6 August 2026
Executive Summary
The United Nations’ biodiversity chief has warned that companies and financial institutions are moving too slowly to assess and manage the commercial risks created by the deterioration of nature.
Businesses depend upon ecosystems for water, agricultural production, raw materials, soil quality, pollination, flood protection and climate regulation. However, many companies have not yet identified where those dependencies exist within their operations and supply chains.
The warning comes as governments prepare for the COP17 biodiversity conference in Armenia in October, where progress against the Kunming-Montreal Global Biodiversity Framework will undergo its first major international review.
That framework includes a global commitment to halt and reverse biodiversity loss and protect 30% of the world’s land and sea by 2030. Current assessments suggest progress remains substantially behind the level required.
UK Impact
UK businesses may be exposed even where their own premises have little direct interaction with the natural environment.
Risk may exist through suppliers dependent upon:
- Reliable water availability.
- Productive agricultural land.
- Healthy forests and fisheries.
- Stable soil and weather conditions.
- Pollination.
- Natural flood and coastal protection.
- Particular plants, organisms or genetic materials.
Potential consequences include:
- Reduced availability of agricultural and natural commodities.
- Higher input prices.
- Production disruption.
- Greater insurance costs.
- Planning and environmental restrictions.
- Loss of licences or operating permissions.
- Reputational criticism from investors and customers.
- New disclosure and due-diligence expectations.
Financial institutions may also face risk where borrowers or investments depend upon deteriorating natural assets but have not reflected that exposure within valuations or forecasts.
Global Impact
The Taskforce on Nature-related Financial Disclosures has warned that business dependencies and impacts upon nature can produce financially material consequences.
Its guidance highlights the relationship between ecosystem deterioration and the reliability, quality and quantity of supply-chain inputs. It also provides companies and financial institutions with a framework for identifying, assessing, managing and disclosing nature-related risk.
Nature-related exposure is likely to become increasingly important within:
- Lending and investment decisions.
- Insurance underwriting.
- Environmental permitting.
- Corporate reporting.
- Supplier selection.
- Acquisition due diligence.
- Infrastructure development.
- Government procurement.
Some businesses may also face transition risk as governments introduce stronger conservation rules, water restrictions, restoration obligations or limits upon land use and resource extraction.
The commercial effect may therefore arise either from the physical loss of natural resources or from regulation introduced to prevent further damage.
Our View
Nature risk is currently where climate risk was several years ago: widely acknowledged, but often poorly measured within individual businesses.
Companies should:
- Identify which products and processes depend upon water, land or natural resources.
- Map those dependencies beyond immediate suppliers.
- Locate facilities and suppliers operating in environmentally vulnerable regions.
- Review exposure to drought, flooding, soil degradation and ecosystem decline.
- Examine whether insurance covers losses arising without physical damage to company property.
- Include biodiversity and water exposure within acquisition and lending due diligence.
- Request evidence of environmental compliance from high-risk suppliers.
- Establish alternative sources for nature-dependent commodities.
- Consider using recognised nature-risk frameworks rather than creating an entirely internal methodology.
A company does not need to own a forest, farm or water source to be financially exposed to its deterioration.
Risk Indicator: ELEVATED
Disclaimer
The information contained within these Market Alerts is provided for general market awareness and informational purposes only. It does not constitute financial, legal, investment, regulatory or insurance advice. Whilst every effort has been made to ensure accuracy at the time of publication using multiple reputable and independently verified sources, geopolitical events, legislation, regulation and market conditions may change rapidly. Readers should obtain appropriate professional advice before acting upon any information contained herein.
Invictus Risk Solutions LLP – Helping organisations stay ahead of emerging risks through informed insight and independent analysis.