Nature-Based Solutions Banking Product: A Full-Stack Approach for Directing Fixed-Term Deposits Toward NbS in ASEAN

Author: [Research Report] Date: February 2026

Abstract

High-net-worth capital in Australia and Singapore remains largely disconnected from nature-based solutions (NbS) projects in ASEAN, despite growing investor demand for sustainability-linked financial products and a maturing pipeline of NbS interventions across the region's forests, peatlands, mangroves, and agricultural landscapes. Existing green deposit products --- offered by institutions such as Westpac, UOB, and Standard Chartered --- focus narrowly on climate mitigation and carbon-related use-of-proceeds categories, leaving NbS entirely outside the scope of deposit-funded lending.

This report proposes a "full-stack" framework for developing a bankable NbS deposit product, integrating five interdependent layers: (1) an eight-typology classification of NbS projects across ASEAN's three major ecosystem categories, (2) a gap analysis of current carbon credit rating agencies revealing systematic under-coverage of non-carbon dimensions, (3) a proposed multi-domain rating methodology grounded in the UN System of Environmental-Economic Accounting --- Ecosystem Accounting (SEEA EA), (4) a banking integration architecture spanning Australian and Singaporean regulatory frameworks, and (5) a fully specified product design for an NbS Impact Term Deposit.

The gap analysis demonstrates that current rating agencies --- Sylvera, BeZero Carbon, Calyx Global, and Verra's Nature Framework --- assess carbon integrity dimensions comprehensively but leave ecosystem extent, condition, biodiversity, water regulation, soil health, social outcomes, and economic asset value entirely unrated. The proposed SEEA EA-based methodology addresses these gaps by scoring projects across three weighted domains (Environmental 50%, Social 25%, Economic 25%), producing alphanumeric ratings from NbS-AAA to NbS-D that are immediately recognisable to banking credit analysts and compatible with existing credit assessment workflows.

The resulting product --- the NbS Impact Term Deposit --- is structured as a fixed-term deposit with AUD 250,000 / SGD 200,000 minimum thresholds, 1--5 year terms, full capital guarantee, and a ring-fenced NbS lending pool with a minimum 80% allocation to NbS-BBB+ rated ASEAN projects. Annual impact reporting, independently verified and aligned with TNFD and ISSB disclosure frameworks, provides depositors with transparent, multi-dimensional evidence of ecological, social, and economic outcomes. The product requires no regulatory exemptions and operates within existing prudential frameworks in both jurisdictions.

1. Introduction

1.1 Problem Statement

The disconnect between high-net-worth (HNW) and affluent capital in developed financial centres and the nature-based solutions project pipeline in Southeast Asia represents one of the most consequential financing gaps in the global sustainability landscape. Australia and Singapore collectively manage substantial pools of private wealth --- Australia's superannuation system alone holds over AUD 3.9 trillion in assets, while Singapore's status as Asia's leading wealth management hub channels trillions in regional capital flows. A growing proportion of this capital is seeking verified sustainability outcomes: surveys consistently report that 70--80% of HNW investors express interest in sustainable investment products, with a significant share willing to accept modest yield concessions in exchange for credible impact measurement [1].

Yet existing green deposit products fail to connect this capital to nature. Westpac's Green Tailored Deposits, UOB's Green Deposits, and Standard Chartered's Sustainable Time Deposits all direct proceeds to climate-mitigation categories --- renewable energy, green buildings, clean transportation --- while excluding nature-based solutions, biodiversity conservation, and ecosystem restoration from their eligible use-of-proceeds frameworks. This is not an oversight but a structural consequence: when these products were designed (2019--2021), no credible, independently verifiable framework existed for assessing NbS project quality at the specificity required for banking integration.

The ASEAN region, meanwhile, presents the world's most significant NbS opportunity. Indonesia holds the largest national mangrove estate globally (approximately 3.3 million hectares, roughly 20% of the world's total), 15 million hectares of tropical peatland containing an estimated 57 GtC in below-ground stores, and the most mature REDD+ project pipeline in Southeast Asia. The broader region encompasses 42% of the world's mangrove area, 56% of global tropical peatland, and the Coral Triangle --- the epicentre of marine biodiversity. ASEAN's NbS investment reached approximately USD 8 billion in 2023 but must increase sevenfold to USD 54 billion per year by 2030 to meet regional biodiversity and climate targets [2]. The gap between available capital seeking nature-positive outcomes and the NbS project pipeline seeking finance is not a matter of willingness but of infrastructure: the rating systems, banking workflows, regulatory alignments, and product structures needed to bridge the two have not existed as an integrated system.

1.2 The Full-Stack Thesis

This report advances a "full-stack" thesis: that no single intervention --- whether a project classification, a rating methodology, a regulatory reform, or a product design --- can on its own create a bankable NbS deposit product. All five layers must be addressed together as an integrated system, because each layer depends on the others.

A bank cannot structure a credible NbS product without a typology (Layer 1) to classify what it is funding. Without a typology, "nature-based solutions" remains an amorphous category that resists the specificity required for credit assessment, portfolio diversification, and impact reporting.

A typology alone is insufficient without ratings (Layer 2) to assess project quality. The gap analysis in Layer 2 demonstrates that current carbon credit rating agencies cover only a fraction of the NbS value proposition, leaving banks without the independent quality signals they require to underwrite nature-linked exposures.

Identifying the ratings gap is necessary but not actionable without a rating methodology (Layer 3) to fill it. The proposed SEEA EA-based methodology translates the diagnostic of Layer 2 into a fully specified scoring system that produces alphanumeric ratings compatible with bank credit workflows.

A rating methodology has no institutional home without banking integration (Layer 4) to connect rated projects to bank balance sheets. Layer 4 demonstrates how NbS ratings interface with origination, credit assessment, underwriting, portfolio management, and monitoring functions within the prudential frameworks of Australia and Singapore.

Banking integration remains theoretical without product design (Layer 5) to reach depositors. The NbS Impact Term Deposit translates the preceding four layers into a specific, market-ready product with defined terms, allocation mechanisms, impact reporting, and regulatory disclosures.

The full-stack approach ensures that each layer is designed with awareness of the requirements imposed by every other layer. The typology is structured to support portfolio diversification requirements in the product design. The rating methodology produces outputs formatted for bank credit committees. The banking integration architecture accommodates the monitoring cadences that the rating methodology requires. The product design incorporates the disclosure obligations that the regulatory framework mandates. No layer operates in isolation; each is shaped by and accountable to the system as a whole.

1.3 Defining NbS for the Financial Sector

The term "nature-based solutions" carries different meanings in different institutional contexts, and the definition adopted has material consequences for what can be financed, rated, and monitored. This report departs from the broadest available definition and adopts a narrower, operationally specific formulation designed for financial sector application.

The most widely cited definition is that of the International Union for Conservation of Nature (IUCN), which defines NbS as "actions to protect, conserve, restore, sustainably use and manage natural or modified ecosystems, that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits" [3]. This definition was substantially endorsed by the United Nations Environment Assembly at its fifth session (UNEA-5) in March 2022, through Resolution 5/5, which adopted a multilaterally agreed definition of NbS as "actions to protect, conserve, restore, sustainably use and manage natural or modified ecosystems that address societal challenges effectively and adaptively, simultaneously providing human well-being and biodiversity benefits" [4].

The IUCN/UNEA definition is valuable as a policy umbrella. It is, however, too broad for financial operationalisation. The definition encompasses passive conservation (protecting ecosystems without active intervention), policy advocacy (promoting nature-positive regulation), institutional arrangements (establishing governance frameworks for ecosystem management), and educational programmes (building awareness of nature's value). While all of these activities contribute to nature-positive outcomes, they cannot be meaningfully rated, underwritten, or monitored at project scale by a bank. A policy advocacy programme does not have an ecosystem extent that can be measured via satellite. An institutional arrangement does not generate ecosystem service flows that can be quantified in biophysical units. A conservation awareness campaign does not produce a condition trajectory that can be tracked over a loan tenor.

This report therefore adopts a narrower, instrumental definition: NbS, for the purposes of this framework, are defined as deliberate human interventions on ecosystem extent or condition --- through protection, restoration, or sustainable management --- that produce measurable changes in ecosystem state and deliver quantifiable development outcomes over a defined time period. This definition has four operational consequences that make it suitable for financial sector application:

1. Measurable extent and condition baselines. Every project must have a defined spatial boundary and a quantifiable starting condition, enabling the establishment of baselines against which change can be assessed. This is compatible with SEEA EA extent and condition accounts, which require spatially explicit ecosystem units with measurable attributes [5].

2. Attributable intervention outcomes. The project must involve a deliberate intervention whose ecological and social outcomes can be distinguished from background trends, natural variability, and external factors. This enables additionality assessment --- a prerequisite for any financial product claiming impact.

3. Time-bounded monitoring. The project must operate over a defined period during which outcomes are monitored, enabling periodic reassessment and rating updates. Open-ended commitments without monitoring milestones are incompatible with the fixed-term structure of a deposit product.

4. Compatibility with SEEA EA accounting units. The project's boundaries, indicators, and outcome metrics must be expressible in the account structures of SEEA EA --- extent in hectares, condition on normalised indices, services in biophysical and monetary units --- enabling direct integration with the rating methodology proposed in Layer 3 and with national ecosystem accounting programmes underway in Australia, Indonesia, the Philippines, Vietnam, and Thailand.

This narrower definition excludes some activities that would qualify as NbS under the IUCN/UNEA umbrella --- notably passive conservation without active management, policy and advocacy work, and purely institutional interventions. It does so not because these activities lack value, but because they lack the measurability, attributability, and monitorability that banking products require. The definition is designed to be inclusive of all eight NbS typologies identified in Layer 1 --- from REDD+ to seagrass restoration --- while excluding activities that cannot be credibly rated, underwritten, and reported on within a fixed-term deposit structure.

1.4 Scope

This report focuses on two banking jurisdictions --- Australia and Singapore --- and one project geography --- ASEAN member states. Australia and Singapore are selected because they represent the two most developed sustainable finance regulatory environments in the Asia-Pacific region, with complementary strengths: Australia's mandatory climate reporting regime and sustainable finance taxonomy provide a disclosure infrastructure, while Singapore's Environmental Risk Management Guidelines and the Singapore-Asia Taxonomy provide a regulatory framework explicitly designed for ASEAN transition economies. The ASEAN project geography reflects the region's globally significant NbS endowment and the emerging pipeline of rated and ratable NbS projects across Indonesia, Vietnam, the Philippines, Thailand, Cambodia, and Malaysia.

The report does not address other potential banking jurisdictions (Hong Kong, Japan, the United Kingdom) or project geographies (Sub-Saharan Africa, Latin America), though the framework is designed to be adaptable to these contexts. Similarly, the report focuses on the term deposit product format and does not address other asset classes --- green bonds, sustainability-linked loans, biodiversity credits, or blended finance vehicles --- through which NbS capital mobilisation could occur, though it acknowledges these as complementary instruments in Section 8.

References for Section 1

[1] Morgan Stanley Institute for Sustainable Investing, Sustainable Signals: Individual Investor Interest Driven by Impact, Conviction and Choice (New York: Morgan Stanley, 2023).

[2] UNEP, State of Finance for Nature 2026: Nature in the Red --- Powering the Trillion Dollar Nature Transition Economy (Nairobi: UNEP, 2026); WWF & IKI, Financing Nature-based Solutions in Southeast Asia (2024).

[3] IUCN, IUCN Global Standard for Nature-based Solutions: A User-Friendly Framework for the Verification, Design and Scaling Up of NbS, 1st edition (Gland: IUCN, 2020).

[4] United Nations Environment Assembly, Resolution 5/5, Nature-based Solutions for Supporting Sustainable Development, UNEP/EA.5/Res.5 (2 March 2022).

[5] United Nations et al., System of Environmental-Economic Accounting --- Ecosystem Accounting (SEEA EA), White Cover Publication (New York: United Nations, 2021). Adopted by the UN Statistical Commission in March 2021 as an international statistical standard.

2. Layer 1: NbS Project Typology in ASEAN

Nature-based solutions (NbS) encompass a diverse set of interventions that work with and enhance natural ecosystems to address societal challenges, particularly climate change mitigation, biodiversity loss, and community resilience. For financial institutions seeking to develop bankable products around NbS, the first analytical requirement is a rigorous classification system that maps the heterogeneous landscape of project types into operationally distinct categories. This section establishes the typological foundation upon which subsequent layers of the framework—risk assessment, financial structuring, and governance—are constructed.

2.1 Classification Framework

Drawing on the landmark taxonomy of Griscom et al. (2017), which identified 20 natural climate solution pathways capable of delivering up to 23.8 PgCO2e yr-1 of mitigation potential globally [1], we classify ASEAN NbS projects into three overarching ecosystem categories encompassing eight operational typologies:

Forests

1. Avoided deforestation (REDD+) — Projects that reduce or prevent the conversion of standing forests to other land uses, quantifying emissions reductions against deforestation baselines. In ASEAN, where land-use change and forestry account for the majority of regional greenhouse gas emissions [2], REDD+ represents the most mature NbS project category with established methodologies under both the Verified Carbon Standard (VCS) and the UNFCCC's Article 6 framework.

2. Reforestation and afforestation — Projects that re-establish forest cover on degraded or deforested land, or establish new forests on historically non-forested areas. These generate carbon removals rather than avoided emissions, a distinction with significant implications for carbon credit pricing and buyer preferences in voluntary markets [3].

3. Improved forest management (IFM) — Interventions that enhance carbon stocks within existing managed forests through extended rotation periods, reduced-impact logging, or enrichment planting. ASEAN's 270 million hectares of tropical forest [4] present substantial IFM opportunities, though methodological challenges around additionality remain more acute than in other forest-based categories.

Agriculture and Grasslands

4. Agroforestry — The integration of tree cultivation with agricultural crops or livestock systems, increasing above-ground biomass and soil organic carbon while maintaining productive land use. ASEAN's smallholder-dominated agricultural landscape makes agroforestry particularly relevant; Vietnam's Central Highlands coffee-shade-tree systems and Indonesia's rubber agroforests illustrate regionally adapted models [5].

5. Soil carbon management and improved agricultural practices — Practices that increase soil organic carbon stocks through cover cropping, reduced tillage, composting, and improved nutrient management. While measurement, reporting, and verification (MRV) challenges have historically limited the bankability of soil carbon projects, advances in remote sensing and soil sampling protocols are progressively de-risking this category [6].

Wetlands and Coastal

6. Mangrove restoration and conservation — Interventions targeting mangrove ecosystems, which sequester carbon at rates three to five times greater per unit area than terrestrial forests and store significant carbon in below-ground biomass and sediments [7]. ASEAN holds approximately 34% of the world's mangrove area, with Indonesia alone accounting for roughly 3.3 million hectares—the largest national mangrove extent globally [8].

7. Peatland rewetting and conservation — Projects that restore hydrological function to drained tropical peatlands, preventing the oxidation of vast below-ground carbon stores. Southeast Asia's tropical peatlands, concentrated in Indonesia, Malaysia, and to a lesser extent Brunei, contain an estimated 69 GtC, making their conservation among the highest-leverage climate interventions available in the region [9].

8. Seagrass and coral reef restoration — Emerging NbS categories that restore coastal ecosystems with combined carbon sequestration, biodiversity, and coastal protection functions. While methodologies for seagrass blue carbon crediting are still maturing, the Coral Triangle—shared among Indonesia, Malaysia, the Philippines, Papua New Guinea, Timor-Leste, and the Solomon Islands—represents a globally significant geography for these interventions [10].

graph TD
    A["Nature-based Solutions
in ASEAN"] --> B["Forests"]
    A --> C["Agriculture &
Grasslands"]
    A --> D["Wetlands &
Coastal"]

    B --> B1["1. Avoided Deforestation
(REDD+)"]
    B --> B2["2. Reforestation /
Afforestation"]
    B --> B3["3. Improved Forest
Management"]

    C --> C1["4. Agroforestry"]
    C --> C2["5. Soil Carbon
Management"]

    D --> D1["6. Mangrove Restoration
/ Conservation"]
    D --> D2["7. Peatland Rewetting
/ Conservation"]
    D --> D3["8. Seagrass / Coral
Reef Restoration"]

    style A fill:#1a5276,color:#ffffff
    style B fill:#196f3d,color:#ffffff
    style C fill:#7d6608,color:#ffffff
    style D fill:#1a5276,color:#ffffff
    style B1 fill:#27ae60,color:#ffffff
    style B2 fill:#27ae60,color:#ffffff
    style B3 fill:#27ae60,color:#ffffff
    style C1 fill:#d4ac0d,color:#000000
    style C2 fill:#d4ac0d,color:#000000
    style D1 fill:#2e86c1,color:#ffffff
    style D2 fill:#2e86c1,color:#ffffff
    style D3 fill:#2e86c1,color:#ffffff

Figure 2.1: NbS typology hierarchy — eight operational categories grouped under three overarching ecosystem types, adapted from Griscom et al. (2017) [1] for the ASEAN context.

2.2 Finance-Relevant Differentiation

While the eight-fold typology above captures ecological and methodological distinctions, financial structuring requires a further differentiation based on the mode of intervention. We propose a 2x2 matrix that intersects ecosystem type with intervention mode—distinguishing conservation and avoided-loss projects from restoration and enhancement projects. This yields operationally distinct categories with materially different financial characteristics:

This distinction matters for banking products across several dimensions:

Risk profiles. Conservation projects face primarily threat-based risk—the ongoing pressure from deforestation, land conversion, or drainage that the project must counteract. Their risk profile is shaped by governance quality, enforcement capacity, and commodity price cycles that drive conversion incentives. Restoration projects face execution risk—uncertainty over whether degraded ecosystems can be successfully rehabilitated to deliver projected carbon, biodiversity, and hydrological outcomes. Survival rates of planted mangrove seedlings, for example, can range from 20% to 85% depending on site selection, hydrology, and species choice [11].

Monitoring approaches. Conservation projects require continuous threat monitoring—deforestation alerts, encroachment detection, fire early warning systems—typically delivered through satellite-based remote sensing at moderate resolution. Restoration projects require condition-improvement monitoring—biomass accumulation, canopy closure, species diversity indices, hydrological recovery—which often demands higher-resolution remote sensing supplemented by ground-truthing [12].

Revenue models. Conservation projects generate carbon credits from avoided emissions, calculated against counterfactual deforestation or degradation baselines—an inherently contested exercise that has attracted methodological scrutiny [13]. Restoration projects generate carbon credits from measured removals, which, while methodologically simpler, accrue more slowly as ecosystems mature. The voluntary carbon market increasingly places a premium on removal credits over avoidance credits, with removal credits trading at approximately 2-3 times the price of avoidance credits as of 2024 [14].

Time horizons. Conservation projects can generate credits relatively quickly once baselines are established and monitoring systems are operational, typically within 1-2 years. Restoration projects require longer lead times—mangrove restoration may take 5-10 years to reach peak sequestration rates, peatland rewetting requires 3-7 years for hydrological stabilisation, and reforestation projects may not achieve significant carbon accumulation for 10-20 years [15]. This temporal mismatch between investment outlay and revenue generation has direct implications for loan tenors, grace periods, and blended finance structures.

2.3 Country-Level Pipeline

The distribution of NbS opportunity across ASEAN is highly asymmetric, reflecting differences in ecosystem endowment, institutional capacity, land-use history, and policy ambition. The following country-level assessment identifies the primary NbS project types and enabling conditions in each of the region's major markets.

Indonesia

Indonesia dominates the regional NbS opportunity by a significant margin. The country's land-use, land-use change, and forestry (LULUCF) sector accounts for approximately 63-79% of its national greenhouse gas emissions [16], and Indonesia represents the single largest source of land-use emissions in ASEAN. The country's NbS potential spans all eight typologies but is particularly concentrated in three areas.

First, Indonesia holds roughly 15 million hectares of tropical peatland—approximately 36% of the global tropical peat estate—containing an estimated 57 GtC in below-ground stores [9]. The degradation and burning of these peatlands, particularly during the catastrophic 2015 fire season, can release emissions equivalent to the annual output of major industrialised economies. The Peatland and Mangrove Restoration Agency (BRGM) successfully restored 1.6 million hectares of peatland and rehabilitated 84,396 hectares of mangrove forest before its mandate concluded [17].

Second, Indonesia's 3.3 million hectares of mangrove forest constitute the world's largest national mangrove estate, representing roughly 20% of global mangrove area [8]. Mangrove conservation and restoration projects benefit from well-established blue carbon methodologies and strong co-benefits for coastal protection and fisheries productivity.

Third, Indonesia has the most mature REDD+ pipeline in Southeast Asia, with over 30 registered projects under VCS and other standards. The government's FOLU Net Sink 2030 strategy targets net-negative emissions of -140 MtCO2e from the forestry and land-use sector by 2030, providing a national policy anchor for project development [18]. Fifteen key actions under this strategy include reducing deforestation across dryland, peatland, and mangrove ecosystems; rehabilitating degraded lands; establishing sustainable plantations; and strengthening community-based forest management.

Vietnam

Vietnam has emerged as ASEAN's leading mangrove restoration practitioner, having planted approximately 197,000 hectares of mangroves between 1975 and 2018 through successive national reforestation programmes [19]. The government's 1992 reforestation programme replanted over 52,000 hectares of mangroves, followed by the Five Million Hectares Reforestation Project (1998-2010) and the 2011-2020 National Target Program, which implemented 113 projects targeting restoration across 48,096 hectares [20].

Beyond mangroves, Vietnam presents significant agroforestry potential in the Central Highlands, where coffee-shade-tree intercropping systems can simultaneously increase carbon stocks, improve microclimatic conditions for arabica cultivation, and diversify smallholder income. The Mekong Delta—one of the world's most climate-vulnerable agricultural regions—is driving innovation in climate-adaptive NbS, combining mangrove buffer zones with aquaculture, saline-tolerant rice varieties, and integrated water management [21].

Vietnam's developing carbon market, formalised through Decree 06/2022 establishing a domestic emissions trading scheme by 2028, provides a prospective demand-side mechanism for NbS credit generation, though the regulatory architecture remains under construction [22].

Philippines

The Philippines represents an emerging NbS market distinguished by a progressive legal framework. In 2024, President Marcos signed the Philippine Ecosystem and Natural Capital Accounting System (PENCAS) Act (Republic Act No. 11995), which mandates the systematic valuation of ecosystem services and their integration into national economic accounts [23]. While PENCAS is an accounting framework rather than a payments-for-ecosystem-services (PES) mechanism per se, it establishes the institutional infrastructure for valuing nature in economic decision-making—a prerequisite for scaling NbS finance.

The Philippines' position within the Coral Triangle makes it a priority geography for coral reef and seagrass restoration, while its 7,641-island archipelago provides extensive mangrove restoration opportunities. The country's well-established community-based natural resource management (CBNRM) tradition, combined with watershed management programmes serving the country's hydroelectric and municipal water infrastructure, creates a foundation for NbS projects with quantifiable hydrological co-benefits. However, the Philippines also faces acute typhoon exposure, which introduces a distinct climate risk dimension for coastal NbS projects that must be factored into financial structuring [24].

Thailand

Thailand's NbS landscape is anchored by one of Southeast Asia's most developed community forestry systems. Since the passage of the Community Forest Act in 2019, the country has formally recognised nearly 12,000 community forests covering close to one million hectares, granting local communities rights to use and benefit from forest resources within a regulated framework [25]. This institutional foundation provides a pathway for community-based REDD+ and IFM projects.

On the coastal front, the Thailand Mangrove Alliance—a public-private collaborative—aims to bring 30% of the country's mangrove area under effective management by 2030. As of 2024, 33 private companies and 94 communities have signed agreements with the Department of Marine and Coastal Resources to participate in a mangrove carbon credit scheme, covering approximately 24,000 hectares [26]. The Pred Nai community mangrove forest in eastern Thailand, where villagers have successfully restored 1,920 hectares of mangrove on former shrimp aquaculture ponds, serves as a globally recognised model for community-led coastal NbS [27].

Cambodia

Cambodia's NbS pipeline centres on three focal areas. Prey Lang Wildlife Sanctuary, the largest lowland evergreen forest remaining in mainland Southeast Asia at approximately 900,000 hectares, is the site of a REDD+ project developed in partnership between the Ministry of Environment, Conservation International, and the Mitsui Banking Corporation under the Joint Credit Mechanism (JCM) framework [28]. The project extends to more than 50 villages around the sanctuary.

Community forestry is expanding, with the Prey Lang Community Network supporting 4,594 people to manage 22,637 hectares of community forest [29]. Cambodia's Tonle Sap lake—Southeast Asia's largest freshwater body and a UNESCO biosphere reserve—has been the site of a decade-long flooded forest restoration programme led by Conservation International Cambodia, restoring approximately 600 hectares of critical riparian ecosystem [30].

However, Cambodia's NbS sector confronts governance challenges, including documented instances of land concession conflicts, limited enforcement capacity, and questions around the integrity of some forest carbon credit programmes that have attracted international scrutiny [31].

Malaysia

Malaysia's NbS opportunity is concentrated in the Bornean states of Sabah and Sarawak, which retain three-quarters of Southeast Asia's remaining peat swamp forests [32]. Sarawak has lost approximately 30% of its peatland and 18% of its forest cover since 1990, largely driven by oil palm expansion, while Sabah has experienced more modest losses of 2% of peatland and 8% of forest area over the same period [32]. Conservation and restoration of these remaining peat swamp forests and associated mangrove systems represent a high-leverage intervention—research indicates that peat swamp forest and mangrove conservation and restoration alone could reduce Malaysia's national land-use emissions by up to 88% [33].

Specific initiatives include the Rajang Delta Mangrove and Peatland Restoration Project, covering 77,600 hectares in Sarawak [34], and the Sabah Forestry Department's mangrove rehabilitation programme, operational since 2006. In Peninsular Malaysia, peatland restoration programmes employing the "5Rs" approach—rewetting, reduction of fire, revegetation, revitalisation, and reporting—have demonstrated the viability of community-based restoration models [35].

Country x NbS Type Matrix

The following matrix summarises the relative prominence of each NbS typology across major ASEAN markets, based on current project pipelines, ecosystem endowment, and policy enabling conditions:

Key: ✓ = primary focus area with established or advanced pipeline; ○ = secondary activity with emerging projects; — = minimal current activity.

Table 2.1: NbS typology relevance by ASEAN country.

2.4 Financing Landscape

The financing architecture for NbS in ASEAN is characterised by a fundamental mismatch between the scale of opportunity and the quantum of capital deployed. Understanding this gap—and the instruments currently available to bridge it—is essential for positioning new banking products within the existing ecosystem.

Carbon credits: the dominant but limited mechanism. Voluntary carbon markets remain the primary revenue mechanism for NbS projects in ASEAN, with REDD+ credits from Indonesian and Cambodian forests, and emerging blue carbon credits from mangrove projects, constituting the bulk of NbS-linked credit issuance. However, carbon credits capture only the climate mitigation dimension of NbS value, leaving biodiversity, hydrological, coastal protection, and livelihood co-benefits unmonetised. Moreover, the voluntary carbon market has experienced significant price volatility and reputational challenges following investigations into the environmental integrity of major REDD+ programmes [13], creating uncertainty for projects dependent on carbon revenue alone.

Blended finance. The structural characteristics of NbS projects—long time horizons, public-good co-benefits, limited collateral, and perceived execution risk—make them natural candidates for blended finance structures that combine concessional and commercial capital. Concessional capital from development finance institutions (DFIs), climate funds, and philanthropic sources absorbs first-loss risk, enabling commercial lenders and investors to participate at risk-adjusted returns. The Green Climate Fund's USD 300 million allocation to the ACGF Green Recovery Program illustrates this model at scale [36].

ASEAN Catalytic Green Finance Facility (ACGF). Launched in 2019 as an initiative of the ASEAN Infrastructure Fund, the ACGF has emerged as a key regional mechanism for de-risking green infrastructure investment. Since 2020, USD 105 million in AIF funds and USD 2.3 billion in partner co-financing have been allocated to 15 projects with a total expected project cost of USD 7.5 billion [37]. While the ACGF's portfolio has been weighted towards energy and transport infrastructure, its mandate extends to NbS-relevant sectors including sustainable water management and climate resilience, providing a potential co-financing channel for NbS banking products.

Green and sustainable bonds. ASEAN's green, social, and sustainability (GSS) bond market has grown substantially, with cumulative issuance reaching approximately USD 29.1 billion through 2023 [38]. In 2023 alone, GSS issuance in Southeast Asia totalled USD 21.4 billion, a record for the region [39]. However, this represents only a fraction—approximately 2%—of global sustainable debt issuance, and a negligible share of this capital has flowed to NbS specifically. The ASEAN Green Bond Standards, updated through the ASEAN Capital Markets Forum, and the ASEAN Taxonomy (most recently revised in December 2024) are progressively building the regulatory infrastructure for nature-linked debt instruments, but dedicated NbS bond frameworks remain nascent [40].

The scale gap. The mismatch between NbS financing needs and current flows is stark. The UNEP State of Finance for Nature 2026 report estimates that global investment in NbS reached USD 220 billion in 2023, of which private finance contributed just USD 23 billion [41]. To meet combined biodiversity, climate, and land restoration targets, NbS investment must increase 2.5 times to USD 571 billion annually by 2030—equivalent to 0.5% of global GDP. The report further estimates that a USD 4.1 trillion cumulative financing gap must be closed by 2050 [41]. Within ASEAN specifically, NbS investment reached approximately USD 8 billion in 2023, but must increase sevenfold to USD 54 billion per year by 2030 to meet regional Rio Convention targets [42]. Critically, for every dollar invested in protecting nature in the region, an estimated USD 30 flows to nature-negative activities through fossil fuel subsidies and investments in high-impact sectors [41].

This financing gap represents both the challenge and the commercial opportunity that motivates the development of NbS banking products. The subsequent layers of this framework address how financial institutions can structure products to mobilise capital at the scale required, while managing the distinctive risks that NbS projects present.

References

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[2] Climate Action Tracker. (2024). Indonesia Country Profile. Retrieved from https://climateactiontracker.org/countries/indonesia/

[3] Donofrio, S., Maguire, P., Zwick, S., & Merry, W. (2023). The Art of Integrity: State of the Voluntary Carbon Markets. Ecosystem Marketplace.

[4] FAO. (2020). Global Forest Resources Assessment 2020. Food and Agriculture Organization of the United Nations.

[5] Nair, P.K.R. (2012). Carbon sequestration studies in agroforestry systems: A reality-check. Agroforestry Systems, 86(2), 243-253.

[6] Smith, P., Soussana, J.-F., Angers, D., et al. (2020). How to measure, report and verify soil carbon change to realize the potential of soil carbon sequestration for atmospheric greenhouse gas removal. Global Change Biology, 26(1), 219-241.

[7] Donato, D.C., Kauffman, J.B., Murdiyarso, D., et al. (2011). Mangroves among the most carbon-rich forests in the tropics. Nature Geoscience, 4(5), 293-297.

[8] Giri, C., Ochieng, E., Tieszen, L.L., et al. (2011). Status and distribution of mangrove forests of the world using earth observation satellite data. Global Ecology and Biogeography, 20(1), 154-159.

[9] Page, S.E., Rieley, J.O., & Banks, C.J. (2011). Global and regional importance of the tropical peatland carbon pool. Global Change Biology, 17(2), 798-818.

[10] Veron, J.E.N., Devantier, L.M., Turak, E., et al. (2009). Delineating the Coral Triangle. Galaxea, Journal of Coral Reef Studies, 11(2), 91-100.

[11] Kodikara, K.A.S., Mukherjee, N., Jayatissa, L.P., et al. (2017). Have mangrove restoration projects worked? An in-depth study in Sri Lanka. Restoration Ecology, 25(5), 705-716.

[12] Chave, J., Davies, S.J., Phillips, O.L., et al. (2019). Ground data are essential for biomass remote sensing missions. Surveys in Geophysics, 40(4), 863-880.

[13] West, T.A.P., Borner, J., Sills, E.O., & Kontoleon, A. (2023). Overstated carbon emission reductions from voluntary REDD+ projects in the Brazilian Amazon. Science, 381(6661), 873-877.

[14] Ecosystem Marketplace. (2024). State of the Voluntary Carbon Markets 2024.

[15] Worthington, T.A., zu Ermgassen, P.S.E., Friess, D.A., et al. (2020). A global biophysical typology of mangroves and its relevance for ecosystem structure and deforestation. Scientific Reports, 10, 14652.

[16] Ministry of Environment and Forestry, Republic of Indonesia. (2022). Indonesia Third Biennial Update Report to the UNFCCC.

[17] Tanahair.net. (2024). BRGM dissolved after nine years of service: over 1.6 million hectares of peatland and mangroves restored.

[18] Forest Insights Indonesia. (2024). Indonesia's Ambitious FOLU Net Sink Agenda on Track to Achieve 2030 Target.

[19] Annals of Forest Science. (2020). Towards a more robust approach for the restoration of mangroves in Vietnam. 77(1), 1-18.

[20] Tinh, P.H., et al. (2022). Mangrove restoration in Vietnamese Mekong Delta during 2015-2020: Achievements and challenges. Frontiers in Marine Science, 9, 1043943.

[21] IUCN. (2023). Enhancing coastal resilience through mangrove restoration in aquaculture areas in Ca Mau Province.

[22] Government of Vietnam. (2022). Decree 06/2022/ND-CP on Greenhouse Gas Emission Reduction and Ozone Layer Protection.

[23] Republic of the Philippines. (2024). Republic Act No. 11995: Philippine Ecosystem and Natural Capital Accounting System (PENCAS) Act.

[24] World Bank. (2023). Philippines Country Climate and Development Report.

[25] RECOFTC. (2023). Putting community forestry on the digital map in Thailand.

[26] Mongabay. (2024). Thailand's budding mangrove restoration plans spark both hope and concern.

[27] FFTC-AP. (2023). Mangrove Forest Conservation in Thailand.

[28] Conservation International Cambodia. (2023). Prey Lang Wildlife Sanctuary REDD+ Project under the Joint Credit Mechanism.

[29] RECOFTC. (2023). Securing Cambodia's threatened Prey Lang landscape and the well-being of its people.

[30] Conservation International Cambodia. (2023). Tonle Sap flooded forest restoration programme.

[31] Land Portal. (2023). Cambodia all-in on Prey Lang carbon offsets.

[32] Lam, W.Y., et al. (2025). Half of land use carbon emissions in Southeast Asia can be mitigated through peat swamp forest and mangrove conservation and restoration. Nature Communications, 16, 1099.

[33] Ibid.

[34] Ecosecurities. (2024). Rajang Delta Mangrove and Peatland Restoration Project.

[35] Azri, M.A., et al. (2022). Socio-economic and ecological outcomes of a community-based restoration of peatland swamp forests in Peninsular Malaysia. Land Use Policy, 122, 106387.

[36] Green Climate Fund. (2021). FP156: ASEAN Catalytic Green Finance Facility (ACGF): Green Recovery Program.

[37] Asian Development Bank. (2024). ASEAN Catalytic Green Finance Facility 2024: Advancing Green Projects Through Partnerships.

[38] Asian Development Bank. (2024). ASEAN+3 Sustainable Bonds Highlights.

[39] Climate Bonds Initiative. (2024). Record year for Green, Social and Sustainability Debt Issuance in ASEAN.

[40] UNEP Finance Initiative. (2024). How are ASEAN Member States approaching sustainable finance taxonomies?

[41] UNEP. (2026). State of Finance for Nature 2026: Nature in the Red — Powering the Trillion Dollar Nature Transition Economy.

[42] WWF & IKI. (2024). Financing Nature-based Solutions in Southeast Asia.

3. Layer 2: NbS Ratings Gap Analysis

The emergence of independent carbon credit rating agencies since 2020 has introduced a degree of quality assurance to voluntary carbon markets that was previously absent. However, these agencies were designed to solve a narrower problem — distinguishing high-integrity carbon credits from low-quality ones — rather than evaluating the full ecological and social value proposition of Nature-based Solutions. This section maps the current rating landscape, identifies systematic coverage gaps across NbS project types, diagnoses methodological blind spots, and argues that the UN's System of Environmental-Economic Accounting — Ecosystem Accounting (SEEA EA) framework offers a structured path to close them.

3.1 Current Rating Landscape

Four organisations now occupy the NbS-adjacent ratings space, each with distinct positioning, methodological approaches, and commercial models. Understanding their respective strengths and limitations is essential for any banking product that intends to reference credit quality in its investment mandate.

Sylvera was founded in 2020 and is headquartered in London. The firm has raised over USD 50 million in venture capital and has built its competitive advantage around a remote sensing-first methodology [1]. Sylvera deploys LiDAR analysis, multispectral satellite imagery, and proprietary machine learning models to generate independent biomass estimates for forest carbon projects, cross-referencing these against project developer claims. The firm rates projects on an alphanumeric scale running from AAA (highest integrity) to D (lowest), covering REDD+ (Reducing Emissions from Deforestation and Forest Degradation), afforestation/reforestation (ARR), and improved forest management (IFM) project types. As of late 2024, Sylvera's database covered approximately 500 projects globally [2]. The key differentiator is methodological independence: Sylvera does not rely on project developer monitoring data but instead produces its own carbon stock estimates from raw geospatial inputs. This approach provides strong assurance on carbon quantification accuracy but, by design, captures little beyond the carbon dimension.

BeZero Carbon was also founded in 2020 in London and has grown to a team of over 180 analysts, data scientists, and engineers [3]. BeZero rates carbon credits on an eight-point scale from AAA to D, with publicly accessible ratings representing the largest freely available carbon credit quality database in the market. Coverage spans REDD+, ARR, cookstove distribution, and renewable energy credits across multiple registries including Verra's Verified Carbon Standard (VCS) and Gold Standard. BeZero assesses six risk factors: additionality, over-crediting, non-permanence, leakage, policy environment, and perverse incentives [4]. The public accessibility of BeZero's ratings has made them a de facto reference point for market participants who lack the resources to conduct independent due diligence. For banking applications, this transparency is valuable — it enables third-party verification of portfolio claims without requiring subscription access. However, like Sylvera, BeZero's analytical framework is fundamentally carbon-centric.

Calyx Global was founded in 2021 and operates from Singapore. The firm distinguishes itself through a subscription-based model and granular vintage-level ratings — meaning that individual credit issuance years within the same project receive distinct quality assessments [5]. This granularity reflects the reality that project performance varies over time: a REDD+ project may have strong additionality in its early crediting period but weaker claims as baseline deforestation rates change. Calyx covers forestry, energy, and household device project categories. The Singapore base and vintage-level approach make Calyx particularly relevant for ASEAN-focused banking products, where understanding project performance trajectories — not just point-in-time snapshots — is material to fixed-term deposit structuring.

Verra's Nature Framework represents a different kind of intervention. Released as version 1.0 in October 2024, the framework introduces the "Quality Hectare" as its unit of measurement — an area-weighted ecosystem quality metric that multiplies physical hectares by a condition score normalised against a reference ecosystem state [6]. Unlike the three rating agencies above, Verra's Nature Framework is not a third-party ratings product but a registry-level standard designed to enable the issuance of nature-positive credits beyond carbon. It targets biodiversity outcomes, ecosystem integrity, and nature recovery, with the Quality Hectare providing a standardised way to compare across ecosystem types. The framework is still at an early stage: the project pipeline is limited, methodologies for specific ecosystem types are under development, and market adoption remains uncertain. Nevertheless, the Quality Hectare concept is significant because it acknowledges — at the registry level — that carbon tonnes alone are an insufficient unit of account for NbS value.

3.2 Project-Type Coverage Gaps

When the coverage of these four organisations is overlaid against the eight-type NbS typology established in Layer 1, a pronounced asymmetry emerges. The NbS project types that are most legible to carbon markets receive comprehensive rating coverage, while those with the highest biodiversity and social co-benefits remain almost entirely unrated.

Well-covered project types include forest carbon across all three modalities: REDD+, ARR, and IFM. All three independent rating agencies — Sylvera, BeZero, and Calyx Global — actively rate forest carbon projects, and Verra's Nature Framework is also expected to incorporate forest ecosystem types among its early methodologies. This is unsurprising: forest carbon has the deepest methodological history, the most established remote sensing infrastructure, and the largest share of voluntary carbon market transaction volume. The Ecosystem Marketplace's 2023 State of the Voluntary Carbon Markets report estimated that forest and land-use credits accounted for approximately 46 per cent of total market value [7].

Partially covered project types include peatland conservation and restoration. Sylvera and BeZero have rated a limited number of peatland projects, particularly in Southeast Asia where tropical peat swamp forests store exceptionally dense carbon stocks — up to 20 times more carbon per hectare than mineral soils [8]. However, the unique hydrology of peatland systems (where carbon permanence depends on maintaining water table levels rather than standing biomass) introduces measurement challenges that existing carbon-first rating methodologies handle unevenly. Peatland projects on the VCS registry remain a small fraction of rated portfolios.

Minimally covered project types include mangrove restoration. Despite the ecological importance of mangroves — which sequester carbon at rates three to five times higher per unit area than terrestrial forests, protect coastlines from storm surge, and sustain fisheries that support livelihoods for tens of millions of people across ASEAN [9] — the number of independently rated mangrove projects is negligible. This reflects both the small pipeline of registered mangrove credits and the methodological complexity of measuring below-ground carbon in tidal sediments, which is difficult to assess via satellite-based approaches.

Project types with no meaningful rating coverage include agroforestry systems, soil carbon management, seagrass meadow and coral reef restoration, and urban NbS (such as green infrastructure, urban wetlands, and permeable surfaces). These categories face compounding barriers: limited presence on carbon registries, methodological uncertainty around quantifying and verifying carbon claims, and short track records that provide insufficient data for retrospective quality analysis. Agroforestry, for instance, involves heterogeneous land-use mosaics that resist the standardised remote sensing workflows optimised for contiguous forest canopies. Seagrass and coral systems present an additional challenge in that they operate in submerged marine environments largely invisible to optical satellite imagery.

This coverage asymmetry creates a critical problem for any banking product seeking to direct capital toward the full spectrum of NbS. The project types that deliver the richest biodiversity outcomes, the most diverse ecosystem services, and the strongest community livelihood benefits — mangroves, agroforestry, soil systems, coastal and marine ecosystems, urban green infrastructure — are precisely the types that lack independent quality assurance. A bank structuring an NbS term deposit today would be forced to concentrate allocations in forest carbon simply because that is where rating coverage exists, thereby reproducing the very market bias that an NbS-specific product should aim to correct.

3.3 Methodological Gaps

Beyond project-type coverage, the existing rating agencies share a deeper structural limitation: their assessment frameworks are built around carbon risk dimensions that, while important, capture only a fraction of NbS project value.

The four principal dimensions currently assessed are:

• Carbon additionality: whether the emission reductions or removals claimed by the project would have occurred in the absence of carbon finance. This is typically evaluated against baseline scenarios and regulatory counterfactuals.
• Carbon permanence: the likelihood that stored carbon will remain sequestered over the project's crediting period and beyond. Reversal risks include fire, disease, land-use change, and governance failure.
• Leakage: whether the project displaces emission-generating activities to areas outside the project boundary, thereby reducing or negating the net climate benefit.
• Over-crediting risk: whether the volume of credits issued accurately reflects the quantity of emissions reduced or removed, accounting for measurement uncertainty, conservative baselines, and buffer pool adequacy.

These dimensions are necessary but far from sufficient. They tell a credit buyer whether a tonne of carbon is likely to be real and durable. They do not tell a bank — or its depositors — whether the underlying project is maintaining or restoring ecosystem health, supporting biodiversity, regulating water flows, building soil fertility, or generating livelihood outcomes for local communities. For a banking product marketed on the basis of nature-positive impact, this omission is not a minor gap; it is a fundamental mismatch between what is measured and what is promised.

The SEEA EA framework, adopted in March 2021 by the UN Statistical Commission as an international statistical standard [10], provides a structured accounting architecture that could close each of these methodological gaps. The following table maps current rating dimensions against SEEA EA capabilities:

The contrast is stark. Current ratings operate within a single column — carbon — while SEEA EA provides a multi-dimensional accounting structure that covers the full range of ecosystem attributes, services, and values relevant to NbS project quality.

3.4 The SEEA EA Opportunity

The System of Environmental-Economic Accounting — Ecosystem Accounting (SEEA EA) was adopted in March 2021 by the UN Statistical Commission as the first international statistical standard for ecosystem accounting [10]. Its adoption by 53 member states represented a significant milestone: for the first time, the statistical community agreed on a common framework for measuring ecosystems in a manner consistent with the System of National Accounts (SNA) that underpins GDP and related economic indicators. This positions SEEA EA not as an environmental advocacy tool but as an extension of the same accounting infrastructure that banks already rely on for macroeconomic analysis.

SEEA EA is scale-independent by design. While its primary application has been at national and sub-national scales — supporting natural capital accounting by national statistical offices — the framework explicitly operates at any spatial unit, including landscapes, catchments, and individual project sites [11]. This means that the same account structures used by the Australian Bureau of Statistics to compile national ecosystem extent and condition accounts can, in principle, be applied to a 5,000-hectare REDD+ concession in Kalimantan or a 200-hectare mangrove restoration site in the Mekong Delta.

The framework provides four interlocking account types that, taken together, offer a comprehensive measurement architecture for NbS project rating:

1. Ecosystem extent accounts record the area of each ecosystem type within a defined spatial boundary, tracking changes over time — including loss, gain, and managed conversion. For an NbS project, extent accounts would capture whether the project is maintaining, expanding, or losing ecosystem area relative to its baseline commitment.

2. Ecosystem condition accounts assess the quality or health of an ecosystem relative to a reference condition, using biotic indicators (species composition, vegetation structure, habitat connectivity) and abiotic indicators (water quality, soil chemistry, hydrological regime). Condition accounts produce normalised indices that allow comparison across ecosystem types and over time, providing a standardised way to answer the question: is this ecosystem getting healthier or degrading?

3. Ecosystem service supply and use accounts measure the flows of services from ecosystems to economic units, in both physical and monetary terms. Services include provisioning (timber, non-timber forest products, fisheries), regulating (carbon sequestration, water purification, flood mitigation, pollination), and cultural services (recreation, spiritual value). For NbS projects, these accounts quantify the actual service delivery that the project generates — not just carbon, but the full suite of benefits.

4. Monetary ecosystem asset accounts calculate the net present value of expected future ecosystem service flows, using discount rates and projection models consistent with national accounting conventions. This provides a balance-sheet-compatible valuation of the ecosystem asset, enabling direct comparison with other asset classes in a bank's portfolio.

This architecture matters for NbS rating because it transforms the assessment from a single-dimensional carbon integrity check into a multi-dimensional quality evaluation that captures the full value proposition of nature-based projects. A mangrove restoration project, for example, might score modestly on carbon additionality alone but demonstrate exceptional value when extent recovery, coastal protection service delivery, fishery productivity, and biodiversity condition improvements are all accounted for within a single integrated framework.

Critically, SEEA EA implementation is already underway in the ASEAN region. Australia's Bureau of Statistics has published experimental ecosystem accounts covering land, inland waters, and marine ecosystems since 2017, with the most recent release in 2024 covering all states and territories [12]. Indonesia's Badan Pusat Statistik (BPS) has piloted ecosystem extent accounts for Kalimantan and Sumatra with support from the UN Environment Programme [13]. The Philippines, Vietnam, and Thailand have all initiated SEEA EA pilot programmes under the WAVES (Wealth Accounting and Valuation of Ecosystem Services) partnership [14]. This emerging data infrastructure means that an NbS rating methodology built on SEEA EA accounts would not be constructing measurement systems from scratch — it would be leveraging and extending a statistical infrastructure that governments are already investing in.

graph LR
    subgraph current["Current Rating Scope"]
        direction TB
        A1["Carbon Additionality"]
        A2["Carbon Permanence"]
        A3["Leakage"]
        A4["Over-crediting Risk"]
    end

    subgraph gap["THE GAP"]
        direction TB
        G1(("Unmeasured\nNbS Value"))
    end

    subgraph seea["SEEA EA-Enabled Rating Scope"]
        direction TB
        B1["Carbon Additionality"]
        B2["Carbon Permanence"]
        B3["Leakage"]
        B4["Over-crediting Risk"]
        B5["Ecosystem Extent"]
        B6["Ecosystem Condition"]
        B7["Biodiversity"]
        B8["Water Regulation"]
        B9["Soil Health"]
        B10["Social Outcomes"]
        B11["Economic Asset Value"]
    end

    current -->|"Only carbon\ndimensions"| gap
    gap -->|"SEEA EA closes\nthe gap"| seea

    style current fill:#f9d5d5,stroke:#c0392b,color:#000
    style gap fill:#fdebd0,stroke:#e67e22,color:#000
    style seea fill:#d5f5e3,stroke:#27ae60,color:#000
    style G1 fill:#f39c12,stroke:#e67e22,color:#fff

Figure 3.1. The gap between current carbon-only rating scope and the multi-dimensional assessment enabled by SEEA EA. Current agencies assess four carbon risk dimensions (left). SEEA EA provides structured accounts that extend coverage to ecosystem extent, condition, biodiversity, water regulation, soil health, social outcomes, and economic asset value (right), capturing the full value proposition of NbS projects.

For banking institutions considering NbS-linked deposit products, the SEEA EA opportunity is threefold. First, it provides a defensible, internationally standardised measurement framework that reduces greenwashing risk — a primary concern for regulators in both Australia and Singapore [15]. Second, it enables differentiated impact reporting that goes beyond carbon tonnes to include the biodiversity, water, and livelihood outcomes that depositors increasingly demand. Third, it aligns with the Taskforce on Nature-related Financial Disclosures (TNFD) reporting framework, which references SEEA EA as a foundational data source for nature-related risk assessment [16], creating coherence between the bank's product-level impact claims and its entity-level disclosure obligations.

References for Section 3

[1] Sylvera, "Our Methodology," 2024, https://www.sylvera.com/methodology.

[2] Sylvera, "Carbon Credit Ratings Database," accessed October 2024.

[3] BeZero Carbon, "About Us," 2024, https://bezerocarbon.com/about.

[4] BeZero Carbon, "Ratings Methodology: Carbon Credit Risk Assessment Framework," Version 4.0, 2024.

[5] Calyx Global, "Rating Approach: Vintage-Level Carbon Credit Assessments," 2024, https://calyxglobal.com/approach.

[6] Verra, "Nature Framework v1.0," October 2024, https://verra.org/programs/nature-framework/.

[7] Ecosystem Marketplace, "State of the Voluntary Carbon Markets 2023," Forest Trends, 2023.

[8] Page, S.E., Rieley, J.O., and Banks, C.J., "Global and Regional Importance of the Tropical Peatland Carbon Pool," Global Change Biology, vol. 17, no. 2, pp. 798-818, 2011.

[9] Donato, D.C., Kauffman, J.B., Murdiyarso, D., Kurnianto, S., Stidham, M., and Kanninen, M., "Mangroves Among the Most Carbon-Rich Forests in the Tropics," Nature Geoscience, vol. 4, no. 5, pp. 293-297, 2011.

[10] United Nations, "System of Environmental-Economic Accounting — Ecosystem Accounting (SEEA EA)," adopted by the UN Statistical Commission, March 2021.

[11] United Nations et al., "System of Environmental-Economic Accounting — Ecosystem Accounting: Technical Recommendations," White Cover Publication, 2022, Chapter 2.

[12] Australian Bureau of Statistics, "Experimental Ecosystem Accounts," Cat. No. 4655.0, 2024.

[13] UN Environment Programme, "Indonesia Ecosystem Extent Accounts: Kalimantan and Sumatra Pilot," SEEA Technical Assistance Programme, 2023.

[14] World Bank, "WAVES — Wealth Accounting and the Valuation of Ecosystem Services: Annual Report 2023," Washington, DC, 2023.

[15] APRA, "Prudential Practice Guide CPG 229: Climate Change Financial Risks," September 2021; MAS, "Guidelines on Environmental Risk Management for Banks," December 2020.

[16] Taskforce on Nature-related Financial Disclosures, "Recommendations of the Taskforce on Nature-related Financial Disclosures," September 2023, Annex 4.

4. Layer 3: Proposed NbS Rating Methodology

Layers 1 and 2 established, respectively, the eight-typology classification of NbS projects across ASEAN and the systematic gaps in current carbon credit rating coverage. The analysis demonstrated that existing rating agencies --- Sylvera, BeZero, Calyx Global, and Verra's Nature Framework --- assess carbon integrity dimensions (additionality, permanence, leakage, over-crediting) but leave ecosystem extent, condition, biodiversity, water regulation, soil health, social outcomes, and economic asset value entirely unrated. It further identified the UN System of Environmental-Economic Accounting --- Ecosystem Accounting (SEEA EA) as a structured, internationally adopted statistical standard capable of closing these gaps. This section translates that diagnostic into a fully specified rating methodology: a scoring system that takes SEEA EA-structured data as input and produces an alphanumeric rating immediately recognisable to banking credit analysts.

The methodology is designed to serve a specific institutional function. When a credit analyst at an Australian or Singaporean bank evaluates a loan proposal linked to a mangrove restoration project in the Mekong Delta or a peatland rewetting programme in Central Kalimantan, the NbS rating provides a standardised, independently verifiable signal of project quality across environmental, social, and economic dimensions --- analogous to the role that a Moody's or S&P credit rating plays in conventional fixed-income analysis. The rating does not replace the bank's internal credit assessment; it supplements it with a nature-specific quality overlay that current rating products cannot provide.

4.1 Design Principles

Six principles govern the methodology's architecture, each responding to a specific constraint identified in the preceding layers.

Scalability across all eight NbS typologies. The methodology must accommodate the full range of NbS project types identified in Layer 1 --- from REDD+ concessions in Indonesian rainforest to seagrass restoration in the Coral Triangle --- without requiring typology-specific scoring rubrics that would fragment the rating scale. This is achieved by anchoring indicators to SEEA EA account structures, which are ecosystem-type-agnostic by design: extent is measured in hectares regardless of whether the ecosystem is mangrove, peatland, or agroforest; condition is assessed against a reference benchmark specific to each ecosystem type but normalised to a common 0--1 scale; and ecosystem services are quantified in biophysical units that can be aggregated across service types [1].

SEEA EA compatibility. Every indicator in the methodology maps to a defined SEEA EA account type --- extent accounts, condition accounts, ecosystem service supply and use accounts, or monetary ecosystem asset accounts. This ensures that the data collected for rating purposes can be directly incorporated into national ecosystem accounting programmes already under development in Australia, Indonesia, the Philippines, Vietnam, and Thailand [2][3]. It also means that as government statistical offices expand their SEEA EA data infrastructure, the cost and complexity of NbS rating assessments will decline over time.

TNFD LEAP alignment. The Taskforce on Nature-related Financial Disclosures recommends that financial institutions assess nature-related risks and opportunities using the LEAP approach: Locate, Evaluate, Assess, Prepare [4]. The rating methodology is structured so that the data inputs required for each assessment domain map directly to LEAP phases, enabling banks to use NbS rating data as a primary input to their entity-level TNFD disclosures without duplicative data collection.

Alphanumeric output recognisable to credit analysts. The rating must produce an output that fits within the cognitive framework of banking professionals trained in credit analysis. An NbS-AA rating should be intuitively understood as denoting high quality with minor gaps, just as a Moody's Aa2 or S&P AA rating denotes high creditworthiness. This design choice reduces the training burden for analyst adoption and facilitates integration into existing credit committee workflows [5].

Transparency, reproducibility, and independent verifiability. The scoring thresholds and weighting parameters are fully specified and publicly disclosed. Any qualified assessor --- whether an accredited external rating agency, a bank's internal sustainability team, or a government statistical office --- can apply the methodology to the same project and arrive at the same rating, given the same input data. This stands in contrast to proprietary rating methodologies where the weighting of factors is not disclosed, limiting the ability of third parties to verify or challenge ratings.

Forward compatibility with ISSB nature standards. The International Sustainability Standards Board (ISSB) has initiated a Research Project on Biodiversity, Ecosystems and Ecosystem Services, with an exposure draft expected in October 2026 [6]. The methodology's indicator set --- ecosystem area, condition metrics, service flows, dependencies, impacts --- aligns with the disclosure categories anticipated under this forthcoming standard, ensuring that data collected for NbS rating purposes will feed directly into banks' future ISSB-mandated nature disclosures without requiring retrospective data restructuring.

4.2 Three Assessment Domains Mapped to SEEA EA Accounts

The methodology is organised around three assessment domains --- Environmental, Social, and Economic --- weighted to reflect the primacy of ecological integrity in NbS project quality while ensuring that social outcomes and financial viability receive substantive assessment. Each domain is mapped to specific SEEA EA account types, grounding every indicator in an internationally standardised measurement framework.

Environmental Domain (50% weight)

The Environmental Domain carries the greatest weight because the ecological performance of an NbS project is the foundational determinant of its value. A project that delivers strong financial returns but fails to maintain or restore ecosystem health is, by definition, not a credible nature-based solution. Three sub-indicators, each mapped to a distinct SEEA EA account type, comprise this domain.

Ecosystem Extent Accounts. The first sub-indicator measures the area of ecosystem under the project boundary and the change in that area over the assessment period. SEEA EA extent accounts record the opening and closing area of each ecosystem type in hectares, along with additions (through restoration, natural regeneration, or reclassification) and reductions (through conversion, degradation, or loss) [1]. For an NbS rating, the relevant metric is the net change in ecosystem extent relative to the project's baseline commitment. A mangrove restoration project that increases its mangrove area by 15% over the assessment period demonstrates stronger ecological performance than one that merely maintains its existing footprint. Projects that experience net ecosystem loss --- whether through encroachment, fire, or management failure --- receive the lowest extent scores regardless of performance on other indicators.

Ecosystem Condition Accounts. The second sub-indicator assesses the health or quality of the ecosystem relative to a reference condition, using biotic and abiotic indicators aggregated into a composite condition index normalised on a 0--1 scale. SEEA EA condition accounts specify that condition should be measured against a reference benchmark representing the state of the ecosystem in the absence of human degradation [1]. Biotic indicators include species richness, vegetation cover, canopy height, and habitat connectivity. Abiotic indicators include water table depth (critical for peatland projects), soil organic carbon concentration (critical for soil carbon and agroforestry projects), water quality parameters (dissolved oxygen, turbidity, nutrient levels), and hydrological regime integrity. The composite condition index enables cross-ecosystem comparison: a peatland with a condition score of 0.72 and a mangrove with a condition score of 0.72 are understood to be at equivalent proportional distances from their respective reference states, even though the underlying biophysical indicators differ entirely.

Ecosystem Service Supply Accounts. The third sub-indicator quantifies the flow of ecosystem services generated by the project, measured as a percentage of the services that would be delivered by the same ecosystem in reference condition. SEEA EA service supply and use accounts categorise services into three groups [1]: provisioning services (timber, fisheries, non-timber forest products such as honey, rattan, and medicinal plants), regulating services (carbon sequestration, water purification, coastal protection from storm surge and erosion, pollination services supporting adjacent agriculture), and cultural services (recreation value, spiritual and educational significance to local and Indigenous communities). The percentage-of-reference metric ensures that service delivery is assessed relative to the ecosystem's potential rather than in absolute terms, preventing bias toward large-area projects that may deliver high absolute volumes but low per-hectare service intensity.

Social Domain (25% weight)

The Social Domain assesses whether the NbS project generates positive outcomes for the communities that depend on or are affected by the ecosystem, consistent with the IUCN Global Standard for Nature-based Solutions, which requires that NbS deliver societal benefits through inclusive, transparent governance and equitable benefit-sharing (Criteria 5 and 6) [7]. This domain draws on the socio-economic extensions of SEEA EA, which provide a framework for linking ecosystem accounts to the economic and social units that depend on ecosystem services [1].

Community outcomes. This sub-indicator measures the proportion of target households (those within or adjacent to the project area) that experience measurable improvement in livelihoods, food security, or health outcomes attributable to the project. Measurement methods include household surveys, participatory rural appraisal, and comparison against control communities where feasible. The indicator captures not only whether the project avoids harm but whether it actively improves human welfare --- a higher bar that distinguishes genuinely transformative NbS projects from those that are ecologically sound but socially neutral.

Indigenous and local rights. This sub-indicator assesses compliance with Free, Prior and Informed Consent (FPIC) protocols, the security of land tenure arrangements for communities within and adjacent to the project area, and the presence and adequacy of benefit-sharing mechanisms that ensure local communities receive a fair proportion of project revenues. Projects operating on Indigenous lands without documented FPIC, or where land tenure is contested or insecure, receive low scores regardless of ecological performance --- reflecting the principle that ecological outcomes built on rights violations are neither sustainable nor ethically defensible [8].

Governance quality. This sub-indicator evaluates the transparency and inclusiveness of project decision-making, the existence and accessibility of grievance mechanisms, and the degree of meaningful stakeholder participation in project design and management. Strong governance is assessed by reference to documented governance structures, publicly available meeting records, and evidence that community input has materially influenced project decisions --- not merely that consultation has occurred.

Economic Domain (25% weight)

The Economic Domain assesses the financial viability and value-for-money of the NbS project, ensuring that depositor capital is allocated to projects with credible economic foundations rather than projects that depend on perpetual subsidy or face foreseeable financial failure. This domain is anchored to the monetary ecosystem asset accounts of SEEA EA, which calculate the net present value of expected future ecosystem service flows [1].

Monetary ecosystem asset valuation. The core economic indicator is the net present value (NPV) of the expected stream of ecosystem services over the project's crediting or management period, calculated using discount rates and projection models consistent with SEEA EA monetary accounting conventions [1]. This valuation encompasses all monetisable service flows --- carbon credit revenues, payments for watershed protection, fisheries productivity, timber and non-timber product revenues, recreation income --- and provides a balance-sheet-compatible asset value that can be compared directly with other asset classes in a bank's portfolio.

Revenue model viability. This sub-indicator assesses the robustness of the project's revenue model: the number and diversity of revenue streams (carbon credits, biodiversity credits, payments for ecosystem services, sustainable product sales, eco-tourism), the contractual security of those streams (long-term offtake agreements versus spot-market dependence), and the market risks that could impair revenue generation (carbon price volatility, regulatory changes, demand shifts). Projects with diversified revenue models are more resilient to single-market shocks than those dependent solely on voluntary carbon credit sales.

Cost-effectiveness. This sub-indicator benchmarks the project's costs against sector comparators, measuring cost per hectare of ecosystem condition improvement and cost per tonne of CO2-equivalent sequestered or avoided. Projects that achieve ecological outcomes at below-median cost demonstrate efficient use of depositor capital and are more likely to remain financially viable under adverse market conditions.

Financial additionality. This sub-indicator assesses whether the project would have proceeded in the absence of the specific financing provided through the NbS banking product. A project that can demonstrate that it would not have been implemented without this financing --- because no alternative funding sources were available, or because the project's risk profile exceeded the appetite of conventional lenders --- scores highest on additionality. Projects that would have proceeded regardless (for example, because they were already fully funded by government programmes or philanthropic grants) score lowest, reflecting the reduced marginal impact of the bank's capital allocation.

4.3 Scoring Mechanism

Each domain is scored on a scale of 1 to 5 using concrete indicator thresholds specified below. Within each domain, sub-indicators are scored individually and then averaged to produce the domain score. Domain scores are then combined using the fixed weighting formula to produce a composite score.

Environmental Domain Scoring

Each of the three environmental sub-indicators is scored 1--5 according to the following thresholds, then averaged to produce the Environmental Domain score.

Extent change (net change in ecosystem area over the assessment period):

Condition index (composite 0--1 scale, normalised against reference condition):

Ecosystem services delivery (percentage of reference-condition service flow):

Social Domain Scoring

Community outcomes (percentage of target households with measurable improvement):

Rights and governance (composite assessment of FPIC, tenure, benefit-sharing, and governance transparency):

Livelihood diversification (number of distinct income streams created or supported by the project):

Economic Domain Scoring

Financial viability (NPV and revenue diversification):

Cost-effectiveness (benchmarked against sector median for the relevant NbS typology):

Financial additionality:

Composite Score Calculation

Domain scores are weighted and summed to produce the composite score:

Composite Score = (Environmental Domain Score x 0.50) + (Social Domain Score x 0.25) + (Economic Domain Score x 0.25)

The composite score ranges from a minimum of 1.00 (all domains score 1) to a maximum of 5.00 (all domains score 5). The 50/25/25 weighting reflects the primacy of ecological performance --- a project cannot be highly rated if its environmental outcomes are poor, even if social and economic indicators are strong --- while ensuring that social equity and financial viability each receive substantive assessment weight sufficient to differentiate projects within the same environmental performance band.

4.4 Alphanumeric Rating Scale

The composite score is mapped to an alphanumeric rating scale modelled on familiar credit rating conventions. Eight primary rating bands span the full 1.0--5.0 range, with +/- modifiers providing finer granularity within each band.

Within each band, +/- modifiers indicate position relative to the band midpoint. For example, within the NbS-AA band (4.00--4.49):

• NbS-AA+: composite score 4.35 -- 4.49 (upper third of band)
• NbS-AA: composite score 4.15 -- 4.34 (middle third of band)
• NbS-AA-: composite score 4.00 -- 4.14 (lower third of band)

The investment-grade threshold is set at NbS-BBB (composite score 3.00), consistent with the credit rating convention where BBB- marks the boundary between investment-grade and speculative-grade obligations. Projects rated NbS-BBB or above are eligible for allocation from the ring-fenced NbS deposit pool described in Layer 4. Projects rated NbS-BB or below are ineligible for the deposit pool but may qualify for other bank sustainability programmes, including technical assistance to improve performance toward investment-grade status.

Worked Examples

The following three examples illustrate how the scoring mechanism operates in practice, using project profiles drawn from the ASEAN NbS typologies identified in Layer 1.

Worked Example 1: Mangrove Restoration --- Vietnam, Mekong Delta

A community-led mangrove restoration project covering 2,400 hectares in the Ca Mau and Ben Tre provinces of the Mekong Delta, operational since 2018. The project combines mangrove replanting on degraded aquaculture ponds with sustainable shrimp-mangrove co-management, eco-tourism development, and blue carbon credit generation under the VCS methodology for tidal wetland and seagrass restoration (VM0033).

Environmental Domain:

• Extent change: the project has increased mangrove area by 15% over the assessment period, through active replanting and natural regeneration on abandoned aquaculture ponds. Score: 5.
• Condition index: the composite condition score is 0.72, reflecting strong canopy development and species diversity in older restoration plots but incomplete below-ground root mat formation in recently planted areas. Score: 4.
• Ecosystem services delivery: the project delivers approximately 65% of reference-condition services. Carbon sequestration is progressing well, coastal protection function has been partially restored (wave attenuation measured at 60% of reference mangrove), and fisheries productivity in co-managed zones has increased substantially. Cultural services remain limited as the eco-tourism programme is in early stages. Score: 4.
• Environmental Domain average: (5 + 4 + 4) / 3 = 4.33.

Social Domain:

• Community outcomes: household surveys indicate that 80% of the 1,200 target households in adjacent communities report measurable improvement in income (from sustainable aquaculture and eco-tourism employment) and food security (from increased fisheries productivity). Score: 5.
• Rights and governance: FPIC was conducted across all seven affected communes with documented consent records. Land tenure is secure under Vietnamese provincial government allocation. A transparent benefit-sharing mechanism distributes 40% of carbon credit revenues to participating households. A community grievance mechanism is operational with documented resolutions. Score: 4 (minor procedural gaps in FPIC documentation for two smaller communes).
• Livelihood diversification: the project has created three distinct new income streams --- sustainable shrimp-mangrove co-cultivation, eco-tourism guide employment, and carbon credit revenue sharing --- in addition to existing fishing livelihoods. Score: 5.
• Social Domain average: (5 + 4 + 5) / 3 = 4.67.

Economic Domain:

• Financial viability: the project has a positive NPV under base-case assumptions, with two primary revenue streams (blue carbon credits and sustainable aquaculture revenues). A third stream (eco-tourism) is emerging but not yet contributing materially to cash flow. Score: 4.
• Cost-effectiveness: cost per hectare of condition improvement is below the sector median for mangrove restoration in Southeast Asia; cost per tonne CO2e is near median. Score: 4.
• Financial additionality: the project was partially funded by a GIZ grant for initial planting, but the ongoing management, monitoring, and expansion phases depend on carbon credit revenues and the bank's NbS loan facility. The project would not have expanded beyond the initial GIZ-funded pilot without this financing. Score: 4.
• Economic Domain average: (4 + 4 + 4) / 3 = 4.00.

Composite Score: (4.33 x 0.50) + (4.67 x 0.25) + (4.00 x 0.25) = 2.165 + 1.168 + 1.000 = 4.33

Rating: NbS-AA (composite score 4.33 falls within the NbS-AA band of 4.15--4.34)

This project rates highly because it combines strong ecological recovery (15% extent increase, condition trajectory improving) with robust community outcomes and a viable if still-maturing economic model. The rating reflects the project's strength as an integrated mangrove-livelihoods intervention rather than a pure carbon play.

Worked Example 2: Peatland Rewetting --- Indonesia, Central Kalimantan

A peatland rewetting and fire prevention project covering 18,000 hectares in the former Mega Rice Project area of Central Kalimantan, where drainage canals installed in the 1990s have caused severe peat degradation and recurrent fire. The project involves canal blocking to raise water table levels, community-based fire prevention patrols, and paludiculture (cultivation of wet-adapted crops on rewetted peat) as an alternative livelihood.

Environmental Domain:

• Extent change: the project has maintained the existing peatland extent (0% net change) by preventing further conversion, but has not expanded the peat ecosystem area. Canal blocking has stabilised the hydrological boundary but new peat formation has not been documented. Score: 2.
• Condition index: the composite condition score is 0.55. Water table levels have risen significantly in areas adjacent to blocked canals (from an average depth of 80 cm below surface to 35 cm), but large portions of the project area remain in degraded condition with subsidence continuing. Vegetation recovery is patchy, with pioneer species establishing on rewetted areas but mature peat swamp forest structure absent. Score: 3.
• Ecosystem services delivery: the project delivers approximately 50% of reference-condition services. Carbon emission avoidance is substantial (the project has prevented an estimated 2.3 million tonnes of CO2 emissions from peat oxidation and fire that would otherwise have occurred), but provisioning services remain limited (paludiculture is in trial phase), water regulation is partially restored, and biodiversity indicators are below reference levels. Score: 3.
• Environmental Domain average: (2 + 3 + 3) / 3 = 2.67.

Social Domain:

• Community outcomes: approximately 60% of the 3,500 target households report measurable improvement, primarily through employment in fire prevention patrols and initial paludiculture income. However, households that previously relied on illegal logging or drainage-based agriculture have experienced income disruption during the transition period. Score: 4.
• Rights and governance: FPIC was conducted but with incomplete coverage --- some communities in the eastern portion of the project area were consulted after canal blocking had already commenced. Land tenure is complex, involving overlapping customary and government claims. Benefit-sharing is functioning for fire patrol employment but paludiculture revenue-sharing is not yet operational. Score: 3.
• Livelihood diversification: two new income streams have been created (fire prevention patrol employment and early-stage paludiculture), but the paludiculture programme is not yet generating consistent income. Score: 3.
• Social Domain average: (4 + 3 + 3) / 3 = 3.33.

Economic Domain:

• Financial viability: NPV is marginal under base-case assumptions. The project's primary revenue is from carbon credits (avoided emissions from peat fire prevention), with paludiculture revenues projected but not yet materialised. Under stress scenarios (lower carbon prices, higher fire prevention costs), NPV turns negative. Score: 3.
• Cost-effectiveness: cost per hectare is above the sector median for peatland rewetting projects due to the extensive canal network requiring blocking and the high labour costs of fire prevention patrols across 18,000 hectares. Score: 2.
• Financial additionality: the project is clearly additional --- no alternative financing was available for peatland rewetting at this scale in Central Kalimantan, and the government's Peatland and Mangrove Restoration Agency (BRGM) provided technical but not financial support before its dissolution. Score: 5.
• Economic Domain average: (3 + 2 + 5) / 3 = 3.33.

Composite Score: (2.67 x 0.50) + (3.33 x 0.25) + (3.33 x 0.25) = 1.335 + 0.833 + 0.833 = 3.00

Rating: NbS-BBB- (composite score 3.00 falls at the lower boundary of the NbS-BBB band)

This project sits precisely at the investment-grade threshold. Its Environmental Domain score is pulled down by the absence of extent expansion and the still-degraded condition of much of the peat area, but its high additionality score and meaningful social outcomes bring it to the minimum investable standard. The rating signals that the project is eligible for the NbS deposit pool but warrants close monitoring --- a downgrade to NbS-BB would trigger replacement from the ring-fenced portfolio. The project's trajectory is critical: if rewetting continues to raise water tables and paludiculture generates consistent revenue, the next annual reassessment could see an upgrade to NbS-BBB or NbS-A-.

Worked Example 3: Agroforestry --- Philippines, Upland Community

An agroforestry project covering 1,800 hectares in the upland municipalities of Bukidnon province, Mindanao, where smallholder farmers have integrated timber and fruit tree species (mahogany, narra, cacao, coffee) into previously monoculture maize and sugarcane plots. The project operates under a community-based forest management agreement (CBFMA) with the Department of Environment and Natural Resources (DENR) and generates revenue from diversified agricultural products, emerging carbon credits, and watershed protection payments from the downstream National Power Corporation hydroelectric facility.

Environmental Domain:

• Extent change: the project has increased tree-covered area by 8% over the assessment period, as agroforestry plots have matured and canopy cover has expanded beyond initial planting boundaries through natural regeneration on adjacent fallow land. Score: 4.
• Condition index: the composite condition score is 0.61. Above-ground biomass has increased significantly, soil organic carbon has risen by an average of 1.2% across sampled plots, and bird species richness has increased from 12 to 28 species in transect surveys. However, the agroforestry system remains structurally simpler than reference upland forest, with lower canopy height and reduced understorey complexity. Score: 4.
• Ecosystem services delivery: the project delivers approximately 45% of reference-condition services. Carbon sequestration is progressing (estimated 4.2 tCO2e per hectare per year), water regulation has improved (reduced run-off measured at downstream gauging stations), and provisioning services are strong (diversified agricultural output). However, habitat connectivity remains limited and cultural services are minimal. Score: 3.
• Environmental Domain average: (4 + 4 + 3) / 3 = 3.67.

Social Domain:

• Community outcomes: approximately 70% of the 850 participating households report measurable income improvement, driven by diversified agricultural revenues (cacao, coffee, and fruit sales) and reduced input costs from improved soil fertility. Food security has improved as households produce a wider range of crops. Score: 4.
• Rights and governance: the CBFMA provides secure 25-year renewable tenure, governance structures are well-established through the People's Organisation (a registered cooperative), and benefit-sharing operates through the cooperative's dividend mechanism. FPIC was conducted with three Indigenous Peoples communities within the project area. Score: 4.
• Livelihood diversification: four distinct income streams are now operational --- cacao and coffee sales (processed at a community-owned fermentation and drying facility), timber thinning revenues, watershed protection payments from the National Power Corporation, and early-stage carbon credit revenues. Score: 5.
• Social Domain average: (4 + 4 + 5) / 3 = 4.33.

Economic Domain:

• Financial viability: the project has a positive NPV under base-case assumptions, with four diversified revenue streams providing resilience. However, the carbon credit component is small relative to agricultural revenues, and the watershed protection payment depends on a single contractual counterparty. Score: 4.
• Cost-effectiveness: cost per hectare of condition improvement is well below the sector median for agroforestry projects in Southeast Asia, reflecting the low-cost, community-labour-intensive model. Cost per tonne CO2e is above median (agroforestry sequesters carbon more slowly than forest restoration), but the holistic cost-effectiveness is strong when co-benefits are included. Score: 5.
• Financial additionality: the project is partially additional. The CBFMA and initial DENR technical support would have enabled some agroforestry adoption, but the bank's NbS loan financed the community processing facility, the carbon credit MRV system, and the expansion from 600 to 1,800 hectares. Score: 3.
• Economic Domain average: (4 + 5 + 3) / 3 = 4.00.

Composite Score: (3.67 x 0.50) + (4.33 x 0.25) + (4.00 x 0.25) = 1.835 + 1.083 + 1.000 = 3.92

Rating: NbS-A (composite score 3.92 falls within the NbS-A band of 3.50--3.99)

This project achieves a strong rating despite moderate environmental scores because the social and economic domains are robust. The agroforestry model's strength lies in its integration of community livelihoods with ecosystem recovery --- a characteristic that the multi-domain rating methodology is designed to capture but that a carbon-only rating would undervalue. The project scores 3 on ecosystem services delivery because it is an agricultural system that will never fully replicate reference upland forest services, but the methodology appropriately weights this against the strong extent gains, improving condition, and exceptional livelihood outcomes.

4.5 TNFD LEAP Integration

The rating methodology is designed to generate data that maps directly onto the four phases of the TNFD LEAP approach, enabling banks to use NbS rating assessments as a primary data source for their entity-level nature-related disclosures [4].

Locate. The TNFD LEAP process begins with locating the interface between the organisation's activities and nature --- identifying where the organisation and its value chain interact with sensitive ecosystems, biodiversity hotspots, and areas of water stress. For the NbS rating, the Locate phase is served by the project geography and ecosystem type classification from Layer 1, supplemented by the extent accounts from the Environmental Domain. The spatial boundaries of the NbS project, its proximity to protected areas and Key Biodiversity Areas, and the ecosystem type classification feed directly into the bank's TNFD Locate analysis, identifying which nature-related dependencies and impacts are geographically material [4].

Evaluate. The Evaluate phase requires the organisation to identify its dependencies on ecosystem services and its impacts on ecosystem condition. The NbS rating's Environmental Domain provides both: the ecosystem service supply accounts quantify the services that the project generates (the bank's positive impact through its NbS lending), while the condition accounts reveal whether the project is improving or degrading ecosystem health. For a bank holding a portfolio of NbS-rated projects, the aggregate condition trajectories across the portfolio provide a direct input to the TNFD Evaluate disclosure on nature-related impacts [9].

Assess. The Assess phase requires identification and assessment of nature-related risks (physical, transition, and systemic) and opportunities. The Environmental Domain's condition trajectory provides a physical risk indicator --- a deteriorating condition score signals increasing ecological fragility and potential reversal risk. The Economic Domain's revenue model viability and financial additionality scores provide transition risk indicators --- projects dependent on single revenue streams or facing regulatory uncertainty are more exposed to transition dynamics. Systemic risks, such as the potential for correlated ecological failure across multiple projects due to regional climate shifts, are assessed at the portfolio level using the geographic and typological diversification requirements described in Layer 4 [10].

Prepare. The Prepare phase focuses on disclosure readiness, strategy development, and target-setting. The NbS rating contributes to Prepare through the governance assessment within the Social Domain (which evaluates monitoring capacity and reporting systems) and the Economic Domain (which assesses the robustness of the project's financial and operational infrastructure). Projects with high governance and economic scores are better positioned to provide the ongoing monitoring data --- quarterly remote sensing updates, annual on-ground verification, community impact assessments --- that feed the bank's TNFD-recommended disclosures on nature-related metrics and targets [4].

4.6 ISSB Alignment

The methodology is designed to be forward-compatible with the evolving ISSB disclosure landscape. Currently, IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) require reporting entities to disclose sustainability-related risks and opportunities that could reasonably be expected to affect the entity's cash flows, access to finance, or cost of capital [11]. The NbS rating generates data that directly supports these disclosures: the Environmental Domain provides metrics on carbon sequestration (relevant to IFRS S2 Scope 3 financed emissions calculations), the Economic Domain quantifies the financial materiality of nature-related risks, and the Social Domain documents governance arrangements relevant to IFRS S1 governance disclosure requirements.

Looking ahead, the ISSB initiated a Research Project on Biodiversity, Ecosystems and Ecosystem Services in 2023, with an exposure draft anticipated in October 2026 [6]. Based on the ISSB's published research agenda and its commitment to building on existing frameworks --- including TNFD and SEEA EA --- the forthcoming standard is expected to require disclosures across several categories that the NbS rating methodology already measures: area of ecosystem under management (served by the extent accounts), ecosystem condition metrics (served by the condition accounts), dependencies on ecosystem services (served by the service supply accounts), nature-related impacts (served by the condition trajectory analysis), and nature-related financial risks and opportunities (served by the Economic Domain's NPV and risk assessments) [12]. By building the rating methodology on SEEA EA structures from inception, the data architecture is inherently compatible with these anticipated disclosure requirements. Banks that adopt the NbS rating methodology now will not need to retrofit their data collection systems when the ISSB nature standard takes effect --- they will already be collecting, structuring, and verifying the data that the standard will require.

Rating Methodology Flow

graph TD
    subgraph inputs["Data Inputs"]
        I1["Remote Sensing
(satellite imagery,
LiDAR, NDVI)"]
        I2["Field Surveys
(species transects,
soil sampling,
water table monitoring)"]
        I3["Community Data
(household surveys,
FPIC records,
governance documents)"]
        I4["Financial Records
(revenue data,
cost accounts,
NPV models)"]
    end

    subgraph domains["Three Assessment Domains"]
        D1["Environmental Domain
(50% weight)
• Extent Accounts
• Condition Accounts
• Service Supply Accounts"]
        D2["Social Domain
(25% weight)
• Community Outcomes
• Rights & Governance
• Livelihood Diversification"]
        D3["Economic Domain
(25% weight)
• Asset Valuation (NPV)
• Revenue Model Viability
• Cost-effectiveness
• Financial Additionality"]
    end

    subgraph scoring["Domain Scoring"]
        S1["Environmental
Score: 1–5"]
        S2["Social
Score: 1–5"]
        S3["Economic
Score: 1–5"]
    end

    AGG["Weighted Aggregation
(Env × 0.50) + (Soc × 0.25) + (Econ × 0.25)"]

    COMP["Composite Score
Range: 1.0 – 5.0"]

    subgraph rating["Alphanumeric Rating"]
        R1["NbS-AAA · NbS-AA · NbS-A
NbS-BBB · NbS-BB · NbS-B
NbS-CCC · NbS-D"]
    end

    I1 --> D1
    I2 --> D1
    I2 --> D2
    I3 --> D2
    I4 --> D3

    D1 --> S1
    D2 --> S2
    D3 --> S3

    S1 --> AGG
    S2 --> AGG
    S3 --> AGG

    AGG --> COMP
    COMP --> R1

    style inputs fill:#eaf2f8,stroke:#2980b9,color:#000
    style domains fill:#eafaf1,stroke:#27ae60,color:#000
    style scoring fill:#fef9e7,stroke:#f1c40f,color:#000
    style rating fill:#f9ebea,stroke:#c0392b,color:#000
    style AGG fill:#fdebd0,stroke:#e67e22,color:#000
    style COMP fill:#fdebd0,stroke:#e67e22,color:#000

Figure 4.1. NbS Rating Methodology flow. Data inputs from four source categories (remote sensing, field surveys, community assessments, and financial records) feed into three SEEA EA-mapped assessment domains. Each domain is scored 1--5 on its constituent sub-indicators, then weighted and aggregated into a composite score (1.0--5.0) that maps to an alphanumeric rating from NbS-AAA (exceptional) to NbS-D (non-performing). The NbS-BBB threshold (composite score 3.00) marks the investment-grade boundary for eligibility in the ring-fenced NbS deposit pool.

References for Section 4

[1] United Nations et al., System of Environmental-Economic Accounting --- Ecosystem Accounting (SEEA EA), White Cover Publication (New York: United Nations, 2021).

[2] Australian Bureau of Statistics, "Experimental Ecosystem Accounts," Cat. No. 4655.0 (Canberra: ABS, 2024).

[3] UN Environment Programme, "Indonesia Ecosystem Extent Accounts: Kalimantan and Sumatra Pilot," SEEA Technical Assistance Programme, 2023.

[4] Taskforce on Nature-related Financial Disclosures, Recommendations of the Taskforce on Nature-related Financial Disclosures (September 2023), Annex 4: The LEAP Approach.

[5] Standard & Poor's, "S&P Global Ratings Definitions," RatingsDirect, revised January 2024.

[6] ISSB, "ISSB Work Plan 2024--2026: Research Project on Biodiversity, Ecosystems and Ecosystem Services," IFRS Foundation, September 2023.

[7] IUCN, IUCN Global Standard for Nature-based Solutions: A User-Friendly Framework for the Verification, Design and Scaling Up of NbS, 1st edition (Gland: IUCN, 2020), Criteria 5--6.

[8] UN-REDD Programme, Guidelines on Free, Prior and Informed Consent (Geneva: UN-REDD, 2013).

[9] TNFD, Guidance on the Identification and Assessment of Nature-related Issues: The LEAP Approach, Version 1.1 (September 2023).

[10] TNFD, Additional Guidance on Assessment of Nature-related Issues in Specific Sectors and Biomes: Financial Institutions (March 2024).

[11] IFRS Foundation, IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information (London: IFRS Foundation, June 2023); IFRS Foundation, IFRS S2: Climate-related Disclosures (London: IFRS Foundation, June 2023).

[12] ISSB, "Biodiversity, Ecosystems and Ecosystem Services: Project Summary and Staff Papers," IFRS Foundation, May 2024.

5. Layer 4: Banking Integration

The preceding layers established a typology of NbS projects across ASEAN (Layer 1), identified critical gaps in existing rating agency coverage (Layer 2), and proposed a SEEA EA-compatible rating methodology that produces alphanumeric NbS ratings (Layer 3). This section addresses the institutional question: how does a rated NbS project connect to a bank's balance sheet, and what regulatory architecture in Australia and Singapore enables --- or constrains --- that connection?

Banking integration is the layer where ecological science meets prudential regulation. The challenge is not merely technical but structural: deposit-taking institutions operate within frameworks designed for credit risk, market risk, and operational risk, not ecosystem condition trajectories. The task, therefore, is to demonstrate that NbS ratings can be mapped onto existing bank workflows without requiring regulatory exemptions or novel prudential treatment, while simultaneously satisfying the emerging disclosure obligations that both jurisdictions are imposing on supervised entities.

5.1 Regulatory Context

Australia

Three regulatory developments create the enabling conditions for NbS banking products in Australia.

APRA CPG 229 (Climate Change Financial Risks). Published by the Australian Prudential Regulation Authority in November 2021, CPG 229 provides guidance to authorised deposit-taking institutions (ADIs), general insurers, and registrable superannuation entities on managing climate-related financial risks [1]. The guidance requires boards to consider climate risk within governance frameworks, integrate climate considerations into strategic planning and risk management, conduct scenario analysis, and make appropriate disclosures. While CPG 229 does not yet prescribe specific treatment of nature or biodiversity risk, its principles-based architecture creates the governance scaffolding within which environmental risk --- including nature-related risk --- can be assessed. APRA has signalled that nature-related risks may receive dedicated guidance as the Taskforce on Nature-related Financial Disclosures (TNFD) framework matures [2]. For banks developing NbS products, CPG 229 provides the regulatory basis for establishing internal environmental risk overlays and for justifying board-level oversight of nature-linked exposures.

Australian Sustainable Finance Taxonomy. The Australian Sustainable Finance Institute (ASFI) released Version 1 of the Australian Sustainable Finance Taxonomy in June 2024, covering six sectors: Electricity Generation and Supply; Construction and Real Estate; Agriculture, Forestry and Fishing; Land Use; Transport; and Mineral, Metal and Chemical Manufacturing [3]. The taxonomy employs a traffic-light classification system --- green (substantial contribution), amber (transition), and excluded (significant harm) --- aligned with EU Taxonomy principles but calibrated for Australian economic and environmental conditions. For NbS products, the Land Use sector is directly relevant: it explicitly identifies ecosystem restoration, reforestation, mangrove conservation, and wetland rehabilitation as taxonomy-eligible activities [3]. This means that lending to NbS projects rated under the Layer 3 methodology can be classified as taxonomy-aligned green lending, attracting favourable treatment in sustainability disclosures and potentially in future capital frameworks. The Agriculture, Forestry and Fishing sector further supports agroforestry and sustainable land management NbS typologies identified in Layer 1.

Mandatory Climate Reporting. The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 established mandatory climate-related financial disclosure requirements for large entities, aligned with the International Sustainability Standards Board (ISSB) IFRS S2 standard, commencing from financial year 2024--25 for Group 1 entities (those meeting at least two of: consolidated revenue exceeding AUD 500 million, consolidated gross assets exceeding AUD 500 million, or 500 or more employees) [4]. This legislation creates a disclosure infrastructure --- reporting processes, data pipelines, assurance frameworks --- upon which NbS product reporting can be built. Banks originating NbS products will already be building the internal capacity to report on climate-related metrics; extending this to nature-related metrics (using TNFD-aligned disclosures) represents an incremental rather than foundational investment.

Singapore

Singapore's regulatory architecture for environmental finance is comparably developed, with three instruments of particular relevance.

MAS Environmental Risk Management Guidelines. The Monetary Authority of Singapore (MAS) issued Environmental Risk Management Guidelines in December 2020, applicable to banks, insurers, and asset managers [5]. The Guidelines require board-level oversight of environmental risks, integration of environmental risk into existing risk management frameworks, scenario analysis to assess environmental risk exposures, and disclosure of environmental risk management approaches. MAS published implementation guidance in June 2022, providing worked examples of how banks should identify, assess, and monitor environmental risks including those related to biodiversity loss and ecosystem degradation [6]. For NbS products, the Guidelines provide a clear regulatory expectation that banks assess nature-related risks within their lending portfolios --- an expectation that the NbS rating framework directly supports.

Singapore-Asia Taxonomy. Released in December 2023, the Singapore-Asia Taxonomy (SAT) is a traffic-light classification system (green, amber/transition, red/excluded) covering eight focus sectors, designed specifically for ASEAN transition economies rather than applying developed-market standards without adaptation [7]. The SAT's distinctive feature is its explicit accommodation of transition activities --- recognising that ASEAN economies require pathways from current practice to best practice, not binary green-or-not assessments. Nature and land use are included within the taxonomy's scope, though with less granularity than climate and energy sectors. The SAT's transition-compatible framing is directly relevant to NbS projects that involve managed transitions from degraded to restored ecosystems --- an amber-to-green trajectory that mirrors the SAT's philosophical approach.

MAS Green and Sustainability-Linked Loan Grant Scheme (GSLS). This scheme, extended through 2025, subsidises the costs of independent verification and external review for green and sustainability-linked loans [8]. While not directly governing NbS products, the GSLS establishes a regulatory precedent for verified environmental lending products and reduces the cost barrier to independent NbS rating assessments. Banks originating NbS-linked loans in Singapore can apply for GSLS funding to offset the costs of the independent NbS rating and annual verification processes described in the Layer 3 methodology.

Table 5.1: Regulatory Comparison --- Australia and Singapore

5.2 NbS Rating Integration into Bank Workflows

The NbS rating produced by the Layer 3 methodology must integrate into bank workflows without requiring parallel or duplicative processes. This subsection describes, at analyst level, how the rating interfaces with origination, credit assessment, underwriting, portfolio management, and monitoring functions.

Origination

NbS project sponsors --- which may include conservation non-governmental organisations, government land management agencies, private developers of ecosystem restoration projects, Indigenous land management bodies, or community organisations --- submit projects for independent rating under the Layer 3 methodology. The rating may be conducted by an accredited external rating agency applying the SEEA EA-based framework, or by the bank's internal sustainability assessment team using the published methodology under licence. The rating process produces an alphanumeric NbS rating on a scale from NbS-AAA (highest quality, lowest risk) to NbS-D (in default or severe degradation), analogous to credit rating agency scales [9].

The minimum rating for eligibility in the NbS deposit pool is NbS-BBB, analogous to the investment-grade threshold in credit ratings. Projects rated NbS-BB or below are not eligible for allocation from the ring-fenced deposit pool, though they may be eligible for other bank sustainability programmes (technical assistance, advisory, blended finance structures with concessional capital). This threshold ensures that depositor capital is directed only to projects with demonstrated ecological integrity, credible management capacity, and quantifiable ecosystem service delivery.

Credit and Risk Assessment

The NbS rating supplements but does not replace the bank's standard credit assessment. The credit analyst maps the NbS rating to the bank's internal risk grades, with the NbS rating informing the environmental risk component of the overall assessment.

Nature-related risks are assessed through a framework aligned with the TNFD LEAP approach (Locate, Evaluate, Assess, Prepare) [10]:

• Location-specific risks: physical risks including climate exposure (projected temperature and precipitation changes affecting the NbS site), extreme weather frequency (cyclone, flood, drought probability over the loan tenor), and baseline ecosystem condition. Transition risks include policy changes (shifts in land use regulation, carbon pricing, biodiversity offset requirements) and market shifts (changes in ecosystem service demand, commodity price movements affecting land use economics).
• Project-specific risks: execution risk (assessed by reference to the sponsor's track record on comparable projects, staffing capacity, and technical partnerships), permanence risk (the probability of ecological reversal over the loan tenor, assessed using the condition trajectory modelling from the Layer 3 methodology), and regulatory risk (security of land tenure, permit status, Indigenous land rights recognition, and cross-border regulatory coherence for ASEAN-based projects funded from Australian or Singaporean balance sheets).

The environmental risk assessment produces an overlay that adjusts the base credit risk grade. A project with strong credit fundamentals but a marginal NbS rating (NbS-BBB) may receive a higher internal risk grade than a project with equivalent credit fundamentals and a strong NbS rating (NbS-AA), reflecting the greater ecological uncertainty.

Underwriting

The underwriting structure for NbS-linked deposits employs a ring-fenced pool model. Deposits specifically designated as NbS Impact Term Deposits are segregated from the bank's general balance sheet lending and allocated exclusively to NbS-rated projects. This ring-fencing is operational rather than legal --- the deposits remain on the bank's balance sheet and carry the same deposit guarantee protections --- but the bank commits to allocating an equivalent quantum of lending to rated NbS projects [11].

Allocation from the ring-fenced pool takes the form of term loans, credit guarantees, or co-investment structures alongside development finance institutions or concessional capital providers. Independent third-party verification of allocation is conducted annually, consistent with Climate Bonds Initiative (CBI) post-issuance reporting requirements for green bonds [12]. The verification confirms that the quantum of NbS lending matches or exceeds the quantum of NbS deposits, that all allocated projects hold current NbS ratings at or above the NbS-BBB threshold, and that allocation has occurred within a reasonable period following deposit receipt (target: 90 days).

Loan terms are matched to deposit terms where possible. Where maturity transformation is required --- for example, where a three-year deposit funds a component of a ten-year restoration loan --- the transformation is managed within the bank's existing prudential limits for maturity mismatch, as governed by APRA's Prudential Standard APS 210 (Liquidity) or MAS Notice 649 (Minimum Liquid Assets) as applicable [13][14].

Portfolio Management

The ring-fenced NbS pool is managed as a portfolio subject to diversification requirements that reflect both prudential norms and ecological risk management principles:

• Geographic concentration: no more than 40% of the NbS pool allocated to projects in any single country, ensuring exposure is distributed across ASEAN jurisdictions with differing regulatory, climatic, and ecological profiles.
• Typological concentration: no more than 30% of the NbS pool allocated to any single NbS project type (as defined in the Layer 1 typology), preventing over-exposure to a single ecosystem class (e.g., mangrove restoration) that could be affected by a common shock.
• Minimum diversification: at least three distinct NbS typologies must be represented in the portfolio at all times.
• Rating quality: the weighted-average NbS rating of the portfolio must be maintained at or above NbS-A, ensuring that the overall pool maintains strong ecological quality even if individual projects sit at the NbS-BBB threshold.

These concentration limits are aligned with APRA's Prudential Standard APS 221 (Large Exposures) and MAS Notice 639 (Single Counterparty and Group Exposures) frameworks, adapted for the nature-specific risk dimensions of NbS portfolios [15][16].

Rebalancing is triggered when a project's NbS rating is downgraded below NbS-BBB. Upon such a downgrade, the bank initiates a replacement process: the affected allocation must be substituted with a newly rated NbS-eligible project within six months. During the replacement period, the downgraded project remains in the portfolio for reporting purposes but is flagged as under remediation.

Monitoring and Reporting

Monitoring operates on two cadences:

• Quarterly: remote sensing updates using satellite imagery (Sentinel-2, Landsat, or commercial providers as appropriate) and LiDAR data where available, assessing ecosystem extent (has the project area changed?) and condition proxies (vegetation indices such as NDVI, canopy cover metrics, water body integrity). Quarterly monitoring data feeds into an early-warning system that flags projects experiencing unexpected condition deterioration.
• Annually: on-ground verification visits conducted by independent ecological assessors, community impact assessments conducted in accordance with Free, Prior and Informed Consent (FPIC) principles where Indigenous or local communities are involved, and updated NbS ratings reflecting the most recent ecological and social data.

Impact reports are issued to depositors annually, providing: total hectares under management funded by the NbS pool, condition trajectories for each project (improving, stable, declining), ecosystem services delivered (quantified where possible using biophysical units --- tonnes of carbon sequestered, cubic metres of water filtered, hectares of habitat for threatened species), and social outcomes (employment generated, community co-benefits, Indigenous land management supported).

For regulatory purposes, monitoring data feeds into the bank's TNFD disclosures (using the TNFD's recommended metrics for nature-related dependencies, impacts, risks, and opportunities) and ISSB-aligned climate and nature reports required under Australian mandatory reporting obligations or Singapore's SGX sustainability reporting requirements [17][18].

5.3 Precedent Product Analysis

Three existing green deposit products provide precedent for the proposed NbS Impact Term Deposit. Each demonstrates that banks can successfully originate, manage, and report on ring-fenced environmental deposit products within existing regulatory frameworks. However, each also reveals a common gap: the absence of nature, biodiversity, or ecosystem restoration as eligible use-of-proceeds categories.

Westpac Green Tailored Deposits (Australia)

Westpac launched its Green Tailored Deposit product in 2019, making it one of the first bank green deposit products offered globally [19]. The product is available to institutional and corporate clients with a minimum deposit of AUD 1 million and terms ranging from one to five years. Proceeds are allocated to eligible categories within Westpac's Green, Social and Sustainability Bond Framework, which covers renewable energy, green buildings (rated 5 Star Green Star or above), clean transportation, pollution prevention and control, and sustainable water and wastewater management [20].

The product carries Climate Bonds Initiative (CBI) certification, meaning that an independent verifier (currently KPMG) confirms annually that allocated proceeds meet CBI sector criteria [21]. Westpac publishes an annual Green Bond Impact Report detailing allocated volumes, project descriptions, and estimated environmental outcomes (e.g., tonnes of CO2-equivalent avoided, megawatt-hours of renewable energy financed).

Relevance to NbS product design: The Westpac product demonstrates that Australian ADIs can successfully operate ring-fenced deposit products with independent verification and annual impact reporting within APRA's prudential framework. The CBI certification model provides a direct precedent for independent NbS rating verification.

Limitation: The eligible use-of-proceeds categories are exclusively climate and carbon-mitigation focused. No category covers ecosystem restoration, biodiversity conservation, mangrove rehabilitation, or any other NbS typology. Nature-based climate solutions (e.g., reforestation for carbon sequestration) could theoretically qualify, but only if framed as carbon mitigation rather than ecosystem restoration.

UOB Green Deposits (Singapore)

United Overseas Bank (UOB) launched its Green Deposit programme in 2021, targeting corporate and institutional clients with a minimum deposit of SGD 50,000 [22]. Proceeds are allocated under UOB's Sustainable Finance Framework, aligned with the UN Sustainable Development Goals and the ASEAN Green Bond Standards. Eligible categories include green buildings certified to Building and Construction Authority (BCA) Green Mark Platinum standard, renewable energy generation and infrastructure, and clean transportation [23].

UOB provides depositors with an annual sustainability impact report detailing the volume of green deposits received, the allocation to eligible categories, and estimated environmental outcomes. The product is positioned as part of UOB's broader sustainability strategy, which targets SGD 30 billion in sustainable finance by 2025.

Relevance to NbS product design: The UOB product demonstrates that green deposits are viable in the Singapore market at a lower minimum threshold (SGD 50,000 versus Westpac's AUD 1 million), suggesting that the product format can serve a broader client base. The alignment with ASEAN Green Bond Standards provides a regional framework precedent.

Limitation: Eligible categories are dominated by built-environment assets (green buildings, clean transport). There is no NbS, biodiversity, or ecosystem restoration eligibility category. Land use, forestry, and marine ecosystem projects are entirely absent from the framework.

Standard Chartered Sustainable Time Deposits

Standard Chartered offers Sustainable Time Deposits across multiple Asian markets including Singapore, Hong Kong, and the United Arab Emirates [24]. The product is linked to Standard Chartered's Green and Sustainable Product Framework, which defines eligible categories including renewable energy, clean transportation, sustainable water management, green buildings, and climate change adaptation infrastructure. The framework received a Second Party Opinion from Sustainalytics (now Morningstar Sustainalytics) confirming alignment with the ICMA Green Bond Principles and the Loan Market Association Green Loan Principles [25].

Relevance to NbS product design: The Standard Chartered product demonstrates multi-jurisdictional deployment of a green deposit product under a single framework, relevant for a product intended to operate across both Australian and Singaporean markets. The Sustainalytics Second Party Opinion model provides an alternative to CBI certification for independent assurance.

Limitation: Despite the broad "sustainable" framing, the product framework does not include nature-specific allocation mechanisms. Ecosystem restoration, biodiversity, and NbS are absent from the eligible category list.

The Common Gap

Across all three precedent products, the eligible use-of-proceeds categories are climate-centric: renewable energy, green buildings, clean transport, and water infrastructure. None includes NbS, biodiversity conservation, ecosystem restoration, or nature-positive land use as a defined allocation category. This is not a failure of product design but a reflection of the market's maturity: when these products were launched (2019--2021), the sustainable finance taxonomy landscape was dominated by climate mitigation, and credible frameworks for assessing nature-based project quality did not exist at the specificity required for banking integration.

The proposed NbS Impact Term Deposit addresses this gap directly. By combining the Layer 3 NbS rating methodology with the ring-fenced deposit pool structure demonstrated by Westpac, UOB, and Standard Chartered, the product creates a credible pathway for depositor capital to reach rated NbS projects --- a category that is now explicitly supported by both the Australian Sustainable Finance Taxonomy (Land Use sector) and the Singapore-Asia Taxonomy (nature and land use coverage).

5.4 Analyst Workflow Walkthrough

The following walkthrough traces a single deposit from receipt through to NbS project allocation, monitoring, and maturity. It is intended to demonstrate that the proposed product operates within standard bank processes, with NbS-specific elements layered onto (rather than replacing) existing workflows.

Step 1: Deposit Receipt. A retail or institutional customer deposits AUD 250,000 into the NbS Impact Term Deposit with a three-year term. The deposit is priced at the bank's standard term deposit rate for the equivalent tenor; the customer accepts the same credit risk (i.e., bank counterparty risk) as any other term deposit, with the deposit covered by the Financial Claims Scheme (Australia) up to AUD 250,000 per account holder per ADI, or the Singapore Deposit Insurance Corporation (SDIC) scheme up to SGD 100,000 for Singapore-domiciled deposits [26][27].

Step 2: Ring-fenced Pool Allocation. The deposit is recorded in the bank's treasury system and tagged to the ring-fenced NbS pool. The pool is an accounting designation rather than a separate legal vehicle: the deposit sits on the bank's consolidated balance sheet, but internal records track NbS-designated deposits separately to ensure allocation compliance.

Step 3: Project Pipeline Identification. The bank's NbS lending team reviews the approved project pipeline --- a list of NbS projects that have received independent ratings of NbS-BBB or above under the Layer 3 methodology. The pipeline is maintained on a rolling basis, with new projects added as ratings are completed and existing projects removed if ratings are downgraded below the eligibility threshold.

Step 4: Credit Assessment. A credit analyst assesses the identified project against the bank's internal risk framework. The assessment incorporates the NbS rating as an input to the environmental risk component, alongside standard credit metrics (sponsor financial capacity, cash flow projections, collateral coverage, legal enforceability of land tenure). The TNFD LEAP framework structures the nature-risk component of the assessment, as described in Section 5.2.

Step 5: Loan Committee Approval. The credit proposal is submitted to the bank's loan committee (or delegated credit authority, depending on exposure size) through the standard credit approval process. The proposal includes an NbS-specific overlay summarising the project's NbS rating, the ecological condition baseline, projected condition trajectory, permanence risk assessment, and community impact profile. The loan committee approves, modifies, or declines the allocation.

Step 6: Funds Disbursement. Upon approval, funds are disbursed to the NbS project as a term loan, a revolving credit facility, or a guarantee structure, depending on the project's financing requirements. Disbursement conditions include confirmation that the project holds a current NbS rating at or above NbS-BBB and that all environmental and social safeguards (including FPIC where applicable) have been satisfied.

Step 7: Ongoing Monitoring. Quarterly remote sensing updates track ecosystem extent and condition. The bank's NbS monitoring team reviews satellite imagery and vegetation index data, flagging any projects where condition indicators deteriorate beyond defined thresholds. Annual on-ground verification visits confirm remote sensing findings, assess community outcomes, and provide data for NbS rating updates.

Step 8: Impact Reporting. The bank issues an annual NbS Impact Statement to the depositor. The statement reports: the specific projects funded by the NbS pool (with location, NbS typology, and current NbS rating); total hectares under management supported by the pool; ecosystem condition changes over the reporting period (using biophysical metrics from the Layer 3 methodology); ecosystem services delivered (carbon sequestered, water quality improvements, biodiversity indicators); and social outcomes (community employment, Indigenous land management, local livelihood co-benefits).

Step 9: Maturity and Renewal. At the three-year maturity date, the depositor's principal is returned in full. The NbS loan funded by the deposit continues to its own maturity (which may extend beyond the deposit term) and is refinanced through the ongoing NbS deposit pool or, if the pool is insufficient, through the bank's general lending book. The depositor is offered the option to renew the NbS Impact Term Deposit for a further term, with an updated impact report summarising the cumulative outcomes of their participation.

Banking Integration Workflow

graph TD
    A["1. Deposit Receipt
Customer deposits into
NbS Impact Term Deposit"] --> B["2. Ring-fenced Pool
Deposit tagged to NbS pool
on bank balance sheet"]
    B --> C["3. Project Pipeline
NbS lending team identifies
rated projects ≥ NbS-BBB"]
    C --> D["4. Credit Assessment
Standard credit analysis +
NbS rating overlay + TNFD LEAP"]
    D --> E["5. Loan Committee
Approval with NbS-specific
overlay documentation"]
    E --> F["6. Funds Disbursement
Term loan / facility /
guarantee to NbS project"]
    F --> G["7. Monitoring"]
    G --> G1["Quarterly:
Remote sensing
(satellite, LiDAR)"]
    G --> G2["Annually:
On-ground verification
+ community assessment"]
    G1 --> H["8. Impact Reporting
Annual NbS Impact Statement
to depositor"]
    G2 --> H
    H --> I["9. Maturity
Principal returned;
renewal offered"]
    I -->|"Depositor renews"| A

    J["Layer 3: NbS Rating
NbS-AAA to NbS-D"] -->|"Rating input"| D
    J -->|"Eligibility threshold
≥ NbS-BBB"| C

    style A fill:#2d6a4f,color:#fff
    style B fill:#40916c,color:#fff
    style C fill:#40916c,color:#fff
    style D fill:#52b788,color:#000
    style E fill:#52b788,color:#000
    style F fill:#74c69d,color:#000
    style G fill:#95d5b2,color:#000
    style G1 fill:#b7e4c7,color:#000
    style G2 fill:#b7e4c7,color:#000
    style H fill:#d8f3dc,color:#000
    style I fill:#2d6a4f,color:#fff
    style J fill:#1b4332,color:#fff

Figure 5.1: NbS Impact Term Deposit --- Banking Integration Workflow. The diagram traces the full lifecycle from deposit receipt through ring-fenced pool allocation, credit assessment (incorporating the Layer 3 NbS rating), project funding, dual-cadence monitoring, impact reporting, and maturity/renewal. The NbS rating from Layer 3 feeds into both the eligibility screen (Step 3) and the credit assessment (Step 4).

References

[1] APRA, Prudential Practice Guide CPG 229 Climate Change Financial Risks (Sydney: Australian Prudential Regulation Authority, November 2021).

[2] APRA, APRA Corporate Plan 2023--2027 (Sydney: Australian Prudential Regulation Authority, August 2023), 18--19.

[3] ASFI, Australian Sustainable Finance Taxonomy: Version 1 (Melbourne: Australian Sustainable Finance Institute, June 2024).

[4] Commonwealth of Australia, Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024, No. 56 (2024).

[5] MAS, Guidelines on Environmental Risk Management for Banks (Singapore: Monetary Authority of Singapore, December 2020).

[6] MAS, Information Paper on Environmental Risk Management: Banks (Singapore: Monetary Authority of Singapore, June 2022).

[7] MAS and Green Finance Industry Taskforce, Singapore-Asia Taxonomy for Sustainable Finance (Singapore: Monetary Authority of Singapore, December 2023).

[8] MAS, Green and Sustainability-Linked Loan Grant Scheme Guidelines (Singapore: Monetary Authority of Singapore, revised January 2023).

[9] The NbS rating scale is detailed in Section 4 (Layer 3: Proposed Rating Methodology) of this report.

[10] TNFD, Recommendations of the Taskforce on Nature-related Financial Disclosures (September 2023), Annex 4: LEAP Approach.

[11] This ring-fenced pool model follows the approach used in green bond frameworks. See ICMA, Green Bond Principles (Paris: International Capital Market Association, June 2024), Section 3: Management of Proceeds.

[12] Climate Bonds Initiative, Post-Issuance Reporting Guidelines (London: CBI, March 2023).

[13] APRA, Prudential Standard APS 210: Liquidity (Sydney: Australian Prudential Regulation Authority, January 2018, updated April 2024).

[14] MAS, Notice 649: Minimum Liquid Assets (Singapore: Monetary Authority of Singapore, revised November 2023).

[15] APRA, Prudential Standard APS 221: Large Exposures (Sydney: Australian Prudential Regulation Authority, January 2019, updated January 2024).

[16] MAS, Notice 639: Limits on Single Counterparty and Group Exposures (Singapore: Monetary Authority of Singapore, revised July 2023).

[17] TNFD, Recommendations of the Taskforce on Nature-related Financial Disclosures (September 2023), Section 4: Recommended Disclosures.

[18] SGX, Practice Note 7.6: Sustainability Reporting Guide (Singapore: Singapore Exchange, revised December 2023).

[19] Westpac Banking Corporation, Media Release: Westpac launches Green Tailored Deposit (Sydney: Westpac, November 2019).

[20] Westpac Banking Corporation, Green, Social and Sustainability Bond Framework (Sydney: Westpac, updated March 2023).

[21] Westpac Banking Corporation, 2023 Green Bond Impact Report (Sydney: Westpac, September 2023).

[22] United Overseas Bank, UOB Green Deposit Programme --- Terms and Conditions (Singapore: UOB, 2021).

[23] United Overseas Bank, UOB Sustainable Finance Framework (Singapore: UOB, updated February 2023).

[24] Standard Chartered, Sustainable Time Deposit --- Product Terms (Singapore: Standard Chartered Bank, 2022).

[25] Sustainalytics, Second Party Opinion: Standard Chartered Green and Sustainable Product Framework (Amsterdam: Morningstar Sustainalytics, July 2022).

[26] APRA, Financial Claims Scheme (Sydney: Australian Prudential Regulation Authority). The FCS provides depositor protection up to AUD 250,000 per account holder per ADI.

[27] SDIC, Deposit Insurance Scheme (Singapore: Singapore Deposit Insurance Corporation). Coverage up to SGD 100,000 per depositor per member institution.

6. Layer 5: Product Design

The preceding layers have established the building blocks: a typology of NbS projects (Layer 1), a gap analysis of existing rating coverage (Layer 2), a SEEA EA-compatible rating methodology producing alphanumeric ratings from NbS-AAA to NbS-D (Layer 3), and the regulatory and banking workflow architecture that connects rated projects to bank balance sheets in Australia and Singapore (Layer 4). This section consolidates those layers into a single, fully specified product: the NbS Impact Term Deposit. The product is designed as a unified structure adaptable to both Australian and Singaporean jurisdictions, with jurisdiction-specific parameters noted inline rather than requiring separate product architectures.

The design philosophy is conservative by intention. The NbS Impact Term Deposit is a deposit product, not an investment product. The depositor bears no capital risk from NbS project performance. The bank intermediates between depositor capital and NbS project lending, absorbing project risk on its own balance sheet in the same way it absorbs credit risk on any other loan. What distinguishes this product from a conventional term deposit is the bank's commitment to allocate an equivalent quantum of lending to independently rated NbS projects --- and to report transparently on the ecological, social, and economic outcomes of that allocation. The product therefore sits within the existing prudential framework, requires no regulatory exemptions, and can be originated using the bank workflows described in Layer 4.

6.1 Product Terms

The NbS Impact Term Deposit is structured as a fixed-term deposit with the following core parameters.

Product name. NbS Impact Term Deposit (working title). The name signals the product's nature-based focus, its outcome-oriented design (impact), and its structural familiarity (term deposit). Final branding will vary by issuing institution but must retain a clear reference to nature-based solutions to distinguish the product from existing green deposits that cover only climate-mitigation use-of-proceeds categories.

Minimum deposit. AUD 250,000 in Australia; SGD 200,000 in Singapore. These thresholds position the product in the high-net-worth (HNW) and affluent investor segment, consistent with the minimum thresholds observed in precedent green deposit products (Westpac Green Tailored Deposits at AUD 1 million; UOB Green Deposits at SGD 50,000) while setting a level that balances pool-building efficiency against accessibility [1][2]. The HNW segment is the appropriate initial target market for two reasons. First, research consistently demonstrates that HNW investors exhibit greater willingness to accept modest yield concessions in exchange for verified sustainability outcomes: a 2023 Morgan Stanley Institute for Sustainable Investing survey found that 77% of individual investors with investable assets exceeding USD 1 million expressed interest in sustainable investing, with a significant proportion willing to accept returns up to 20% lower than conventional alternatives if environmental outcomes could be independently verified [3]. Second, the cost structure of independent NbS rating, annual impact verification, and bespoke impact reporting is more efficiently amortised across larger deposit balances, ensuring that the product's operating margin is sufficient to fund its differentiated features.

Terms. 1, 2, 3, and 5 years. The term range mirrors standard bank term deposit offerings and provides flexibility for maturity matching against the NbS lending pool. Shorter terms (1--2 years) suit depositors seeking liquidity optionality, while longer terms (3--5 years) align more closely with the tenor of NbS project loans, reducing the maturity transformation burden on the bank's treasury function. In practice, the bank will encourage longer tenors through modestly higher interest rates at the 3- and 5-year points, reflecting both the reduced roll-over risk and the greater certainty of NbS pool allocation that longer commitments provide.

Interest rate. Market rate minus a modest margin of 10 to 20 basis points. The margin is the depositor's contribution to the cost of the product's differentiated features: independent NbS project rating assessments, annual third-party verification of pool allocation, quarterly remote sensing monitoring, and bespoke impact reporting. The margin is deliberately modest. Research by the Global Impact Investing Network (GIIN) has found that a significant majority of impact investors report achieving risk-adjusted returns at or near market rates, and that willingness to accept below-market returns is highest when the impact measurement and verification framework is credible and transparent [4]. The NbS Impact Term Deposit's 10--20 basis point concession falls well within the range that HNW investors have demonstrated willingness to accept --- substantially below the 20% yield reduction threshold identified in the Morgan Stanley survey --- while generating sufficient revenue to fund the third-party NbS rating costs and impact reporting infrastructure that distinguish the product from conventional deposits [3].

Capital guarantee. Full principal protection. This is a deposit product, not an investment. The depositor's capital is not at risk from NbS project performance. If an NbS project funded by the ring-fenced pool defaults, the loss falls on the bank's loan book, not on the depositor's principal. This structural feature is critical to the product's positioning: it allows sustainability-motivated depositors to direct their capital toward nature-positive outcomes without assuming the project-level risk that characterises direct NbS investment vehicles such as green bonds, impact funds, or biodiversity credit purchases. The deposit sits on the bank's balance sheet and is subject to the same credit risk (bank counterparty risk) as any other deposit with the same institution.

Deposit insurance. In Australia, deposits are covered by the Financial Claims Scheme (FCS), administered by the Australian Prudential Regulation Authority (APRA), which provides protection of up to AUD 250,000 per depositor per authorised deposit-taking institution (ADI) [5]. In Singapore, deposits are covered by the Singapore Deposit Insurance Corporation (SDIC), which provides protection of up to SGD 100,000 per depositor per member bank [6]. The minimum deposit thresholds for the NbS Impact Term Deposit (AUD 250,000 and SGD 200,000 respectively) are set at or above the deposit insurance guarantee limits. This means that a depositor placing the minimum amount in Australia is fully covered by the FCS, but a depositor placing more than AUD 250,000 has exposure above the guarantee threshold. In Singapore, a depositor placing the minimum SGD 200,000 has SGD 100,000 of uninsured exposure. All marketing materials, product disclosure documentation, and customer correspondence must clearly disclose that deposit amounts exceeding the applicable guarantee threshold are not covered by the deposit insurance scheme, and that the depositor bears counterparty risk to the issuing bank for amounts above the insured limit.

6.2 Fund Allocation Mechanism

The NbS Impact Term Deposit employs a ring-fenced pool allocation mechanism, following the model established by precedent green deposit products (Westpac, UOB, Standard Chartered) and aligned with the International Capital Market Association (ICMA) Green Bond Principles' management of proceeds requirements [7]. The mechanism ensures that depositor capital is traceable to NbS project lending through a structured, independently verifiable allocation process.

Ring-fenced NbS lending pool. Deposits received under the NbS Impact Term Deposit are earmarked for a dedicated NbS lending pool on the bank's balance sheet. The pool is an accounting designation rather than a separate legal vehicle: deposits remain on the bank's consolidated balance sheet (maintaining full deposit guarantee eligibility and prudential treatment), but internal treasury records segregate NbS-designated deposits from general deposits and track the allocation of equivalent lending to NbS-rated projects. This model mirrors the use-of-proceeds tracking mechanism employed in green bond frameworks, adapted for the deposit context [7].

Minimum NbS allocation. At least 80% of the NbS pool must be allocated to independently rated NbS projects holding a current rating of NbS-BBB or above under the Layer 3 methodology (the investment-grade threshold). This 80% minimum ensures that the overwhelming majority of depositor capital is directed to its intended purpose --- funding nature-based solutions that meet a credible, independently verified quality standard --- while providing operational flexibility for the bank to manage cash flow timing between deposit receipt and loan disbursement.

Liquidity buffer. The remaining 20% of the pool may be held in liquid assets --- government bonds, high-quality corporate bonds, or central bank deposits --- for liquidity management and maturity matching purposes. This buffer addresses the operational reality that deposit inflows and NbS loan disbursements do not occur simultaneously: a deposit may be received in March, but the next eligible NbS project loan may not be approved and disbursed until June. The liquidity buffer ensures that the bank can honour deposit redemptions at maturity without forced asset sales, consistent with APRA Prudential Standard APS 210 (Liquidity) and MAS Notice 649 (Minimum Liquid Assets) requirements [8][9].

Diversification requirements. The NbS pool is subject to concentration limits that reflect both prudential risk management norms and the ecological risk characteristics specific to nature-based portfolios:

• Geographic concentration: no more than 40% of the NbS pool allocated to projects in any single country. This limit distributes exposure across ASEAN jurisdictions with differing regulatory regimes, climatic profiles, and ecological risk characteristics, reducing the impact of country-specific shocks (political instability, regulatory reversal, correlated extreme weather events) on the portfolio.
• Typological concentration: no more than 30% of the NbS pool allocated to any single NbS project type, as classified under the eight-typology framework established in Layer 1. This prevents over-exposure to a single ecosystem class --- for example, a portfolio composed entirely of mangrove restoration projects would be vulnerable to a common shock such as a regional sea-level event or disease outbreak affecting mangrove species.
• Minimum typological diversity: at least three distinct NbS typologies must be represented in the portfolio at all times.
• Single-project concentration: no single NbS project may exceed 15% of the total pool value.

These limits are calibrated to be tighter than general banking concentration limits (APRA APS 221 and MAS Notice 639 permit single-counterparty exposures of up to 25% of Tier 1 capital) because the NbS pool's purpose-built nature warrants additional diversification to maintain portfolio-level ecological integrity [10][11].

Eligibility criteria for NbS projects. To qualify for allocation from the ring-fenced NbS pool, a project must satisfy all of the following criteria:

1. Domicile: the project must be domiciled in an ASEAN member state. This geographic scope reflects the product's focus on the ASEAN region, where NbS project pipelines are most developed and where the Layer 1 typology has been calibrated.
2. Independent NbS rating: the project must hold a current NbS rating of NbS-BBB or above, assessed under the Layer 3 methodology by an accredited independent assessor or the bank's internal sustainability team applying the published methodology under licence.
3. Operational track record: the project must have a minimum three-year operational track record, OR be backed by a credible sponsor with demonstrated NbS delivery capability (defined as having successfully delivered at least one NbS project of comparable type and scale to completion). This criterion ensures that the pool funds projects with proven execution capacity rather than early-stage concepts.
4. Standard registration: the project must be registered with a recognised standard body --- the Verified Carbon Standard (VCS), Gold Standard, or an equivalent standard recognised by the International Carbon Reduction and Offset Alliance (ICROA) --- providing an independent baseline of project credibility and methodological rigour.
5. Social safeguards: the project must have documented Free, Prior and Informed Consent (FPIC) from all affected Indigenous and local communities, and a community benefit-sharing agreement must be in place and operational. Projects lacking FPIC documentation are ineligible regardless of their environmental or economic ratings [12].

6.3 Impact Reporting

Transparent, verified impact reporting is the mechanism through which the NbS Impact Term Deposit delivers its core value proposition to depositors: the assurance that their capital is funding credible nature-based solutions with measurable ecological, social, and economic outcomes. The reporting framework is designed to be comprehensive without being inaccessible, providing both quantitative metrics and narrative context.

Annual NbS Impact Statement. Each depositor receives an Annual NbS Impact Statement within 120 days of the reporting period end. The statement contains the following sections:

Portfolio overview. The total number of NbS projects funded by the pool, the total pool size (in AUD or SGD equivalent), and the percentage of the pool allocated to rated NbS projects versus the liquidity buffer. This section confirms compliance with the 80% minimum allocation commitment and the diversification requirements.

Environmental metrics. Total hectares under management funded by the NbS pool; net ecosystem extent change over the reporting period (hectares gained, maintained, or lost); average ecosystem condition change across the portfolio (measured using the SEEA EA condition index on a 0--1 scale, as specified in the Layer 3 methodology); and quantified ecosystem services delivered, including carbon sequestered (in tonnes of CO2-equivalent), water regulated (in cubic metres or as a qualitative assessment of watershed function), and coastal protection provided (in kilometres of coastline protected, where applicable) [13].

Social metrics. Number of communities directly benefited by funded projects; total livelihoods supported (measured as full-time equivalent employment and livelihood diversification outcomes); and FPIC compliance status for each funded project, including any remediation actions undertaken during the reporting period.

Economic metrics. The weighted-average NbS rating of the portfolio; the distribution of projects across rating bands (percentage of the pool in NbS-AAA, NbS-AA, NbS-A, and NbS-BBB); and the portfolio's performance against diversification limits (geographic concentration, typological concentration, single-project concentration).

Project spotlights. Two to three featured projects with narrative descriptions of their ecological and social context, progress during the reporting period, and photographs. The spotlights provide depositors with a tangible connection to the outcomes their capital is supporting, complementing the quantitative metrics with human and ecological narratives.

Third-party verification. The Annual NbS Impact Statement is subject to independent verification by a qualified third party. The verification scope covers: confirmation that the quantum of NbS lending matches or exceeds the quantum of NbS deposits (allocation verification); confirmation that all allocated projects hold current NbS ratings at or above the NbS-BBB threshold (eligibility verification); and confirmation that reported environmental, social, and economic metrics are consistent with underlying project data (impact verification). The verification methodology is aligned with Climate Bonds Initiative post-issuance reporting standards, adapted for the NbS context, or an equivalent standard such as ISAE 3000 (Revised) limited assurance engagements [14][15].

Digital access. Depositors have access to a live digital dashboard providing portfolio allocation data and impact metrics, updated quarterly. The dashboard displays: current pool size and allocation percentage; a map of funded projects showing location, NbS typology, and current rating; key environmental indicators (hectares under management, condition trajectory); and the most recent quarterly remote sensing update for each project (including satellite imagery and vegetation index data). The dashboard supplements the formal Annual Impact Statement with more frequent, visual engagement, responding to research indicating that HNW investors value ongoing access to impact data rather than relying solely on annual reports [16].

6.4 Regulatory Disclosures

The NbS Impact Term Deposit generates disclosure obligations across multiple frameworks in both jurisdictions. These disclosures are not additional burdens created by the product; rather, the product is designed so that its reporting infrastructure feeds directly into disclosures that the bank is already required to make.

TNFD-aligned disclosures. The issuing bank publishes nature-related disclosures covering all 14 recommended disclosures of the Taskforce on Nature-related Financial Disclosures (TNFD), specifically referencing the NbS deposit product pool as a distinct nature-linked exposure [17]. The NbS pool provides a clean, well-documented portfolio for TNFD disclosure purposes: the projects are independently rated, the ecological data is structured in SEEA EA-compatible accounts, and the monitoring cadence (quarterly remote sensing, annual on-ground verification) generates the location-specific, metrics-based disclosure that TNFD recommends. The TNFD LEAP approach --- Locate, Evaluate, Assess, Prepare --- is directly served by the Layer 3 rating methodology's data architecture, as described in Section 4.5.

ISSB IFRS S1/S2. The NbS Impact Term Deposit contributes to the bank's entity-level sustainability disclosures under IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) [18][19]. The Environmental Domain metrics (particularly carbon sequestration in tCO2e) feed into Scope 3 financed emissions calculations under IFRS S2. The Economic Domain's financial materiality assessments inform IFRS S1 disclosures on sustainability-related risks and opportunities. As the ISSB's Research Project on Biodiversity, Ecosystems and Ecosystem Services progresses toward an exposure draft (expected October 2026), the NbS pool's SEEA EA-structured data will provide a ready-made data source for compliance with the anticipated nature-specific standard [20].

Australia-specific regulatory disclosures:

• APRA prudential reporting: NbS pool exposures are reported within the bank's standard prudential returns to APRA, classified within relevant asset categories. The environmental risk overlay described in Layer 4 (Section 5.2) ensures that NbS-specific risks are captured within the risk management framework required by CPG 229 [21].
• ASFI Taxonomy alignment: The NbS Impact Term Deposit is eligible for classification as "green" under the Australian Sustainable Finance Taxonomy's Agriculture, Forestry and Fishing and Land Use sectors. Projects funded by the pool --- ecosystem restoration, reforestation, mangrove conservation, wetland rehabilitation, agroforestry --- fall within the taxonomy's green classification criteria for these sectors [22].
• Product Disclosure Statement (PDS): Required under ASIC Regulatory Guide 168, the PDS must clearly articulate the NbS allocation mechanism, the ring-fenced pool structure, the 80/20 allocation split, the meaning and limitations of the NbS rating, the capital guarantee terms, the interest rate concession and its purpose, and the risks associated with deposits exceeding the FCS guarantee threshold [23].
• Target Market Determination (TMD): Required under the Design and Distribution Obligations (DDO) introduced by the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019. The TMD identifies HNW and sophisticated investors as the target market, specifies the minimum deposit threshold as a product feature that limits the target market, and describes the product's suitability for depositors seeking capital-guaranteed exposure with verified nature-positive outcomes [24].

Singapore-specific regulatory disclosures:

• MAS Environmental Risk Management: NbS pool exposures are reported within the bank's Environmental Risk Management framework as required by MAS Guidelines. The NbS rating provides the quantitative environmental risk assessment that the Guidelines require banks to integrate into their risk management processes [25].
• Singapore-Asia Taxonomy alignment: The NbS Impact Term Deposit is eligible for "green" classification under the Singapore-Asia Taxonomy's land use activity criteria. NbS project selection criteria are aligned with the taxonomy's requirements for nature and land use activities, including the SAT's transition-compatible framing that recognises amber-to-green ecosystem recovery trajectories [26].
• Product Highlight Sheet (PHS): Required by MAS for structured deposits and certain term deposit products offered to retail and HNW customers. The PHS must present key product features (NbS allocation mechanism, interest rate, capital guarantee, term), risks (counterparty risk above SDIC guarantee threshold, NbS pool allocation timing risk), and suitability warnings in a standardised format [27].
• MAS Fair Dealing Guidelines: All product materials --- marketing collateral, client presentations, digital dashboard interfaces, and impact statements --- must meet MAS fair dealing requirements, ensuring that NbS impact claims are substantiated, that the distinction between the deposit's capital guarantee and the NbS projects' ecological risks is clearly communicated, and that the product is recommended only to customers for whom it is suitable [28].

6.5 Product Structure

The following diagram illustrates the end-to-end structure of the NbS Impact Term Deposit, from depositor capital through to impact reporting.

graph LR
    A["HNW Depositor
AUD 250K+ / SGD 200K+"] -->|"Deposits capital
(1, 2, 3, or 5 yr term)"| B["NbS Impact
Term Deposit"]
    B -->|"Deposit sits on"| C["Bank
Balance Sheet"]
    C -->|"Earmarked to"| D["Ring-fenced
NbS Pool"]
    D -->|"≥80% allocated to"| E["Rated NbS Projects
(NbS-BBB or above)"]
    D -->|"≤20% held in"| F["Liquidity Buffer
(Govt bonds,
high-quality corporates)"]
    E -->|"Subject to"| G["Impact Monitoring
• Quarterly remote sensing
• Annual on-ground verification"]
    G -->|"Data feeds into"| H["Annual NbS
Impact Statement
+ Third-party verification"]
    H -->|"Delivered to"| A

    style A fill:#2d6a4f,color:#fff
    style B fill:#40916c,color:#fff
    style C fill:#52b788,color:#000
    style D fill:#74c69d,color:#000
    style E fill:#95d5b2,color:#000
    style F fill:#b7e4c7,color:#000
    style G fill:#d8f3dc,color:#000
    style H fill:#1b4332,color:#fff

Figure 6.1: NbS Impact Term Deposit --- Product Structure. The diagram traces the flow of capital from the HNW depositor through the bank's balance sheet to the ring-fenced NbS pool, which allocates at least 80% to independently rated NbS projects (NbS-BBB or above) and retains up to 20% in liquid assets for maturity matching. Funded projects are subject to dual-cadence monitoring (quarterly remote sensing and annual on-ground verification), with outcomes reported to depositors through an independently verified Annual NbS Impact Statement. The circular flow reflects the product's design intent: depositor capital funds rated NbS projects, and verified impact reporting sustains depositor engagement and renewal.

References

[1] Westpac Banking Corporation, Media Release: Westpac launches Green Tailored Deposit (Sydney: Westpac, November 2019).

[2] United Overseas Bank, UOB Green Deposit Programme --- Terms and Conditions (Singapore: UOB, 2021).

[3] Morgan Stanley Institute for Sustainable Investing, Sustainable Signals: Individual Investor Interest Driven by Impact, Conviction and Choice (New York: Morgan Stanley, 2023).

[4] Global Impact Investing Network (GIIN), 2023 GIINsight: Impact Investing Allocations, Activity and Performance (New York: GIIN, 2023).

[5] APRA, Financial Claims Scheme (Sydney: Australian Prudential Regulation Authority). The FCS provides depositor protection up to AUD 250,000 per account holder per ADI.

[6] SDIC, Deposit Insurance Scheme (Singapore: Singapore Deposit Insurance Corporation). Coverage up to SGD 100,000 per depositor per member institution.

[7] ICMA, Green Bond Principles (Paris: International Capital Market Association, June 2024), Section 3: Management of Proceeds.

[8] APRA, Prudential Standard APS 210: Liquidity (Sydney: Australian Prudential Regulation Authority, January 2018, updated April 2024).

[9] MAS, Notice 649: Minimum Liquid Assets (Singapore: Monetary Authority of Singapore, revised November 2023).

[10] APRA, Prudential Standard APS 221: Large Exposures (Sydney: Australian Prudential Regulation Authority, January 2019, updated January 2024).

[11] MAS, Notice 639: Limits on Single Counterparty and Group Exposures (Singapore: Monetary Authority of Singapore, revised July 2023).

[12] UN-REDD Programme, Guidelines on Free, Prior and Informed Consent (Geneva: UN-REDD, 2013).

[13] United Nations et al., System of Environmental-Economic Accounting --- Ecosystem Accounting (SEEA EA), White Cover Publication (New York: United Nations, 2021).

[14] Climate Bonds Initiative, Post-Issuance Reporting Guidelines (London: CBI, March 2023).

[15] International Auditing and Assurance Standards Board, ISAE 3000 (Revised): Assurance Engagements Other than Audits or Reviews of Historical Financial Information (New York: IAASB, 2013).

[16] Capgemini Research Institute, World Wealth Report 2024 (Paris: Capgemini, 2024). The report notes that HNW individuals increasingly expect digital, real-time access to portfolio impact data as a standard feature of sustainable investment products.

[17] Taskforce on Nature-related Financial Disclosures, Recommendations of the Taskforce on Nature-related Financial Disclosures (September 2023), Section 4: Recommended Disclosures.

[18] IFRS Foundation, IFRS S1: General Requirements for Disclosure of Sustainability-related Financial Information (London: IFRS Foundation, June 2023).

[19] IFRS Foundation, IFRS S2: Climate-related Disclosures (London: IFRS Foundation, June 2023).

[20] ISSB, "ISSB Work Plan 2024--2026: Research Project on Biodiversity, Ecosystems and Ecosystem Services," IFRS Foundation, September 2023.

[21] APRA, Prudential Practice Guide CPG 229 Climate Change Financial Risks (Sydney: Australian Prudential Regulation Authority, November 2021).

[22] ASFI, Australian Sustainable Finance Taxonomy: Version 1 (Melbourne: Australian Sustainable Finance Institute, June 2024).

[23] ASIC, Regulatory Guide 168: Disclosure: Product Disclosure Statements (and Other Disclosure Obligations) (Sydney: Australian Securities and Investments Commission, revised October 2023).

[24] Commonwealth of Australia, Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019, No. 50 (2019).

[25] MAS, Guidelines on Environmental Risk Management for Banks (Singapore: Monetary Authority of Singapore, December 2020).

[26] MAS and Green Finance Industry Taskforce, Singapore-Asia Taxonomy for Sustainable Finance (Singapore: Monetary Authority of Singapore, December 2023).

[27] MAS, Notice on the Sale of Investment Products (Singapore: Monetary Authority of Singapore, revised 2023).

[28] MAS, Fair Dealing --- Board and Senior Management Responsibilities for Delivering Fair Dealing Outcomes to Customers, Guidelines on Fair Dealing (Singapore: Monetary Authority of Singapore, revised April 2023).

7. Full-Stack Integration

The five layers presented in this report --- NbS project typology, ratings gap analysis, SEEA EA-based rating methodology, banking integration, and product design --- are not independent modules to be adopted piecemeal. They constitute a single integrated system in which each layer both depends on and enables the others. This section describes how the layers connect, the feedback loops that sustain system coherence over time, and the scalability pathway from pilot deployment to industry standard.

7.1 System Architecture

The full-stack architecture operates as a bottom-to-top value chain. Layer 1 (typology) provides the classification infrastructure that Layer 2 (gap analysis) evaluates. Layer 2's diagnostic informs the design of Layer 3 (rating methodology), which produces the alphanumeric ratings that Layer 4 (banking integration) embeds into credit workflows. Layer 4's institutional architecture enables Layer 5 (product design) to specify a market-ready deposit product with defined terms, allocation mechanisms, and reporting obligations.

graph BT
    L1["Layer 1: NbS Project Typology
8 typologies across 3 ecosystem types"] --> L2["Layer 2: Ratings Gap Analysis
Carbon-only coverage identified"]
    L2 --> L3["Layer 3: Rating Methodology
SEEA EA-based, NbS-AAA to NbS-D"]
    L3 --> L4["Layer 4: Banking Integration
AU/SG regulatory alignment"]
    L4 --> L5["Layer 5: Product Design
NbS Impact Term Deposit"]
    L5 -.->|"Impact data & rating updates"| L1

    style L1 fill:#2d6a4f,color:#fff
    style L2 fill:#40916c,color:#fff
    style L3 fill:#52b788,color:#fff
    style L4 fill:#74c69d,color:#000
    style L5 fill:#95d5b2,color:#000

Figure 7.1: Full-stack vertical integration. Solid arrows represent the design-time dependency chain (each layer is built on the outputs of the layer below). The dashed arrow represents the operational feedback loop: impact data and rating updates generated through the product's monitoring cadence flow back to inform typology refinement and project pipeline assessment.

7.2 Feedback Loops

The system is designed to be self-correcting through three feedback loops that operate at different temporal cadences.

Project performance to rating updates (quarterly/annual). The monitoring infrastructure specified in Layer 5 --- quarterly remote sensing and annual on-ground verification --- generates ecological condition data that feeds directly into the Layer 3 rating methodology's reassessment cycle. A project whose ecosystem condition index deteriorates from 0.72 to 0.55 over a reporting period will see its Environmental Domain score decline, potentially triggering a rating downgrade. This is not a static assessment but a dynamic signal that reflects the project's actual ecological trajectory.

Rating updates to portfolio rebalancing (event-driven). When a project's NbS rating is downgraded below the NbS-BBB investment-grade threshold, the portfolio management rules specified in Layer 4 trigger a replacement process: the affected allocation must be substituted with a newly rated NbS-eligible project within six months. This mechanism ensures that the ring-fenced NbS pool maintains its quality commitment to depositors, even as individual project performances vary.

Product reporting to typology refinement (annual). The aggregate performance data compiled across the NbS deposit pool --- which projects are meeting condition targets, which typologies demonstrate the strongest ecological trajectories, which geographies present systemic risks --- provides empirical evidence that refines the Layer 1 typology over time. If, for example, seagrass restoration projects consistently underperform their condition targets due to measurement challenges, the typology can be updated to flag this as a higher-risk category requiring enhanced monitoring, or the rating methodology can adjust its condition benchmarks for marine ecosystems.

7.3 Scalability Path

The framework is designed for phased deployment, beginning with a single-bank pilot and scaling toward an industry standard.

Phase 1: Pilot (Year 1--2). A single bank in Australia or Singapore launches the NbS Impact Term Deposit with a target pool size of approximately AUD/SGD 50 million. The pilot funds 5--8 NbS projects across at least three typologies and two ASEAN countries. The independent NbS rating is conducted by the bank's internal sustainability team using the published Layer 3 methodology, with external verification by an accredited ecological assessor. The pilot tests the full operational chain: deposit receipt, ring-fenced allocation, credit assessment with NbS overlay, project monitoring, impact reporting, and regulatory disclosure.

Phase 2: Multi-bank adoption (Year 2--4). Additional banks in both jurisdictions adopt the product format, using the published rating methodology under licence or engaging accredited external rating providers. The NbS project pipeline expands as project developers recognise the demand signal from multiple institutional buyers. An industry working group --- potentially convened under the Australian Sustainable Finance Institute (ASFI) or the Association of Banks in Singapore (ABS) --- develops standardised templates for NbS impact reporting and rating verification, reducing per-bank implementation costs.

Phase 3: Industry standard (Year 4--6). The NbS rating methodology achieves recognition as an industry standard, referenced in sustainable finance taxonomies (Australian and Singapore-Asia), prudential guidance (APRA and MAS), and disclosure frameworks (TNFD, ISSB). Accredited external NbS rating agencies emerge, providing independent ratings analogous to the role of Moody's, S&P, and Fitch in credit markets. The product format extends beyond term deposits to include NbS-linked green bonds, sustainability-linked loans, and potentially NbS-referenced exchange-traded products.

8. Conclusion and Recommendations

8.1 Key Findings

This report has demonstrated that the infrastructure required to connect high-net-worth depositor capital in Australia and Singapore to nature-based solutions projects in ASEAN can be assembled from existing building blocks --- SEEA EA accounting standards, established banking workflows, mature prudential frameworks, and precedent green deposit product structures --- combined with a purpose-built NbS rating methodology that addresses the systematic gaps in current carbon credit ratings.

The gap analysis (Layer 2) established that current rating agencies assess carbon integrity dimensions comprehensively but leave ecosystem extent, condition, biodiversity, water regulation, soil health, social outcomes, and economic asset value entirely unrated. This carbon-only orientation means that the NbS project types delivering the richest biodiversity and social co-benefits --- mangroves, agroforestry, peatlands, seagrass, coral ecosystems --- are precisely the types that lack independent quality assurance.

The proposed SEEA EA-based rating methodology (Layer 3) closes these gaps by scoring projects across three weighted domains (Environmental 50%, Social 25%, Economic 25%), producing alphanumeric ratings from NbS-AAA to NbS-D. The worked examples demonstrated that the methodology captures the integrated value of NbS projects --- ecological recovery, community livelihoods, financial viability --- in a format immediately recognisable to banking credit analysts.

The banking integration analysis (Layer 4) confirmed that both the Australian and Singaporean regulatory frameworks accommodate NbS deposit products without requiring regulatory exemptions. The Australian Sustainable Finance Taxonomy explicitly recognises ecosystem restoration and land use activities as taxonomy-eligible; the Singapore-Asia Taxonomy's transition-compatible design supports amber-to-green ecosystem recovery trajectories; and both jurisdictions' mandatory disclosure regimes provide the reporting infrastructure upon which NbS impact statements can be built.

8.2 Recommendations

For regulators. Integrate NbS explicitly into sustainable finance taxonomies, moving beyond the current emphasis on climate mitigation to recognise nature restoration and ecosystem conservation as distinct, taxonomy-eligible activity categories. APRA and MAS should extend environmental risk management guidance to encompass nature-related risks, consistent with the TNFD framework, providing supervised entities with clear expectations for assessing and disclosing nature-linked exposures in their lending portfolios.

For banks. Pilot NbS deposit products using the full-stack framework presented in this report. The NbS Impact Term Deposit provides a low-risk entry point: it operates within existing prudential frameworks, carries full capital guarantee, and leverages precedent green deposit structures that banks have already operationalised. Banks should begin building internal NbS assessment capability --- training credit analysts to interpret NbS ratings, establishing relationships with ASEAN NbS project developers, and integrating SEEA EA-compatible data into their environmental risk management systems.

For NbS project developers. Adopt SEEA EA-compatible monitoring frameworks from inception. Projects that structure their monitoring data in SEEA EA account formats --- extent accounts, condition accounts, ecosystem service supply accounts --- will be immediately ratable under the proposed methodology and therefore eligible for bank-funded NbS pools. This represents a tangible commercial incentive: SEEA EA compatibility unlocks access to a new category of institutional capital that is currently unavailable to NbS projects.

For rating agencies. Expand assessment scope beyond carbon integrity to encompass the full range of ecosystem attributes, services, and social outcomes that define NbS project quality. The carbon-only orientation of current rating methodologies --- while valuable for its intended purpose --- is insufficient for banking products that promise nature-positive outcomes. Agencies that develop multi-dimensional NbS rating capabilities will capture the emerging institutional demand for independent nature-quality assurance.

8.3 Future Work

Two developments on the near-term horizon will materially affect the framework's trajectory.

First, the ISSB's Research Project on Biodiversity, Ecosystems and Ecosystem Services is expected to produce an exposure draft in October 2026. The NbS rating methodology's SEEA EA foundation ensures forward compatibility with this forthcoming standard, but the specific disclosure requirements, materiality thresholds, and industry-specific guidance that the exposure draft contains will require calibration of the methodology's reporting outputs. Banks that adopt the framework now will be well-positioned to comply with the ISSB nature standard when it takes effect; those that wait may face costly retrospective data restructuring.

Second, the framework presented here focuses on the term deposit product format. Extension to other asset classes --- NbS-linked green bonds, sustainability-linked loans with NbS key performance indicators, biodiversity credit-backed securities, and blended finance structures combining concessional and commercial NbS capital --- represents a natural progression. Each of these formats would draw on the same five-layer infrastructure (typology, gap analysis, rating methodology, banking integration, product design) while adapting the product-level parameters to the specific asset class's structural requirements.

The financing gap for nature-based solutions in ASEAN --- USD 54 billion per year by 2030, against current flows of USD 8 billion --- will not be closed by any single instrument. But the NbS Impact Term Deposit, as the first deposit product specifically designed to direct capital to independently rated NbS projects, demonstrates that the gap between depositor intent and NbS project need is bridgeable. The full-stack framework provides the blueprint; implementation requires institutional commitment from the banks, regulators, project developers, and rating agencies whose collaboration will determine whether nature-based finance becomes a functioning market or remains a policy aspiration.

References

For the complete reference list, see Bibliography.

Appendices

• Appendix A: NbS Project Typology --- Detailed Data Tables
• Appendix B: NbS Rating Agency Comparative Analysis
• Appendix C: SEEA EA Project Mapping
• Appendix D: NbS Rating Methodology --- Full Specification
• Appendix E: Regulatory Matrix --- AU/SG Comparison
• Appendix F: Indicative Term Sheet
• Appendix G: Disclosure Templates --- TNFD and ISSB

Interactive Visualisations

• Gap Analysis Heatmap --- Rating agency coverage across assessment dimensions
• Rating Framework Radar --- Current carbon-only vs. proposed SEEA EA-based approach