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
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
