Nature: there is value now in devising a nature strategy

More often than not, climate action takes centre stage in sustainability regulation. However, some rules are now also changing how companies interact with nature. Some regulations directly reshape business’ relationship with nature, such as the EU Deforestation Regulation, which is placing a new responsibility on companies to cut deforestation out of their supply chains. Other regulations, such as the Corporate Sustainability Reporting Directive, are not just about nature, but they push companies to think about nature and report on their significant nature-related issues, including impacts and dependencies and the corresponding risks and opportunities. Then there are other regulations indirectly benefiting nature, such as the Ecodesign for Sustainable Products Regulation and Packaging and Packaging Waste Regulation, which force companies to reduce pollution from products and packaging.

As companies respond to these regulations, they are taking pockets of action to reduce their impact on the natural world. In doing so, they are managing some of the risks and opportunities that come with relying on nature. One example of this is companies assessing how their existing products and packaging will be affected by incoming circularity requirements and identifying the feasibility of transitioning to alternative, more sustainable materials.

However, isolated or piecemeal actions can prevent companies from seeing the bigger picture – specifically, how these individual regulatory requirements are interconnected, and are part of a larger landscape of nature- and climate-related risks and opportunities arising from dependencies and impacts on the environment. This landscape encompasses physical risks, such as wildfires or flooding causing significant damage to operational infrastructure resulting in capital expenditures for repairs. Additionally, the degradation of natural habitats and the unsustainable use of resources can disrupt supply chains, leading to increased costs for supplies and insurance. It also includes opportunities, such as preserving brand value from partnering with regenerative farms to source ingredients that promote soil health or reduced exposure to raw material and natural resource price volatility by diversifying from virgin materials.

To navigate this complex landscape effectively, companies should develop a comprehensive nature strategy that integrates fragmented efforts into a cohesive plan of action. This strategy can serve as a framework for addressing a company's most significant nature-related risks and opportunities, ultimately guiding it to mitigate its impact on nature and create value for both its business and the environment. This holistic approach will contribute to a company’s wider efforts to seize opportunities to strengthen organisational and operational resilience through sustainability initiatives. This includes streamlined efforts, more effective resource allocation, enhanced collaboration and knowledge-sharing, and more proactive risk management.

As new EU nature-related regulations continue to emerge, this strategic and integrated approach to nature will become more important due to the crystallisation and amplification of nature-related initiatives. One major regulation is the Corporate Sustainability Due Diligence Directive, which will apply from July 2028. It will require companies to assess and address their environmental impact across their value chains, marking a significant shift towards greater corporate accountability for protecting and restoring nature.

A wealth of new and emerging guidance is readily available to help companies develop robust nature strategies, with the Taskforce on Nature-related Financial Disclosures (TNFD)’s LEAP approach being a prime example. This approach helps organisations to determine their business model’s material impacts and dependencies on nature. This provides a foundation for identifying corresponding risks and opportunities, enabling companies to prioritise action effectively.

The market is demonstrating a growing, albeit early, interest in this more strategic approach. 559 companies and financial institutions committed to reporting under the TNFD framework as of March 2025 (a 75% increase since January 2024). Companies operating in some sectors, such as consumer goods, food and beverage and infrastructure, have taken proactive steps. This growing awareness is attracting significant investment, with global assets in related funds and ETFs more than doubling to $3.7 billion (3.2 billion) between 2020 and 2024. However, most companies are still in the early stages of addressing their nature-related impacts, indicating there is significant progress yet to be made.

To read our EU 2025 Sustainability Regulation Outlook click here.

Acknowledgements:

The author would like to thank Ruth Kilsby, Ramon Bravo Gonzalez and Giorgio Consoli for their contributions to this article.