The report spotlights the importance of NCS in climate change mitigation, challenges to NCS investments and country-specific opportunities for businesses

SINGAPORE - MediaOutReach - 8 December 2020 - Conservation International, DBS Bank, NationalUniversity of Singapore (NUS) and Temasek today jointly released areport on The Business Case for Natural Climate Solutions: Insights andOpportunities for Southeast Asia. The report waslaunched at a virtual session of EcosperityConversations, a series of sustainability-focused dialogues hosted byTemasek.

As the first-of-its-kind study done inSoutheast Asia, the report highlights the opportunities for businesses toinvest in natural climate solutions (NCS) -- climatemitigation technologies that harness natural processes to reduce or removegreenhouse gas -- to stimulate the implementation of NCS at scale. Italso presents actionable takeaways for businesses to evaluate NCS opportunitiesand engage with the public sector in the region.

"Toimplement natural climate solutions at scale, we need public-private sectorpartnerships to deploy financial capital and preserve our natural capital. Thisreport brings together perspectives from players across several sectors todefine the investment case for natural climate solutions in Southeast Asia, aregion among the richest in both terrestrial and blue carbon sinks." said RobinHu, Head, Sustainability & Stewardship Group at Temasek.

Thebusiness case for NCS

According to the Intergovernmental Panel onClimate Change (IPCC), global warming is projected to reach 1.5°C between 2030and 2052. This will have a long-term negative impact on natural and humansystems, contributing to sea level rise and increased incidences of extreme anddeadly weather events^[1].  

Studieshave shown that NCS play an important role in mitigating these devastating effects.With the potential mitigation impact of 11 gigatons of CO₂ annually,NCS can provide over a third of the mitigation action needed to meet the ParisAgreement Targets by 2030^[2].Yet, less than 3% of global climate finance is going towards NCS, signaling aneed for investments to plug the financing gap needed for NCS to scale and reachthe current climate targets set by governments to reach net-zero emissions by2050.

Thenew report highlights the role that businesses can play in helping to bridgethis gap, along with the following business advantages:

• Theprivate sector has key, distinct advantages as an investor in NCS. Compared tothe public sector, the private sector can often more rapidly deploy larger poolsof investment that are less susceptible to political risks. It is also skilled indeveloping cost-effective models that are financially self-sustaining.
• Dueto the speed and scale at which they can deploy capital, businesses areuniquely positioned to catalyse investment in NCS and stimulate a thrivingcarbon market by purchasing offsets. To ensure this resulting carbon market iseffective, they should also commit to high quality credits and fair prices,support design and development costs, and engage in policy development andadvocacy.
• NCSprojects are comparable to engineered alternatives (such as carbon capture,utilisation and storage technologies) in terms of cost and return-on-investment,but are significantly favourable when non-carbon benefits such as other social,economic and environmental outcomes are considered. When implemented with theappropriate safeguards, NCS projects offer positive impacts far beyond carbonsequestration, such as biodiversity conservation and ecosystem services tolocal communities such as the provision of fresh water, food and disaster riskmitigation.
• NCSproject risk can be reduced through policy advocacy, technology deployment,inclusion of cost buffers, and upfront community engagement.

"Many of the world's mostcarbon-rich ecosystems -- tropical forests, peatlands and mangroves -- are foundright here in Asia. Nature provides the best and most cost-effective technologyfor removing carbon from the atmosphere but is vastly underfunded despite newcorporate climate commitments that are being made every day. This reportprovides a clear roadmap for direct investment in natural climate solutions,"said Dr Richard Jeo, Senior Vice President, Conservation InternationalAsia-Pacific Field Division.

Opportunitiesfor NCS in Southeast Asia

The benefits of NCS for the SoutheastAsian region are striking. With its vast rainforests and densestock of mangroves and seagrass, countries in the region possess highlyfavourable conditions for NCS investment and implementation in both terrestrialand blue carbon, including an immense potential for investable carbon. Forexample, a new study by the NUS Centre for Nature-based Climate Solutions thisyear has shown that protection of tropical forests in Southeast Asia couldpotentially generate a return-on-investment of up to US$27.5 billion a year.

Significant progress has been made toimplement and incentivise NCS in Southeast Asian countries. Several countriesare developing relevant regulations, presenting major opportunities forencouraging the inclusion of NCS. An individual country-level analysis thatevaluates the most critical policies for NCS investments, includingopportunities for policy engagement to scale NCS, is included on pages 61-64 ofthe report.

In addition to forest protection,reforestation as a climate solution could provide a significant portion ofclimate mitigation potential across Southeast Asia. Even after factors such asbiophysical, financial, and land-use constraints are considered, reforestationin Southeast Asia can potentially contribute to removal of between 0.4 and 0.5 gigatonsof carbon emissions per year^[3]. Across differentecosystems, Southeast Asia holds the highest density of carbon prospecting forNCS investments, including both terrestrial and blue carbon.

"The potential climate mitigation andfinancial payoffs of NCS are comparable with engineered mitigation solutions. If otherco-benefits that NCS provide are considered, such as clean air and water, coastalresilience, biodiversity conservation, food security safeguard, and floodprevention, they present even greater benefits," said Professor Koh Lian Pin,Director of the NUS Centre for Nature-based Climate Solutions.

Putting NCS into play

Tohelp businesses implement NCS, the report highlights five areas of action:

• Investmentin NCS and offsets should be part of a broader portfolio of climate action thatalso includes decarbonisation, with the aim of reaching net zero by 2050 inline with the Paris Agreement.
• Theprivate sector has a unique and critical role in scaling NCS: purchasing and committingto high-quality carbon credits; supporting business model development and technicalinnovation for project design, implementation, and verification; and supportingnational and jurisdictional government priorities. This includes aligning withemerging national frameworks for NCS and providing clarity on ownership ofcredits to avoid double counting.
• Companiesshould apply a transparent price per metric ton that supports sustainable,'high-quality' projects.
• Investing in deeper, science-based spatial analyses to quantifythe full scope of both NCS and co-benefits captured would ensure a better andmore targeted ROI, help measure impact, and potentially fetch higher prices.
• Blue carbon is a major opportunity in Southeast Asia but is stillpoorly represented in carbon markets. As they have limited scalable potentialand geographic restrictions, businesses should identify and target areas wherethe co-benefits can be maximised.

Mikkel Larsen, Chief Sustainability Officer,DBS Bank, said, "Natural climate solutions present a compelling means toaddress climate change's threatening trajectory, particularly in SoutheastAsia, and a collective effort across public and private players is key tobringing this to fruition. With the science, investors and other buildingblocks of this ecosystem falling into place, we are now reaching an inflectionpoint where -- with the inclusion of the private sector's investment,innovation, and expertise -- we can greatly catalyse growth and drive change.More than ever before, the private sector needs to consider the interests ofthe communities they serve, rather than focusing primarily on shareholders. Notonly is this the right thing to do, it also leaves the businesseswell-positioned to mitigate potential risks and capture opportunities in thisnew frontier. At DBS, we're committed to supporting the development of industrycollaborations and frameworks that will help pave the way for a more resilientand sustainable future."

The full report is available at https://bit.ly/3lTaBuz

About Conservation International

Conservation International worksto protect the critical benefits that nature provides to people. Throughscience, partnerships and fieldwork, Conservation International is drivinginnovation and investments in nature-based solutions to the climate crisis,supporting protections for critical habitats, and fostering economicdevelopment that is grounded in the conservation of nature. ConservationInternational works in 30 countries around the world, empoweringsocieties at all levels to create a cleaner, healthier and more sustainableplanet. Follow Conservation International's work on Conservation News,

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About National University of Singapore(NUS)

The National University of Singapore (NUS) is Singapore's flagshipuniversity, which offers a global approach to education, research andentrepreneurship, with a focus on Asian perspectives and expertise. We have 17faculties across three campuses in Singapore, with more than 40,000 studentsfrom 100 countries enriching our vibrant and diverse campus community. We havealso established our NUS Overseas Colleges programme in more than 15 citiesaround the world.

Our multidisciplinary and real-world approach to education, research andentrepreneurship enables us to work closely with industry, governments andacademia to address crucial and complex issues relevant to Asia and the world.Researchers in our faculties, 31 university-level research institutes, researchcentres of excellence and corporate labs focus on themes that include energy;environmental and urban sustainability; treatment and prevention of diseases;active ageing; advanced materials; risk management and resilience of financialsystems; Asian studies; and Smart Nation capabilities such as artificialintelligence, data science, operations research and cybersecurity. For moreinformation, please visit www.nus.edu.sg.

About DBS Bank

DBS is a leading financial services group in Asia with a presence in 18markets. Headquartered and listed in Singapore, DBS is in the three key Asianaxes of growth: Greater China, Southeast Asia and South Asia. The bank's"AA-" and "Aa1" credit ratings are among the highest in theworld. Recognised for its global leadership, DBS has been named "World's BestBank" by Euromoney, "Global Bank of the Year" by The Banker and "Best Bank inthe World" by Global Finance.

DBS provides a full range of services in consumer, SME and corporatebanking. As a bank born and bred in Asia, DBS understands the intricacies ofdoing business in the region's most dynamic markets. DBS is committed tobuilding lasting relationships with customers, and positively impacting communitiesthrough supporting social enterprises, as it banks the Asian way. It has alsoestablished a SGD 50 million foundation to strengthen its corporate socialresponsibility efforts in Singapore and across Asia. For more information,please visit www.dbs.com

About Temasek

Temasek is an investment company with a net portfolio value of S$306billion as at 31 March 2020. Our three roles as an Investor, Institution andSteward, as defined in our Temasek Charter, shape our ethos to do well, doright and do good. At Temasek, sustainability is at the core of everything wedo. We actively seek sustainable solutions to address present and futurechallenges, as we capture investment and other opportunities that help to bringabout a better, smarter and more sustainable world. For more information,please visit www.temasek.com.sg.