Intelligence Briefing about Biodiversity

Critical Trends Impacting RHB Bank

• Increasing vulnerability of biodiversity due to climate extremes, with nearly 8,000 animal species at risk from heat and habitat loss.
• The dramatic loss of warm-water coral reefs, threatening marine ecosystems and global fisheries sustainability.
• Expansion of conservation efforts, with over one-third of land in some regions protected through Other Effective Conservation Measures (OECMs), reflecting growing environmental regulatory focus.
• Escalating global e-waste generation, expected to reach 74 million tons by 2030, creating significant environmental and waste management challenges.
• Political and social volatility driven by youth activism (Gen Z), increasing fragility in multiple countries with disrupting impacts on markets and investments.
• New government-backed nature restoration funds and infrastructure projects emphasizing ecological restoration alongside economic development.

Key Challenges, Opportunities, and Potential Risks

• Challenges: Navigating regulatory changes linked to conservation policies; managing exposure to sectors affected by biodiversity loss such as fisheries, tourism, and agriculture.
• Opportunities: Financing and investing in sustainable infrastructure, land restoration projects, and green technologies aligned with biodiversity goals.
• Risks: Exposure to political and social instability affecting creditworthiness and investment climates; reputational risks from insufficient ESG performance related to biodiversity conservation.

Scenario Development

• Best-case: Strong global cooperation leads to effective biodiversity restoration financed by sustainable investments; regulatory clarity supports green projects; political stability enhances market confidence.
• Moderate progress: Incremental conservation successes and growing sustainable finance; some political volatility limits scale; biodiversity loss slows but persists.
• Challenging environment: Fragmented policies and rising socio-political unrest disrupt markets; biodiversity continues to decline impacting sectors; e-waste and environmental risks increase operational challenges.
• Worst-case: Accelerated biodiversity collapse with ecosystem failures; sharp regulatory penalties; intensified political and social instability undermining economic growth and financial returns.

Strategic Questions for Senior Advisors

• How can RHB Bank integrate biodiversity risk assessments into its credit and investment decision frameworks to mitigate emerging environmental and social risks?
• What role could the bank play in mobilizing capital toward nature restoration and sustainable infrastructure in key markets?
• How might increasing political and social fragility in key regions affect RHB’s risk appetite and portfolio resilience?
• To what extent should RHB Bank proactively engage with regulators and industry stakeholders to shape biodiversity-related financial policies?
• How can RHB leverage technology and data, including public conservation metrics, to enhance ESG reporting and compliance?

Actionable Insights for Strategic Decision-Making

• RHB Bank could explore forming strategic partnerships with environmental agencies and conservation initiatives to access robust biodiversity data and identify green finance opportunities.
• Investing in capacity-building around biodiversity risks could strengthen the bank’s risk management and product innovation relating to sustainability.
• The bank could consider developing tailored financial products that support clients in sustainable land use, nature restoration, and waste management sectors.
• Monitoring geopolitical trends linked to youth-led activism and social unrest could inform proactive portfolio adjustments to mitigate credit risks.
• Integrating biodiversity considerations into broader climate and ESG strategies could enhance stakeholder trust and align with evolving regulatory expectations.

Sources: (Climate Cosmos), (UNEP), (Association for Mineral Exploration BC), (Market Data Forecast), (Coface), (UK Government)