Key takeaways for board directors

• Nature loss and ecosystem collapse are foreseeable, financially material risks over mainstream investment and corporate planning horizons. Board directors should start integrating nature considerations into corporate decision-making; the scale of the risks in the long term is determined by decisions made today.
• Lawyers around the world are starting to recognise that the materiality of nature-related risks supports consideration of these risks by directors in fulfilment of their statutory corporate law duties. It is equally important that directors consider nature-related commercial opportunities as well as risks.
• Mandatory nature-related disclosures are expected to increase, driven by international targets like the Global Biodiversity Framework (GBF). It is likely that states will use the TNFD Recommendations or the International Sustainability Standards Board (ISSB) standards when enacting disclosure regimes. It will therefore be helpful for board directors to be familiar with these disclosure frameworks and standards and their relevance for the organisation.
• Nature-related cases against corporates and financial institutions are being brought under corporate due diligence legislation, under tort law, shareholder rights and anti-money laundering law. It may be easier to prove liability in nature-related claims by attributing an action to a loss, in comparison to climate which often relies on attribution science.
• Directors can take 5-steps to minimise allegations they have breached their legal duties relating to the management of nature risks: 
  1. identify nature risks; 
  2. assess and evaluate which risks are material; 
  3. manage and/or mitigate those risks; 
  4. disclose risks as required (mandatorily or voluntarily); and 
  5. document how the steps have been taken.

Nature-related risks: a growing concern

Although environmental, social and governance (ESG) risks, including nature-related risks, have become increasingly politicised on the global stage, they continue to pose material financial risks to businesses, investors, governments, and society as a whole. These risks are real and are already materialising: 

• More than half of the world’s total GDP is moderately or highly dependent on nature and its services. Despite this, biodiversity - the variability among living organisms - is being lost at an increasing rate. The average size of wildlife populations has declined by 73% between 1970 and 2020 and we are using natural resources 1.7 times faster than ecosystems can regenerate them. If left to continue at current rates, biodiversity loss could cost the global economy USD 2.7 trillion annually by 2030.
• In the World Economic Forum’s Global Risks Report 2025, biodiversity loss and ecosystem collapse were ranked as the second most severe risk over 10 years. The proximity of these risks is growing in recognition; they experienced one of the largest increases in ranking by the Forum across all risks, moving from No. 37 in 2009 to No.2 in 2025. But there is equal evidence to show that biodiversity loss and ecosystem collapse pose more immediate risks to business. 
• Studies undertaken by central banks in the UK, EU, Netherlands, Malaysia, France, Brazil and across Africa have found their national financial sectors to have high levels of exposure to companies that are highly or very highly dependent on one or more ecosystem services. Other studies have taken place in relation to Lithuania, the Philippines, Georgia and Mexico. In July 2024, the Financial Stability Board published a report on nature-related risks, which highlighted that biodiversity loss and nature risks may have profound effects on the real economy and, in turn, the financial system.

A December 2023 study by BloombergNEF and the Taskforce on Nature-related Financial Disclosures (TNFD) examined 10 instances of companies suffering material financial losses from poorly handled interactions with nature. Some of these are summarised in the table below.
 

Key takeaway for boards: Nature-related risks are already translating into real financial consequences - from delayed operations and legal liabilities to reputational damage and constrained access to capital. Boards must take a forward-looking approach, actively identifying and addressing both physical (e.g., water availability) and transition risks (e.g., evolving investor expectations). Boards should ensure the company strategy addresses current and emerging nature-related issues.

Directors' duties and nature-related risks

Generally, directors everywhere owe two core duties when discharging their functions (phrased differently in different countries):

1. The duty to promote the success of the company (also described as the duty of loyalty).
2. The duty of care (also described as skill, diligence and competence).

Directors exercise these duties in strategic planning, oversight of foreseeable and material risks, and attesting to disclosure and financial reports. Directors’ duties evolve over time because the law commonly assesses the directors’ standard of care and loyalty by reference to the current market, social and regulatory context. This evolving context can raise the standards expected of directors. What may have been considered a reasonable decision 10 years ago might not be reasonable today.

A number of recent legal opinions clarify the position of nature-related risks with respect to directors’ duties (see Figure 1). Even though the legal opinions are jurisdiction-specific, it is likely that similar conclusions will be drawn in other countries. 

Nature-related disclosures

Nature-related disclosure requirements and frameworks exist globally, both mandatory (e.g., the EU Deforestation-free Products Regulation) and voluntary (e.g., Taskforce on Nature-related Financial Disclosures (TNFD)). 

Mandatory nature-related disclosures are expected to increase, driven by international commitments under the Global Biodiversity Framework (GBF). The GBF, adopted as part of the legally binding Convention on Biological Diversity, sets out global goals and targets, including Target 15, which calls on governments to take measures to encourage and enable businesses to regularly monitor, assess, and transparently disclose their risks, dependencies, and impacts on biodiversity.

It is likely that when governments implement disclosure regimes to achieve Target 15, they will use the TNFD recommendations or International Sustainability Standards Board (ISSB) standards (see Figure 2). The TNFD — an international market-led and science-based initiative supported by national governments, businesses and financial institutions worldwide — has established a set of nature-related disclosure recommendations, with over 500 organisations managing USD 17.7 trillion in assets reporting in line with them. In addition, the ISSB — an international, independent standard setting body within the International Financial Reporting Standard Foundation — has produced standards that are being adopted by jurisdictions representing over half the global economy by GDP. Importantly, the ISSB plans to conduct research on disclosures relating to the risks and opportunities associated with biodiversity, ecosystems, and ecosystem services. When undertaking this research, the ISSB will consider how to build on the TNFD recommendations. 

Whilst few countries have adopted mandatory corporate nature-related disclosures, the EU is an exception. Its Corporate Sustainability Reporting Directive (CSRD) requires in-scope companies to disclose information on the risks and opportunities relating to certain ESG factors, which include biodiversity and ecosystems (ESRS E4). Although it’s worth noting that the final scope of the CSRD will be dependent on ongoing revisions to EU sustainability legislation (the so called ‘Omnibus’) which aim to simplify and align requirements under a range of EU rules (FAQs here) and reduce reporting burdens (especially for SMEs). 

Litigation risk: relevant updates

Current litigation landscape: To date, no nature-related cases have been brought directly against directors, but claims are emerging in diverse ways that may still pose legal risks to companies and their boards. For the purpose of this section, nature-related litigation does not include climate litigation.

Themes in nature-related litigation: The Network for Greening the Financial System — a coalition of central banks and supervisors — reports that nature-related litigation is: 

• Aimed at safeguarding nature and its ability to provide the ecosystem services on which humanity depends.
• Wide-ranging, covering topics such as biodiversity loss, deforestation, protecting vulnerable species, ocean degradation, plastic pollution and the rights-based claims.
• Used by activists, lawyers, and NGOs as a tool to influence policy and regulatory outcomes, as well as to change corporate and societal behaviour.

A range of claimants are bringing cases against states, public entities, corporations, and financial institutions. Litigation against states and public bodies can have knock-on effects for corporations and financial institutions. For example, setting legal precedents that might affect private actors, trigger policy changes, and reviews of permitting processes may all result in increased compliance costs, risk management and business uncertainty.

Cases against corporates and financial institutions are brought under corporate due diligence legislation, under tort law, shareholder rights and anti-money laundering law (see Figure 3).

Future trends and implications for boards: We expect to see more types of ‘tracing’ cases. This is because causation in biodiversity and deforestation claims can be easier to establish by supply chain tracing in comparison to establishing causation in damages-based climate claims, which rely on attribution science. In addition, it is expected that there will be a growth of rights-based nature and climate-nature nexus cases (e.g., ‘forest carbon grabbing’), and corporate responsibility cases, including shareholder actions against directors for breach of duty, greenwashing and linked to due diligence and disclosures.

Threatened or initiated litigation can have far-reaching consequences, even if unsuccessful. Nature-related litigation can be expected to generate nature-related financial risks in three ways (see Figure 4).

Shareholder activism: Shareholder activism related to climate issues is also prevalent, with the start of a shift in focus to nature. Investors filed a record number of biodiversity resolutions in 2024 - 18 biodiversity and deforestation-related shareholder resolutions were filed in 2024 (although some sources report higher), up from 12 in 2023 and 9 in 2022. Resolutions focus on issues such as deforestation in supply chains, deep-sea mining, water use, pesticides in agriculture, and biodiversity impact assessment. Whilst support for these resolutions has dropped sharply, it is anticipated by industry experts that there will be a rising focus on shareholder resolutions focused on nature impacts or risk reporting.

The business case: business opportunities from managing nature-related issues

In addition to managing nature-related risks, it is important that directors consider the commercial opportunities that arise as well. The identification and management of dependencies and impacts on nature can lead to business opportunities. Nature-related opportunities can emerge in two key ways: 

1. when organisations avoid, reduce, mitigate or manage nature-related risks (e.g., minimising resource exploitation); or
2. through the strategic translation of business models, products, services and investments that halt or reverse nature loss (e.g., nature-based solutions). 

BloombergNEF has profiled 12 instances of companies that are realising financial gain by mitigating the drivers of nature loss – being land- and sea-use change, natural resource exploitation, climate change, pollution, and invasive alien species.

Some of these examples are summarised in the table below.

Key takeaways for boards: Understanding how your business and the economy depends on and impacts nature can unlock significant opportunities for value creation. Forward-looking companies are already capturing commercial benefits - from developing nature-positive products and services to improving resource efficiency, accessing new markets, and strengthening long-term resilience. Boards should integrate nature considerations into strategy and innovation pipelines, helping position the business for sustainable growth, stakeholder alignment, and competitive advantage in a transitioning economy.

Conclusion: How can directors minimise allegations of breach of duty?

Directors should take proactive steps to embed nature into corporate governance and risk oversight. This starts with understanding how the company depends on and impacts nature and identifying where these connections could pose material financial, operational, or reputational risks. Factoring nature into strategic decisions and enterprise risk and opportunity management is essential to future-proof the business amid accelerating ecological decline and growing scrutiny from regulators, investors, and stakeholders.

A UK Legal Opinion published in March 2024 recommends five steps directors could take to minimise allegations of breach of duty (see Figure 5). This guidance is useful for directors across the world, particularly in sectors that have a high dependency on nature. 

Managing nature-related risks is no longer optional. It is a core component of responsible, forward-looking governance. Directors who engage with these issues will be better placed to meet their legal duties, protect long-term value, and position their companies for resilience in a rapidly changing operating environment.