Financial institutions operating in Southeast Asia need to develop a better understanding of the materiality of nature-related risks to their portfolios, according to the first report from the Singapore Sustainable Finance Association (SSFA). ‘Financing our Natural Capital’ offers a roadmap for such an assessment by mapping Southeast Asia’s GDP figures to publicly available data on the impacts and dependencies of industries and sectors. The report was developed by the SSFA’s natural capital and biodiversity workstream, and draws on insights from more than 25 industry members across key stakeholder groups. According to the report, the degradation of nature represents a risk to companies’ activities and, by extension, to financial portfolios, noting also that revenues may come under threat, or companies may incur additional costs from new regulations or increased consumer scrutiny. Sectors highlighted as highly dependent on natural capital include agriculture, mining, manufacturing, and real estate, underscoring the need for financial institutions in the region to begin assessing the materiality of nature-related risks and dependencies within these key sectors. “Understanding and managing nature-related risks, while leveraging existing climate infrastructure, allows us to develop innovative products and services that support nature-positive initiatives,” said Eric Nietsch, workstream co-lead, and Head of Sustainable Investing for Asia at Manulife Investment Management. “By collaborating with policymakers and real economy players, we can create a sustainable finance ecosystem that benefits both nature and the economy.” The SSFA was established in January 2024 by the Monetary Authority of Singapore to collaborate across the financial and real economy sectors to support the growth of Singapore as a sustainable finance centre.
