Emergence of Biodiversity into corporate risk management
Biodiversity is moving rapidly from an environmental concept to a core business issue. For UK organisations, declining biodiversity is no longer only a matter of environmental responsibility – it is increasingly recognised as a source of financial risk, regulatory scrutiny and strategic opportunity.
This article explains what biodiversity means in a business context, why it matters to UK companies, how expectations are changing, and how biodiversity links to emerging reporting frameworks such as TNFD.
Global Regulatory Context
At a global level, climate, biodiversity and environmental risks are identified and discussed at the annual and bi-annual COPs (Conference Of the Parties). There are three types of COP:
- COP Climate: This conference focuses on climate change and is hosted each year in a different country.
- COP Biodiversity: This conference focuses on biodiversity and takes place every two years. COP15, took place in Montreal, Canada, in December 2022 where 196 countries agreed to halt and reverse biodiversity loss by 2030 under the Kunming-Montreal Global Biodiversity Framework (GBF).
- COP Desertification: This conference focuses on land degradation and takes place every two years.
The UK’s National Biodiversity Strategy & Action Plan (NBSAP) commits to achieving all 23 of the Global Biodiversity Framework (GBF) targets at home by 2030 and outlines how it will fully implement each of these, including commitments to:
- Expand protected areas to at least 30% of the land and seas.
- Reduce pollution from all sources to levels that are not harmful to biodiversity.
- Enhance biodiversity and sustainability in agriculture, aquaculture, fisheries, and forestry.
- Ensure sustainable, safe and legal harvesting and trade of wild species”.
UK commitments under the Global Biodiversity Framework (GBF)
UK Target 15: The UK will take legal, administrative or policy measures to encourage and enable business, and in particular to ensure that large and transnational companies and financial institutions:
- regularly monitor, assess and transparently disclose their risks, dependencies and impacts on biodiversity, including with requirements for all large as well as transnational companies and financial institutions along their operations, supply and value chains, and portfolios;
- provide information needed to consumers to promote sustainable consumption patterns;
- report on compliance with access and benefit-sharing regulations and measures, as applicable;
- in order to progressively reduce negative impacts on biodiversity, increase positive impacts, reduce biodiversity-related risks to business and financial institutions, and promote actions to ensure sustainable patterns of production.
The UK will:
- take steps to implement Sustainable Disclosure Requirements (SDR) in the UK. This will enable market participants to identify investment opportunities, ensuring that sustainability claims stand up to scrutiny and protect against consumer harms such as ‘greenwashing’.
UK policy and regulation are increasingly focused on halting and reversing nature loss. Key developments include:
The Environment Act 2021, which embeds long-term environmental targets
Biodiversity Net Gain (BNG) requirements for developments in England
Increasing focus on water abstraction, nutrient neutrality and habitat protection
While not all biodiversity-related requirements are framed as reporting obligations, they shape the operating environment and risk profile for UK businesses.
What is biodiversity?
Biodiversity refers to the variety of life on Earth, including:
Species diversity – plants, animals and microorganisms
Genetic diversity – variation within species
Ecosystem diversity – forests, rivers, wetlands, soils, oceans and the services they provide
From a business perspective, biodiversity underpins the natural systems that organisations depend on, such as clean water, fertile soils, pollination, flood protection and climate regulation.
Biodiversity Net Gain (BNG) works by improving the condition and diversity of natural capital stocks, so that ecosystem service flows are sustained or increased, delivering long-term value for people and nature.
Natural capital thinking simply asks:
- Are we increasing the quality and quantity of stocks so future flows and values improve, not decline?
- Healthy stocks → reliable flows → sustained value.
Terminology in plain English:
- Stocks = what exists right now (the Natural capital asset).
- Flows = what the stock provides over time (the Ecosystem service benefits).
- Values = why those flows matter to people, nature, or the economy (why society cares).
- Biodiversity Net Gain (BNG) = deliberate action to improve the stock so flows and values increase over time.
Natural Capital Examples of Stocks and Values
| Stock (Natural Capital Asset) | Woodland ecosystem | Fish population | Water system (rivers, lakes, wetlands) |
|---|---|---|---|
| What the Stock Consists Of | Trees (species & age structure), understory plants, soils, fungi, birds, mammals, insects. | Population size, species diversity, age structure, breeding adults, genetic diversity. | Water quantity and quality, river channels, wetlands, bankside vegetation, aquatic species and microbes. |
| Flows (Ecosystem Services) | Timber and wood fuel, carbon sequestration, flood regulation, habitat provision, recreation, pollination support. | Sustainable fish harvests, food supply, nutrient cycling, ecosystem balance, livelihoods, recreation. | Clean drinking water, irrigation, flood attenuation, natural cleansing and dilution of pollutants, habitat provision, recreation. |
| Values Created | Economic (timber, tourism, avoided flood damage), Environmental (climate regulation, species survival), Social (health, wellbeing, education, cultural value). | Economic (commercial fisheries, jobs), Social (food security, traditions), Ecological (stable food webs, water quality). | Economic (water supply, agriculture, reduced treatment costs), Health (clean water, disease regulation), Environmental (functioning aquatic ecosystems). |
| Biodiversity Net Gain (BNG) Actions | Increase species diversity, improve structural complexity (deadwood, varied ages), expand area or connectivity. | Restore spawning grounds, protect juveniles, increase species diversity, remove migration barriers. | Restore wetlands and the river’s natural shape and flow, improve water quality, increase native species diversity, enhance habitat connectivity. |
| BNG Outcome | Stronger, more resilient woodland stock delivering higher and longer-lasting ecosystem service flows. | Rebuilt fish stocks that sustain long-term harvests and ecosystem stability. | Healthier water systems with improved resilience, cleaner water, and more reliable ecosystem services. |
Why biodiversity matters to UK businesses
The loss of biodiversity is increasingly recognised as a material business risk. UK businesses may be exposed through:
Operational risk – water scarcity, soil degradation or ecosystem collapse disrupting operations or supply chains
Financial risk – rising costs, asset impairment or reduced productivity
Regulatory risk – tighter planning, permitting and environmental requirements
Reputational risk – scrutiny from investors, customers and civil society
For many sectors – including property, infrastructure, food and agriculture, manufacturing and financial services – biodiversity is closely linked to long-term resilience and financial viability.
Biodiversity, climate and nature-related risk
Biodiversity loss and climate change are deeply interconnected. Climate change accelerates nature loss, while degraded ecosystems reduce resilience to climate impacts.
For businesses, this means:
Climate and nature risks often co-exist and compound
Addressing climate risk without considering biodiversity can leave material gaps
Integrated climate and nature strategies are increasingly expected by investors and regulators
This linkage is a key reason why biodiversity is now being addressed through financial disclosure frameworks rather than standalone environmental reporting.
From biodiversity awareness to disclosure: TNFD
To support better understanding and management of nature-related risks, the Taskforce on Nature-related Financial Disclosures (TNFD) has developed a voluntary framework for organisations to identify, assess and disclose biodiversity- and nature-related issues.
TNFD builds on the structure of the Taskforce on Climate-related Financial Disclosures (TCFD), using the same four pillars:
Governance
Strategy
Risk management
Metrics and targets
For UK businesses already familiar with TCFD, TNFD represents an extension of existing approaches rather than a completely new reporting requirement.
How businesses are responding in practice
Most organisations are taking a phased and proportionate approach to biodiversity and TNFD. Typical first steps include:
Developing a baseline understanding of dependencies and impacts on nature
Identifying priority locations or value chains where biodiversity risk is highest
Linking biodiversity considerations to existing risk management and governance processes
Piloting TNFD-aligned disclosures alongside sustainability or annual reporting
This approach allows organisations to build capability over time while responding to growing stakeholder expectations.
Key takeaways for UK businesses
Biodiversity loss is increasingly recognised as a business and financial risk
UK regulation and investor expectations are moving quickly
Biodiversity and climate risks are interconnected and should be addressed together
Frameworks such as TNFD provide a practical route from understanding risk to disclosure
Frequently Asked Questions
TARGET 1: Plan and Manage all Areas To Reduce Biodiversity Loss
TARGET 2: Restore 30% of all Degraded Ecosystems
TARGET 3: Conserve 30% of Land, Waters and Seas
TARGET 4: Halt Species Extinction, Protect Genetic Diversity, and Manage Human-Wildlife Conflicts
TARGET 5: Ensure Sustainable, Safe and Legal Harvesting and Trade of Wild Species
TARGET 6: Reduce the Introduction of Invasive Alien Species by 50% and Minimize Their Impact
TARGET 7: Reduce Pollution to Levels That Are Not Harmful to Biodiversity
TARGET 8: Minimize the Impacts of Climate Change on Biodiversity and Build Resilience
TARGET 9: Manage Wild Species Sustainably To Benefit People
TARGET 10: Enhance Biodiversity and Sustainability in Agriculture, Aquaculture, Fisheries, and Forestry
TARGET 11: Restore, Maintain and Enhance Nature’s Contributions to People
TARGET 12: Enhance Green Spaces and Urban Planning for Human Well-Being and Biodiversity
TARGET 13: Increase the Sharing of Benefits From Genetic Resources, Digital Sequence Information and Traditional Knowledge
TARGET 14: Integrate Biodiversity in Decision-Making at Every Level
TARGET 15: Businesses Assess, Disclose and Reduce Biodiversity-Related Risks and Negative Impacts
TARGET 16: Enable Sustainable Consumption Choices To Reduce Waste and Overconsumption
TARGET 17: Strengthen Biosafety and Distribute the Benefits of Biotechnology
TARGET 18: Reduce Harmful Incentives by at Least $500 Billion per Year, and Scale Up Positive Incentives for Biodiversity
TARGET 19: Mobilize $200 Billion per Year for Biodiversity From all Sources, Including $30 Billion Through International Finance
TARGET 20: Strengthen Capacity-Building, Technology Transfer, and Scientific and Technical Cooperation for Biodiversity
TARGET 21: Ensure That Knowledge Is Available and Accessible To Guide Biodiversity Action
TARGET 22: Ensure Participation in Decision-Making and Access to Justice and Information Related to Biodiversity for all
TARGET 23: Ensure Gender Equality and a Gender-Responsive Approach for Biodiversity Action
No. While some sectors have more direct impacts, most organisations depend on ecosystem services such as water, climate regulation or stable supply chains. Biodiversity risk can therefore be relevant across the economy.
At present, biodiversity-specific reporting is largely voluntary. However, it is increasingly referenced through planning, environmental regulation and emerging disclosure standards such as TNFD.
Biodiversity is a core component of the environmental pillar of ESG, but is increasingly treated as a financial and strategic risk issue rather than a purely environmental one.
No. Most organisations begin with high-level screening and qualitative assessment, refining their analysis over time as data and internal capability develop.
Biodiversity-related risks are increasingly seen as a governance issue. Boards are expected to understand material risks, oversee management responses and ensure appropriate disclosure.
TNFD has been designed to align closely with TCFD, allowing organisations to integrate biodiversity into existing climate governance, risk management and reporting processes.
