Asia Pacific’s (APAC) economies are vulnerable to nature-related risks, including biodiversity loss, pollution and fresh water availability, according to the Asia Investor Group on Climate Change (AIGCC) and PwC.
Research carried out by the organisations revealed 53% – around $18trn (£14.5trn) – of APAC’s Gross Value Add (GVA) is in sectors that are moderately or highly directly dependent on nature. This includes reliance on fertile soils, clean water, pollination and climate stability, all of which are in decline in many parts of the region.
Figures show 20%, or $7trn (£5.6trn), of APAC’s GVA are in sectors with high direct exposure, 4% higher than the global figure. This includes agriculture, construction, fishery and aquaculture, food systems and forestry.
Further, public equities are even more exposed, with 58% of regional market capitalisation being moderately or highly dependent on nature. The research revealed 11 out of the 14 APAC stock exchanges have more than 50% of market capitalisation with a high or moderate direct dependency on nature.
As a result, AIGCC and PwC have provided general guidance for investors to identify and manage nature-related risks. This advises financial professionals to identify the relevant information required to assess nature-related risks in their portfolio; gain management and board commitment on nature; confirm priorities by assessing assets and portfolio exposure; and engage with sectors and companies in supply chains within investment portfolios.
Investors are recommended to follow a framework for nature-related reporting, specifically The Taskforce on Nature-related Financial Disclosures (TNFD) recommendations and the Science-based Targets Network’s (SBTN) science-based targets for nature.
PwC Malaysia, Asia Pacific sustainability, biodiversity, director, Perpetua George, said: “Crisis in our natural ecosystems is not only an environmental concern but also a major economic threat for the Asia Pacific region. The loss of nature presents huge risks to our people, communities and businesses. Asia Pacific businesses, such as the agriculture sector, already have familiarity with biodiversity concerns, so now is the time for us to take the next bold step, leverage on sustainability, and safeguard the valuable ecosystems that support us all.
“Together, AIGCC and PwC will use our combined knowledge and resources to identify practical solutions that allow us to understand the problems threatening our environment and safeguard our natural ecosystem that we all rely on.”
