rethink sustainability
Tackling Asia’s biodiversity and natural resources challenge
Asia is facing some of the world’s greatest biodiversity losses, making it vital that governments and businesses in the region work together to mitigate the risks of climate change and the threats against its natural resources
From climate change to nature-loss, humanity is destabilising the environment on multiple fronts, and nowhere is this demonstrably clearer than in the Asia Pacific region. According to a study by Singapore’s sovereign wealth fund Temasek, compiled in conjunction with AlphaBeta and the World Economic Forum, 63% of Asia’s GDP, totalling $19.5 trillion of economic activity, is at risk due to a potential loss of nature and biodiversity.1 Additionally, up to 42% of all species in southeast Asia could be lost, with half of them representing global extinctions. Of the 100 cities most in danger of facing environmental risk, 99 of them are in the region.2
The continent has a vast array of challenges to grapple with when it comes to biodiversity and nature loss. Deforestation rates in Southeast Asia are some of the highest in the world. Some countries, like the Philippines and parts of Indonesia, have already lost over half of their original forest landscape.3 According to the World Wildlife Fund, the landscape of the APAC region makes its forests – ranging from dense tropical jungles in the Pacific Islands to the flooded forests of the Mekong countries – some of the most vital biodiversity spots in the world.4
Moreover, according to the Temasek report, the APAC region also accounts for 35% of global agricultural land and 45% of global agricultural emissions. Over 70% of fish stocks in the Philippines are fished beyond what is sustainable, while APAC accounts for more than half of global food waste, and 8 of the top ten countries responsible for marine plastic pollution.5
Find out more about green fintech in APAC.
Opportunities for Change
Drastic change is needed, and addressing biodiversity and nature loss within the region can spur economic growth. The Temasek report identifies a $4.3 trillion opportunity in 2030 from a nature-positive economy in APAC, with the potential to create up to 232 million jobs annually.6
Non-governmental organisations (NGOs), business stakeholders, and governments are supporting efforts to prevent further biodiversity and nature loss. In June, for example, eight NGOs launched the Southeast Asia Climate and Nature-based Solutions Coalition (SCeNe Coalition)7, a partnership to support the delivery of high-quality and triple-benefit nature-based solutions that focus not only on tackling climate change, but also on biodiversity conservation and ecosystem restoration. SCeNe also aims to ensure that these solutions benefit the local communities and Indigenous people who live in those ecosystems.
In 2022, representatives from the region came together with other global players at the 15th Conference of the Parties to the Convention on Biological Diversity (CBD COP15) to adopt the Kunming-Montreal Global Biodiversity Framework.8 The framework lays out four goals and 23 targets for 2030 for the conservation, management, and sustainable use of biodiversity.9 Targets include protecting 30% of land and sea, halving food waste, and reducing harmful subsidies by $500 billion a year.10 In 2023, this was followed by the launch of the new Global Biodiversity Framework Fund, designed to attract funding from governments, philanthropy and the private sector, and mobilise capital to invest in the conservation of wild species and ecosystems.11
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Nature as an Asset Class
At Lombard Odier, we believe that there is an investment case for a strategy that supports the mitigation of biodiversity loss and boosts natural capital. In our opinion, nature is currently the world’s most under-priced asset class. We believe that corporate demand for regenerative commodities – commodities that are produced in harmony with nature rather than against it – will lead to the reconfiguration of key supply chains over the next century.
The market has not fully internalised the projected impacts of climate change and nature loss. Through holistiQ, our unique partnership with systems change experts Systemiq, we take a science-based approach to identify opportunities for nature-based investment, offering investors the chance to achieve long-term returns and minimise the climate risk of their portfolios, while driving the transition to a nature-positive economy.
Long gone are the days when humans could look at nature and only think about what they could take from it, without giving anything back. It is now time to invest in nature’s regenerative power. 12 We believe that real-world nature-based assets will command an investment premium going forward. As ecosystems are restored, land valuations will rise, yields will grow, and the value of regenerative commodities produced will exceed that of conventional production.13
APAC is at the beginning of its vital journey in reforestation and mitigation of biodiversity loss. While there is a long road ahead, we believe that these mitigations are vital for the future of the planet and will catalyse new and compelling opportunities for investors in the coming years.
Find out about the growth of impact investing in Asia.
1 Asia is the battleground for biodiversity loss (Euromoney.com)
2 Asia is the battleground for biodiversity loss (Euromoney.com)
3 Understanding the drivers of Southeast Asian biodiversity loss (ESA journals)
4 Forests (Asiapacific.panda.org)
5 Asia is the battleground for biodiversity loss (Euromoney.com)
6 New nature economy: Asia's next wave (Ecosperity.sg)
7 Leading Global NGOs launch SCeNe coalition to deliver nature-based climate solutions in Southeast Asia
8 Final text of Kunming-Montreal Global Biodiversity Framework available in all language (Convention on Biological Diversity)
9 Regional cooperation in South Asia crucial for meeting global biodiversity targets (World bank blogs)
10 Regional cooperation in South Asia crucial for meeting global biodiversity targets (World bank blogs)
11 New global biodiversity fund launched in Vancouver (thegef.org)
12 Investing in nature's regenerative power (lombardodier.com)
13 Investing in our natural capital (lombardodier.com
Important information
This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.
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