Climate risk has dominated sustainability conversations for years. Now, nature-related risk is receiving attention from investors, regulators, insurers, and large corporations.

Nature can feel far off or distant in the traditional economy. It’s sad to see a species on the brink of extinction or learn that the world’s rainforests continue to shrink, but most people don’t connect it to their company’s bottom line. 

Unlike climate change, where rising temperatures and disruption to food systems feel like imminent dangers, the evidence for biodiversity loss, soil degradation, and water scarcity is harder to quantify. That does not make them less consequential. Concern is growing that these nature-related risks are capable of disrupting supply chains and threatening long-term prosperity like the carbonemissions related risks that tend to dominate the conversation.

Many businesses depend on nature far more than they realise.

In business, nature is often treated as an “externality.” That means that the economic value of nature, and the damage done to it, is not fully reflected in market prices or business decisions. When a factory pollutes a river, that environmental damage is “external” to the company’s balance sheet.

Is nature really superfluous to economic value? The answer appears to be no. 

Businesses rely on clean water, biodiversity, pollinators, and stable ecosystems to support global supply chains and economic activity. More directly, an agricultural conglomerate may depend on bees to pollinate their crops, soil to grow in, or freshwater to irrigate fields. 

If these vital ecosystem services become damaged, it’s not just the agricultural firm that’s affected, it’s everyone downstream of the primary input.

Financial impacts are becoming more visible, even if the data is still imperfect.

In 2025, the Taskforce on Nature-Related Financial Disclosures (TNFD), composed of the ECI, Oxford University, Global Finance & Economy Group, and others, published an evidence review on the financial effects of nature-related risks. 

The task force analysed more than 600 pieces of evidence from 360 sources. Despite this, company-specific evidence is scarce, as businesses rarely disclose nature-related financial impacts in their own reporting.

 Here are the main takeaways:

• Water scarcity currently has the strongest evidence base. The report found that water-related risks, including drought, reduced water quality, and supply disruption, already have measurable financial impacts across sectors such as agriculture, manufacturing, mining, and semiconductors. 
• Nature-related risk is highly uneven across industries. Businesses with direct dependence on land, water, raw materials, or stable ecosystems appear significantly more exposed than sectors with limited physical environmental dependency.
• The report found operational disruption matters more than abstract ESG narratives. The strongest examples involved physical and operational pressures, including flooding, drought, supply chain disruption, infrastructure damage, and resource scarcity, rather than reputational damage alone.

Unlike carbon emissions, more work is needed to quantify the effects of biodiversity and ecosystem degradation. However, the evidence that does exist suggests some nature-related risks are already producing measurable financial effects in specific sectors.

Investors and insurers are starting to treat nature loss as a material risk.

The TNFD’s report reflects a broader shift in how investors, insurers, and business leaders view environmental exposure. No longer is nature a mere externality. As floods disrupt agricultural production and wildfires threaten critical infrastructure, the material risk from nature is of increasing concern to forward-thinking investors and insurers.

Companies that are heavily invested in multiple industries are noticing the ripple effects from a single environmental disaster. BlackRock, for example, routinely discusses biodiversity and ecosystems in regard to its long-term portfolio exposure.

This shift in investment and governance isn’t going anywhere. Whether it concerns deforestation in the Amazon, which can lead to agricultural and hydroelectric ramifications, or challenges with invasive species, nature is becoming more of a priority than ever before.

Not every claim around nature-related risk is equally convincing.

Not everyone agrees about the risks from nature to business.

Some risks, like water shortages, crop failures, or floods, are inarguable. The effects are immediate. But the further the timeline moves into the future, the greater cognitive dissonance.

As businesses face a trilemma of inflation, geopolitics, and energy volatility, biodiversity concerns might seem far down the agenda. Indeed, most businesses aren’t exposed to the initial risks. It’s the ripple effects as prices rise from inputs that cause secondary and tertiary problems.

Understanding these risks requires business leaders and industry insiders who recognise what lies beyond the horizon. They can deal with day-to-day problems while still planning for the future. 

In short, it’s a hiring problem.

The challenge is that these risks rarely arrive as isolated environmental events. They emerge gradually through disrupted supply chains, rising insurance costs, resource constraints, and increasing operational volatility. By the time the financial effects become obvious, businesses often have little room to adapt quickly. 

That is why the conversation around nature-related risk is increasingly becoming less about sustainability reporting and more about organisational capability.

Companies need leaders who can interpret weak signals early, understand how environmental pressures translate into commercial exposure, and make decisions before those risks become visible on a balance sheet.