A Trusted Steward

Our Temasek Charter defines who we are and what we do as an investor, institution, and steward.

We are governed by the Singapore Companies Act and the Singapore Constitution.

Under the Singapore Constitution, Temasek is a Fifth Schedule entity with a constitutional responsibility to safeguard our Company’s past reserves. Temasek’s reserves form part of the nation’s reserves.

Temasek owns its assets — we are not a fund manager. We do not manage Singapore’s Central Provident Fund savings, or the Singapore Government assets, or the foreign exchange reserves of Singapore. Neither does Temasek manage the assets of any other Fifth Schedule entity: these are independently managed by the respective Fifth Schedule entities themselves.

Relating to the President of Singapore

The Board and CEO of Temasek have the responsibility under the Singapore Constitution to protect our Company’s past reserves.

Under the Singapore Constitution, Temasek’s past reserves are those Temasek accumulated before the current term of Government. Temasek’s current reserves are those Temasek accumulates during the current term of Government.

Every year, the Temasek Board and senior management brief the President and the Council of Presidential Advisers on Temasek’s portfolio and financial performance, global economic outlook, and investment strategies.

Relating to Our Shareholder

Incorporated on 25 June 1974, Temasek is wholly owned by the Singapore Minister for Finance. As Temasek is a commercial investment company, the Government does not direct our investment or other business decisions. Instead, the Government holds the Board accountable for our overall performance by assessing Temasek’s long term returns. In turn, the Board delegates the day-to-day management of Temasek to Temasek’s senior management.

Temasek declares dividends annually in accordance with our dividend policy. Our Board sets our dividend policy, balancing the sustainable distribution of profits as dividends to our shareholder with the retention of profits for reinvestment to generate future returns. The policy also takes into account our constitutional responsibility to protect Temasek’s past reserves. Our Board recommends the dividend payout for our shareholder’s acceptance at the annual general meeting.

Under the Net Investment Returns (NIR) framework, the Government is permitted to spend up to 50% of the expected long term real rates of return of GIC, the Monetary Authority of Singapore, and Temasek. The NIR framework does not affect, change, or impact Temasek’s dividend policy, strategies and operations as a long term investor, and our responsibility to protect Temasek’s past reserves.

Every year, the Temasek Board and senior management meet with the Minister for Finance and officials from the Ministry of Finance to review Temasek’s portfolio and financial performance, global economic outlook, and investment strategies.

Relating to Our Portfolio Companies

We manage our portfolio as an active investor and asset owner. We increase, decrease, or hold our investment positions based on our views on intrinsic values, to enhance our risk-adjusted returns over the long term.

As an engaged shareholder, we also seek to add value to our portfolio companies by exchanging ideas and sharing best practices in areas such as sustainability, governance, industry and technology trends, and cybersecurity.

We keep abreast of industry developments that impact our portfolio companies, and track their performance. Through our engagements with their boards and management, we gain a better understanding of their changing operating environments and longer term trends.

We also encourage them to be nimble and innovative, and to be prepared to face disruptions and take on new opportunities. This is with the view of building a resilient and forward looking portfolio as part of our T2030 strategy, and ultimately, to deliver sustainable value over the long term.

We expect companies to abide by sound corporate governance and codes of conduct and ethics. We do not condone any form of misconduct and malfeasance. We engage the boards and management of our portfolio companies regularly and hold them accountable for the activities of their companies. Boards should set the tone — to effectively oversee management in the development and implementation of strategies and ensure robust governance, compliance systems, and processes are in place. These must be constantly reviewed and refreshed to ensure relevance.

Board directors have a fiduciary duty to safeguard the interests of their respective companies.

Accordingly, we advocate that boards be independent of management in order to provide effective oversight and supervision of management. This includes having mostly non-executive board members with the independence and experience to oversee management.

We advocate that the Chairman and CEO roles be held by separate persons, independent of each other. This is to ensure a healthy balance of power for independent decision making, and a greater capacity for management supervision by the board.

We protect our interests by exercising our shareholder rights, including voting at shareholders’ meetings.

Relating to Our Communities

As an owner of our assets, Temasek has a wider group of stakeholders beyond our shareholder — employees, investee companies, partners, and communities. As a responsible company, we operate with respect to the considerations of this wider group. Since 2003, we have been setting aside a portion of our net positive returns above our risk-adjusted cost of capital for community gifts. Through our community gifts, Temasek seeks to contribute to the progress, cohesion, and resilience of our communities, enhancing our social licence to operate.

The skills required for the financial management of endowment funds are very different from those for developing and delivering community and social programmes. This was why TT was established in 2007 ― to oversee the financial management and sustainable disbursements of philanthropic gifts from Temasek. These donations and gifts have been earmarked for social and community programmes to be developed or delivered by Temasek's non-profit ecosystem which includes TF, Temasek Life Sciences Laboratory, Stewardship Asia Centre, and Mandai Nature.

This governance model separates the financial management of philanthropic assets by TT, from the programme design and delivery by Temasek’s non-profit ecosystem, and enables the respective entities to develop clear focus and capabilities. TT, TF, and other non-profit entities are separate, independent entities from Temasek, each with their respective boards and management teams. Temasek does not direct their day-to-day operations.

TT’s role is evolving beyond managing philanthropic financial assets to driving societal good as an advocate of sustainability and governance in philanthropy, a catalyst in creating shared value, and an investor for impact.

Alongside the work of Temasek’s non-profit ecosystem, our staff volunteers play an active role in contributing to their communities around the world. Through our staff-driven volunteer T-Touch initiative, our employees commit ideas, time, and money to support their chosen charities and community projects, and pursue philanthropic and public good causes.

From time to time, we may seed institutions to develop capabilities which promote good governance and community stewardship. In addition, we collaborate with like-minded partners, such as universities and multilateral agencies, to build these institutions.