Nature at a Tipping Point: 58% of Asia Pacific economies depend on nature
29/05/24
KUALA LUMPUR, 29 May 2024 – PwC and the Asia Investor Group on Climate Change (AIGCC) have released a report that finds 53%, or US$18 trillion of Asia Pacific’s Gross Value Add (GVA) is in economic sectors that are moderately or highly dependent on nature.
The report finds economies in the Asia Pacific region are particularly vulnerable to nature-related risks, including biodiversity loss, pollution and water availability. This includes reliance on fertile soils, clean water, pollination, and climate stability, all of which are in serious decline in many parts of the region.
20%, or US$6.7tn of Asia Pacific’s GVA is in sectors with higher direct exposure: including agriculture, construction, fishery and aquaculture, food systems, and forestry. This is higher than the global figure of 16%.
33%, or US$11tn, is in sectors with moderate direct exposure, including energy, manufacturing, and services.
The remaining 47% is in sectors including real estate, healthcare, IT, and retail where the nature risk exposure is more likely to be indirect.
Public equities are even more exposed, with 58% of regional market capitalisation being moderately or highly dependent on nature.
11 out of the 14 Asia Pacific stock exchanges have more than 50% of market capitalisation with higher or moderate direct dependency on nature.
The Taiwan Stock Exchange (TWSE) (44%), New Zealand Stock Exchange (NZSE) (42%), and Shanghai Stock Exchange (SHSE) (37%) stock exchanges have the highest proportion of market capitalisation with higher direct nature dependence.
Perpetua George, Asia Pacific Sustainability, Biodiversity, Director, PwC Malaysia, said: “All 20 industries analysed by PwC have exposures to nature risk in their value chains. In fact, companies may be more exposed to nature risk than anticipated, considering that 20% of business value in Asia Pacific has higher dependency on nature, exceeding the global figure of 16%. Despite this, Asia Pacific businesses, such as the agriculture sector, already have experience on how to address biodiversity concerns as part of their operations. Now is the time for more businesses and industries to take actions to build nature positive approaches to safeguard valuable ecosystems that support us all, while enabling business resilience.”
AIGCC Director of Investor Practice, Monica Bae said: “Global economies are heavily reliant on healthy ecosystems and the Asia Pacific region is no exception. Nature-related risk is a risk that can’t be ignored. The Nature at a Tipping Point report will help as a crucial first step for investors to understand how nature loss can impact their portfolios. A nature-positive future unlocks significant new opportunities. By acting now and integrating nature-related risks into their investment strategies, Asia Pacific investors can ensure they're positioned to benefit from a sustainable and resilient future. AIGCC is committed to supporting investors on this journey.”
Guidance for investors to manage nature-related risks
The report, supported by case studies from corporations and investors, demonstrates how to effectively manage nature-related risks. It includes a checklist developed by PwC and AIGCC as general guidance for investors in identifying and managing nature-related risks.
ENDS
Notes for editors
The preliminary findings and case studies are from the report Nature at a Tipping Point, by PwC and AIGCC, which will help investors in the region prepare to manage these nature-related risks. The research covers 14 Asia Pacific territories: Australia, China, Hong Kong SAR, India, Indonesia, Japan, Malaysia, New Zealand, Philippines, Singapore, South Korea, Thailand, Taiwan, and Vietnam.
PwC’s analysis draws on data from the ENCORE database designed for financial institutions to assess their exposure to natural capital risks according to economic sector and geographical location.
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About the Asia Investor Group on Climate Change (AIGCC)
The Asia Investor Group on Climate Change (AIGCC) is an initiative to create awareness and encourage action among Asia’s asset owners and asset managers about the risks and opportunities associated with climate change and low-carbon investing. AIGCC provides capacity for investors to share best practice and peer-to-peer learning on sustainable investment, risk management, corporate engagement and policy advocacy. With a strong international profile and significant network, AIGCC represents the Asian investor perspective in the evolving global discussions on climate change and the transition to a greener economy. AIGCC has over 70 members from 11 markets and with over USD 35 trillion in assets under management. www.aigcc.net
