global perspectives

Nature risk: Five key considerations for directors

15 June 2023 / WORDS BY Thea Philip

Nature is in significant decline globally and nature loss, like climate change, poses a systemic risk to the global financial system. There is unprecedented political and private sector momentum building to address this risk globally and at the national level. As a result, the legal and regulatory context relevant to directors’ duties in the UK and other Commonwealth jurisdictions is changing. 

On 13 June, Pollination hosted an event in collaboration with the Commonwealth Climate and Law Initiative (CCLI) and the Cambridge Institute for Sustainability Leadership (CISL) to discuss the role nature risk might play in directors’ duties. Participants came together to explore the critical issues that directors in the UK need to be aware of, and indeed act upon, with respect to nature-related risks to their companies. 

Expert speakers Laura Waterford, Director at Pollination; Zaneta Sedilekova, Biodiversity Consultant at CCLI; Dr. Nina Seega, Director of the Centre for Sustainable Finance at CISL; and Simon Zadek, Executive Director of NatureFinance participated in a panel discussion facilitated by Geoff Summerhayes, Senior Advisor at Pollination. An audience of approximately 50 leaders from financial institutions, corporates, legal and other advisors then reflected on both the opportunities and barriers to addressing nature risk in their own organisations. 

The event concluded with five key takeaways: 

1. The playbook used for addressing climate risk is now being used for nature risk, but in fast forward 

In 2015, we saw world leaders agree to the Paris Agreement global temperature goal. This was followed by the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) in 2017, initially as a voluntary initiative. In 2023, TCFD reporting is now mandatory in an increasing number of jurisdictions. Around the same time TCFD was released, legal analyses emerged which confirmed that directors’ duties under company law in Commonwealth jurisdictions, such as Australia, impose obligations on directors to consider climate-related risks.  

Similarly for nature, world leaders agreed to the Global Biodiversity Framework at COP15 in 2022. The Taskforce on Nature-related Financial Disclosures (TNFD) has released a series of beta frameworks for pilot testing, with the final recommendations expected to be published in September 2023. France is already leading the way on mandatory reporting in relation to nature-related risks, having made disclosure of biodiversity impacts and dependencies mandatory for financial institutions. We anticipate that other countries will soon follow. 

2. Directors may face legal liability for failure to consider nature risks in governance and disclosure if this breaches directors’ duties under company law. 

CCLI recently published a report “Biodiversity Risk: Legal Implications for Companies and their Directors,” examining relevant considerations in a select number of jurisdictions, including the UK. The report argues that biodiversity loss can present foreseeable and material financial risks and opportunities to companies, and that directors may therefore be required to consider biodiversity impacts and dependencies in discharging their duties and disclosure obligations. 

Additionally, a legal opinion was released earlier this year that concludes New Zealand company directors’ duties to exercise reasonable care require identification of foreseeable and potentially material nature-related risks and to take this into account in decision-making.

3. There is a need for board-level education and stakeholder engagement to accelerate action. 

Boards and their companies are underprepared for the developments mentioned above. There is a knowledge gap that needs to be filled by demonstrating the links between the nature crisis and the associated financial implications, as well as what can be done to mitigate these risks commercially. Board-level education and stakeholder engagement can support businesses to overcome this hurdle.  

4. There are practical actions that companies and financial institutions can take today to get on the front foot in addressing their exposure to nature risk. 

Even for companies without comprehensive supply chain data, there are tools available right now which can help companies and firms to get started. Sectoral and jurisdictional hotspot analysis of nature impacts and dependencies is possible without asset level data. This work can inform strategies to address nature risk and build business resilience. 

Much of the internal infrastructure that businesses have developed to collate and report on climate data can also be utilised for nature. There is an opportunity to streamline processes and prevent unintended consequences by considering climate and nature together. This is contemplated in the disclosure guidance under TNFD, as well as nature target setting guidance from the Science-based Targets Network. 

5. Taking these steps can uncover value creation opportunities for businesses. 

As businesses begin to understand their impacts and dependencies on nature, they can uncover potential value creation opportunities to help them seize commercial upside from transitioning to net zero and contributing to nature positive. This can include opportunities to strengthen supply chain resilience, enhance portfolio partnerships, access new markets (including biodiversity credit markets), and capitalise on stakeholder aspirations on nature via first mover advantages to secure an enhanced customer base and achieve preferential or discounted access to capital. 


Pollination is already advising a range of clients across geographies and sectors to understand the importance of nature to the commercial viability of their business.

We are supporting companies to shift from awareness to action as there is now a clear imperative to address risks and seize the opportunities presented by nature.  

We offer a range of workshops tailored to your organisation’s needs and maturity in this space. We work with board level and senior stakeholders to explore exposure to nature risk at an enterprise level; to co-design strategies to mitigate risks and maximise market opportunities; as well as to design innovative, future-proof solutions with nature at their core.  

For more information or to discuss this further please contact, Head of Business Development.



Pollination in the news


Stay informed


Please provide your details below to access the report

    By clicking submit, you agree to our Terms & Conditions.