The research work lasted 18 months and was initially focused on the food and agriculture field, because it was an important engine of the Southeast Asian economy and was very dependent on natural conditions.
According to a joint statement by the local three banks on Thursday (June 26), this is the first time that the three banks have jointly studied to understand the potential financial impact of natural-related risks and help banks identify, evaluate and measure natural-related risks.
This study, launched in January 2024, conducted a natural dependency analysis on the loan portfolio of the three banks. Ultimately, the research explores the food and agriculture sector, which accounts for 11% of Southeast Asia’s GDP and is highly vulnerable to climate change and natural-related disturbances.
The joint statement noted that the study “represents an important first step in the financial industry, aiming to increase industry awareness of natural-related risks and build the ability to more effectively assess the financial impact of such risks”.With the support of the Monetary Authority of Singapore, DBS, OCBC and UOB jointly conducted a study to discuss how nature-related risks and dependencies translate into credit risks—that is, the risk that borrowers cannot repay their loans.
The study, entitled “Building the Capacity to Identify and Assess Nature-Related Financial Risks”, was conducted by the Bank in partnership with the University of Cambridge Institute for Sustainability Leadership.