As business as usual both threatens and causes environmental change, the focus on sustainability reporting is ramping up.

It means there is a growing imperative for businesses to recognise nature as a stakeholder. Doing so offers potential to streamline nature-related reporting and decision-making and better fulfil sustainability commitments and requirements.

Irreversible environmental changes

Already scientists warn that six out of nine ‘Planetary Boundaries for a safe operating space for humanity’ have been transgressed. In short, that translates to an increased risk of generating large-scale abrupt or irreversible environmental changes. 

As a result, government, investors, consumers and businesses are putting an increasing emphasis on sustainability amid recognition that the environment is the foundation of economic growth and job creation.

The European Corporate Sustainability Reporting Directive (CSRD), effective this year, requires large, listed companies to share information about how they monitor a wide range of environmental, social and governance issues, including their impact on the environment. 

Impact on biodiversity and ecosystems

As part of the CSRD, the European Sustainability Reporting Standards (ESRS) state that companies must assess and disclose how their business affects biodiversity and ecosystems, in terms of material positive and negative, actual and potential impacts. This includes the extent to which it contributes to the drivers of biodiversity and ecosystem loss and degradation. 

Furthermore, the introduction of double materiality assessments in CSRD means that companies must not only report on how they impact nature, but the potential impacts and opportunities that nature provides to them.

The EU reporting standards confirm that the environment or ‘nature’ is a stakeholder in business, albeit a silent one, under Application Requirement 7. This view aligns with the Organisation for Economic Co-operation and Development Guidelines for Multinational Companies on Responsible Business Conduct, which state that nature has a moral right to be included in decision-making.

Recognising nature as a stakeholder and including it in an organisation’s corporate governance is an approach supported by academic research. Corporate governance researchers working on stakeholder theory – an approach to organisational management that emphasises the engagement of parties impacted by a business – have expanded the definition of stakeholder to include nature and illustrate that doing so is both feasible and important. 

This is further supported by environmental ethicists – among them Norwegian philosopher Arne Naess – who argue that nature has inherent value and a right to be included in decision-making.

How can nature be given a voice in business?

Considering nature as a stakeholder means that companies take its needs and interests into account in the course of decision-making. Doing so recognises the central role of nature in business. 

However, as recognised in the CSRD, nature is a silent stakeholder, meaning it cannot be consulted in the traditional ways that human stakeholders are. So how can nature be given a voice in a business’s operations?

A research project conducted by Nyenrode Business University, B Lab Benelux and Earth Law Center – Nature Governance Agency puts forward several new and innovative nature-inclusive governance structures. 

Ten companies that all formalise nature’s voice in their governance processes were interviewed and their responses analysed: they are Hub Culture, Willicroft, Faith in Nature, the Zoönomic Foundation, Tony’s Chocolonely, Palais de Tokyo, Corporate ReGeneration, Blyde and Patagonia. The findings were supplemented with additional research in the Netherlands, Belgium, and the UK.

Based on the findings, the researchers developed a framework for understanding four emerging nature-inclusive corporate governance models:

• Nature as inspiration
• Nature as adviser
• Nature as director 
• Nature as shareholder

Nature as inspiration centres nature within a business on a policy or legal basis. This can entail the symbolic appointment of nature as CEO or legally adopting nature in a company’s constitutional documents. 

Nature as adviser uses individual experts or a committee of experts that supports nature-related decision-making within the business.

With nature as director, a directorship role is established by amending the company’s governance framework. The role can be executive, non-executive, individual or collective and mandates the director(s) to represent the interests of nature in the board’s decision-making process, and provides a range of rights to support this. 

The nature as director model is inspired by the UK eco-beauty brand Faith in Nature, the world’s first company to put nature on its board of directors. “The rights of nature will be to the 21st century what human rights were to the 20th,” says Paul Powlesland, Co-founder of Lawyers For Nature, which helped the company to implement the new corporate governance structure.

Nature as shareholder creates an alternate ownership model that puts purpose over profit and can take the form of steward ownership, a golden shareholder or neutralised capital. For example, outdoor apparel company Patagonia has allocated all of its voting shares to a foundation mandated to protect the company’s mission of “saving the home planet” and all non-voting shares to a foundation that awards all dividends to groups and projects whose work supports the company mission.

For those looking to learn more, the Onboarding Nature toolkit provides an in-depth introduction to nature governance, a deeper explanation of the models, legal templates to guide the design of the governance model and practical first steps to start a nature governance journey.

Embedding nature as a stakeholder

For any company inspired to embed nature as a stakeholder, the starting point must be identifying how it defines nature, establishing a concrete idea of the basic components of their relationship with nature and outlining what the company hopes to achieve through nature governance. 

Additionally, the company must ensure that the values of transparency, accountability and action are centred within their model to avoid potential greenwashing. To ensure these qualities are achieved, the organisation should make public the theory of change and publish annual impact reports with clear measurable evidence of the results of the governance change. 

An adaptable mindset 

Nature governance is an emerging field of corporate governance that responds to an urgent need for increasing sustainability in business and is set to evolve. 

For those companies that want to be active participants in the transition to sustainability, recognising nature as a stakeholder through one of the governance models identified can streamline nature-related decision-making and help them to meet sustainability obligations and reporting requirements.

Tineke Lambooy, professor of Corporate Law at Nyenrode Business University in the Netherlands and Ebba Hooft Toomey, an independent researcher based in Vancouver, Canada.