Due to increasingly frequent and severe nature-related risks and opportunities, it has become clear that the duties of board directors also include the identification and management of nature-related issues. Managing your company’s dependencies and impacts on nature is now an integral part of your legal obligations, specifically, the duty to act with due care, diligence, and responsibility. Moreover, it is central to shaping a long-term business strategy that ensures financial stability and organizational sustainability.
As with other rapidly evolving topics – such as artificial intelligence and cybersecurity – governing nature-related issues (which include but are not limited to climate change) requires board members to regularly seek information on how risks, impacts, opportunities, and dependencies related to nature are being managed. At the same time, they must actively strengthen their own understanding of nature-related matters.
Asking informed and probing questions is not only essential for identifying nature-related challenges, it also plays a critical role in fostering accountability within the organization and reducing bias in boardroom decision-making.
Why the Resilience of Your Business Depends on the Resilience of Nature
The accelerated loss of natural resources and biodiversity is becoming a growing financial and operational risk for businesses. Across sectors and regions, nature-related issues such as air pollution, water scarcity, deforestation, and microplastics are increasingly influencing stock prices, credit ratings, and market valuations. At the same time, governments, investors, and consumers are demanding stronger action to protect nature – creating new market opportunities.
Yet many businesses still fail to properly integrate these risks and opportunities into their governance frameworks, strategies, risk management systems, and investment decisions.
Every business model depends – directly or indirectly – on nature and the ecosystem services it provides, such as healthy soils, pollinators, and clean water. For example: agriculture depends on pollinators and fertile soil; semiconductor manufacturing requires ultra-pure water; and banks are indirectly reliant on the nature-based foundations of their clients' businesses.
At the same time, companies also impact nature – agriculture through pesticide use, industry through water extraction, and so on. These impacts create risks, but reducing them can also unlock new business opportunities.
As the state of nature deteriorates, regulatory scrutiny, legal risks, and investor pressure are all increasing. Nature is no longer merely an operational issue – it is a strategic one.
12 Key Questions Boards Should Ask About Nature
The Taskforce on Nature-related Financial Disclosures (TNFD) has developed a practical guide with 12 questions to help board members obtain the critical information needed to incorporate nature into governance, strategy, risk management, and investment decisions:
How and where does our business depend and impact on nature?
How do our dependencies and impacts on nature give rise to potential financial and non-financial risks?
How do our dependencies and impacts on nature generate potential opportunities for the organisation?
What is the interplay between our nature- and climate-related dependencies, impacts, risks and opportunities?
How are we assessing and measuring our potentially material nature-related dependencies, impacts, risks and opportunities? What data are we using and generating?
How are we engaging with our value chain and Indigenous Peoples, Local Communities, affected and other stakeholders to understand their views with respect to our nature-related issues?
How does management integrate nature into short- and long-term decision-making?
How do we expect our understanding of nature-related issues to change over time in our sector and in the markets and locations in which we operate?
Are we up to date with shifting regulatory developments, both voluntary and mandatory, industry standards and investor expectations across the jurisdictions in which we operate?
Does the board and senior management team have the requisite skills and experience to adequately manage the organisation’s nature-related issues?
Are the organisation’s skills and capabilities on nature-related issues, including assessment and learning, being institutionalised for the long term?
Are we confident that we are fulfilling our legal duties in relation to nature across the jurisdictions in which we operate? What evidence do we have that we are doing so?
Nature is no longer a peripheral concern or simply part of corporate social responsibility – it is now a strategic imperative for the long-term success and resilience of businesses. Board members have a legal and moral duty to identify, monitor, and integrate nature-related dependencies, impacts, risks, and opportunities into the core of their decision-making.
By acting in a timely manner, asking the right questions, and investing in knowledge and internal capacity, companies can not only reduce risks but also create new value, strengthen stakeholder trust, and contribute to the restoration of nature on which they ultimately depend.