diligence on potentially relevant investments that GenZero conducts include the abovementioned criteria.
Roles and Responsibilities
GenZero’s Board of Directors approves our ESG policy and provides ultimate oversight, while the CEO oversees its implementation across the organisation.
From an operational perspective, the Strategy & Development Group is responsible for formulating and updating the overall ESG framework. The Investment Group is responsible for implementing the ESG framework throughout the investment process, and engaging the appropriate stakeholders should any significant ESG issues arise among investees. The Investment Committee (and Board, as appropriate) is responsible for taking ESG considerations into account for all final investment decisions.
From an organisational perspective, the Human Resources and Legal teams are responsible for formulating and implementing ESG-related policies and processes in our own operations.
The GenZero team would be supported by guidance from industry standards bodies and coalitions, access to multiple sources of ESG data, and where warranted, industry experts and third party advisors.
Commitment to Continual Improvement
GenZero expects to continue to evolve this policy to meet changing needs and industry best practices, and to cater to the development phases of GenZero. In the spirit of continual improvement, this policy will be reviewed on an annual basis and updated as appropriate.
This ESG Policy was last updated in June 2023 and is subject to change as GenZero considers necessary or advisable.