Climate has been the starting point for most of us as we focus on achieving greater sustainability. Biodiversity is, arguably, just as critical for our future and not only as a natural defence against climate change. The good news is that there is increasing recognition of biodiversity, nature-related risks, the opportunities and the urgency to act.
According to the Stockholm Resilience Centre, there are nine boundaries within which humanity can continue to develop and thrive for generations to come. Six have already been crossed. Excluding climate change, the five that have also been crossed – biosphere integrity, land system change, freshwater change, biogeochemical flows and novel entities – are all nature-related.
In Asia, considerations of biodiversity and nature-related risks are especially important due to these factors:
- Asia is one of the most biologically diverse regions globally, hosting multiple biodiversity hotspots.
The Indo-Burma hotspot encompassing all non-marine territories of Cambodia, the Lao People’s Democratic Republic, Myanmar, Thailand, and Vietnam alongside sections of southern China stands out as some of the world’s most biologically significant areas in terms of species and ecosystems diversity.
- Emerging markets in Asia rely heavily on biodiversity and ecosystem services.
According to the World Economic Forum, 63% of Asia’s GDP relies directly or indirectly on nature and ecosystem services. Scenario analysis by the World Bank shows that East and South Asia could lose over 3% and 6% of their GDP respectively by 2030 compared to a baseline scenario without nature loss.
- Many countries in the Asia region are particularly vulnerable to environmental risks such as natural disasters and habitat degradation.
Southeast Asia has one of the highest rates of deforestation, with Indonesia, Laos and Malaysia being top countries for primary forest loss by area in 2022 according to the World Resources Institute Global Forest Watch. This speed of deforestation and land clearing can increase the risks of catastrophic landslides and flooding.
- Forests across Southeast Asia have collectively become a net source of carbon emissions due to clearing for plantations, uncontrolled fires and drainage of peat soils.
Forests are some of the world’s largest terrestrial carbon sinks, absorbing about 7.6 billion metric tonnes of CO2 per year, which is roughly 1.5 times the annual emissions by the US. Without tackling deforestation, it would be impossible to reach our climate goals.
Our stewardship on nature
At BNP Paribas Asset Management, nature is a focal point for stewardship, with healthy ecosystems being one of the ‘3 Es’ that we believe to be prerequisites for a sustainable world (the other two being energy transition and equality).
In our capacity of sustainable asset manager for a changing world, we believe in using our influence to bring about progress towards a more environmentally friendly economic model that is also more inclusive and equitable. Such an approach is conducive to the positive performance of investments over the long term and thus in the interest of clients.
In Asia, we collaborate in investor initiatives with peers and other stakeholders on this topic, including Nature Action 100 (NA 100), a collaborative engagement programme formed by institutional investors that aims to engage companieswith the highest biodiversity impacts globally, improve transparency and reduce impacts, and align with the Global Biodiversity Framework’s goal to reverse nature loss by 2030.
We were part of the launching investor group in 2023. Adam Kanzer, Head of Stewardship Americas, is currently co-chair of the steering committee of Nature Action 100. In Asia, we are part of the engagement groups for Sime Darby Plantation, one of the world’s largest palm oil producers, and Indofood, a major Indonesian food company.
We are also a founding partner of Asia Research & Engagement’s Asia Protein Transition Platform launched in 2022 to set investor expectations for Asia and engage with companies across value chains on the subject. Expectations include zero deforestation, responsible use of natural capital and minimal chemical use. There are specific nuances to tackling the topic of sustainable protein in Asia as local consumption patterns, income levels and awareness differ significantly from developed markets.
Since the launch, we have seen focus company China Mengniu, one of China’s largest dairy companies, announce a zero-deforestation commitment alongside their forest protection policy.
On the policy front, we are part of the Investor Policy Dialogue on Deforestation (IPDD), a collaborative investor initiative set up in 2020 to engage with public agencies and industry associations in selected countries on deforestation. The goal is to coordinate a public policy dialogue on halting deforestation.
In Asia, we participate in the Indonesia Working Group, which complements other bilateral policy and corporate engagements we hold. Globally, we are part of the Brazil Working Group and the upcoming consumer country working group.
One key forum for peer-to-peer sharing, the Asia Investor Group on Climate Change’s Forest & Land Use Working Group, focuses on capacity building in areas such as global initiatives and frameworks on deforestation, sharing and promoting current and emerging investor practice and developing practical tools and solutions for engagement. Jane Ho, Head of Stewardship APAC, co-chairs this working group.
Finally, we implement our global policy to vote against companies identified as the most critical for biodiversity that do not assess and report on their key impacts and dependencies on nature, with a focus on deforestation and water-related issues.
Looking ahead
The stewardship team has been actively evaluating stepping up engagement on plastic and hazardous chemicals. Plastic pollution is particularly rampant in Southeast Asia, owing to rapid urbanisation, a rising middle class and inadequate infrastructure for waste management.
Major events in 2024 include Colombia hosting COP16 on biodiversity in October, and Azerbaijan hosting COP29 in November. Brazil will assume the G20 presidency this year and, considering importance of the Amazon rainforest, it is probable that the G20 sustainable finance working group will name biodiversity a focal area.
As the topic of nature gains momentum globally among policymakers, regulators and investors, we see it as a priority for Asia to lead and participate in its international development.
