In managing the OFR, MAS aims to achieve good long-term returns, while ensuring that the portfolio remains resilient across market conditions.  Managing the financial impact arising from climate change therefore aligns fully with our long-term investment objectives.

We assess the potential impact of climate change on the portfolio by conducting climate scenario analysis to understand the range of possible future climate states. Guided by our findings, we are taking pre-emptive actions to mitigate the impact of climate risks on our equities investments from an accelerated low-carbon transition.  We expect the portfolio actions that we are implementing to reduce the emissions intensity of our equities portfolio by up to 50% by FY2030. These actions include:

• Setting stewardship expectations for external managers to engage portfolio companies and vote on climate-risk issues.

• Implementing a climate overlay programme to mitigate transition risk to our equities portfolio.

• Allocating to investment strategies that are focused on sustainability and climate change themes.

• Excluding investments in companies that derive more than 10% revenues from thermal coal mining and oil sands activities.