In 2021, we set a goal to achieve net zero for our operational carbon emissions by 2025. We have set specific carbon reduction targets and milestones to achieve our goal and adopt appropriate “Avoid, Reduce and Offset” measures for a consistent Group-wide approach.

In 2022, our total operational emissions reduced by 11% to 13,081 tCO2e from our 2019 baseline of 14,732 tCO2e. Our emission intensity has reduced by 20% from 3.25 tCO2e/FTE to 2.61 tCO2e/FTE. We will continue to implement the various initiatives in the pipeline to reduce our energy consumption and track our progress accordingly.

Towards net zero for our premises

Since 2019, we have endeavoured to minimise carbon emissions by enhancing and improving our premises and infrastructure. In line with our Operational Net Zero target, we have and will continue to adopt passive design principles and energy-efficient technologies for our buildings.

To validate our efforts, we intend to seek green building certification in our owned properties. In Singapore, we plan to obtain the BCA Green Mark certification for all buildings over time. In Malaysia, we have started work to obtain the Green Building Index (GBI) certificate for Menara Great Eastern and Great Eastern Mall. Where certification is unavailable or not feasible, we will implement measures to reduce carbon emissions and track our progress using methodologies aligned to industry standards.

In 2022, our offices in Singapore and Malaysia started on their office transformation projects with our Operational Net Zero target in
mind. In Q4 2022, we formally established environmental and safety requirements and metrics for the office transformation projects.

We continue to review our investment strategies and allocate capital to promising areas to foster long-term, sustainable economic growth while improving our portfolios’ risk-adjusted returns.

Reducing our portfolio carbon intensity

Climate transition can present a set of unique risks and opportunities to an investment portfolio. In 2022, we placed close to S$1bn in Asian equities and S$800mn in Asian bond investments with fund managers that are to be managed on a low carbon objective. We will be transiting an even greater share of our listed equity and corporate bond asset classes into such strategies over the next five years. We are assessing the various levers and approaches to decarbonisation, including what a 2050 Net Zero commitment on our investment portfolio may entail. We expect to drive a decline in emissions
through a combination of low carbon transition mandates and consciously replacing high emitters with lower equivalents.

Relating to coal divestments, we have fully exited listed equity exposure in utility companies that do not have a credible transition plan, and materially reduced such exposures within our fixed income portfolio. We remain committed to fully exit these bond exposures in due course in an orderly manner.

As of December 2022, Great Eastern Group’s listed equity portfolio’s carbon footprint was 114.0 tCO2e per million SGD invested, 4.5% lower than December 2021 and 16.1% below our December 2020 baseline. Likewise, the portfolio’s weighted average carbon intensity of 195.0 tCO2e per million SGD sales represents an improvement of 11.6% from 2020 levels. The decarbonisation trajectory is not expected to be a linear one, as it is dependent on the pace of transition adopted by global corporates and governments. We have also observed considerable variability around our emission numbers arising from equity mark-to-market volatility and currency movements, e.g. MYR/SGD input from our regional subsidiaries. We will be reviewing our carbon measurement methodologies and metrics to ensure that we are in line with industry best practices.

To this end, we engaged an external consultant in 2022 to perform a review of our portfolio carbon footprint calculations for listed  equity and corporate bond. This helps ensure that our procedures are in line with market practices and latest industry standards, and has also informed enhancements to our process. We are pleased to provide an inaugural update on the carbon footprint of our corporate bond following this review. As a group, we will look to achieve a 20% reduction in carbon footprint across the listed equity and corporate bond asset classes by 2025 (2020 baseline). Collectively, these two asset classes represent more than 50% of our assets under management. These targets demonstrate our commitment and transparency towards decarbonising our portfolios.

Scaling up green investments

Beyond taking active steps to reduce emissions across our portfolios, we recognise that as stewards of capital, we can play a significant influence in directing funds towards climate-positive areas. Green bonds, in particular, play a critical role in catalysing real-world decarbonisation. Our holdings in green bonds have doubled from a year ago to c. S$1.6bn today, and we aim to grow these investments to S$3bn by 2025. In Malaysia, we participated in the inaugural issue of domestic sustainability government bonds via bond forwards. Issuance proceeds would be utilised to finance or refinance eligible social and green projects under Malaysia’s Sustainable Development Goals (SDG) Sukuk framework. We have also invested in other areas of sustainable finance impact and decarbonisation solutions within private equity. We plan to commit certain proportion of new funds to these new areas, and to increase our total commitment to reach S$100mn by 2025. Concurrently, we are exploring opportunities in nature-based solutions, which play an integral role in the climate transition. 

Enhancing our role as active owners

We believe that active stewardship will over time help to steer investee companies towards sustainable business practices, and support the value of our investments. In 2022, we formalised our stewardship and engagement guidelines and put it to practice. We will, through our investment affiliate Lion Global Investors (LGI) and regional investment teams, actively engage the top emitters in our portfolio and those which score poorly on ESG characteristics. In 2022, we conducted close to 300 engagements with companies and raised with them various topics from the importance of having transition plans to upholding responsible business practices. Exercising our proxy voting rights is a key pillar of our stewardship and engagement programme. We support shareholders’ resolutions that promote long-term sustainability of companies in our portfolios, and exercise our votes in such a way that encourages companies to address material ESG issues. Together with LGI, in 2022 we voted in support of management 88% of the time while against management 11% of the time. Beyond directly engaging with investee companies, we are now a member of the Asia Investor Group on Climate Change (AIGCC) with effect from January 2023. We look forward to making joint efforts with other investors in the push towards real-world transition as we play our role as active owners. Ahead of the 27th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP27), our asset manager LGI signed the 2022 Global Investor Statement to Governments on the Climate Crisis.

Along with hundreds of investors around the world, we are calling on governments globally to entrench five priority climate asks into their national legislation. Effective policies that are aligned to the goal of limiting global warming to no more than 1.5°C are essential for mobilising and scaling up private capital flows needed for a climate resilient, net-zero transition.

Beyond these, we have continued our engagements with regulators across the region through regular consultations and participation in surveys. We participated in industry workgroups for the betterment of practices. We made contributions in the Bank Negara Malaysia Climate Change and Principle-based Taxonomy (CCPT) Implementation Group, and provided inputs to the Life Insurance Association (LIA) Singapore surveys in preparation for
the implementation towards the Monetary Authority of Singapore’s (MAS) Environmental Risk Management (EnRM) Guidelines. We maintained partnerships with leading asset managers in the area of sustainability, and joined industry roundtables involving peers in sharing our knowledge of industry practices in the hope of collectively charting the way forward in responsible investments.

In 2022, we started assessing the environmental risks of our General Insurance portfolio based on the United Nations Principles for Sustainable Insurance (UN PSI) Heatmap. Starting with the property line of business in GEG, our risk management strategy involves environmental risk identification, assessment and an escalation system according to the risk profile of the customer. We have also introduced a prohibition on new coal-fired power plants as part of the risk management strategy.

In November 2022, the PCAF launched the Global Greenhouse Gas (GHG) Accounting and Reporting Standard for insurance-associated emissions. The Standard supplements are built on the requirements of the GHG Protocol.

We are in the process of assessing our General Insurance portfolio in accordance to this standard and will use the Net Zero Insurance Alliance Target Setting Protocol to guide our future actions.