A Director’s Guide to Nature-Based Governance

Nature and the Balance Sheet: Why Governance Must Evolve

Nature is reshaping how businesses assess risk, performance and value. In other words, it’s starting to influence the balance sheet. 

As biodiversity loss, deforestation and ecosystem degradation create material impacts on markets and assets, businesses and investors must account for these in decision-making.  

For fiduciaries, integrating nature is more than compliance. It supports long-term value, meets evolving stakeholder expectations, and upholds a duty of care in a world where ecological stability underpins economic resilience.

Why Nature is Fundamental to People, Economies and Business 

Every person, organisation and economy depends on healthy, functioning ecosystems. Yet, the values nature provides are often invisible in financial reports and risk assessments. 

 Consider these facts: 

• One in three bites of food relies on pollinators like bees, which contribute over 200 billion dollars a year to global crop production. 
• Half of modern medicines originate from natural compounds, such as aspirin from willow bark and cancer treatments from rainforest plants.  
• Oceans generate more than half the oxygen we breathe and absorb 90% of excess heat from climate change. 

When ecosystems thrive, so do communities and businesses. When nature is under pressure, risks ripple through economies and supply chains. 

Understanding the Taskforce on Nature-related Financial Disclosures (TNFD)

The Taskforce on Nature-related Financial Disclosures (TNFD) provides a practical framework to help organisations understand, manage and report on their nature-related dependencies, impacts, risk and opportunities.  

 At its core is the LEAP approach 

• Locate your organisation’s interface with nature 
• Evaluate nature-based dependencies and impacts 
• Assess nature-related risks and opportunities 
• Prepare to respond and report 

Use these as an annual nature health check to evaluate how effectively your organisation identifies, manages, and governs nature-related risks and opportunities. 

How is Nature Linked to Your Value Chain?

Manufacturing relies on mined or recycled metals. Technology depends on water and energy. Urban development relies on stable ecosystems. Directors must broaden their lens because these indirect links to nature can become financial, legal, or reputational risks. 

Next Steps 

• Identify key resources: Start by identifying the key natural resources your organisation relies on and focus on the most critical. 
• Query and understand: Speak with procurement or operations about any known resource risks. 
• Review often: Plan to revisit these risks regularly, even if informally at first. 

Are You Meeting Fiduciary Responsibilities on Nature-Related Risks?

For directors, fiduciary duty  includes anticipating and managing emerging risks that could impact the company’s long-term performance.  

Australian courts and regulators, as seen in the ASIC v Cassimatis case, have signalled that failure to consider foreseeable environmental risks, including biodiversity loss, could breach these duties, especially if such neglect leads to harm to company value or stakeholder interests. 

Nature-related risks such as deforestation, water degradation and pollinator loss can affect asset values, supply chains, and access to capital. These risks make it critical for directors to consider nature in fulfilling their fiduciary responsibilities. 

Next Steps 

• Establish awareness: Organise targeted training sessions for directors and executives on nature-related risks and evolving regulatory expectations 
• Update governance procedures: Review your organisation’s governance documents to ensure fiduciary duties explicitly include environmental and nature-related risks 
• Foster accountability: Assign a governance lead or committee to monitor compliance with emerging fiduciary obligations

Where Are Your Material Dependencies and Impacts on Nature?

Most organisations interact with natural systems through water use, raw materials, energy and waste. These interactions often go unexamined but can carry real risks if ecosystems degrade or access becomes limited. Understanding your nature touchpoints is an important step in managing exposure and building resilience. 

This holds true even in sectors not traditionally associated with nature-based risks. For example, Edge worked with the University of New South Wales (UNSW) to assess how their supply chain both depends on and impacts nature helping them identify key risks and opportunities to strengthen resilience.  

Next Steps 

• Develop clarity: Map and document your organisation’s dependencies and impacts on natural ecosystems using available internal data and supplier information. 

Have You Experienced Nature-Related Disruptions?

Flooding, drought, resource shortages and community opposition expose vulnerabilities and reveal where controls or governance were insufficient. 

Next Steps 

• Reflect: Review incident logs or operational reports for past flooding, drought, supply interruptions, or community complaints linked to nature impacts 
•  Identify possible causes and oversight: Assign clear responsibility for managing nature-related risks to a specific leader or committee

Are You Future-Proofing Strategy for Disclosure and Policy Requirements?

Global frameworks like the TNFD are reshaping expectations around how companies disclose and manage their nature-related risks and impacts. Regulators, investors, and customers are seeking transparent, credible action on environmental governance and sustainability. 

Next Steps 

•  Assess your current position: Review your current sustainability strategy to see if nature-related issues are being tracked. 
• Formalise understanding: brief your board or leadership team on the importance of nature-positive goals. 
• Plan for alignment: Identify one or two immediate actions to start aligning with TNFD and anticipated regulatory expectations, such as updating reporting templates or assigning a nature risk lead. 

Moving from Awareness to Action

How to Guide Your Organisation Toward Nature-Positive Resilience

Embedding nature into corporate strategy is good stewardship and a business imperative. 

What you can do now 

Build shared understanding  

Nature-related issues like water scarcity, land degradation or biodiversity loss can affect everything from supply continuity to investor confidence. Leadership teams need a shared understanding of why nature matters for your organisation’s future value. 

Practical actions: 

• Integrate nature-related topics including key frameworks like TNFD into board training and executive education. 
• Build a shared understanding of why nature matters for your industry, risk profile, and future value creation. 

How Edge can help:   

We deliver tailored briefings and workshops that help boards and executives understand emerging nature-related risks and their business relevance, grounded in your sector, strategy, and exposure.

What you can do next 

Assess, act, and report  

Nature-related risks aren’t future concerns; they’re already material for many sectors. From land use and resource depletion to supply chain fragility, fiduciaries have a duty to understand how these issues impact long-term business performance. 

Practical actions: 

• Assess: Undertake a LEAP assessment to identify and prioritise what nature-related issues are material to your business. 
• Act: Use the results of this assessment to make informed decisions about how you will manage the material nature-related issues you identified. Document this in relevant strategies and plans. 
• Report: Integrate nature reporting into your existing reporting suite, explaining what nature-related issues are material to your business, and how you are managing them.

How Edge can help: 

We work with organisations to assess nature-related risks and opportunities aligned with TNFD guidance. See how a recent Edge-led readiness assessment helped Yarra Valley Water uncover nature risks and chart a confident path forward.  

Integrating climate and nature

Climate and nature are inseperable, and leading organisations are beginning to introduce integrated approaches.

Here are some examples:

• Extending climate risk assessments to consider nature-based implications
• Intertwining climate risk management with nature-related management practices across assets
• Mainstreaming climate alongside nature reporting to reduce duplication

Ready to take the next step? 
Nature-related risks are already reshaping how businesses operate, and expectations are growing.

Whether you are just getting started or ready to embed nature into governance and strategy, now is the time to take action.