Study finds nature-related risks offer competitive edge for businesses

Why nature-related risk now appears on board agendas

UK businesses face a quiet but significant shift in how strategic risk is defined. Nature loss is no longer treated as an environmental concern alone. It now sits alongside financial risk, supply chain continuity, and long-term competitiveness in boardroom discussions.

This change matters because dependencies on ecosystems, biodiversity, and natural capital can affect costs, revenue, and operational stability. Firms that assess these dependencies early can build resilience before competitors do. Meanwhile, those that wait may face rising costs, supply chain disruption, and weaker market positions over time.

The World Economic Forum has quantified the scale of exposure. More than half of global GDP is moderately or highly dependent on nature. Companies that shift toward nature-positive strategies can therefore create comparative advantage, according to the Forum’s analysis. It estimates that nature-positive transitions could generate up to £8 trillion in annual business value and 395 million jobs by 2030. Early movers stand to gain the most.

How disclosure frameworks are shaping commercial expectations

Several frameworks now guide businesses on nature-related risk assessment. The Taskforce on Nature-related Financial Disclosures (TNFD) offers a structured approach to identifying, assessing, managing, and disclosing dependencies, impacts, risks, and opportunities. It is designed to help firms build trust with investors and integrate nature into strategic decision-making.

Accounting for Sustainability reinforces the same principle. Companies should first identify their dependencies and impacts on nature. They should then translate those findings into risks and opportunities within their business models. This process is becoming a standard expectation rather than a voluntary exercise.

For UK SMEs, this shift carries practical implications. Public sector procurement frameworks increasingly require environmental disclosures. Larger clients and supply chain partners are asking suppliers to demonstrate how they manage nature-related risks. Firms that cannot provide credible answers may lose tender opportunities or face contract exclusions.

Where nature-related risks affect business operations

Nature-related risks can surface in multiple parts of a business. Ecosystem decline can disrupt raw material availability. It can raise input costs. It can affect operations that depend on water, soil quality, or pollination. It can also influence access to capital, as investors and lenders begin pricing environmental dependencies into credit decisions.

Consider a food manufacturer that relies on agricultural inputs. Changes in pollinator populations, soil health, or water availability can directly affect production volumes and costs. Similarly, a construction firm that sources timber may face supply constraints if forestry ecosystems degrade. These are not abstract future risks. They can affect quarterly performance and margin forecasts.

Furthermore, reputational and regulatory risks are growing. Stakeholders increasingly expect businesses to demonstrate how they manage environmental impacts. Regulatory frameworks are tightening. The UK government has committed to nature-positive targets, and this will shape future compliance requirements. Firms that prepare now will adapt more easily when regulations tighten.

Commercial logic behind early action on nature risk

Acting early on nature-related risks offers several advantages. Businesses that integrate these considerations into strategy can shape their supply chains before competitors. They can influence customer expectations and investor preferences. They can also reduce exposure to future cost increases or regulatory penalties.

First-mover advantage matters here. Companies that embed nature-positive strategies into their operations can differentiate themselves in tenders. They can attract investment from funds that prioritize environmental, social, and governance criteria. They can also build stronger relationships with clients who require transparent environmental performance data.

In addition, early action allows businesses to test and refine their approaches while regulatory requirements remain relatively flexible. Waiting until compliance becomes mandatory limits strategic options and increases implementation costs. Firms that act now can develop internal expertise, refine data collection processes, and establish credible disclosure practices over time.

What boards should focus on now

Businesses should start by assessing their direct and indirect dependencies on natural systems. This means identifying which inputs, processes, or services rely on ecosystem functions. Water, raw materials, pollination, climate regulation, and soil fertility are common examples. Understanding these dependencies helps quantify potential risks to operations and revenue.

Next, firms should evaluate how their activities affect ecosystems. This includes impacts on biodiversity, land use, water quality, and carbon storage. Negative impacts can translate into regulatory risk, reputational damage, or supply chain disruption. Positive contributions, such as habitat restoration or sustainable sourcing, can create opportunities and strengthen market position.

Once dependencies and impacts are mapped, businesses should integrate findings into risk management and strategic planning. This might involve adjusting sourcing policies, engaging suppliers on environmental standards, or investing in nature-based solutions. It might also mean updating risk registers, scenario planning, and capital allocation decisions to reflect nature-related exposures.

Disclosure is another critical step. Using frameworks like TNFD helps businesses communicate their approach to investors, clients, and regulators. Clear, credible disclosure builds trust and demonstrates governance. It also prepares firms for future mandatory reporting requirements, which are likely to expand as policy frameworks develop.

Key facts for UK businesses

• Nature-related risk is now considered a financial and strategic issue, affecting costs, revenue, and access to capital.
• More than half of global GDP is moderately or highly dependent on nature, according to the World Economic Forum.
• Nature-positive transitions could generate up to £8 trillion in annual business value and 395 million jobs by 2030.
• The Taskforce on Nature-related Financial Disclosures (TNFD) provides a framework for assessing and reporting nature-related risks and opportunities.
• Early action on nature risk can create competitive advantage through improved supply chain resilience, better tender performance, and stronger investor relations.
• UK businesses increasingly face disclosure expectations from public sector procurement, large clients, and financial institutions.

How SBS helps businesses assess nature-related risks

We support UK SMEs in understanding and managing their exposure to nature-related risks. This includes mapping dependencies on natural systems, evaluating impacts, and integrating findings into business strategy. Our approach focuses on practical, commercially grounded analysis that aligns with disclosure frameworks such as TNFD.

Businesses can use our nature-positive project support to identify opportunities for habitat restoration, biodiversity enhancement, and sustainable land use. These initiatives can reduce risk, improve compliance, and create measurable environmental value. They can also strengthen tender applications and client relationships.

For firms that need to meet public sector procurement requirements, our compliance services help businesses prepare credible environmental disclosures. We also provide training through the SBS Academy to help teams understand how nature-related risks intersect with carbon reporting, supply chain management, and strategic planning.

Ultimately, nature-related risk management is about protecting your business while positioning it for future growth. Firms that act early can build resilience, reduce costs, and differentiate themselves in increasingly competitive markets. Those that delay may find their options narrowing as regulatory and commercial expectations tighten.

Further reading and authoritative sources

The UK government’s Environmental Improvement Plan sets out the policy framework for nature recovery and environmental targets. It outlines the regulatory direction businesses should anticipate over the coming years.

The Taskforce on Nature-related Financial Disclosures provides detailed guidance on assessing and reporting nature-related risks. Its framework is increasingly used by investors and large corporations to evaluate environmental dependencies.

The World Economic Forum publishes research on the economic value of nature-positive transitions. Its reports explore how businesses can integrate natural capital into strategy and risk management.

The Cambridge Institute for Sustainability Leadership offers insights on how companies can account for nature-related risks in financial planning and decision-making. Its research supports businesses in developing credible environmental strategies.