Biodiversity Risks and Opportunities in Asia Pacific

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.