New guide highlights nature as financial risk for businesses
Nature loss as a boardroom issue
New guidance from the Institute of Sustainability and Environmental Professionals and the Aldersgate Group treats nature decline as a formal board responsibility. The document argues that environmental degradation now creates material risk across resilience, financial performance and long-term value. It is designed to shift directors from awareness to practical action on governance, strategy and capital decisions.
The guidance, titled Placing Nature on the Board Agenda, was developed with support from the Department for Environment, Food and Rural Affairs. Published in June 2026 and updated the following month, it offers a structured approach for senior leaders across sectors. The framework builds on Defra's earlier Boardroom Briefing for Nature, which encouraged businesses to identify savings and growth by integrating nature into decision-making.
Consequently, boards face growing expectations to manage nature-related risks alongside climate obligations. The guide frames this as a financial issue, not just an environmental one. For many businesses, that represents a significant shift in how nature fits into corporate governance and risk management.
A five-phase framework for board action
The guidance sets out five phases for boards to follow. First, understand nature impacts and interdependencies. Second, develop a nature strategy and set credible, ambitious targets. Third, embed nature into operations and supply chains. Fourth, build nature skills and expertise across the organisation. Fifth, invest in nature and green investments.
Each phase is intended to support practical implementation. The document emphasizes that nature should be treated as a whole-business issue, not delegated solely to sustainability teams. Boards are encouraged to establish clear targets, governance structures, reporting mechanisms and oversight processes. This approach aligns with emerging thinking on nature-related financial risk in capital markets.
Moreover, the framework asks businesses to examine both their dependencies on nature and their impacts on it. That dual focus reflects the logic behind nature-related risk disclosure frameworks. For example, a food manufacturer depends on stable water supplies and soil quality. At the same time, its operations may affect biodiversity or land use. Both sides of that relationship carry financial implications.
The guidance also highlights the need for boards to ask harder questions about ecosystem exposure. Specifically, directors should consider supply-chain vulnerability, capital allocation, and the quality of data used to assess nature-related risk. These questions are becoming standard in sectors that rely on water, land, biodiversity and stable ecosystems.
Why this matters for UK businesses
Nature loss affects operating costs, supply chains, financing conditions and asset values. For businesses that depend on natural systems, decline in those systems translates into direct financial risk. Water scarcity disrupts production. Soil degradation raises input costs. Biodiversity loss undermines ecosystem services that many industries take for granted.
Therefore, treating nature as a board-level issue is no longer optional for many organisations. Investors increasingly expect companies to assess and disclose nature-related dependencies. Regulators are starting to ask similar questions. Financial institutions are beginning to factor ecosystem risk into lending and investment decisions. As a result, businesses that fail to address nature may face higher costs, reduced access to capital, or reputational damage.
The guidance arrives as policy expectations shift across the UK. Defra has made clear that nature must move higher up the corporate agenda. Meanwhile, financial and policy institutions are pushing organisations to use structured frameworks for assessing nature-related risk. The Institute of Sustainability and Environmental Professionals describes the guide as sector-agnostic, meaning it applies to a wide range of industries.
Furthermore, early action may create competitive advantage. Businesses that identify dependencies quickly and adapt their operations can reduce exposure to ecosystem decline. They may also capture opportunities linked to nature-positive investment, sustainable supply chains, or new market demand for environmentally responsible products and services. The guidance frames this as an economic opportunity, not just a compliance exercise.
In addition, the document supports a broader trend toward integrating nature into strategic planning alongside climate risk. Many boards already manage climate-related financial risk through governance structures, scenario analysis and target-setting. The same discipline is now expected for nature. That requires new skills, better data, and clearer accountability at senior levels.
Material risks across sectors and supply chains
The financial case for treating nature as a board issue rests on material risk. For some sectors, that risk is immediate and visible. Agriculture depends on pollination, soil health and water availability. Food manufacturing relies on stable supply of raw materials from ecosystems under pressure. Construction and property face exposure to flooding, land degradation and changing planning requirements linked to biodiversity net gain.
However, nature-related risk also affects sectors with less obvious dependencies. Retailers depend on agricultural supply chains. Financial services hold assets linked to land, property and natural resources. Energy companies face regulatory and reputational risk if their operations damage ecosystems. Even technology firms can be exposed through supply chains, real estate portfolios, or investor expectations.
Supply chains amplify these risks. A business may not directly depend on a specific ecosystem, but its suppliers might. Disruption to those suppliers creates operational and financial consequences further down the chain. Consequently, boards need to understand where nature dependencies exist across their entire value chain, not just within their own operations.
The guidance also links nature risk to long-term value creation. Assets tied to natural systems may lose value as those systems degrade. Conversely, investments that restore or protect nature may generate returns through cost savings, regulatory compliance, or access to green finance. That makes nature a strategic issue for capital allocation and investment decisions.
Additionally, disclosure expectations are rising. While mandatory nature-related reporting is not yet in place for most UK businesses, voluntary frameworks are gaining traction. Investors, lenders and customers increasingly ask for transparency on nature dependencies and impacts. Boards that establish governance and reporting structures early will be better prepared as disclosure requirements evolve.
Key facts about the guidance
- The guidance was published in June 2026 by the Institute of Sustainability and Environmental Professionals and the Aldersgate Group, with support from Defra.
- It was updated in July 2026 to reflect additional stakeholder input and emerging policy developments.
- The document frames nature as a material financial risk, not solely an environmental concern.
- It proposes five practical action areas for boards: understanding impacts and dependencies, developing strategy and targets, embedding nature into operations, building skills, and investing in nature.
- The guidance is designed to be sector-agnostic and applies to businesses of all sizes and industries.
- It builds on Defra's earlier Boardroom Briefing for Nature, which encouraged businesses to identify savings and growth opportunities by placing nature at the centre of decision-making.
- The Institute of Sustainability and Environmental Professionals describes the guide as supporting efforts to incorporate nature into business strategy while highlighting risks to resilience, financial performance and long-term value creation.
Governance, skills and investment priorities
Implementing the guidance requires changes at multiple levels. Governance structures must be updated to give nature the same board attention as climate, financial performance and operational risk. That means establishing clear accountability, setting measurable targets, and ensuring regular reporting to the board on nature-related issues.
Skills are another critical area. Many boards lack the expertise to assess nature-related risk or evaluate nature-positive investment opportunities. Therefore, organisations may need to invest in training, recruit advisors with relevant knowledge, or partner with specialists who understand ecosystem science and its financial implications. The guidance emphasizes building capability across the organisation, not just within sustainability teams.
Investment decisions also need to reflect nature considerations. Boards should evaluate how capital is allocated to projects that protect or restore ecosystems. They should also assess whether existing investments carry nature-related risk that could affect future returns. In some cases, that may mean redirecting capital toward nature-positive initiatives or divesting from activities that accelerate ecosystem decline.
Furthermore, the guidance encourages businesses to look beyond compliance. Meeting minimum regulatory requirements is necessary, but it may not be sufficient to manage material risk or capture opportunities. Companies that go further, setting ambitious targets and integrating nature into core strategy, are more likely to build resilience and create long-term value.
Reporting is another priority. Clear, transparent disclosure helps boards track progress, investors assess risk, and stakeholders understand performance. The guidance recommends using recognised frameworks where available, ensuring consistency and comparability across sectors. However, it also acknowledges that nature-related reporting is still evolving, and businesses may need to adapt their approach as standards develop.
Commercial context for small and medium enterprises
For small and medium enterprises, the guidance creates both challenges and opportunities. Many SMEs lack dedicated sustainability teams or the resources to conduct detailed nature-related risk assessments. Nevertheless, they face the same pressures from customers, investors and regulators as larger organisations. Supply chain requirements are particularly important. SMEs that supply larger businesses may be asked to demonstrate how they manage nature-related impacts and dependencies.
However, smaller businesses can benefit from early action. Reducing reliance on scarce natural resources can lower operating costs. Improving environmental performance can strengthen relationships with customers who prioritise sustainability in procurement decisions. Access to green finance may also improve for businesses that demonstrate credible nature-positive strategies. In addition, ESG compliance support can help smaller organisations meet expectations without building large internal teams.
The guidance also highlights the importance of collaboration. SMEs can work with industry bodies, trade associations or consultancies to access tools, data and expertise. Sector-specific initiatives may provide frameworks tailored to particular industries, reducing the burden on individual businesses. For example, food and drink manufacturers might use guidance developed for their sector, while construction firms could adopt frameworks designed for the built environment.
Moreover, training and capacity-building are essential. Small businesses need practical knowledge about how nature-related risk applies to their operations and what actions make commercial sense. Resources such as SBS Academy training on environmental strategy can help build that capability without requiring large investments in time or money. The key is to start with the most material risks and build from there.
Links to climate strategy and net-zero programmes
Nature and climate are closely connected. Many nature-positive actions also support carbon reduction. For example, protecting forests stores carbon while preserving biodiversity. Restoring peatlands reduces emissions and improves water quality. Regenerative agriculture can sequester carbon in soil while enhancing ecosystem health. Consequently, businesses that integrate nature into their strategy often find synergies with their climate commitments.
However, the guidance makes clear that nature should not be treated as a subset of climate action. While the two issues overlap, they also have distinct characteristics. Climate risk is often measured in carbon and temperature. Nature risk involves a wider range of factors, including water, soil, biodiversity, land use and ecosystem services. Boards need to address both, using appropriate tools and frameworks for each.
For businesses working toward net zero, nature can play a supporting role. Natural carbon sinks, such as woodlands and wetlands, can offset residual emissions that are difficult to eliminate. Many organisations are exploring nature-based solutions as part of their carbon reduction and net-zero programmes. These solutions may offer co-benefits, such as improved water management, enhanced biodiversity, or stronger community relationships.
In addition, nature-related targets can complement carbon targets. A business might set goals for reducing water use, restoring habitat, or sourcing materials from certified sustainable sources. These targets provide additional metrics for tracking environmental performance and demonstrating progress to stakeholders. They also help manage risks that carbon targets alone do not address, such as biodiversity loss or water scarcity.
Where to find further information
The full guidance is available from the Institute of Sustainability and Environmental Professionals. Defra has also published resources on nature and business strategy, including the Boardroom Briefing for Nature, which can be found on the Defra website. These documents provide detailed frameworks, case studies and practical tools for boards and senior leaders.
Businesses looking for guidance on nature-related financial risk can consult the Taskforce on Nature-related Financial Disclosures, which has developed a framework for assessing and reporting nature dependencies and impacts. Information is available through the TNFD website. The framework is designed to help organisations identify material nature-related risks and opportunities in a structured way.
For sector-specific support, trade associations and industry bodies often provide tailored resources. The Chartered Institute of Ecology and Environmental Management offers guidance for professionals working on nature and biodiversity. The Environmental Association for Universities and Colleges provides resources for education and public sector organisations. These sources can help businesses understand how general frameworks apply to their specific circumstances.