Is your board ready for nature risk? What directors need to know

As nature loss accelerates and the global economy becomes increasingly exposed to degraded ecosystems, nature-related risks are quickly moving up the board’s agenda.

Nature loss is not an isolated environmental concern. Much of our financial capital has been built by drawing down natural capital – and we are now exceeding ecological limits in many systems.

Directors need to recognise the flow of services that nature provides are rapidly diminishing. This presents risk to any organisation that depends on natural systems for supply chain, operational or infrastructural resilience.

The link between nature loss and financially material business risk is clear:

• 85% of the world’s largest companies have high operational dependency on nature. (S&P Global Sustainable, 2023)
• More than half of global GDP is dependent on nature (WEF, 2025)
• The global value of nature’s services (such as clean water, fertile soils and climate regulation) is estimated at US$150 trillion per year, nearly twice global GDP (Nature4Climate, 2025) yet annual investment in nature is just US$64 billion – a quarter of what is required (UNEP, 2024)
• NZ$68 billion in Aotearoa New Zealand’s economic output is directly dependent on ecosystem services, such as clean water, fertile soils and pollination (WWF & EY, 2024).

Where there is risk, there is also opportunity

While expectations for directors’ ‘reasonable care’ on nature-related risks will continue to evolve, forward-thinking companies are already embracing nature-positive strategies.

These can unlock new sources of value and build resilience in the face of customer expectations, investor concern and regulatory frameworks. Globally, a shift to nature-positive business models across key sectors could generate US$10 trillion in annual economic opportunity and 395 million jobs by 2030.

In Aotearoa New Zealand, research by WWF and EY estimates that achieving biodiversity targets could deliver a net economic benefit of NZ$272 billion between 2025 and 2080, including through avoided costs and carbon sequestration credit value.

Boards that act early can strengthen supply chains, future-proof operations and earn long-term stakeholder trust.

What directors need to know

Boards are not expected to be technical experts, but they must:

• Understand the basic types of physical and transitional nature risk 
• Identify how financially material these risks are to their organisation
• Be assured that nature risks and opportunities are being periodically reviewed, and that appropriate management responses are in place
  
  

Good governance requires governing for nature

Just as directors are required to govern material ESG and climate-related risks, they now also carry responsibility for financially material nature-related risk.

There are three categories – physical risks (including drought, flooding), transitional risks (including regulation, market change, investor pressure), and systemic risks (including cascading failures across supply chains or ecosystems).

The concept of ‘double materiality’ means that financially material risks could result either from the effects of nature loss on the value chain or the adverse effects of the value chain on nature.

Nature and climate risks often overlap. Boards must ensure they have sufficient information to assess and govern both effectively.

The methods employed to identify and respond to nature risks will be commensurate with your value chain. The Taskforce on Nature-related Financial Disclosures (TNFD) provides an internationally recognised framework that builds on existing climate frameworks and can be scaled to fit any organisation or value chain.

Voluntary TNFD disclosures are not mandatory, but they can increase transparency, enhance credibility and build investor confidence.

Nature is not an add-on to climate – they are interdependent

Climate and nature are deeply interconnected, and so are the risks and responsibilities. Exposure and vulnerability to many climate-related risks – such as flooding, drought and supply chain disruption – is intensified by degraded ecosystems. At the same time, nature regeneration is a key tool for climate mitigation and adaptation.

If treated in isolation, climate and nature strategies risk being incomplete or even counterproductive. A much stronger approach is to build an integrated Climate and Nature Transition Plan, allowing boards to align investment, identify cross-cutting risks and chart the path to long-term value creation.

Key questions for your board

To govern effectively, directors must start asking the right questions:

• Do we understand the likelihood and financial impacts of any material nature risks?
• Are we screening for material nature risks and opportunities across our operations, value chain and investment profile?
• Are nature risks represented in our enterprise risk management, strategy and reporting frameworks? 
• Has integration of nature risk with the assessment, management and reporting of climate-related risks been examined? 
• Do we have the internal or external capability to support nature governance – do we need further training or advice?
• Is there a business case to publish any external nature-related reporting or disclosures?  If so, can we be confident they will be credible.
• Are we monitoring expectations around double materiality, where our impacts on nature may be considered material, even without clear financial effects on our company?

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Dr Robin Mitchell is the co-founder and CEO of Nature Positive, a specialist nature consultancy that provides expert guidance and due diligence advice to companies, financial institutions, governments and trusts in Aotearoa and globally. Nature Positive has contributed to the development of key international nature reporting frameworks (e.g. TNFD, SBTN and the Nature Positive Initiative), hosts the Australia-NZ working group for SBTN and supported the Lyttleton Port Company to produce the first TNFD disclosure in New Zealand.