Assistant Managing Director of the Monetary Authority of Singapore Offers Insights on Building Resilience Between Finance & Nature

Key Takeaways:

• Climate and Nature Interconnection: The Assistant Managing Director of the Monetary Authority of Singapore (MAS) emphasized the growing recognition that nature loss is as critical as climate change, with both issues being interconnected and equally urgent.
• Financial Institutions Must Act: Financial institutions must adapt their risk management frameworks to address both climate and nature-related risks, not as corporate social responsibility but as core risk management priorities.
• Carbon Markets as a Solution: Well-functioning carbon markets can drive significant change by offering financial incentives for nature-based solutions like reforestation and mangrove conservation, contributing to both climate mitigation and biodiversity preservation.
• Challenges in Measuring Nature Risks: Unlike climate-related risks, measuring nature-related risks is complex due to the diverse ecosystem services involved, requiring new approaches and methodologies to be integrated into financial risk assessments.
• Collaboration for Resilience: Collaborative efforts between governments, financial institutions, and stakeholders, such as the MAS and Banque de France, are crucial for building a stable and sustainable system that addresses both climate and nature risks effectively

Deep Dive

In an address at the MAS-Banque de France Seminar during Ecosperity Week, Marcus Lim, Assistant Managing Director (Banking & Insurance) of the Monetary Authority of Singapore (MAS), talked about how sustainability isn’t just about preventing the inevitable collapse of systems, it’s about maintaining balance before we reach a tipping point.

The seminar, which took place under the banner of the France-Singapore Joint Year of Sustainability (JYOS), is part of a long-term collaboration between Singapore and France, focused on pressing issues like the circular economy, renewable energy, and sustainable shipping. Lim’s remarks were a reminder of how vital it is to find harmony between the economy, the environment, and our collective future.

Since launching the JYOS initiative in April 2024, both countries have been working side by side to create new pathways for tackling climate change. But as Lim pointed out, the challenge now goes beyond simply managing the effects of a changing climate. “Climate change is the obvious villain, but the loss of nature—the very ecosystems that sustain us—is also rapidly becoming an equally pressing crisis,” he said.

It’s not a new idea, but it's one that is too often relegated to the background in discussions about climate risk. The truth is that the natural world (forests, oceans, biodiversity) is just as intertwined with the climate as the climate itself. Lim used an accessible analogy about how making a great sauce requires balance between salt, fat, acid, and heat.

"Too much of one ingredient, and the sauce breaks," he said. The same goes for nature and climate. If one element fails, the entire system is at risk.

The Risks We Face: It’s Not Just Theory Anymore
Lim’s speech made it clear that this isn’t just a theoretical exercise—these risks are real and escalating. With last year’s record-breaking ocean temperatures triggering Typhoon Yagi and devastating coral reefs, the threats to ecosystems—and by extension, the economy—are now glaring. As the storm damage from Typhoon Yagi exceeded $15 billion across eight countries, Lim stressed that these impacts aren’t confined to the distant future.

And if that weren’t enough, the Asian Development Bank projects that by 2070, GDP losses in Asia Pacific could hit a staggering 16.9% under a high emissions scenario. “This is not about corporate social responsibility anymore,” Lim said. “This is about the survival of our systems, both financial and environmental.”

The effects of a changing climate and ecosystem degradation are no longer abstract—they’re happening here and now. Lim’s message was clear: financial institutions have no choice but to act now.

One of the toughest challenges Lim pointed out was the measurement and management of nature-related risks. Unlike climate risks, where CO₂ metrics offer a common reference point, nature-related risks are far more complex. Think about the countless ecosystem services we rely on—water, soil health, pollination—many of which are nearly impossible to measure with precision.

But Lim remained optimistic. Drawing inspiration from European financial institutions—especially those in France—he acknowledged that progress is being made. “It’s a long road, but one that’s worth traveling,” he said, citing the success of French firms in integrating nature-related risks into their operations.

In Singapore, efforts are also underway to support financial institutions in managing these risks. Just last month, the Singapore Sustainable Finance Association (SSFA) released a whitepaper on “Financing Our Natural Capital,” which offers practical steps for FIs to consider nature as part of their risk assessments. The MAS, Lim said, would continue to work with industry stakeholders to build capacity in addressing these complex challenges.

A Catalyst for Change
Among the tools available to address these risks, Lim singled out carbon markets as one of the most promising. Far from being a mere regulatory tool, carbon markets can drive real-world change by providing financial incentives for companies to invest in solutions that benefit both the climate and nature. Projects like reforestation, mangrove conservation, and peatland restoration can help combat both climate change and biodiversity loss.

“The demand for high-quality carbon credits is expected to explode,” Lim noted, with markets projected to grow to $1 trillion annually by 2050. Southeast Asia, rich in natural resources, stands at the forefront of this opportunity, especially with its potential for nature-based carbon solutions like forestation and blue carbon.

As Lim wrapped up his speech, he echoed a central theme: we are at a crossroads, and the path we choose today will shape the future. Just as a chef watches carefully over their sauce, society must do the same with the planet. “A sauce that breaks might be salvageable,” he said, “but once ecosystems collapse, there’s no coming back.”

It is clear we can no longer afford to sit back and wait for nature to reach its tipping point. Financial institutions must integrate these risks into their governance frameworks, and governments must collaborate to set the stage for systemic change. Carbon markets, alongside other initiatives, will play a key role in driving this transition.

Lim closed his speech with a hopeful note, stressing that working together across borders, industries, and sectors, we have the power to create a system that is not just sustainable, but resilient.

"We need more than good ideas," he said. "We need courage—and we need action.".

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