Pioneering Framework: DBS, OCBC, and UOB, in partnership with CISL, release an industry-first study to assess nature-related financial risks, focusing on the food and agriculture sector.
Strategic Sector Focus: The study highlights palm oil as a pilot case to evaluate biodiversity loss, droughts, and ecosystem degradation impacts on credit risk.
Call to Action: Findings underscore the need for better data, localized analysis, and collaboration to integrate nature risks into corporate lending strategies.
In an unprecedented industry collaboration, DBS, OCBC, and UOB, with support from the Monetary Authority of Singapore (MAS), have launched a report to help banks assess the financial implications of nature-related risks—with a particular focus on Southeast Asia’s food and agriculture sector.
Titled “Building capacity to identify and assess nature-related financial risks”, the report was developed with the University of Cambridge Institute for Sustainability Leadership (CISL) and represents an 18-month study aimed at linking nature-related impacts directly to credit risk within lending portfolios.
“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,” said Gillian Tan, Chief Sustainability Officer at MAS. “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.”
The pilot focused on the palm oil industry, a major contributor to Southeast Asia’s GDP and highly vulnerable to climate change, drought, ecosystem degradation, and water scarcity. A comparative analysis of clients revealed that upstream producers were more exposed to risk than vertically integrated firms, while financial resilience helped buffer short-term shocks.
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“The health of our natural capital is intrinsically linked to economic development and human wellbeing,” said Helge Muenkel, Chief Sustainability Officer of DBS. “At DBS, we see the preservation of nature as a business imperative, foundational to inclusive growth and financial stability.”
Mike Ng, Group Chief Sustainability Officer at OCBC, added: “Advancing our understanding of nature-related financial risks… will serve us well as we support our clients in their transition by assessing emerging risks as well as harnessing opportunities for long-term value creation.”
Eric Lim, Chief Sustainability Officer of UOB, emphasized the region’s dependence on biodiversity: “We aim to catalyse early conversations so that solutions can be unlocked to promote inclusive economic growth, while safeguarding the planet for future generations.”
According to the study, over 50% of global GDP—about USD 58 trillion—is dependent on nature. The report serves as a critical first step in helping banks embed nature-based risk assessments into credit analysis and lending decisions.
“It is paramount to understand, measure, and manage risks at the climate-nature nexus,” said Dr Nina Seega, Director at CISL. “Such collaborations are key to building capacity and broader industry awareness.”
The report ultimately calls for further research, enhanced data collection, and greater cross-sector collaboration to embed nature-risk considerations into mainstream finance.
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