Singapore's Temasek Holdings has decided against investing in Saudi Aramco's initial public offering over environmental concerns, Bloomberg reported.
The world's most-profitable company first flagged a public share sale in 2016 and is expected to list with a valuation of between $1.1trn to $2trn later this year. Saudi Aramco has been courting funds globally to act as cornerstone investors, including Temasek, which had a net portfolio value of SGD313 billion ($227bn) as of 31 March 2019.
But Temasek's focus on sustainability and environmental, social and governance principles made it more difficult to support Aramco's share sale, the people said, asking not to be identified because the discussions are private. Temasek has a 2030 goal to reduce the carbon emissions of its portfolio companies by 50%.
The company highlighted ESG assessments are a key factor in its decision making, alongside commercial considerations.
Temasek International Chief Executive Officer Dilhan Pillay was more direct last month when asked about which investment areas the company was avoiding as part of its focus on sustainability.
Saudi Aramco's IPO is expected to be the biggest in history. People involved in the transaction say about two per cent of the company may be sold, which could raise $40 billion for the oil producer.