New means of enticing private sector investment are needed to fund nature restoration projects in Southeast Asia that could cost up to $200 billion. That’s according to a new study from researchers at Imperial College Business School’s Centre for Climate Finance & Investment (CCFI). It argues that investing in nature projects of this kind offers a logical and powerful response to the climate emergency in Southeast Asia, where a number of economies are underpinned by nature.
“Climate change is already impacting Southeast Asian economies and, together with the risk of ecosystem collapse, provides a strong motivation for investing in nature. Investors stand to benefit greatly from nature investments – whether for resilience, portfolio diversification or cost reduction efforts,” said report author and CCFI research fellow Pernille Holtedahl.
Sustainability-linked bonds (SLBs) offer one route to further investment, according to the report. SLBs to the tune of $73 billion were issued globally in 2022 and are designed to tie organisations to specific sustainability commitments, with penalties incurred for missed targets. Drawing on cases studies from Malaysia, the report recommends that SLBs are administered with credible and verifiable key performance indicators.
The report, Nature Investment as a Response to the Climate Crisis: Opportunities in Southeast Asia, also cautions against basing investment cases for nature around carbon credits, arguing that the goal should be the long-term incorporation of nature benefits into broader corporate investment decisions.
Headline image credit: Eutah Mizushima on Unsplash
This article originally appeared in the print edition (Issue 3 2023) of Business Impact, magazine of the Business Graduates Association (BGA)
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