The boardroom illusion hiding climate and nature risks
This piece by Felicity Jackson was originally published by Forbes
As governments prepare for the next climate conference, what’s been dubbed the ‘Nature COP’, new data reveal a problem that could shape the next decade of corporate strategy. While most global companies recognise that climate and nature are inseparable, they still manage them as if they were not. That separation has become a structural disconnect, a risk hidden in plain sight.
A Growing Awareness, Without Integration
According to Business for Nature’s new It’s Now for Nature Pulse report, 94% of the world’s largest firms now fold climate targets into their nature strategies, but that’s largely a reporting alignment, not an operational one. Only half have board-level oversight of nature, and even fewer can quantify how their businesses depend on ecosystems. They may acknowledge the link, but they don’t yet understand or measure the dependencies that make it real.
Eva Zabey, chief executive of Business for Nature, told me that the biggest barrier is not awareness but maturity. Even with 91% assessing impacts, the Pulse shows companies are struggling to disclose the emerging risks, dependencies, or opportunities of a nature-positive world. Nature, Zabey warns, “is still treated by many boards as an ESG add-on, not a material financial risk.” The financial case for nature seems clear, but the systems for managing it remain fragmented, a problem that cannot be solved by disclosure alone.
Unpriced Exposures in the Value Chain
The Pulse examined 32 corporate nature strategies representing more than $700 billion in revenue and 1.6 million employees. It found that while businesses are increasingly assessing and disclosing their nature-related impacts, their dependencies, risks and opportunities are still reported unevenly, creating what Zabey describes as “unpriced exposures across the value and distribution chains.” Climate and freshwater dominate corporate metrics, while soil, pollination and biodiversity remain under-measured.
Zabey notes that some sectors are already showing what integration looks like in practice. “Food and cosmetics sectors are some of the fast movers because their business models and supply chains so visibly and directly depend on nature,” she said. “The proactive stance these companies take is becoming a clear competitive advantage.”
She points to examples such as L’Occitane en Provence’s fair trade shea-butter programme, which ensured “a fair distribution of value across the chain” and remained resilient through recent supply disruptions. Likewise, Brazilian cosmetics group Natura demonstrates that “complexity is no excuse for inaction,” integrating climate, nature, and social inequality to achieve R$2.50 in positive socio-environmental impact for every R$1 of revenue.
Unaccounted-for nature risks already distort insurance pricing, credit ratings and asset valuations. Physical disruptions, from floods and droughts to declining soil fertility, erode margins in sectors as diverse as consumer goods and real estate, while markets still price those shocks as anomalies rather than structural. As investors begin to model nature-related dependencies, that blind spot could rapidly become a liability.
Finance Is The Missing Link
The scale of the disconnect is clear in capital flows. An October 2025 analysis from CISL found that roughly $5 trillion in private finance each year harms nature, compared with just $35 billion supporting it, a 140:1 ratio. The report distinguishes between two fundamentally different approaches: greening finance (embedding nature into credit, portfolio, and underwriting decisions) and financing green projects focused on restoration and conservation.
In practice, these approaches are often treated as interchangeable, with the latter receiving disproportionate attention – even though most harm to nature comes from mainstream capital flows. That imbalance is a major driver of the 140:1 ratio: conservation finance grows at the margins while everyday lending and investment continue to degrade ecosystems at scale. When nature risk isn’t priced, capital is misallocated. Until investors factor these dependencies into decisions, mispriced credit and stranded assets will persist.
This mispricing isn’t limited to investors. Governments reinforce it through more than $800 billion a year in subsidies that degrade nature, masking the real economic cost of ecosystem loss. When both capital markets and public policy signal that nature is essentially free, companies unsurprisingly struggle to manage the risk, reinforcing the illusion that climate and nature can be governed separately. The companies that adapt fastest will be those that recognise the distortion and act anyway, integrating nature into strategy because their future resilience depends on it.
The tools for integration already exist. Financial institutions increasingly use ENCORE, the WWF Risk Filter and providers like GIST Impact to screen portfolios, assess nature dependencies, and flag high-risk sectors or geographies. Frameworks such as TNFD are giving banks and investors structured ways to connect insights to real financial decisions. Yet most institutions stall at the assessment stage: even when they can map nature dependencies, they rarely adjust lending terms, underwriting criteria, or portfolio choices in response.
Corporates face a similar challenge. Tools like IBAT, the ISO’s biodiversity standard, and board level guidance from the TNFD can help companies map their exposure, but most still struggle to translate those assessments into operational decisions, capital allocation, or board-level priorities. Ultimately, until finance prices nature accurately, corporate strategies will remain constrained by the same misaligned signals that created the climate–nature divide in the first place.
The CISL study identifies four proven levers already operating across banks, insurers, and investors: corporate stewardship, integration into financial decisions, innovative products, and policy engagement. Together, these levers show that the barrier is not capability but priority. With just 250 companies accounting for two-thirds of global nature impacts, the leverage for systemic change is enormous.
Governance And Regulation Are Forcing A Shift
Board oversight of nature has doubled in the past two years, and a small but growing number of companies are linking executive pay to nature-related targets. But regulation is now the bigger driver of change. The Pulse report identifies 2026 as a turning point, with new disclosure regimes such as the CSRD, ISSB S2 and TNFD converging, pushing companies to manage interdependence rather than categories
Zabey cautions that political efforts to weaken EU sustainability directives could prove damaging, noting that proposals to shrink the scope of the CSRD and CSDDD “would gut transparency and weaken investor confidence at precisely the wrong time.” Mandatory reporting on nature-related dependencies and impacts, she argues, “is not red tape; it is essential for better decision-making, business resilience and long-term European competitiveness.”
Regulators beyond Europe are also raising expectations. “With countries like Brazil and China preparing for mandatory nature disclosure, and UN Biodiversity COP17 approaching in 2026, the next 18 months are pivotal for businesses to embed nature in their decision-making,” Zabey says.
Boards are beginning to respond. As she notes, “Boards are shifting their focus from short-term harm reduction to long-term value,” recognising that resilience comes from proactively managing nature risks and capturing new revenue opportunities.
Unsurprisingly, the most advanced nature strategies are emerging in sectors closest to physical assets, like food, forestry and consumer goods, where soil health, water and biodiversity risks are material today. Finance and technology, by contrast, still treat nature largely as a reporting issue rather than an operational dependency, a lag that is likely to shape the next wave of investor scrutiny.
From Risk Management To Competitive Advantage
For those leading the charge, integrating climate and nature strategies is beginning to deliver tangible results. Natura has translated integration into financial language. “By quantifying our impacts through the Integrated Profit & Loss (iP&L), we demonstrate that socio-environmental performance can be measured with the same rigor as financial results,” said chief sustainability officer Angela Pinhati in an interview. “For every $1 of Natura’s revenue, $2.50 is generated in socio-environmental impact.” This, she adds, “reduces perceived risk and attracts capital aligned with long-term regeneration.”
At Holcim, climate and nature are treated “with the same importance, they are at the core of our NextGen Growth 2030 strategy,” according to a company spokesperson. The company highlights emerging opportunities as customers seek materials with lower carbon and nature impacts, from concrete that uses less freshwater to cement with lower biodiversity footprint and circular aggregates that rely less on primary raw materials.
These products are opening new growth markets and, in some cases, commanding a premium from customers seeking low-carbon, circular and nature-positive construction. Holcim notes that quarry rehabilitation and nature-restoration projects also strengthen local stakeholder relations and licence to operate. These priorities are embedded in governance, with executive compensation tied to climate, freshwater and circularity targets.
Transparent integration of nature and climate issues, Zabey notes, “unlocks a powerful source of competitive advantage.” The challenge now is to move that mindset from the sustainability team to the balance sheet.
The Real Test Of Corporate Resilience
For boards, the message is simple. The next decade of value creation will depend on systems governance, the ability to see, measure and manage ecological and economic dependencies as one. As Natura’s Pinhati puts it, “Moving from doing less harm to creating more good reframes performance evaluation and incentives. When every function is accountable for social and natural outcomes, the company evolves from mitigation to regeneration.” She adds that, “integration starts with leadership. Sustainability is not housed in a single department but embedded in core business functions, from finance and sourcing to innovation and marketing.”
The climate-nature divide is more than bad science, it is bad strategy. Companies that manage climate, nature, supply chains and finance as one interconnected system, rather than as isolated ESG issues, will be far better positioned to compete in increasingly volatile markets. Those that fail will learn the hard way, through market correction, investor loss, or operational failure, that the cost of ignoring nature is not an environmental loss, but a collapse of the systems their business depends on.