DBS, OCBC and UOB launch first-of-its-kind report to understand the potential financial implications of nature-related risks
DBS, OCBC and UOB launch first-of-its-kind report to understand the potential financial implications of nature-related risks
Industry-wide effort, in partnership with the University of Cambridge Institute for Sustainability Leadership, to help banks identify, assess and measure nature-related risks
Singapore, 26 June 2025 – In a first-of-its-kind initiative, DBS, OCBC and UOB, with support from the Monetary Authority of Singapore, have joined forces to better understand how nature-related risks and dependencies can translate into credit risk - the risk of borrowers failing to repay their loans. Titled “Building capacity to identify and assess nature-related financial risks”, the study was conducted in partnership with the University of Cambridge Institute for Sustainability Leadership (CISL). It represents an important initial step by the financial sector to raise industry awareness of nature-related risks and build capability to better assess the financial impact of such risks.
More than half of the world’s gross domestic product, or an estimated USD 58 trillion[1], depends on nature. With a growing emphasis on mitigating the impact of nature loss, understanding nature-related risks and opportunities is of critical importance. However, the connections between nature, biodiversity and people are different in every part of the world. This complexity poses significant challenges in the identification, assessment, measurement and tracking of nature-related risk.
Against this backdrop, the report serves to help banks build internal capability to identify and assess nature-related dependencies, as well as the potential financial impacts of nature-related risks within their corporate lending portfolios. The findings from the study highlight areas where further research, data gathering, analysis and collaboration are needed to better quantify and address the financial risks associated with biodiversity loss, ecosystem degradation and extreme weather events.
The study, which began in January 2024, involved a nature dependency analysis across the loan portfolios of the three banks. It eventually deep dived into the food and agriculture sector, which accounts for 11% of gross domestic product across Southeast Asia[2] and is highly susceptible to climate change and nature-related disruptions. Within the sector, the palm oil industry was selected as the pilot case study.
Participants and researchers examined the impact of various hypothetical scenarios, ranging from mild to severe, on palm oil production. These included ecosystem degradation, water shortages, prolonged droughts and elevated temperatures. Findings from a select sample of clients for each bank showed that upstream players were generally more sensitive to the impact of nature-related risks as compared to integrated players. Clients with relatively better financial strength were also more resilient to the short-term acute risks.
Ms Gillian Tan, Assistant Managing Director (Development and International) and Chief Sustainability Officer, Monetary Authority of Singapore (MAS), said: “Nature-related risks are inherently location-specific, requiring a contextual lens to assess how localised events can translate into material impact for businesses and financial institutions. This study is a significant contribution to the industry’s understanding of the risks facing a sector that is both economically important in this region and key to global supply chains. We welcome the joint efforts by DBS, OCBC and UOB in addressing this complex area, leveraging the pioneering work of CISL in nature-related financial risks. Their collaboration will lead the way for the financial sector to take concrete steps towards channelling finance to nature-positive assets and activities.”
Helge Muenkel, Chief Sustainability Officer of DBS, said: “The health of our natural capital – forests, soils, oceans and biodiversity – is intrinsically linked not only to economic development, but also to human wellbeing. This is also true across Asia, where communities, livelihoods and food systems are closely intertwined with and dependent on nature. At DBS, we see the preservation and restoration of nature not just as an environmental and social priority, but as a risk and business imperative. It enhances food security, promotes healthier populations and lays the foundation for long-term, inclusive growth, while also protecting financial value. In this context, banks have a vital role to play in addressing the nature crisis, and we see it as an extension to our climate agenda. Building an understanding of nature-related risks and opportunities across our business is critical to tackling one of the most urgent challenges of our time.”
Mike Ng, Group Chief Sustainability Officer of OCBC, said: “In light of Southeast Asia’s vulnerability to biodiversity loss and climate change, this is a timely pioneering study. Advancing our understanding of nature-related financial risks, starting with the food and agriculture sector, will serve us well as we support our clients in their transition by assessing emerging risks as well as harnessing opportunities for long-term value creation. In partnership with our clients, and through forward-looking industry collaborations such as this, OCBC is committed to contributing to inclusive and sustainable growth in the region.”
Eric Lim, Chief Sustainability Officer of UOB, said: “Southeast Asia’s economies and communities are highly dependent on nature and biodiversity. At UOB, we seek to understand and address nature-related risks and opportunities including those of our clients. This complements our commitment to decarbonisation and a just transition. Through meaningful partnerships and cross-sector collaboration, we aim to catalyse early conversations so that solutions can be unlocked to promote inclusive economic growth, while safeguarding the planet for future generations.”
Dr Nina Seega, Director of the Centre for Sustainable Finance at the Cambridge Institute for Sustainability Leadership (CISL), said: “We were delighted to collaborate with DBS, OCBC and UOB on this pioneering use case that explores how climate change and nature loss can be material to a financial portfolio. It is paramount to understand, measure, and manage risks at the climate-nature nexus and such collaborations are key to build capacity and support broader industry awareness of nature-related financial risk.”
Report from leading banks in Singapore demonstrates the business case for nature
A groundbreaking collaboration between DBS, OCBC, UOB and the Monetary Authority of Singapore in conjunction with the University of Cambridge Institute for Sustainability Leadership shows how banks can build internal capacity to better understand the nature risks and dependencies in their portfolios.
Using the palm oil sector as a use case, the group undertook scenario analysis to capture the possible credit impact of nature risks on their customers.
The global palm oil industry is worth about US$60 billion and is a major global sector. It is concentrated in Southeast Asia, primarily in Indonesia and Malaysia, which together account for over 85% of the world's palm oil production. With growing demand for palm oil, it is crucial to understand the industry's vulnerability to nature-related risk events.
Since 1960, the oscillation of weather patterns between the dryer, hotter El Niño and the wetter, cooler La Niña events have become more frequent and intense. This is one of the most important climate phenomena on Earth and has significant impacts in the region including drought, flooding and wildfires.
This has potentially serious implications for the agriculture sector and for palm oil companies in particular. The scenario analysis showed varied impacts across different palm oil companies. Some were highly resilient while others were significantly impacted by nature risks such as droughts and floods. This demonstrates a clear commercial need to understand nature risk and the consequences for each customer.
In addition to showing a clear business case for the banks to invest in nature, the work is aimed at encouraging and accelerating assessments of nature-related risks across the financial sector. Using the report as a template, other financial institutions are enabled to better understand the nature risks and associated commercial impacts across their own portfolios. While this research is location specific, it informs global transformational change.
The full report can be viewed here: Building Capacity to Identify and Assess Nature-Related Financial Risks | Cambridge Institute for Sustainability Leadership (CISL)