SGFIN Director Professor Johan Sulaeman and Research Fellow Dr David Broadstock, together with two co-authors, contributed to this working paper, exploring the untapped potential of sustainability-linked finance (SLF) to address nature-related risks in Southeast Asia. As the region’s rich biodiversity faces increasing threats from deforestation, water stress, and land-use change, the paper presents the first comprehensive analysis of Southeast Asia’s SLF market and addresses critical gaps in integrating nature-related risks into financial instruments.
Using market analysis and a retrieval-augmented generation approach to classify key performance indicators (KPIs), the authors reveal that 60% of nature-related KPIs disclosed in corporate reports —particularly those related to water usage and waste management — are absent from SPTs in SLF deals, presenting significant opportunities for improved ecological accountability. The authors’ findings underscore the need for harmonising regional frameworks (e.g. ASEAN SLB Standards) with global guidelines like the Taskforce on Nature-related Financial Disclosures (TNFD) to standardise SPTs, improve transparency and mitigate greenwashing risks. Four policy implications for enhancing the transparency, credibility and scalability of SLF instruments in Southeast Asia are identified.