The World’s Biggest Investors Are Waking Up to Nature Risk
Nature is moving up the investor agenda. What began as a fringe concern — the territory of sustainability teams and NGO briefings — is now firmly a boardroom issue.
The reason is straightforward: growing recognition that over half of the world’s GDP, some $44 trillion, is moderately or highly dependent on nature. When ecosystems degrade, portfolios suffer. Investors have begun to connect those dots, and the implications for businesses are profound.
The shift has been driven by evidence that is increasingly hard to dismiss. Physical risks are materialising faster than models predicted. Regulatory pressure is building. And the signals from policymakers have sharpened considerably: a recent report by the Joint Intelligence Committee classified biodiversity loss and ecosystem collapse as a direct threat to national prosperity and security. Each of these forces has reinforced the others. Taken together, they have moved nature from a long-run concern — something to be managed by future boards, future investors, future governments — to a live financial issue. Nature risk, it turns out, is a problem for this earnings cycle.
Consider chocolate. The price has risen 15% in the past year alone. Severe droughts and intense rainfall linked to El Niño and global warming have devastated cocoa harvests across West Africa, sending prices surging. Last month, it was reported that shares in Barry Callebaut — the world’s largest chocolate maker — plunged by 15% as the consequences of that supply shock hit the market. This is what nature-dependent risk looks like when it crystallises. Cocoa farming depends on stable rainfall, functioning soils, and pollinator populations.
This is what nature-dependent risk looks like when it crystallises. Cocoa farming depends on stable rainfall, functioning soils, and pollinator populations. When those natural systems fail, the financial systems built on top of them follow.
Investors are listening. And the most consequential signal yet has come from Norway. Its Government Pension Fund Global — the world’s largest sovereign wealth fund, managing approximately $2.1 trillion in assets — has officially instructed its portfolio companies to begin measuring and managing their nature-related risks. The expectations apply to between 7,000 and 9,000 companies globally in which the fund holds stakes, representing roughly 1.5% of all listed equities worldwide.
These companies are expected to use the Taskforce on Nature-related Financial Disclosures (TNFD) framework to identify, measure, and disclose their material impacts and dependencies on nature across their entire supply chains. In practice, this means mapping where a business touches nature — water abstraction, land use, supply chain sourcing — and quantifying the financial exposure if those natural systems degrade or become regulated. Critically, boards are expected to take explicit responsibility for oversight, ensuring that nature risk is understood, governed, and integrated into strategic decision-making.
For boards, the implication is clear. The questions now are how well you have measured your nature-related exposures, who owns them at the top, and what you intend to do about them. And that is where most boards will find themselves exposed. Nature sits awkwardly across traditional responsibilities: it is part finance, part operations, part supply chain. That ambiguity can make it easy to defer. Closing that gap will require boards to be honest about where their knowledge runs out, and deliberate about how they fill it.
In practice, this means moving beyond high-level awareness to genuinely interrogating where the most material exposures sit across your value chain. It means pressure-testing whether management's data and scenarios are good enough to make real decisions. And for most boards, it will mean closing a significant capability gap to build the confidence to challenge assumptions in an area that few directors have had to grapple with before.
Norway’s pension fund is one of the first movers in what will become a much broader shift. The investors who take nature seriously now will set the terms that others are eventually held to. For any board still treating this as tomorrow's problem, the timing is worth reconsidering.
Michael Burgass is Co-founder and Director of corporate conservation consultancy, Biodiversify. He specialises in large-scale biodiversity monitoring, the design and use of biodiversity indicators, and integrating nature into corporate decision-making and accounting. Michael has played a key role in advancing nature-positive frameworks globally, including leading Biodiversify’s contributions to the Conservation Hierarchy project and the Science Based Targets for Nature.
