Understanding nature

Nature is a foundational input to financial performance, and the resilience of every business and capital portfolio depends on the resilience of the natural world. The Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) confirms that the decline in biodiversity and ecosystem services constitutes a critical systemic risk to economies, financial stability and human well-being. Chief Financial Officers (CFOs) must understand their organisation’s dependencies and impacts on nature to manage material risks and capture opportunities. Nature-related issues should be positioned as sources of value that support business resilience and sustainable growth rather than being viewed as a compliance or corporate social responsibility exercise.

Organisations rely on ecosystem services such as water supply, pollination and healthy soils. Impacts, including pollution or land-use change, can translate into increased costs, supply chain vulnerabilities and reduced productivity. A survey of Norges Bank Investment Management investee companies in 2025 found that 44% of respondents consider nature-related physical risks to have financial effects already today, while 28% said the same for transition risks. CFOs should look for evidence of how nature-related issues affect revenues, expenditures, asset valuations and access to capital. Qualitative analysis and the identification of causal chains are recommended as initial steps in understanding these financial implications. For instance, Natura uses an integrated profit and loss statement to monetise its human, social and natural capital impacts, demonstrating how sustainability creates long-term business value.

Assessing and prioritising nature-related risks and opportunities

Nature-related dependencies and impacts give rise to risks that may already be affecting an organisation, even if they are not yet labelled as such. These are typically grouped into physical risks, such as water scarcity; transition risks, including regulation and market shifts; and systemic risks related to financial and ecosystem stability. Prioritising these issues involves assessing the likelihood and magnitude of potential financial implications. Although quantification methodologies are evolving, qualitative evaluations involving scenarios and timeframes are currently the most feasible approach for most companies. The Taskforce on Nature-related Financial Disclosures (TNFD) recommends using the LEAP (Locate, Evaluate, Assess, Prepare) approach for these assessments.

In addition to risks, nature-related issues create opportunities for enhancing business resilience and value creation. These include operational efficiency gains, the development of new product or service markets, supply chain resilience and business model innovation. Finance and strategy teams should evaluate these opportunities based on their financial significance, strategic relevance and contribution to improving or restoring nature. Scenario analysis can be used to test potential outcomes under different ecological or regulatory conditions, ensuring that these assessments inform broader strategic decision-making.

Integrating nature into business decision making and financial planning

Integrating an understanding of nature into core strategy and risk management is critical for success. Leadership commitment at both board and management levels is necessary to ensure that nature-related considerations are proactively identified and actioned. Responsibilities should be assigned within existing governance structures, potentially adapting approaches like RACI (Responsible, Accountable, Consulted and Informed) matrices. Integrating these factors into quarterly and annual reporting cycles, as well as longer-term strategic decision-making, ensures that resources are allocated in line with resilience and value creation objectives.

Financial planning must support the execution of nature-related strategies. This involves incorporating nature-related factors into existing processes such as capital expenditure decisions, budgeting and securing financing. Budgeting approaches—including ring-fencing, allocation, capital budgeting and internal pricing—can be used to manage dependencies and impacts. Organisations are encouraged to set science-based nature targets that are SMART (specific, measurable, achievable, relevant and time-bound). Furthermore, incentives should be designed to align internal behaviour and value chain actions with nature objectives, such as linking executive remuneration to nature performance metrics.

Responding to market expectations – Investor relations, reporting and disclosure

Investors, regulators and wider stakeholders increasingly expect clear information on an organisation’s exposure to nature-related risks and its management of those risks. The International Sustainability Standards Board (ISSB) has issued standards requiring material information on sustainability-related risks, with proposed requirements for nature-related disclosures expected by 2026. Effective reporting relies on robust data, systems and internal controls. CFOs should assess whether existing data management systems are capable of storing and reporting nature-related data with the same level of consistency and auditability as financial information.

Natural capital accounting is a valuable tool for assisting finance teams in structuring nature data, making it consistent, comparable and auditable. While few businesses currently track this data in-house, some advanced organisations are already using these tools to support their reporting and assessments. Finance teams should also consider the use of third-party data and independent assurance to add credibility to their disclosures. Case studies such as Forico, a Tasmanian forest manager, demonstrate the application of natural capital reports to manage extensive land holdings and build market trust. Horizon scanning for upcoming regulations allows organisations to anticipate obligations and align with peer practices.

Advocating for collaboration and building capacity on nature across the organisation

Addressing nature-related issues requires coordinated, organisation-wide action. The finance team is uniquely positioned to lead this effort by connecting sustainability processes with financial data and tools. CFOs should identify the skills, tools and guidance their teams need to analyse and report on nature-related issues confidently. Capacity building through training, staff exchanges and joint projects is essential for empowering staff across the organisation. The finance team can act as sustainability champions, translating complex nature-related information into decision-useful insights that support investment, strategy and risk management. Facilitating cross-functional collaboration between teams such as sustainability, risk, operations and procurement is necessary to progress nature-related action and ensure long-term business resilience.