Twenty years ago, the concept of an online space in which people around the world could collaborate on anything, from creating new worlds to running businesses, seemed out of reach. Today, Roblox – an online game and game creation platform – has reimagined the way people live, work, and play, whether they are eight or 80. With a market capitalisation of more than $23.6bn as of November 2023, the digital platform is entirely fuelled by community and user-generated content as a hub for culture, creativity, education and business. It's a virtual playground, classroom, concert hall and workplace all rolled into one, and today’s teens and preteens, also known as Generation Alpha, can't seem to get enough of it.
As the global landscape evolves and consumer behaviour changes in our omnichannel world, we can expect more of these experiential platforms to take centre stage and shape the future of consumption. Other megatrends – such as sustainable living, digitisation and longer lifespans – are also poised to have a big impact on businesses and society for years to come.
The future of consumption: a world of changing preferences
Trends and preferences in consumer consumption are rapidly changing thanks to rising middle-income populations, increased spending power and technological advances. Areas such as ecommerce and digital payments are driving the growth of the internet economy. Approximately two-thirds of the world's population is currently online, and as this number grows, the future of consumption is likely to shift towards digitally integrated and digital-first experiences.
Temasek, a global investment firm, recognises that investments in sectors such as ecommerce and financial services have the potential to tap into these changing consumer behaviours and to drive growth. “We actively examine changing consumption patterns that are underpinned by structural shifts in society,” says Chia Song Hwee, Deputy CEO of Temasek. “In doing so, we identify investment opportunities at different stages of long-term trends, such as growing middle-income populations and the rising demand for tech-enabled services.”
Sustainable living: mitigating climate change and resource conservation
Energy transition, food security and the decarbonisation of industry require breakthrough solutions. The International Energy Agency (IEA) expects emerging technologies to account for more than 40 per cent of global greenhouse gas (GHG) emission reductions in the net-zero emissions by 2050 scenario. Current innovations such as carbon capture and storage, green hydrogen, sustainable aviation fuel and green ammonia are gaining traction, but need to be scaled up for industrial decarbonisation. This will require trillions of dollars of new investment. These capital-intensive, high-risk initiatives will create a worldwide finance gap that will need to be filled to reach net zero ambitions.
Global climate goals also depend on the decarbonisation of key sectors – food, water, waste, energy, materials, clean transportation and the built environment. For example, at least one-third of worldwide GHG emissions from human activities is estimated to come from food production, processing, transport and packaging, costing the environment about $3tn every year. Food systems continue to cause global nature loss and deforestation with serious consequences for humanity.
Note: Agrifood systems account for more than one-third of global greenhouse gas emissions, second only to energy. This dynamic is even more pronounced in some regions, such as South Asia and Southeast Asia, where agrifood accounts for up to 50 per cent of total emissions.
“At Temasek, we believe that a more sustainable future will require an economy-wide transformation of key sectors. As long-term investors, we recognise the importance of using catalytic capital to accelerate solutions in key sectors and achieve impact at scale.”
Digitisation: fostering economic growth and bridging divides
Digitisation is another megatrend that will transform business models and operations. Increased connectivity and access to digital services can foster economic growth, enhance education and healthcare accessibility, and bridge the digital divide. The digitisation trend extends to foundational technologies such as blockchain and AI, as well as advancements such as 5G and IoT. “These technologies bring about risks and complexities,” notes Chia. “Tackling challenges that surface as we digitise, such as the need for cyber security and deep-tech talent and capabilities, is equally crucial for harnessing the potential of digitisation.”
To exploit these opportunities, Temasek is investing in digital solutions and building its own specialised skills in the fields of artificial intelligence (AI), blockchain, cyber security, data and digital, and sustainable solutions. It has set up ventures and companies, such as Aicadium, a global technology company partnering with Temasek’s portfolio companies to co-innovate and scale AI products, and ISTARI, a global cyber-security advisor and educator that is supported by a comprehensive portfolio of solutions.
Longer lifespans: challenges and opportunities in healthcare
By 2030, one in six people worldwide will be 65 or older. As the global population ages, healthcare costs and the demand for elderly care services are expected to surge. New treatment approaches, innovative detection applications and preventative medicine are all key to reducing morbidity, complications, functional disabilities and mortality, says Chia. As a long-term investor, Temasek supports companies developing new therapies and innovative healthcare solutions that cater to the silver economy.
For example, the company is supporting Verily Life Sciences’ pioneering chronic disease prevention and management technology, which aims to improve the quality of healthcare and the overall well-being of the elderly. Another of Temasek’s portfolio companies, BeiGene, focuses on novel cancer treatments.
Sustainability as a pillar of investment decision-making
Scrutiny from stakeholders and growing consumer pressure are pushing the public and private sectors to improve their ESG (environmental, social, and governance) performance globally. Consumers are voting with their wallets, aligning financial decisions with their ethical values. Temasek is resolutely committed to sustainability, says Chia. It is embedded in every facet of operations, from delivering sustainable value over the long term to engaging portfolio companies in building sustainable businesses. “We recognise that ESG is a continuous journey. The ability for us to engage and effect positive change is a key consideration in our investment decision-making. As part of looking at how our investments can catalyse change, we consider how a company has been demonstrating its commitment over time to improvement, accountability and change,” he says.
These structural trends offer a roadmap to a more sustainable, digitised and connected future.
According to Temasek, the company’s portfolio exposure to these trends has been rising steadily since 2016, reaching 31 per cent as of 2023. Keeping pace with continued shifts in investment opportunities ultimately reflects a dedication to creating a better world for present and future generations.
