Supply Chain Risk in Asia: The Nature Risk Nobody Prices

Most businesses believe they have outsourced their nature risk. They have not. In this episode we look at why so much climate and nature risk sits in supply chains rather than on the balance sheet, and what that means for any organisation buying from, selling into or manufacturing in Asia. I am joined by Fran van Dijk, CEO and founder of One Stone Advisors, who has just shared a discussion paper on nature and climate risk with the accountancy profession, and Eleanor Whittle, founder of Alopias Earth, who spent a decade in UK government on international biodiversity policy including two years as a diplomat in Beijing, and now advises companies on climate and nature strategy from Taiwan. Together they write the Real World Briefing series. Charlie Luxton and I take the conversation from accounting rules to the water systems that keep global trade moving. The numbers land hard. Drought cut daily Panama Canal crossings by 36%. Low water on the Rhine pushed shipping from around 20 euros a tonne to 150. Around 41% of Asian data centres sit in areas of extremely high water stress, with another 22% in high stress zones. The Asian Development Bank puts roughly 75% of the region's GDP in sectors moderately or heavily dependent on nature, well above the global average. What comes out of it is practical. Separate your risks from your dependencies, because you can diversify a risk and you cannot diversify a dependency. Investigate your supply chain to tier four, not tier one. Build a live risk register. Ask whether you have the regional expertise and local partnerships to turn a disclosure into a credible strategy. And stop filing this under sustainability, because it belongs in business strategy.

ABOUT THE GUESTS Fran van Dijk, One Stone Advisors Fran advises boards and senior leadership teams on nature, biodiversity and integrated climate and nature strategy through One Stone Advisors. She is a B Corp founder and a Public Interest Member of the Council of the Institute of Chartered Accountants of Scotland. Fran is also Chief Impact Officer at Subsee, an AI and ocean technology company. Fran recently wrote a paper highlighting the sustainability challenges to conventional accounting, such as its failure to record the erosion of the critical shared assets a company doesn't own, and its reliance on historical data to predict non-linear future risks. Giving examples from published data and major corporate losses at firms like PG&E and Toyota, Fran explains why the profession needs better forward-looking, climate- and nature-related risk models. She draws on the UK Government's National Security Assessment, the Institute and Faculty of Actuaries' Parasol Lost report, and documented corporate information. Fran and Will have known each other since Will moved to Edinburgh. She sat on Green Element's advisory board. She brings the ‘what is actually happening’ lens, and the financial translation: unpriced insurance risk, tail risk, going concern, and the questions a CFO cannot answer from a standard risk register. Eleanor Whittle, Alopias Earth Eleanor founded Alopias Earth and advises private-sector organisations on climate and nature-related risk and strategy. She spent around ten years in the UK government, including leading major international climate finance programmes and two years as a diplomat in Beijing, where she led UK-China engagement on climate and nature. Eleanor then went on to be Programme Director at global energy think tank Ember. She is based in Taiwan, giving her a working perspective on a region that many European businesses primarily experience through their supply chains and operations. She is also Chief Strategy Officer at Subsee, an AI and ocean technology company. A keen diver and freediver, her connection to the ocean is personal as well as professional. Eleanor co-authors the Real World Briefing series with Fran and wrote the Asia Pacific briefing this episode draws on. She brings the regional and regulatory picture: h