Nature and biodiversity risk

Every business depends on nature in some way: clean water, fertile soil, pollination of crops, forests that hold hillsides in place, mangroves that protect coasts from storms. Many businesses also damage nature, through land clearing, pollution, water extraction and emissions.

Nature risk arises from both sides. A company that depends on a river that is drying up faces a physical risk. A company that clears forest may face new rules, lawsuits or customer boycotts. These risks are often local, slow to build and easy to overlook until they suddenly become costly.

In December 2022, almost 200 countries adopted the Kunming-Montreal Global Biodiversity Framework, with 23 targets for 2030, including protecting 30% of land and sea and asking large companies to assess and disclose their nature-related risks, dependencies and impacts. Reporting frameworks are now following.

Dependencies and impacts

• Dependencies: what the business needs from nature, such as water for a beverage plant, pollination for a fruit grower or stable slopes for a hill road
• Impacts: what the business does to nature, such as land use change at a mine, effluent from a textile unit or overfishing by a seafood supplier

The main drivers of nature loss

1. Changes in land and sea use
2. Direct exploitation of plants and animals
3. Climate change
4. Pollution
5. Invasive species

Types of nature risk

• Physical: acute (a flood after mangroves are lost) or chronic (falling groundwater levels)
• Transition: new rules, changing customer demand, technology shifts and litigation
• Systemic: the breakdown of an ecosystem that many businesses share, such as a river basin

India's rules

• Biological Diversity Act 2002, amended in 2023: access to biological resources and benefit sharing
• Forest (Conservation) Act 1980, amended in 2023: approvals for using forest land for other purposes, with compensatory afforestation
• Environmental Impact Assessment Notification 2006: prior environmental clearance for listed projects
• Coastal Regulation Zone Notification 2019: limits on activity along the coast
• Eco-sensitive zones: buffer areas around protected areas with restrictions on activities

Nature disclosures in the BRSR

Under Principle 6, companies must disclose whether they have operations or offices in or around ecologically sensitive areas, such as national parks, wildlife sanctuaries and biosphere reserves, and whether they comply with environmental approval conditions. They also report environmental impact assessments carried out during the year.

Global frameworks

• TNFD: recommendations and the LEAP approach (Locate, Evaluate, Assess, Prepare)
• GRI 101: Biodiversity: in force from 1 January 2026
• ESRS E4: the EU standard on biodiversity and ecosystems
• ISSB: a non-mandatory practice statement on nature-related disclosures, with a draft planned for October 2026