Beyond Climate: Why Nature Risk is becoming a Business Priority

Climate change has dominated the sustainability agenda in recent years, from emissions target setting to decarbonisation strategies. Despite global political headwinds, climate commitments among Fortune 500 companies have tripled since 2019.¹

Nature is now moving rapidly onto the same strategic agenda. Nature risk refers to the business risks and opportunities arising from an organisation's interaction with biodiversity, ecosystems and natural resources such as freshwater. Yet many organisations still view biodiversity primarily as a sustainability reporting issue. For asset owners, developers and investors, the implications extend much further: nature-related factors can influence development approvals, operating resilience, capital planning and long-term asset value.

These risks are already reshaping business decisions. In one example, 3M agreed to a US $10.5 billion settlement linked to PFAS contamination of water systems, illustrating how poorly managed interactions with nature can develop into material financial liabilities.² This growing focus is also reflected in frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD), which encourages organisations to identify and assess nature-related dependencies, impacts, risks and opportunities. 

For portfolio owners, the strategic question is clear: which assets may be exposed to biodiversity risk, ecosystem degradation or water stress, and what could this mean for future development, resilience and value?

Three Ways Nature Risk is Affecting Business Decisions Today

Nature-related risks typically affect organisations through three main pathways: development constraints, financial and capital impacts, and long-term asset resilience.

1. Delaying Development and Constraining Growth 

Nature-related constraints can affect whether a project proceeds, how quickly it secures approval, and whether an operating site can expand as planned. Water availability, ecosystem sensitivity and species protection requirements are increasingly relevant to permitting and development decisions. In Germany, groundwater concerns hindered the development of one of Tesla’s manufacturing facilities, demonstrating how dependence on a local natural resource can become a constraint on growth.³

For developers and investors, early nature screening can complement established site-selection and due-diligence criteria by identifying locations that may require further investigation.

This challenge is particularly relevant to diversified property portfolios. In a recent engagement, SE Advisory Services supported a major Asian real estate developer by assessing biodiversity sensitivity, ecosystem condition and water-related pressures across portfolio assets, transforming complex environmental data into actionable portfolio insights that informed biodiversity and water stewardship priorities.

2. Increasing Liabilities and Constraining Access to Capital

Nature-related concerns can extend beyond environmental compliance to affect financing, transactions and market access. Allegations linking meat producer JBS to Amazon deforestation placed its proposed US listing under scrutiny as banks and customers reconsidered their relationships with the company.⁴

For asset owners and developers, this reinforces the value of identifying material nature-related exposure before it surfaces during investment due diligence, financing or stakeholder review, where unresolved concerns may affect transaction readiness or capital decisions. 

3. Weakening Asset Resilience and Long-Term Value

Nature-related risks arise not only from a company’s impact on biodiversity and ecosystems, but also from its dependence on ecosystem services and natural capital. Freshwater availability, flood regulation, soil stability and healthy surrounding ecosystems underpin operational continuity and physical resilience. Water stress is increasingly emerging as one of the most financially material nature-related risks, with implications for operating continuity, future expansion plans, community relations and long-term asset resilience.

For real estate and infrastructure portfolios, degradation of these nature systems may increase operating and adaptation costs, disrupt asset performance and weaken long-term value. Water stress and ecosystem condition should therefore be considered alongside conventional physical and financial risk factors.

Building Resilience in a Nature-Constrained World

As biodiversity loss, water scarcity and ecosystem degradation become increasingly material business issues, organisations that understand where nature-related risks exist will be better positioned to strengthen resilience and protect long-term asset value. 

Nature-related risks are increasingly influencing where organisations develop, how assets operate and how they manage biodiversity risk, water stress and ecosystem-related challenges across their portfolios. The practical starting point is not to investigate every asset in equal depth, but to establish a portfolio baseline and identify the locations that warrant closer attention. 

SE Advisory Services helps organisations translate biodiversity, ecosystem and water data into portfolio priorities, from location-based screening and priority-site assessment to water resilience planning, risk integration and TNFD-aligned disclosure.

Organisations can identify where nature matters most to their portfolios and turn location-based insights into focused action. SE Advisory Services can support organisations in beginning a nature risk assessment. Contact us today.

Contributor:

Andrea Tan, Sustainability Consultant

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