Hong Kong News

Nonpartisan, Noncommercial, unconstrained.
Tuesday, Oct 08, 2024

Pressure is on for Asian businesses to protect natural resources

Pressure is on for Asian businesses to protect natural resources

Much like carbon emissions, companies will soon be expected to monitor their impact on biodiversity. Measures to promote and preserve biodiversity will need to go beyond greenwashing practices like pledges to plant trees.

Many scientists believe we are in the middle of a mass extinction event – only the sixth in earth’s geological history. Around 1 million species worldwide are expected to die out unless we can reduce the pressure we are putting on nature.

Asia is ground zero for efforts to stop the extinction crisis. Southeast Asia alone has around one-fifth of all plant and animal species, while China is one of the world’s largest markets for wildlife products.

Directly and indirectly, the effects of our economic activity – from pollution to land-use change to climate change – are responsible for the threats to about 80 per cent of at-risk species. But our economy relies on nature too, with more than half of global GDP coming from sectors that are moderately or highly dependent on natural resources.

As a result, there is a growing consensus that businesses urgently need to take stock of the effects of their operations on nature and biodiversity. At the COP15 biodiversity summit in December, almost 200 countries agreed on a plan to reverse nature loss by protecting at least 30 per cent of land and water ecosystems by 2030. The agreement has been described as a “Paris moment” for biodiversity.

Momentum is growing among financial regulators, as well. The Network for Greening the Financial System, an association of with members from some 95 central banks, has concluded that biodiversity loss presents a risk to financial stability, and proposed that biodiversity-related recommendations be incorporated into monetary policy.

Given the accelerating pace of nature and biodiversity loss, reversing that trend will take serious and concerted action from stakeholders in all sectors. Businesses should start preparing for a world where impact on biodiversity will be scrutinised as closely as corporate emissions are today.

Baby snakes killed in a forest fire at a palm oil plantation in Pekanbaru, Indonesia, on September 4, 2019.

Hong Kong and other jurisdictions in Asia have already mandated emissions reporting for listed companies. With growing awareness of the financial risks of ecosystem loss, mandatory nature reporting is likely to follow.

The Taskforce on Nature-Related Financial Disclosures, an initiative of the G20’s Financial Stability Board, is preparing draft guidance on how companies should report on their nature and biodiversity impact. Companies can review the framework and weigh in before the taskforce’s final recommendation is released in September 2023.

Manufacturers can prepare for assessing their environmental impact and dependency by making sure they have visibility across their full value chains, from raw materials suppliers down to the consumer. This will help to inform metrics like water and soil health and invasive species. For businesses wondering where to start, Eurasia Group’s recent report on addressing nature loss in Asia has a list of tools and metrics businesses can use.

Investors should begin engaging with their portfolio companies on the issue, and preparing for the possibility that financial institutions will incorporate biodiversity into their risk management frameworks. Aviva Investors recently set out nature loss as one of its focus areas for 2023.

These steps will make clear where the gaps are and allow time to build up the relevant expertise, which many companies are finding challenging given the shortage of ESG talent in Asia.

Importantly, businesses need to make a good-faith effort to measure their impact on nature and form mitigation plans. These could range from a commitment to avoid locating operations near important biodiversity sites, to a switch to regenerative agriculture. Public and civil society groups will be quick to point out anything that has the whiff of greenwashing (think tree-planting programmes), as the backlash against ESG has already shown.

In addition to formally measuring and disclosing their impact on nature, there is much that businesses can do here in Hong Kong, where development and land reclamation are major threats to biodiversity. From providing financial support for conservation studies to developing public-private partnerships with local NGOs, it can be meaningful for local businesses to help preserve nature in their backyard.

Globally, only 17 per cent of biodiversity financing comes from private sources at the moment. Overall, global funding comes to just US$150 billion per year, out of an estimated US$700 billion per year needed by 2030. Increasing awareness about the need for more private-sector finance can help build momentum towards reaching the crucial 2030 deadline to stop nature loss.

In support of that goal, Hong Kong should incorporate a bigger focus on biodiversity in its ambition to become a sustainable finance centre, where discussions to date have mostly centred on climate change.

In late 2021, the Bank of China’s Macau branch became the first in Asia to issue biodiversity-linked bonds. A focus in this area could help to differentiate Hong Kong and the Greater Bay Area from rival hubs such as Singapore, particularly given recent moves to align EU and China taxonomies, making it easier for green bonds to be sold across borders.

China already has the world’s biggest green bond market, although transparency needs to be improved. And its rich biodiversity and the presence of multilateral funds like the Global Environment Facility present ample opportunities for developing conservation-linked financial instruments in the Greater Bay Area.

It won’t happen overnight. As elsewhere, Hong Kong financial institutions report challenges in measuring and calculating their climate risks, because of issues like a lack of data, and nature-related metrics could prove even more of a challenge. But that’s all the more reason businesses need to make biodiversity a priority today.

Newsletter

Related Articles

Hong Kong News
0:00
0:00
Close
It's always the people with the dirty hands pointing their fingers
Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Steve Jobs' Son Launches Venture Capital Firm With $200 Million For Cancer Treatments
Google reshuffles Assistant unit, lays off some staffers, to 'supercharge' products with A.I.
End of Viagra? FDA approved a gel against erectile dysfunction
UK sanctions Russians judges over dual British national Kara-Murza's trial
US restricts visa-free travel for Hungarian passport holders because of security concerns
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Political leader from South Africa, Julius Malema, led violent racist chants at a massive rally on Saturday
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
'I am not your servant': IndiGo crew member, passenger get into row over airline meal
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Spanish Citizenship Granted to Iranian chess player who removed hijab
US Senate Republican Mitch McConnell freezes up, leaves press conference
Speaker McCarthy says the United States House of Representatives is getting ready to impeach Joe Biden.
San Francisco car crash
This camera man is a genius
3D ad in front of Burj Khalifa
Next level gaming
BMW driver…
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
×