Biodiversity Risks and Opportunities in Asia Pacific
Research Paper
April 8, 2024
Preview
Asia Pacific (APAC) is at the heart of the global biodiversity crisis, with 63% of the region's GDP at risk from nature loss.1 In this report, using data from MSCI ESG Ratings, we assessed the constituents of the MSCI AC Asia Pacific Investable Market Index (IMI)2 on their exposure to three sources of risk that relate to biodiversity: biodiversity and land use, toxic emissions and waste and water stress.
Given that biodiversity risks may be even higher for companies operating in biodiversity-rich regions, we focused on the companies with assets located in biodiversity-sensitive areas (BSA),3 looking in particular at their direct operations.
The report also looks to identify opportunities in addressing biodiversity impacts, using MSCI ESG Sustainable Impact Metrics to evaluate sectors4 and companies that have generated revenues from pollution prevention, sustainable agriculture and sustainable water solutions.
APAC companies assessed across biodiversity-related key issues and exposed to BSA
Of all the constituents of the MSCI AC Asia Pacific IMI (n=4,307), 36% (1,540) were assessed on at least one biodiversity-related key issue. Data as of Oct. 17, 2023. Source: MSCI ESG Research
1. Akanksha Khatri and Steve Howard, "How to address Asia Pacific's biodiversity crisis and encourage nature-positive growth," World Economic Forum, September 2021.
2. The MSCI AC Asia Pacific IMI captures large-, mid- and small-cap representation across five developed and eight emerging market countries in the Far East. With 4,307 constituents as of November 2023, the index covers approximately 99% of the free float-adjusted market capitalization in each country.
3. The MSCI Biodiversity-Sensitive Areas Screening Metrics identify companies that could directly contribute to biodiversity loss based on the nature of their operations and if three or more physical assets are located within a 1.5-kilometer (km) vicinity of a BSA, which include healthy forest, intact biodiversity areas, prime areas for conservation and deforestation fronts.
4. "Sector" refers to the Global Industry Classification System (GICS®). GICS is the global industry classification standard jointly developed by MSCI and S&P Global Market Intelligence.
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