Nature risk: the missing pillar of credible climate transition plans

Climate risk is now mainstream in boardrooms and capital markets. But nature and biodiversity risks, which are just as financially significant, remain largely unmapped. Accela Research and Alopias Earth consider this to be the next frontier for investors because climate action cannot succeed without stable ecosystems.

In Accela’s latest investor consultations, 60% of respondents reported being ‘very interested’ in biodiversity risks and opportunities, but their understanding is limited.

Nature risk is the financial exposure companies face when the ecosystems they depend on begin to degrade, like water scarcity affecting industrial operations or poor soil health disrupting agricultural supply chains.

Here, investor interest is surging, but practical integration has been slow. That gap signals a market at an inflection point. At Alopias Earth, we see an unmistakable trend: nature is as financially consequential as climate, and companies and investors urgently need coordinated strategies.

Why? Because nature and biodiversity risks threaten project viability, supply chains, and long-term asset value. Ecosystem collapse and community consent issues can trigger cost overruns, stranded assets, or legal and reputational fallout.

Global policy is setting the direction. The Global Biodiversity Framework commits governments to a suite of 2030 targets to halt and reverse nature loss, while Australia’s Strategy for Nature 2024–2030 sets national targets and calls for nature to be factored into economic decisions. At COP30, we also saw an increased focus on ecosystem integrity, Indigenous rights, and nature finance in climate decisions.

Despite this rising awareness, many misconceptions persist.

Companies often don’t view nature risk as material, or they focus solely on their impacts on nature, rather than the way they rely on it. This leads to overlooking water stress, soil stability and other concealed dependencies that can hit margins.

Others view nature as a subset of climate rather than as an interdependent, but distinct, issue. Net-zero targets plus a handful of “nature-based offsets” are presented as sufficient.

There is also a perception that nature risk is a compliance issue, not a strategic one, as well as a belief that the relevant data is scarce. But the real problem isn’t data, it's a lack of internal capability to synthesise complexity into strategy, governance and capital allocation.

Land use and food systems drive both emissions and biodiversity loss. Change them, and it’s a win for both. Our oceans and coasts, from mangroves to seagrass beds and reefs, lock away carbon and support fisheries that underpin local and regional economies. But the energy transition and the rush for critical minerals bring their own consequences for land, water and habitat. Beneath it all are ecosystems that build resilience, protecting supply chains and making infrastructure last.

Nature disclosure still lags climate, but it’s catching up fast. Climate has one universal metric: CO₂e. Nature doesn’t. It’s place-based, multi-indicator and harder to measure. But markets deal with complex risks every day, and nature should be no different.

What translates from the climate transition to nature, and what doesn’t? Interim targets, strong governance, scenario analysis, and capex alignment all carry over. What doesn’t: that one-metric thinking, offset dependence and siloed departments. The transition journey has taught us that decarbonisation planning works best when climate and nature teams are embedded into the heart of corporate strategy, not parked on the sidelines.

While the TCFD (Task Force on Climate-related Financial Disclosures) asks how climate change and climate policy affect financial performance, the TNFD (Taskforce on Nature-related Financial Disclosures) widens the frame. It looks at how businesses depend on and impact nature, and where those risks are.

Adoption is moving faster than early-stage TCFD because boards have more experience in climate disclosure and investors want insights into nature. In Australia, 23 organisations committed to TNFD by late 2024 and the number is rising. Allianz, the global insurance giant, offers a glimpse of what’s next. After a LEAP (Locate, Evaluate, Assess, and Prepare) assessment of portfolio companies in Australia and Germany, it began exploring a systematic biodiversity approach and ways to turn data into action.

So, what should investors do now? We believe they should agitate companies on three fronts—getting them to identify and assess the biggest nature dependencies and impacts; setting targets for water, land use and biodiversity and deploying the necessary capex to back them; and integrating nature risk into governance at the board level.

Other quick wins include adding nature questions to climate engagements, requesting heat maps of high-risk assets, and encouraging TNFD pilots for the most exposed parts of portfolios.

Investors don’t choose between climate and nature. They select credible transition portfolios over investments riddled with opaque risks. Nature integrity is fast becoming the test of real transition: not just decarbonisation, but climate-positive and aligned with nature.

The market is moving fast. At Alopias Earth and Accela, we see the leaders as those currently mapping nature risk, integrating it into low-carbon strategies, and treating ecosystems not as externalities, but as assets with lasting, transformative value.