In a landmark move for the financial sector, DBS, OCBC and UOB have collaborated, with backing from the Monetary Authority of Singapore (MAS), to launch an unprecedented study aimed at uncovering the financial implications tied to nature-related risks.
The report, titled Building capacity to identify and assess nature-related financial risks, was developed in partnership with the University of Cambridge Institute for Sustainability Leadership (CISL) and sets out to deepen understanding within the banking industry on how environmental dependencies can affect credit risk.
The new study underlines a stark reality: more than half of the world’s GDP—estimated at $58tn—relies on healthy natural systems. Yet the link between nature, people and the economy varies widely across regions, creating a challenge for financial institutions to quantify and manage the risks that come from biodiversity loss and ecosystem damage.
By focusing on the food and agriculture sector, which makes up 11% of Southeast Asia’s GDP, the study looked closely at the palm oil industry as a pilot case. The banks explored how scenarios like water shortages, droughts and ecosystem decline could impact different players within the palm oil supply chain. The research found that upstream producers are typically more vulnerable to nature-related risks than integrated companies, while clients with stronger financial positions appear more resilient to short-term shocks.
MAS assistant managing director and chief sustainability officer Gillian Tan said, “Nature-related risks are inherently location-specific, requiring a contextual lens to assess how localised events can translate into material impact for businesses and financial institutions. This study is a significant contribution to the industry’s understanding of the risks facing a sector that is both economically important in this region and key to global supply chains. We welcome the joint efforts by DBS, OCBC and UOB in addressing this complex area, leveraging the pioneering work of CISL in nature-related financial risks. Their collaboration will lead the way for the financial sector to take concrete steps towards channelling finance to nature-positive assets and activities.”
DBS chief sustainability officer Helge Muenkel said, “The health of our natural capital – forests, soils, oceans and biodiversity – is intrinsically linked not only to economic development, but also to human wellbeing. This is also true across Asia, where communities, livelihoods and food systems are closely intertwined with and dependent on nature. At DBS, we see the preservation and restoration of nature not just as an environmental and social priority, but as a risk and business imperative. It enhances food security, promotes healthier populations and lays the foundation for long-term, inclusive growth, while also protecting financial value. In this context, banks have a vital role to play in addressing the nature crisis, and we see it as an extension to our climate agenda. Building an understanding of nature-related risks and opportunities across our business is critical to tackling one of the most urgent challenges of our time.”
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