Analyzing Environmental Trends: Taking the Pulse of Asia’s Financial Community

Executive Summary

In 2008, a unique research collaboration between The World Resources Institute (WRI) — a leading environmental think tank —and HSBC — a major global financial institution — was formed to better understand the financial materiality of environmental trends affecting selected sectors in Asia. This research collaboration produced in-depth, peer-reviewed research on the impacts of climate change and water scarcity in South and Southeast Asia’s power, food and beverage, and real estate sectors.

This working paper draws on insights gained from the research as well as feedback from the region’s financial community, to frame the key challenges that analyze the financial impacts of emerging environmental trends in the region.

These challenges can be summarized as:

• A lack of publicly available data relating to both environmental trends (for example, localized water scarcity data) and company-specific exposure to potential environmental risks (for example, the number of corporate facilities in water scarce areas);
• Limited contextual analysis for framing the complex connections between environmental trends and their financial impacts;
• The highly unpredictable nature of environmental trends which limits the ability to forecast their likelihood and their magnitude.

While these challenges are not specific to South and Southeast Asia, this report provides examples of analysis that incorporates environmental trends in the region and suggests practical steps to enhance and expand how Asian (and other emerging) financial markets are responding to emerging environmental issues.