This guide outlines why nature matters for board members, the growing importance of nature-related governance, and key steps they can take to integrate nature into corporate strategies. Investors, regulators, and other stakeholders are demanding greater transparency on nature-related issues, making it essential for boards to act now.
The role of board members in nature-related governance
Board members, including both executive and non-executive directors, are vital in ensuring the long-term success and growth of an organisation. Their role involves balancing the interests of the company's management with those of its stakeholders and holding senior management accountable. Recently, the importance of integrating nature-related issues into strategic planning has risen significantly for board members. They are expected to have a baseline knowledge across various areas, including nature, to develop appropriate plans.
This is a high-level overview of how nature connects with the typical responsibilities of a board member:
- Strategic planning: Setting the organisation's vision, including sustainability and nature-related commitments.
- Fiduciary duty: Directors need to fulfil their legal obligations by considering material nature-related risks.
- Corporate governance: Embed nature in corporate governance by staying current on the latest nature-related requirements and best practice.
- Managing with care, skills and diligence: Capacity to anticipate and respond to emerging nature-related risks.
- Performance and risk management: Managing nature-related risks and opportunities and disclosing nature-related issues in annual reports while avoiding ‘greenwashing’.
Legal opinions from regions such as New Zealand, Australia, and the UK suggest that directors must identify, assess, and manage material nature-related risks. This is especially crucial in industries that depend heavily on nature or in jurisdictions with stringent nature-related regulations. Failure to consider these risks and opportunities could potentially breach directors' duties. Although the current risk of claims against directors is low, prudent directors should start addressing nature-related issues relevant to their organisation and manage them effectively in the long term.
Many board members have already begun to understand the impact of climate change on their businesses and have implemented strategies, such as ESG frameworks and climate transition plans. It is vital for board members to have a plan and to continually improve it.
Here are five key actions to help board members get started in addressing nature-related issues.
Five key actions for board members to get started
1. Understand your organisation’s relationship with nature
Board members must develop a high-level understanding of how their organisation depends on and impacts nature. This involves:
- Reviewing materiality assessments to identify key nature-related risks.
- Understanding how nature-related risks translate into financial risks.
- Staying informed on regulatory developments such as CSRD, IFRS standards, and Global Reporting Initiative (GRI) requirements.
- Assessing dependencies on natural resources within the supply chain.
- Engaging with sustainability and risk teams to identify key concerns.
Nature loss can create financial risks and opportunities. Companies with direct or indirect dependencies on nature must integrate these into their long-term strategy. The TNFD LEAP guidance provides and overview and explanation.
2. Identify applicable nature-related legal and reporting requirements
Board members must ensure their organisation meets current and future nature-related legal requirements. Key steps include the following.
- Understanding legal opinions on directors' duties and nature-related risks.
- Staying up to date on regulations and standards such as IFRS Sustainability Disclosure standards, EFRS or TNFD.
- Guiding the senior management to align corporate governance with sustainability best practices.
- Ensuring nature-related disclosures meet investor and regulator expectations.
By proactively addressing these issues, boards can minimise compliance risks and enhance corporate resilience. Board members need to seek guidance and training as necessary to ensure they have the relevant expertise.
3. Establish your organisation’s nature strategy
Just as organisations have strategies for financial growth, cyber security, and ethics, they must develop a strategy for nature which should be a regular feature on the board’s agenda.
Board members are responsible for:
- Setting nature-related strategic goals;
- integrating nature considerations into the overall corporate strategy;
- identifying sector-specific nature-related risks and opportunities; and
- ensuring alignment with climate transition plans and broader ESG strategies.
For example, a company in the food sector may set a goal to transition to sustainable agriculture, while a financial institution may prioritise green financing initiatives.
4. Ensure senior management establishes and tracks nature-related targets
Board members are responsible for ensuring that management sets meaningful nature-related risk management and strategic targets. This includes:
- physical or transition risks and opportunities;
- the organisation’s direct operations or upstream and downstream value chain; and
- factors within your organisation’s control and sphere of influence, as well as factors outside your control.
Ensure that those nature-related targets are achievable and adaptable. By embedding nature-related targets into corporate performance metrics, organisations can enhance their long-term sustainability.
5. Engage with stakeholders on nature-related issues
As an accountant board member, engaging stakeholders on material issues such as nature is crucial for long-term organisational growth. A clear strategy linking nature actions to priorities like net-zero goals and commercial targets strengthens the business case and ensures a holistic approach.
Leveraging your accounting skills can provide valuable insights into metrics, data collection, and controls. Applying professional scepticism ensures transparency, credibility, and mitigates greenwashing risks. Consider the following.
- Identify key nature-related stakeholders, including internal teams, investors, local and indigenous communities, and others in your sector.
- Determine the most important stakeholders for shaping your nature strategy.
- Ensure senior managers effectively communicate the organisation's nature-related strategy and goals to stakeholders.
- Evaluate if the organisation has structures and processes for transparent and verifiable market commitments.
Board members play a critical role in ensuring that nature-related risks and opportunities are integrated into corporate strategy and governance. As regulatory landscapes evolve and investor expectations rise, boards must act now to safeguard long-term business resilience.
By understanding their organisation’s relationship with nature, identifying legal requirements, setting a strategic vision, ensuring management accountability, and engaging with stakeholders, board members can drive meaningful action on nature-related issues. Organisations that proactively integrate nature into corporate governance will be better positioned to navigate future challenges, build stakeholder trust, and create long-term value.