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APAC Prone to Nature Risk

Economies across Asia-Pacific (APAC) are particularly vulnerable to nature-related risks, including biodiversity loss, pollution and fresh water availability, according to the Asia Investor Group on Climate Change (AIGCC) and PwC. Sharing preliminary findings from their forthcoming ‘Nature at a Tipping Point’ report showed that 53% (US$18 trillion) of APAC’s gross value added (GVA) is in economic sectors either moderately, or highly, directly dependent on nature. 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. Around 20% (US$7 trillion) of APAC’s GVA is in sectors with higher direct exposure – including agriculture, construction, fishery and aquaculture, food systems, and forestry – which is more than the global figure (16%). Meanwhile, 33% (US$11 trillion) is in sectors with moderate direct exposure, such as energy, manufacturing, and services. The remaining 47% is spread across real estate, healthcare, IT and retail – where the nature risk exposure is more likely to be indirect. APAC’s public equities are even more exposed – with 58% of regional market capitalisation either moderately or highly directly dependent on nature. Of APAC’s 14 stock exchanges, 11 have more than 50% of their market cap with higher or moderate direct dependency on nature. The Taiwan Stock Exchange, the New Zealand Stock Exchange, and the Shanghai Stock Exchange had the highest proportion, with 44%, 42% and 37% respectively. “Nature-related risks can’t be ignored,” said AIGCC Director of Investor Practice Monica Bae. “By acting now and integrating nature-related risks into their investment strategies, APAC investors can ensure they’re positioned to benefit from a sustainable and resilient future.” The report is a crucial first step for them to understand how nature loss can impact their portfolios, she added.

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